MIRZA VIQAS RAUF , J.----This appeal is directed against the order dated 28th of November , 2007, whereby the learned Civil Judge 1st Class, Lahore rejected the petition under Section 34 of The Arbitration Act, 1940 filed by the appellant.
2. Precisely the facts necessary for adjudication of instant appeal are that the respondent company filed a suit for recovery , damages, rendition, declaration and ancillary relief against the appellant before the learned Senior Civil Judge, Lahore. The appellant in response thereof preferred a petition under Sectio n 34 of The Arbitration Act, 1940 seeking stay of the proceedings in view of presence of arbitration clause in the agreement, executed between the parties. The application was resisted by the respondent who filed reply of the same. The learned Civil Judge, seized with the matter dismissed the petition vide order dated 28th of November , 2007, hence this appeal.
3. Learned counsel for the appellant submitted that the impugned order is not tenable under the law. He added that the matter involved in the suit is duly covered under the clauses of agreement which also carries an arbitration clause, thus the learned Civil Judge was not vested with the jurisdiction to proceed with the same. Learned counsel maintained that the petition has been wrongly dismissed.
4. Conversely , learned counsel for the respondent, while defending the order contended that the matter in controversy raised in the suit is not covered by the arbitration agreement and the learned Civil Judge was right in his approach to dismiss the petition by way of impugned order .
5. I have heard the learned counsel for both the sides and perused the record with their assistance.
6. There is no cavil that the parties have agreed to run the operation of card pay phone service and to this effect a license was issued to the respondent to establish, maintain and operate Card Pay Phone Service in Pakistan on the terms and conditions contained in license with the brand name of "UniCall". Iv pursuance to the license both the parties have entered into an agreement dated 30th of January , 2006. The agreement provides an arbitration clause to the following ef fect:- "3. GOVERNING LA W AND ARBITRA TION 13.2 The Parties shall use their best efforts to settle amicably all disputes other than the disputes in clause 12.4.3 arising out of or in connection with this Agreement or its interpretation. Any dispute between the Parties as to matters arising under this Agreement which cannot be settled amicably within 10 (Ten) days after receipt by one Party of the other Party's request for amicable settlement may be submitted by either Party to arbitration in accordance with the provisions set out below .
13.3 In the event of disputes, other than the disputes in clause 12.4.3, between the Parties arising out of the terms of this Agreement, the same shall be settled by arbitration by 2 (two) arbitrators, one each to be appointed by the Parties. The Parties shall appoint such arbitrators within 10 (Ten) working days of the receipt of the first notice in this behalf by other Party . In the case of this Agreement among the arbitrators or if they are unable to resolve the matter within 30 (Thirty) days thereafter , the matter will be referred to an umpire nominated by both Parties or their arbitrators who shall preferably be a retired judge of the High Court of a Province or the Supreme Court of Pakistan. The award given by the arbitrator(s) as aforesaid shall be binding on the Parties. The fee of the umpire shall be equally shared by the parties."
The precise question before this Court is "whether under the circumstances, the proceedings before the learned Civil Judge, Lahore are liable to be stayed in terms of Section 34 of The Arbitrat ion Act, 1940 or not." For ready reference and convenience Section 34 of the Act ibid is reproduced below :- "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 mater 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 is mine for emphasis)
It is manifest from the above that for invoking the provisions contained in Section 34 of The Arbitration Act, 1940 for an order staying the proceedings, it is necessary that these conditions should be fulfilled:-- i) The proceedings must have been commenced by a party to an arbitration agreement against any other party to the agreement. ii) The legal proceedings, which are sought to be stayed must be in respect of a matter agreed to be referred. iii) The applicant for stay must be a party to the legal proceedings and he must have taken no step in the proceedings after appearance. It is also necessary that he should satisfy the Court not only that he is, but also was, at the commencement of the proceedings , ready and willing to do everything necessary for the proper conduct of the arbitration. iv) The Court must be satisfied that there is no sufficient reason, why the matter should not be referred to an arbitration in accordance with the agreement.
No doubt that the respondent claimed multiple reliefs in his suit, however he sought refund of the security deposit as well as rendition of accounts. It is evident from the record that the agreement provides a separate clause to deal with the refund of security deposit which reads as under :- "12.4.3. Upon termination of this Agreement, PTCL shall forthwith refund the security deposit as stipulated in Clause 7 of this Agreement after adjusting any outstanding dues, to the Operator ."
Now while reading clause 12.4.3 of the agreement and 13.3 jointly , no other inference can be drawn except that in case of any dispute with regard to the refund of security deposit the arbitration clause provided in the agreement will not be applicable. The parties have entered into the Agreement with their free will and consent and they are bound to abide the terms and conditions enumerated therein. It is necessary that the matter in issue raised in the suit must be agreed to be referred to the arbitrator . The provisions of Section 34 of The Arbitration Act, 1940 cannot be made applicable in piecemeal. The Civil Court has a plenary jurisdiction in terms of Section 9 of The Code of Civil Procedure (V of 1908) and the same can be extended to the claims of all civil nature except where the jurisdiction is expressly or impliedly barred. Since the matter in issue is not fully covered under the agreement executed between the parties rather the issue of refund of security deposit has been specifically ousted from the purview of arbitration. In such an eventuality , provisions of Section 34 of The Arbitration Act, 1940 cannot be stretched into service.
7. In view of above discussions, I am of the considered view that the learned Civil Judge has committed no illegality or irregularity while rejecting the petition under Section 34 of The Arbitration Act, 1940. This being so, the instant appeal fails and is dismissed with no order as to costs.