MIRZA VIQAS RAUF , J. This petition in terms of Section 115 of the Code of Civil Procedure (V of 1908)
(hereinafter referred as "CPC") arises out of judgment and decree dated 25 September , 2018, whereby learned Additional District Judge, Lahore, while dismissing the appeal preferred by the petitioner affirmed the order dated 09 May , 2017 passed by the learned Civil Judge Class-I, Lahore.
2. Facts in precision necessary for adjudication of instant petition are that petitioner instituted a suit for recovery of Rs.20,00,000/- against the respondents averring therein that he was awarded a contract by the respondents for the construction of a building for Milk Center and Feed Milk at Gakhar Mandi District Gujranwala.
As per contents of plaint, the petitioner after completion of work submitted final bill to the tune of Rs.18,87,391/- but payment was not released by the respondents without any lawful excuse. The respondents after entering their appearance before the learned Civil Judge moved an application under Order VII Rule 11 of "CPC" seeking rejection of plaint on the ground that suit has been filed without resorting the arbitration as per clause 63 of the contract agreement. The petitioner though contested the application but same was allowed vide order dated 09 May, 2017. This followed an appeal by the petitioner before the learned Additional District Judge, Lahore. The appeal was, however, dismissed vide judgment and decree dated 25 September, 2018.
3. Mr. Riaz Karim Qureshi, Advocate learned counsel for the petitioner contended that the respondents in order to resist the suit moved an application under Order VII Rule 11 of "CPC" seeking rejection of plaint but the learned Civil Judge in oblivion of the settled princ iples of law treated the same as under Section 34 of the Arbitration Act, 1940 and stayed the proceedings. Learned counsel maintained that the procedure adopted by the learned Civil Judge is quite alien to law. It is argued with vehemence that the respondents have stepped into the proceedings, which could not be stopped, while invoking the provisions of Section 34 of the Arbitration Act, 1940. Learnedth th th th counsel submitted that though the petitioner filed an appeal but the learned Additional District Judge has only played the role of a post office and affixed his stamp on the order passed by the learned Civil Judge. Emphasized that both the courts below have failed to apply their judicious mind to the facts of the case.
4. Conversely, Mr. Yasir Islam Ch, Advocate learned counsel for the respondents submitted that though application was moved under Order VII Rule 11 of "CPC" but it was based on the arbitration clause stipulated in the contract agreement. He added that mere wrong mentioning of the correct provision of law does not disentitle the respondents from the relief for which they are entitled. Learned counsel maintained that courts have rightly performed their duty by applying the correct law. It is argued that no illegality or material irregularity is committed by the courts below, warranting interference in exercise of revisional jurisdiction.
5. After having heard learned counsel for both the sides at considerable length, I have examined the record.
6. It is an admitted fact that parties have entered into an agreement for the execution of construction work. On account of purported breach of terms of agreement, the petitioner instituted the suit in hand. The learned Civil Judge Class-I, Lahore after registering the suit issued process for summoning of respondents. The respondents have arranged their representation through an Advocate, who submitted memo of appearance on their behalf. The learned trial court adjourned the proceedings with a direction to the respondents to submit written statement and power of attorney whereas petitioner was directed to file court fee amounting to Rs.15,000/-. On the adjourned date i.e. 21 January , 2016, due to strike of Advocates, proceedings were adjourned to 22 February , 2016. The petitioner tendered the requisite fee whereas power of attorney submitted on behalf of the respondents on the preceding date was made part of record. The matter was again adjourned for submission of written statement. The respondents instead of filing written statement on the adjourned date moved an application under Order VII Rule 11 of "CPC".
7. The question for determination before this Court is two fold.
"Firstly whether an application under Order VII Rule 11 "CPC" can be treated as an application under Section 34 of the Arbitration Act, 1940 and secondly whether while subm itting power of attorney and availing multiple adjournments, the respondents have acquiesced their right to move an application under Section 34 of the Act ibid?"
8. Attending the former question, it is observed that after availing two opportunities for filing of written statement, the respondents moved an application under Order VII Rule 11 of "CPC" seeking rejection of plaint on the ground that suit is not maintainable in view of clause 63 of the contract agreement. The application was ultimately treated as an application under Section 34 of the Arbitration Act, 1940 and the proceeding s were stayed. There is no cavil that mere wrong mentioning of a provision of law, would not deprive a party from the relief for which it is otherwise entitled. The instant matter is not a matter hinging upon wrong mentioning of a provision. Perusal of application reveals that respondents with conscious mind moved the same, while invoking provision of Order VII Rule 11 of "CPC". It is apparent from the contents and prayer clause of the application that it was never the intent of respondents to seek stay of proceedings rather they while canvassing multiple reasons, including clause 63 of the agreement sought rejection of plaint.
9. Both the provisions are neither paramateria nor akin to each other . The object and scheme of Other VII Rule 11 of "CPC' and Section 34 of the Arbitration Act, 1940 is altogether different. For comparative analysis, both are reproduced below :- "11. Rejection of plaint .-- The plaint shall be rejected in the following cases:-
(a) where it does not disclose a cause of action;
(b) where the relief claimed is undervalued, and the plaintif f, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so;
(c) where the relief claimed is properly valued, but the plaint is returned upon pape r insuf ficiently stamped, and the plaintif f, on being required by the Court to supply the requisite stamp-paper within a time to be fixed by the Court, fails to do so;
(d) where the suit appears from the statement in the plaint to be barred by any law." (Underlining supplied for emphasis)st nd "34. Power to stay legal proceedings where there is an arbitration agreement. Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration such authority , may make an order staying the proceedings. " (Underlining supplied for emphasizes)
From the comparative analysis of the above referred provisions of law, it is clearly evident that both the provisions run on altogether different procedure and mechanism. Powers under the former provision i.e. Order VII Rule 11 of "CPC" can be invoked even without any formal application if court is satisfied that the plaint is hit by any of the four eventualities mentioned therein. The consequence thereof would be the rejection of plaint whereas in the latter the court cannot by its own invoke the provisions. It is the party to the proceedings, who may at any time before filing a written statement or taking any other steps in the proceedings can apply for the stay of proceedings. In this view of the matter one form of proceedings cannot be converted into other on the ground that there was merely wrong mentioning of provision of law. The view thus adopted by the courts below is contrary to the well-settled principles of law.
10. There is yet another important aspect that an application under Order VII Rule 11 of "CPC" seeking rejection of plaint can be moved at any stage of the proceedings whereas an application under Section 34 of the Arbitration Act, 1940 for the stay of proceedings can only be filed before filing written statem ent or taking any other steps in the proceedings. As already observed that the respondents before moving the application have sought two adjournments for filing of written statement. This act tantamount to stepping into the proceedings as per contemplation of Section 34 ibid. In somewhat similar situation the Hon'ble Apex Court in the case of "MUHAMMAD F AROOQ versus NAZIR AHMAD and others" (PLD 2006 Supreme Court 196 ) held as under : "8. The admitted position is that the appellant/defendant for the first time appeared in the Court on 28th of March, 1998 when the same was adjourned to 17-4-1998 for submission of the written statement and filing power of attorney. The written statement was not filed as such suit was adjourned to 30-4 1998 when the learned Presiding Officer was on leave. The suit was accordingly adjourned to 13-5-1998 yet on the said date written statement was not filed. Learned counsel for the appellant/defendant requested for adjournment to file written statement which was allowed and suit was adjourned to 18-5 1998 but as the Presiding Officer was on leave, therefore the suit was again adjourned to 30-5-1998 when application under section 34 of the Arbitration Act was moved. From the above proceedings in the Court it would be clear that the appellant even after the receipt of notice of the plaint got three clear dates for filing written statement but the application under section 34 of the Act was moved on the fourth date. Above acts of the appellant on number of dates stated above would show that he intended to participate and defend the suit before the Court. In this process he engaged a counsel and filed adjournment application or requested for adjournment on the above dates. We may also observe that test for determining whether an act is a step in the proceedings or not, this Court in the case of Pakistan International Airlines Corporation v. M/s. Pak Saaf Dry Cleaners PLD 1981 SC 553 at page 559 in the last para. has observed:--- "As would be seen from above, the mere existence of a clause providing for arbitra tion does not bar a suit or other legal proceeding in Court. It only entitles a party to have the legal proceedings stayed. In order that a stay may be granted under the provisions of this section, certain conditions must be fulfilled. The party must take the objection and apply for stay proceedings before taking any step, for example, the filing 'of the written statement, that is, before he placed his cards on the table. The provisions of the section, further imply that the Court should, first of all, examine whether the arbitration clause applies to the dispute, and if it does, whether the nature of the dispute is such that the ends of justice will be better met by the decision of the Court than by that of private forum chosen and agreed upon, and to which the parties had made themselves bound to adhere and adopt in case that type of dispute arose between them. The Legislature has, of course, clearly implied in the language used in the section that the arbitration clause should be respected, but has also made it abundantly clear that the party seeking to avail of the provision of stay under this section must clarify his posit ion at the earliest possible opportunity , so as to leave no manner of doubt that he wishes to have resort to arbitration proceeding. If he hesitates in this regard, or allows the suit to proceed in any manner , that conduct would indicate that he has abdicated his claim to have the dispute decided under the arbitration clause, and to have thereby forfeited his right to claim stay of the proceedings in the Court."
In para. 3 at page 564 of the above cited decision this Court has observed:-- "In my opinion, the true test for determining whether an act is a step in the proceedings is not so much the question as to whether the party sought an adjournment for filing the written statement although of course that would be a satisfactory test in many cases but whether taking into consideration the contents of the application as well as all the surrounding circumstances that led the party to make the application display an unequivocal intention to proceed with the suit, and to give up the right to have the matter disposed of by arbitration. An application of such nature, therefore, should prima facie be construed as a step in the proceedings within the meaning of section 34 and the whole burden should be upon the party to establish why effect should not be given to the prima facie meaning of the application."
9. In the instant case it would appear that the appellant/defendant has been obtaining adjournments on the ground that he intended to file written statement and power of attorney. On all the three dates he made such request for postponement for filing written statement which clearly indicated that he had intention to contest the suit and not to resort to so called Iqrarnama for arbitration. Frequent requests for adjournment for filing written statement would fall within the purview/ambit of the phrase "taking any other steps in the proceedings" within the meaning of section 34 of the Arbitration Act.
10............
11........................ Provision of section 34 of the Arbitration Act would indicate that the party has to promptly act raising the plea of referring the matter to the arbitrator at the very first opportunity and delay on any pretext in raising the plea would estop the party from raising the said plea of staying all proceedings. It may be observed that the appellant/defendant made the aforesaid application after about six months of service of summons of the suit and during the said period he went on seeking adjournment twice for filing written statement. He had even contested the application for interim injunction and had also applied for rejection of plaint and thus the appellant/defendant had taken positive steps for furtherance of the proceedings in the suit. Consequently application for stay of suit under the aforesaid provision of law was rightly rejected by the first appellate Court and affirmed by the learned Single Judge."
This Court in the case of "YEZDIAR HOMI KAIKOBAD and another versus FEROZSONS LTD. through Chief Executive and 3 others" (2005 YLR 783 ) also adopted the same principles.
11. The nutshell of above discussion is that under the circumstances the application moved by the respondents could not be treated as an application under Section 34 of the Arbitration Act, 1940 and as such stay of proceedings is highly unwarranted. Resultantly the instant petition is allowed, impugned judgment and decree as well as order is set aside, as a consequence thereof, application instituted by the respondents/defendants shall stand dismissed with no order as to costs.