' SYED SAEEDUDDIN NASIR, J.---Through this common Judgment, I intend to dispose of all the listed suits which are in fact applications under Section 20 of the Arbitration Act, 1940 through which the Plaintiffs seek an order of this court for reference of the disputes which have arisen between the parties to the Arbitrators appointed under arbitration agreement dated: 06.12.2011 (hereinafter referred to as the "arbitration agreement").
2. The facts giving rise to the present to the plaints are that the plaintiffs and defendants are real brothers and directors/partners/shareholders/joint owners of various business concerns, assets and properties thereof in equal proportion of 20% shareholding each, which have been established in Karachi, but are extended in the scope of their work all across Pakistan. It is the case of the plaintiffs that defendants Nos,1 and 2 willingly, readily and unconditionally entered into the arbitration agreement and unanimously consented to the appointment of the umpire.
3. The parties over the years built a huge business Empire throughout Pakistan, however, the head offices of all the business concerns continued to remain at Karachi, where all parties permanently reside. The details of the movable and immovable properties, are given in the plaint, and the plaintiffs Nos,1 and 2 and the defendants Nos,1 and 2 are real brothers, all being sons of Mst.
Kulsoom Bi; the defendant No,3, who is also a partner/shareholder/joint owner of various business concerns, assets and properties thereof as aforesaid to the extent of 20% shareholding and also one of the signatories to the arbitration agreement, however, the said Mst. Kulsoom Bi was not impleaded as a necessary party to the instant suits when the same were filed in this Court.
4. On account of some altercation that took place between the plaintiffs and the defendants, disputes arose between them who felt a need to enter into an arbitration agreement dated 06.12.2011 in order to resolve their disputes by way of distribution of properties, assets and managements of the aforesaid joint businesses. On account of the fact that the parties calculated that the arbitration would be concluded within a period of six months' time, in clause 3(E) of the arbitration agreement its validity was made up to 30.06.2012, which was made extendable by mutual consent of the parties, and clause-3(D) of the arbitration agreement stated that any matter at dispute between the parties, not provided in the arbitration agreement, shall be governed by the mode and manner as provided in the Arbitration Act, 1940 and the amendments made therein from time to time.
5. According to the averments in the plaints the parties agreed to submit all the disputes and differences between them pertaining to the distribution of all the businesses and properties jointly owned by them to the joint Arbitrators appointed by them under the aforesaid arbitration agreement namely; Mr. Abdul Salam Chawla, who was appointed as an arbitrator by plaintiffs Nos,1 and 2, and Hafiz Feroz Ahmed Ludhanwala, who was appointed as Arbitrator by defendants Nos,1, 2, 3, whereas Mr. Zahid Saeed was appointed as the Arbitral Umpire by unanimous consent of all the parties. Thereafter, all the disputes concerning the distribution of properties, assets and managements of the aforesaid joint businesses and differences between the plaintiffs and defendants were referred to the said Arbitrators for arbitration award.
6. The parties submitted their respective lists of businesses and properties before the Arbitrators, which were incorporated in the arbitration agreement as Schedule-I and II. It is the case of the plaintiffs that defendants Nos,1 and 2 willingly, readily and unconditionally entered into the arbitration agreement and unanimously consented to the appointment of the umpire. The proceedings of the arbitration commenced on 09.12.2011, wherein both the parties submitted Schedule I pertaining to all joint businesses and Schedule-II disclosing all the joint properties to the arbitrators as per the arbitration agreement. Thereafter, a meeting was called by the arbitrators on 22.12.2012, wherein the arbitrators delivered letters to both the parties, calling upon them to furnish information with regard to certain properties and businesses mentioned in the Schedules-I and II, appoint their representatives and submit documents in respect of the same. However, instead of submitting the documents and information as aforesaid, the defendant No,1 proceeded for holiday and requested the arbitrators to postpone further proceedings scheduled for 24.12.2011 until 04.01.2012. On 30.12.2011 the arbitrators sent a letter to all concerned parties requesting them to appoint/ nominate authorized representatives on behalf of each of them to appear before the arbitrators and submit detailed complaints/ grievances along with its solution in writing accompanied by documentary evidence by 10.11.2012. The proposal for appointment of Chartered Accountants and payment of their fee was also made in the said letter. The defendants sent a letter dated 02.01.2012 addressed to the arbitrators stating therein that Hafiz Feroz Ludhanwala, who was their arbitrator, had retired on personal grounds. This attempt, according to the plaintiffs, was made by the defendants, to wriggle out of the arbitration proceedings; however, the arbitrators pronounced an interim award dated 11.02.2012 against the defendants directing them to handover possession of Plot No,71, Block-3, DMCHS at which address many jointly owned businesses of the parties are listed along with all assets, furniture, office record etc.
7. It is the case of the plaintiffs that such interim award was never obeyed and acted upon by the defendants Nos,1 and 2, who refused to abide by the same. Thereafter, the plaintiffs filed the instant suits as applications under Section 20 of Arbitration Act, 1940 with two prayers namely: "direct the defendants Nos,1 and 2 to file the arbitration agreement dated 06.12.2011 entered into between the plaintiffs and defendants before this Court;" (2) "direct the defendants Nos,1 and 2 to proceed with, appear before and participate in the arbitration proceedings which have already commenced by mutual consent of the parties under the terms and conditions of the arbitration agreement."
Whereas, the defendants Nos,1, 2 and 3 filed Suit No,1439/2013 on 16.11.2013, which is an application under section 33 of Arbitration Act, 1940 seeking declaration that the arbitration agreement dated 06.12.2011 neither exists after 30.06.2012 nor is legally valid and/or binding upon the parties thereto, therefore, the same should be declared as invalid.
8. Vide order dated: 07.03.2013 passed by this Court, the plaintiffs and defendants Nos,1 and 2 agreed for appointment of arbitrators pursuant to the arbitration agreement, and vide consent order dated 08.03.2013 specific terms of the reference were framed and arbitrators were appointed by this Court, however, the defendant No,3, another partner of the business and party/ signatory to arbitration agreement, namely; Mst. Kulsoom Bi challenged the said order by way of an High Court Appeal bearing No,45 of 2013 on the ground that she was not made a party in the instant proceedings and that she did not concur to the consent order whereby the matter was referred to the arbitrators pursuant to the arbitration agreement. The defendant No,3 also raised the contention before the learned Division. Bench of this Court in the aforesaid High Court Appeal that the arbitration agreement had become invalid due to lapse of time and is unenforceable due to that reason alone. In the aforesaid High Court Appeal the order dated 08.03.2013 was set-aside and the said Mst. Kulsoom was impleaded as a necessary party to the instant proceedings as the defendant No,3, the learned Division Bench, however, left open the question with regard to validity and enforceability of the arbitration agreement to be decided by the single Judge by observing as under: "As noted in the narrative, Mst. Kulsoom Bi is very much privy to the arbitration agreement dated 06.12.2011. It was not proper for the plaintiffs in Suit No,208/ 2012 and Suit No,576/ 2012 to leave out the necessary party to the agreement in the judicial proceedings when admittedly the appellant has 20% interest in the business. The contention whether the agreement is enforceable or otherwise or whether the appellant has any right or interest to challenge the arbitration, we are afraid the appellate Court may not indulge in such finding when the appellant had no opportunity to voice the concern or raise objection before the Court seized of the matter at trial. Accordingly the impugned order dated 08.03.2013 is set aside."
9. The learned counsel for the plaintiffs Mr. Khawaja Shamsul Islam and Mr. Abdul Sattar Pirzada have inter alia argued that vide order dated: 07.03.2013 passed by this court, the plaintiffs and defendants Nos,1 and 2 have, in principle agreed for appointment of arbitrators pursuant to the arbitration agreement, and vide consent order dated 08.03.2013 specific terms of the reference were framed and arbitrators were appointed, therefore, after remand of the case by the learned Division Bench of this Court on account of a mere technical defect that the defendant No,3 was not joined as a party to the instant proceedings at the time when the earlier reference was made by this Court to arbitrators, the defendants Nos,1 and 2 are estopped from raising any objection with regard to reference of the dispute between the parties to the arbitrators once again pursuant to the arbitration agreement entered into between them. They further submitted that since the aforesaid technical defect has been done away with by the learned Division Bench as aforesaid by impleading the defendant No,3 as a necessary party to the instant proceedings, therefore, the applications under Section 20 should be allowed and reference to the arbitrators should be made strictly in accordance with the terms and conditions of orders dated 07.03.2013 and 08.03.2013.
10. The main contention of the counsel for the plaintiffs is that since the defendants Nos,1 and 2 had agreed to refer the dispute to arbitrators on 07.03.2013, which culminated into order dated 08- 03.2013 agreeing for appointment of arbitrators and proceedings, they cannot subsequently resile from their statement, and since the instant proceedings are continuation of the earlier ones, therefore, the validity of the arbitration agreement will be deemed to have been extended beyond the stipulated date mentioned in the same and as such the defendants Nos,1 and 2 are estopped from objecting to second reference of the dispute between the parties to arbitrators pursuant to arbitration agreement through this Court. Learned counsel for the plaintiffs Mr. Khawaja Shamsul Islam in support of his arguments placed reliance on the following cases:
(i) Saifullah Khan v. Karachi Customs Agents Association reported in 2011 YLR 202, wherein it is held that "The principle of estoppel and acquiescence would apply with full force to which the parties have consented to arbitrate and participate in the proceedings before the said Arbitrator. In such circumstances, the parties are estopped from making an attempt to challenge the jurisdiction of the said Arbitrator."
(ii) Communication an Works Department v. Pavital/Pivato Joint Venture reported in 2002 CLC 1798, wherein it is held that "petitioner has chosen and appointed arbitrator unconditionally, without any reservation and then participate in the proceedings. The petitioner subsequently sought revocation of authority of arbitrators and setting aside of arbitration proceedings. Held, conduct of the petitioner did not permit it to resile from its contractual commitments and obligations-trial Court had rightly applied the principle of estoppel in dismissing the application filed by the petitioner."
(iii) Trading Corporation of Pakistan v. Nidera Handelscompagnic B. V. Reported in 3001 UC 474 wherein it is held that "from the above-quoted Section 32 of the Act it is evident that notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award. It may further be observed that under Section 33 of the Act, a party can file an application in the competent Court for challenging the existence or validity of arbitration agreement or an award or to have the effect of either determined."
(iv) Qamaruddin Ahmed and Co. v. Din Muhammad reported in 1970 SCMR 402 wherein it is held that "parties acquiescing in reference and ratifying action of referring dispute to arbitrator by participating in such proceedings--Estopped from challenging validity of reference on ground of its not being made on his behalf. "
(v) Abdul Salam v. Muhammad Yaqoob reported in 1999 CLC 1005 wherein it is held that "Arbitration Act, 1940 is to save the parties from the cumbersome and tiring proceedings of the civil litigation and to resolve their disputes through arbitration as early as possible."
(vi) Sharbat Khan v. Fazal Rahim reported in 1998 SCMR 867 wherein it is held that "The petitioner having himself agreed to refer the dispute to the agreed named persons, cannot turn around and object to it.
11. At the end of their arguments, the learned counsel for the plaintiffs submit that the dispute between the parties may be referred to the arbitrators in terms of the aforesaid two orders of this Court and arbitration agreement between the parties and Suit No,1439/2013, through which the defendants Nos, 1, 2 and 3 have sought declaration for invalidity of the arbitration agreement may be dismissed.
12. Turning now to the arguments extended by the learned counsel Mr. Muhammad Ali Lakhani appearing for the defendants Nos,1 and 2, he has submitted that despite the fact that the consent was given by the defendants Nos,1 and 2 for reference of the dispute between the parties to the arbitrators pursuant to the arbitration agreement, nevertheless, they can still resile from the earlier consent on the sole ground that the arbitration agreement was in itself void, ab initio due to lack of fulfilling certain mandatory pre-conditions which are contemplated by the said agreement itself, therefore, their earlier consent was of no legal effect and they are not bound by the same.
' The learned counsel further argued that order dated 07.03.2013 was only in the nature of interim order which was finally culminated into consent order dated 08.03.2013 by the plaintiffs and the defendants Nos,1 and 2; that the order dated 07.03.2013, therefore, cannot be read in isolation of order dated 08.03.2013 and since the latter has been set-aside in the aforesaid High Court Appeal bearing No,45 of 2013. The former loses its applicability inasmuch as both the orders merged into appellate order dated 23.05.2013. Whereby the case has been remanded back to the single Judge for decision upon the same afresh, therefore, the defendants Nos,1 and 2 cannot be bound down by the aforesaid two orders and are not estopped from refusing to concur to an order for reference once again of dispute to the arbitrators pursuant to the arbitration agreement; that the arbitration agreement stands negated by virtue of the fact that the defendant No,3 has become party to the instant proceedings in terms of the appellate order as aforesaid, who has raised serious issues with regard to the validity and enforceability of the arbitration agreement before the appellate forum as well as before this Court; that it is an admitted position that at the time when the defendant No,3 Mst. Kulsoom Bi was impleaded as a necessary party the arbitration agreement had already lapsed and had become invalid by virtue of clause of the said agreement which contemplated that the same shall be valid for arbitration amongst the parties until 30.06.2012 and may be extended for further period by mutual consent of all the parties; that on the foregoing terms, the plaintiffs and the defendants Nos, 1 and 2 initiated certain proceedings before the persons nominated through the agreement as arbitrators without intervention of this Court in terms of Chapter II of the Arbitration Act, 1940, which resulted in the pronouncement of an interim award in favour of plaintiffs Nos,1 and 2, after which the defendants Nos,1 and 2 alleged bias and prejudice against the arbitrators nominated through the agreement who pronounced the partial/interim award; that since the proceedings already commenced under Chapter II of the Act, this Court, therefore, lacks jurisdiction under Chapter III of the Arbitration Act; that the parties have filed several parallel proceedings, whereby they have sought dissolution and/or winding up their businesses and liquidation of assets owned by the parties hereto collectively, which could be done under specific winding up proceedings and decree of the Court, therefore, this Court lacks jurisdiction under Section 20 of the Arbitration Act, 1940; that the alleged disputes have not been categorized and/or classified through the arbitration applications, as such vague and/or unsubstantiated allegations cannot be considered sufficient for the purposes of Section 20 of the Arbitration Act, 1940; that there is no consensus of the parties herein insofar as the role and/or authority of the persons nominated through the arbitration agreement, who are not arbitrators for the purpose of enforcing the agreement, but are the persons who are required to distribute the business and assets of the partnership concerns of the parties; that first para of the arbitration agreement at page-2 as well as clause-2 of the agreement contemplates that a comprehensive list of businesses and all the properties will be prepared by the arbitrators in consultation with the above parties in the form of Schedule I and Schedule II, which will be signed by all the parties and arbitrators, whereas no such schedule enlisting the businesses and properties was filed by either party to the arbitration agreement which renders it void ab initio and unenforceable. Referring to clauses (B), (D) and (E) of the arbitration agreement the counsel for the defendants Nos,1 and 2 further argued that clause (B) categorically states that the parties to the arbitration agreement shall not involve in litigation(s) among themselves and/or with their firms/AOP/ companies, whereas several parallel legal proceedings have been filed by the parties, clause-E contemplates that the agreement shall be valid amongst the parties until 30.06.2012 and may be extended for further period by mutual consent of all the parties. The learned counsel for defendants Nos, 1 and 2 has prayed for dismissal of instant suits, which are applications under Section 20 of Arbitration Act, 1940. He further submits that the defendants Nos,1, 2 and 3 have already filed Suit No, 1439/2013, which is an application under Section 33 of Arbitration Act, 1940 praying therein that the arbitration agreement dated 06.12.2011 may be declared as invalid and not binding upon the parties, which may be granted inasmuch as the arbitration agreement has become invalid due to lapse of time.
13. The learned counsel for the defendants Nos,1 and 2, in order to support of his arguments, has placed reliance upon the following cases:
(a) General (Recd.) Pervez Musharraf through Attorney v. Pakistan through Secretary Interior and others reported in PLD 2014 Sindh 389, wherein it is held that "Interim order would merge in the final order and would not survive after final adjudication."
(b) Federation of Pakistan through Secretary, M/O Interior v. General (R) Pervez Musharraf and others reported in PLD 2016 Supreme Court 570, wherein it is held that "Temporary order stood merged/vacated in terms of the final order."
(c) Pakistan International Bulk Terminal Limited through Chief Finance Officer and others v.
Maqbool Associates (Pvt.) Limited through M.D. And others reported in 2014 CLD 773 Sindh, wherein it is held that "Interim order exhausts or becomes merged in final order made in case."
(d) Mujtaba Hussain Siddiqui v. Sultan Ahmed reported in 2005 YLR 2709 Karachi, wherein it is held that "Section 20 Arbitration Act is not applicable when the parties have invoked the provisions of Chapter II Arbitration Act."
(e) West Punjab Government v. Messrs.' Pindi-Jhelum Valley Transport Limited Rawalpindi and others reported in PLD 1960 SC (Pak) 88, wherein it is held that "Mere promises de futuro are not binding on the promisor unless they amount to a contract."
(f) M/s. Commodities Trading International Corporation v. Trading Corporation of Pakistan Limited and another reported in 1987 CLC 2063 Karachi, wherein it is held that ""Section 20 Arbitration Act is not applicable when the parties have invoked the provisions of Chapter II Arbitration Act."
(g) Ganesh Chandra Dey and another v. Kamal Kumar Agarwalla reported in AIR 1971 Calcutta 317, wherein it is held that "Dissolution of partnership can only be enforced through decree of Court."
(h) Nelofar Saqib v. Saiban Builders and Developers and others reported in 2011 CLD 341 Karachi, wherein it is held that "Dissolution of partnership can only be enforced through decree of Court."
(i) Mrs. Yasmeen v. M/s. Beach Developers through M.D. And another reported in 2003 YLR 1109 Karachi, wherein it is held that "Vague and/or unsubstantiated allegations cannot be considered sufficient for the purpose of Section 20 of Arbitration Act."
14. Mr. Ishrat Zahid Alvi, learned counsel appearing for defendant No,3, Mst. Kulsoom Bi has argued on almost the same lines as Mr. Muhammad Ali Lakhani, however, due to the fact that he has gone little farther in his arguments, the same are reproduced shortly. He inter alia contended that the said Mst. Kulsoom Bi was very much privy to the arbitration agreement dated 06.12.2011 and also owns shareholding to the extent of 20% in all the businesses, assets and properties of the family business empire, however, she was not made a necessary party to the instant application under Section 20 of Arbitration Act, 1940 with ulterior motives and mala fide intentions on the part of the plaintiffs, and at the time when order dated:08-03-2013 was passed by consent of the plaintiffs and the defendant's Nos, 1 and 2, the defendant No,3, Mst.Kulsoom Bi was neither a party to the instant proceedings nor gave consent to the aforesaid order, who later on challenged the said order through High Court Appeal No,45/2013, which was allowed in her favour by the Division Bench of this Court on 23.05.2013 by setting-aside the impugned order and adding Mst. Kulsoom Bi as a necessary party to the instant proceedings as defendant No,3, however, at that time the validity of arbitration agreement had already expired on 30.06.2012; that the learned Division Bench did not deliberate upon objection with regard to the validity and enforceability of arbitration agreement and left it open to the single Judge to determine the same; that the application to enforce arbitration agreement under Section 20 of the Arbitration Act, 1940 is not maintainable in view of the bar created under Section 69 (3) of the Partnership Act that since the agreement could not be acted upon, having become inoperative, the application, under Section 20 is not maintainable; that the arbitration agreement provided that the party shall prepare comprehensive list pertaining to the businesses and properties of the family business in Schedules-I and II for amicable settlement by the arbitrators, however, no such schedules were filed by the parties; that the validity of the agreement expired on 30.06.2012. Firstly, the plaintiffs referred the matter to sole arbitrator, who awarded his partial award under Schedule-II of the Arbitration Act, thereafter the defendants took a u-turn and filed the instant application under Section 20 of Arbitration Act, 1940 for reference of the disputes to arbitration before arbitrators appointed by the Court, which is not permissible under the Arbitration Act, 1940. He states that when the parties have once initiated proceedings under Chapter II of the Arbitration Act, 1940, then the provisions of Section 20 are not applicable for the simple reason that the purpose of invoking the provisions of Chapter II, which covers Sections 3 to 19 of the Arbitration Act, 1940 and Section 20 is covered by Chapter III of the said Act are identical and similar in nature i,e, appointment of arbitrator. He submits that Suit No,1439/2013, filed by the defendants Nos,1, 2 and 3 which is an application under Section 33 of Arbitration Act, 1940 praying therein that the arbitration agreement dated 06.12.2011 may be declared as invalid and not binding upon the parties, may be granted. In addition to the case law cited by the learned counsel for the defendants Nos,1 and 2, Mr. Muhammad Ali Lakhani, he has placed reliance on a case of 1985 MLD 402 wherein it is held that: "Petitioner failing to invoke arbitration clause within period stipulated in contract and also failed to comply with preconditions, was debarred from invoking arbitration clause."
' AIR 1977 Allahabad 352, AIR 1994 Bombay 16, PLD 1968 Lahore 712 wherein it is held that: "Agreement to enforce arbitration clause under Section 20 of the Arbitration Act, 1940 is not maintainable in view of the bar under Section 69 (3) of the Partnership Act."
' M/s. Hafiz Abdul Aziz Cotton Ginning Factory v. Ali Muhammad Abdullah and Co. And another reported in PLD 1966 Karachi 197, wherein it is held that: "Where the agreement itself could not be acted upon having become inoperative, it was held that the Court was not entitled to appoint arbitrator of its own choice and substitute original agreement of the parties"
15. At the end of his arguments, the learned counsel for defendant No,3 has submitted that the instant suits are liable to be dismissed and Suit No,1439/2013 is liable to be granted/allowed inasmuch as the arbitration agreement has lost its validity as well as on account of the fact that after first invoking the Chapter II of the Arbitration Act, 1940 the plaintiff cannot file application under Chapter III of Section 20 of the said Act.
16. I have heard the arguments of the learned counsel for the parties, perused material available on the record of the case and examined the case law cited by them with their able assistance. In the present suits, there are two prayers which are quite contrary and opposed to each other namely: "(1) direct the defendants Nos,1 and 2 to file the arbitration agreement dated 06.12.2011 entered into between the plaintiffs and defendants before this Court; (2) direct the defendants Nos,1 and 2 to proceed with, appear before and participate in the arbitration proceedings which have already commenced by mutual consent of the parties under the terms and conditions of the arbitration agreement."
17. In the light of the aforesaid facts and circumstances, the core issues before me to be decided are Firstly; as to whether or not the arbitration agreement is valid and can be enforced after 30.06.2012? And Secondly; whether after invoking provisions of Chapter II Arbitration Act, 1940, the parties to the arbitration agreement can invoke the jurisdiction of this court under Chapter III Section 20 of the said Act?
18. It is an admitted position that when the instant applications under Section 20 of the Arbitration Act were filed by the plaintiffs, the defendant No,3 who is also a partner/shareholder/joint owner of 20% shares of various business concerns and assets of the business as aforesaid and is also one of the signatories to the aforesaid arbitration agreement, was not joined as a necessary party for some obscure reason, the rationale of which is best known to the plaintiffs. Therefore, when the matter was referred to the arbitration by mutual consent of the parties vide order dated 08.03.2013, the defendant No,3 was not present before this Court and was not a consenting party to the aforesaid reference to arbitration and the validity of arbitration agreement had expired on 30-6- 2012.
19. In my opinion even at that time reference to arbitration could not have been made to the arbitrators pursuant to the arbitration agreement as it had already lost its validity on 30-06-2012, and so also due to the fact that the parties had already resorted to submission of their dispute to the arbitrators appointed by them under the arbitration agreement, who announced their interim award, and as such since the parties have previously invoked the provisions of Chapter II Sections 3 to 19 of the Arbitration Act, 1940, then Section 20 of the Arbitration Act, 1940 will not be attracted.
20. Even if we assume for the sake of argument for a moment that since it was a consent order between the plaintiffs and the defendants Nos,1 and 2, therefore, it will be presumed that by tacit approval of the consenting parties the validity of the arbitration agreement was extended, then the question will arise as to whether such extension was valid and legal in the absence of concurrence being given to it by the Defendant No,3, who was admittedly not present before the court at that relevant point in time, and whereas the arbitration agreement contemplates that the validity of the same can be extended beyond the stipulated date by mutual consent of all the parties? The answer would be that indeed the consent given to such order by the parties was void ab initio and of no legal effect inasmuch as the arbitration agreement had lost its validity and it was neither extended with the consent of the defendant No,3 nor by the order of the court under section 37(4) of the Arbitration Act, 1940, and since the initial consent was void, therefore, the defendants Nos,1 and 2 are no longer bound by the same. Thereafter, the Defendant No, 3 said Mst. Kulsoom Bi impugned the validity of the aforesaid consent court order by filing a High Court appeal which was disposed of by Division Bench vide order dated 23.05.2013, whereby the defendant No,3 the said Mst. Kulsoom Bi was impleaded as a necessary party to the instant proceedings. The learned Division Bench left the question with regard to validity and enforceability of the arbitration agreement open to be decided by the single Judge.
' It would be advantageous to reproduce clause-E of the arbitration agreement which contemplates as under: "This agreement shall be valid for Arbitration among the parties until 30.06.2012 and may be extended for further period by mutual consent of all the parties."
21. If we closely examine the aforesaid provision of the arbitration agreement, we can easily say that at the time when the defendant No,3, Mst. Kulsoom Bi was impleaded as a necessary party by virtue of the aforesaid order passed in the High Court Appeal No,45/2013 on 23.05.2013, the validity of the arbitration agreement, which is being sought to be enforced through the instant suits, had already expired on 30.06.2012.
22. No case law was cited at the Bar and no assistance was accorded to the Court on the point of expiration of validity of the arbitration agreement by the learned counsel for the parties, however, upon conducting personal search on the relevant law myself, I found out that it is settled law that an arbitration agreement fixing the time during which reference may be made to arbitration is impliedly considered valid by subsection (4) of Section 37, which also vests the Court with a discretion to extend such time only in case if the Court is of opinion that in the particular circumstances of the case undue hardship would otherwise be caused to the parties due to expiration of time. Guidance can be taken from the case of Jam Khursheed Khan v. The Province of West Pakistan reported in PLD 1973 Lahore 131, wherein it is held that: "An agreement fixing time during which reference may be made to arbitration is impliedly considered valid by the subsection (4) of section 37 which vests the Court. With discretion to extend such time."
23. For the sake of convenience, Section 37 of Arbitration Act, 1940 is being reproduced as under: ' S.37 Limitations (1) All the provisions of the Limitation Act, 1980, shall apply to arbitrations as they apply to proceedings in Court.
(2) Notwithstanding any term in an arbitration agreement to the effect that no cause of action shall accrue in respect of any matter required by the agreement to be referred until an award is made under the agreement, a cause of action shall, for the purpose of limitation, be deemed to have accrued in respect of any such matter at the time when it would have accrued but for that term in the agreement.
(3) For the purposes of this section and of the Limitation Act, 1908, an arbitration shall deemed to be commenced when one party to the arbitration agreement serves on the other parties thereto a notice requiring the appointment of an arbitration, or where the arbitration agreement provides that the reference shall be to a person named or designated in the agreement, requiring that the difference be submitted to the person so named or designated.
(4) Where the terms of an agreement to refer future differences to the arbitration provide that any claim to which the agreement applies shall be barred unless notice to appointment of an arbitrator is given or an arbitrator is appointed or some other step to commence arbitration proceedings is taken within a time fixed by the agreement, and a difference arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms if any, as the justice of the case may require, extend the time for such period as it thinks proper.
(5) Where the Court orders that an award be set aside or orders, after the commencement of an arbitration, that the arbitration agreement shall cease to have effect with respect to the difference referred, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1908, for the commencement of the proceedings (including arbitration) with respect to the difference referred.
24. In the present case the dispute which is sought to be referred to the arbitrators nominated in the aforesaid arbitration agreement is in respect of the same subject matter, which is already sub judice in Suits and J.M. Between the same parties. It may further be pointed out that the plaintiffs had already invoked the arbitration agreement by appointing the arbitrators and requested the defendants to concur with the said reference to the arbitration, meaning thereby the plaintiffs have already invoked the provisions of Section 8 of the Arbitration Act, 1940, whereas in order to invoke the provisions of Section 20 of the said Act it is essential that the following pre-conditions must be fulfilled:
(1) There should be arbitration agreement between the parties executed between them before the institution of any suit with respect to the subject-matter of the agreement, (2) There should be a dispute between the parties to such agreement, and (3) The parties have not invoked the provisions of Chapter II Sections 3 to 19 of the Arbitration Act, 1940.
25. If the aforesaid .Three conditions are fulfilled, then the purpose of Section 20 of the Arbitration Act, 1940 is achieved and reference of the dispute between the parties can be made to the arbitrators appointed by the parties in the agreement, or where the parties cannot agree upon for appointment of any arbitrator, the Court shall appoint an arbitrator, however, when the parties have once initiated proceedings under Chapter II of the Arbitration Act, 1940, then the provisions of Section it) are. Not applicable for the simple reason that the purpose of invoking the provisions of Chapter II, which covers Sections 3 to 19 of the Arbitration Act, 1940 and Section 20 is covered by Chapter III of the said Act are identical and similar in nature i,e, appointment of arbitrator.
Therefore, it is condition precedent for invoking Section 20 of Arbitration Act that the parties or anyone of them should not have invoked the provisions of Chapter II Sections 3 to 19 of the Arbitration Act, 1940 or in other words we can say that there is bar on invoking the provisions of Section 20 Chapter III of the Arbitration Act, 1940, when B the parties to the arbitration agreement have invoked the provisions of Chapter II Sections 3 to 19 of the said Act.
26. It is pertinent to mention here that though the heading of Chapter III manifests that the provisions of Section 20 of Arbitration Act, 1940 are applicable only in the case where there is no suit pending, nevertheless upon examining Section 20 in its entirety, it transpires that no such condition is contemplated by the Section itself. Then the question arises as to what was the exact intention of the legislature behind giving such heading to Section 20. Despite being acutely conscious of the fact that merely heading of the Chapter would not affect the unequivocal intention of the legislature conveyed through the words appearing in the section, one cannot turn a blind eye to the conflict of dicta in the authorities of various superior Courts with regard to the interpretation of the heading of Chapter III of the Arbitration Act, 1940.
27. In some of the judgments of the superior Courts, it is held that the heading of the Chapter is like preamble of a statute and while