' By this common judgment I propose to dispose of Civil Revision No, 103 of 1988 and Civil Revision No, 113 of 1988.
2. Facts in both the cases are common but for the sake of convenience we briefly state facts from Petition No, 103 of 1988.
3. Respondent was in occupation of shop No, 1-14/8 Jinnah Road, Quetta and was carrying on his business as. Druggist under the name and style of Saleem Medical Store. On 28-10-1981 he entered into an agreement with the petitioner, taking him as partner in his business of sale of electrical goods to be carried under the name and style of Saleem Electronics. It is the case of the petitioner that although respondent sent a notice on 14-3-1988 informing him that the partnership is dissolved from, the said date and that accounts may be rendered within 15 days of the receipt of notice, but before that he filed a civil suit. Alongwith the civil suit he also filed an application under Order 39, Rules 1 and 2, C.P.C. Claiming grant of interim relief in terms that till pendency of the case petitioner be restrained.
4. At the time of registration of the suit, the Civil Judge directed notice as well as ordered that till further orders petitioner is restrained from interfering in the business of the plaintiff/respondent.
The matter was adjourned to 28-3-1988.
5. On the date so fixed, an application was moved by petitioner that since the dispute is subject- matter of arbitration, therefore, proceedings may be stayed and matter be referred to the Arbitrators. While staying proceedings of case on 11-4-1988 the learned trial Judge did not vacate order dated 16-3-1988.
6. Both parties felt aggrieved from order dated 11-4-1988 and consequently both of them filed appeals before the District Judge, Quetta, as Civil Appeal No, 9 of 1988 and Civil Appeal No, 10 of 1988.
7. The learned District Judge dismissed both the aforesaid appeals through common judgment dated 30-6-1988. These two petitions are directed against impugned orders passed by Civil Judge and the Appellate Court.
8. Heard Mr. Basharatullah assisted by Mr. Tariq Mehmood for the petitioner and Mr. Khalid Malik for respondent in Petition No, 103 of 1988, Mr. Ayyaz, Zahoor for petitioner and Mr. Basharatullah for respondent in Petition No, 113 of 1988.
9. The main contest between the parties appears to be the ad-interim stay granted and confirmed by the lower Court in Petition No, 103 of 1988. We will, therefore, proceed to dispose of this petition first. It is pointed out here that alongwith the suit, an application was also filed under Order 39'
Rules 1 and 2, C.P.C. On such application an ad-interim order was passed on 16-3-1988 by the learned Civil Judge with the effect that till further orders the defendant is restrained from interfering in the business of the plaintiff. After receiving notice an application was moved by petitioner for stay of proceedings and seeking directions to refer the matter to the Arbitrators as per terms of agreement. This application was moved under section 34 of the Arbitration Act (hereinafter referred to as "Act"). The learned Civil Judge while disposing of this application ordered stay cf proceedings and referred the matter to the arbitration but simultaneously observed that order of status-quo dated 16-3-1988 would not be vacated. This order was passed on 11-4-1988.
10. Mr. Basharatullah learned counsel for petitioner mainly urged that this order tantamounts to confirmation of ad-interim stay granted under Order 39, Rule 2, C.P.C., therefore, the Appellate Court had the jurisdiction to dispose of appeal on its own merits. The learned counsel further contended that Civil Judge becomes functus officio in respect of subject-matter of the suit alone, but the Court still has the jurisdiction to pass interlocutory orders as held in case -of Arbab Abdul Qadir v. Bibi Fatima as reported in 1984 CLC Quetta 546.
11. Controverting the aforesaid arguments Mr. Khalid Malik vehemently urged that as soon as the matter is referred to the arbitration, the Court ceases to function till the arbitrators submit their award to the same. For interlocutory orders there is a provision under the Act i.e, section 41(b). He also relied on the authority already referred hereinabove.
12. I have perused the cited authority and with all respect agree to the proposition as observed regarding the fact that' as soon as reference in a pending case is made to arbitration the trial Court becomes functus officio and cannot deal with such matters in a suit except as provided under the Act. It was also held in the said case that the Court while retaining power to deal with such a matter cannot make any order or adjudication touching merits of such matter of suits.
While dilating upon section 23(2) and second schedule it was also held that the Court in spite of reference retains certain powers and such powers include to pass orders of interim nature for custody, issue an injunction for preserving and protecting property of subject-matter and appointment of receiver etc., as indicated in Ilnd Schedule of the Act. Court assumes jurisdiction only when the arbitrator is superseded or award is filed.
13. In the light of aforeaid observations if we look into the facts of the present case we find that an application was moved under section 34 of the Act as required by law and while disposing of the same the learned Civil Judge ordered stay cf proceedings but at the same time, also confirmed the ad-interim order already granted under Order 39, Rules 1 and 2, C.P.C. ##TE#
14. The question, therefore, for determination would be whether any order could be passed by a court regarding confirmation or setting aside of ad-interim orders passed under C.P.C., on an application under section 34 of the Act. There is no dispute that interim order passed on 16-3-1988 was under Order 39, Rule 2, C.P.C., the same was holding the field till an order was passed on 11-4- 1988. In fact the application moved by petitioner was to stay the proceedings and to make a reference to the arbitrators as stipulated in the agreement. It is also admitted that no fresh application was ever moved by any of the parties under section 41(b) of the Act. It is, therefore, to be seen whether after passing order staying the proceedings, the learned Civil Judge had jurisdiction to have confirmed the ad-interim stay granted in exercise of jurisdiction under C.P.C.?
15. Lengthy and detailed arguments were advanced by the counsel for the parties on the point.
16. It was contended by Mr. Khalid Malik that once the proceedings are stayed and matter is referred to arbitrators then Civil Court becomes functus officio for all purposes. On this assumption it was further argued that appeal before Appellate Court was also not competent as the order was passed on an application under section 34 of the Act. In terms of section 39 of the Act an appeal shall lie from orders passed under the said Act (and from no others) to the Court authorised by law to hear appeals from original decrees. No appeal is provided against an order passed on an application seeking interim relief, therefore, it was urged that Appellate Court was right in dismissing the appeal under Order 43 Rule 1, C.P. C. Another limb of the argument advanced by the learned counsel was that order dated 11-4-1988 confirming the ad-interim order already passed under C.P.C. Was in purported exercise of jurisdiction under section 41(b) of the Act which is also not appealable under section 39 of the Act.
17. In order to settle this issue, we have to determine whether after passing orders on an application under section 34 of the Act, the civil Court had jurisdiction either to confirm or reject an order passed under Order 39, Rules 1 and 2, C.P.C. As has been done in the instant case? There is no cavil to the proposition that no appeal under section 39 of the Act lies against an order passed under section 41(b) of the Act. But on the other hand order passed under Order 39, Rules 1 and 2, C.P.C. Is appealable within the meaning of Order 43, Rule 1, C.P.C. From the plain reading of order dated 11- 4-1988 it becomes abundantly clear that the learned Civil Judge confirmed order dated 16-3-1988, while disposing of application moved under section 34 of the Act. This order, however, was not passed on an application under section 41(b) of the Act. Even if it had been so passed it was not an appealable order under the Act.
18. It may be observed that when an ad-interim order is passed under some law, it has either to be confirmed or vacated under the said law. Thus, as original ad-interim order was passed under Order 39, Rule 2, C.P.C., therefore, it could either be vacated or confirmed in exercise of the powers under C.P.C. And it could not have been confirmed under the provisions of the Act. It may further be observed that confirmation or vacation of an order under some law is the continuation of exercise of jurisdiction under the same law. If that be so, then an appeal under Order 43, Rule 1, C.P.C. Was competent before District Judge against an order passed under Order 39, Rule 2, C.P.C. The learned District Judge while referring to the case of Abdul Qadir as reported in 1984 CLC 546 (referred to hereinabove) held that since the matter was referred to arbitrators and order dated 11-4-1988 was passed on an application under section 34 of the Act, therefore, appeal under Order 43, Rule 1, C.P.
C. Was not competent. In my view the larned District Judge fell into error. As observed in the preceding the import of the aforesaid judgment was that even after referrence to arbitration the original Court retains certain powers as provided under section 41(b) read with second schedule.
But here learned Civil Judge did, not exercise powers under the Act. While passing orders on an application under section 34, she confirmed an ad-interim order earlier passed under Order 39, Rules 1 and 2, C.P. C. The only course open for the petitioner in such circumstances, therefore, was to file an appeal before the District Judge under Order 43, Rule 1, C.P.C. It may further be observed that Civil Judge did not exercise jurisdiction under section 41(b) as canvassed by Mr. Khalid Malik. It is neither borne out from the record that any such application was made nor it transpires from the order that the learned Civil Judge while confirming stay order exercised powers under section 41(b) of the Act. Whether Civil Judge had powers to pass such orders or not, after staying the proceedings will hardly affect the jurisdiction of appellate forum because undisputedly order dated 16-3-1988 was passed under Order 39, Rule 2, C.P.C. And subsequently it was confirmed on 11-4- 1988. The appeal of petitioner, thereto,- could not have been dismissed on the mere ground that it was nut. Competent.
19. From minute scrutiny of impugned order, it becomes clear that order dated 11-4-1988 has two parts, the first; that proceedings were stayed under section 34 of the Act; and second, that an ad- interim order passed under Order 39, Rules1 and 2, C.P.C. Was confirmed The first portion of the order is subject-matter of Petition No, 11s of 1988 and it will be dealt with subsequently. As far as second part is concerned it relates to confirmation of ad-interim order passed under C.P.C. Appeal, therefore, regarding this part was competent under C.P.C. I, therefore, accept this petition, set aside judgment dated 30-6-1988 but remand case to learned District Judge to dispose of the same in accordance with law and on its own merits.
20. We now take up Petition No, 113 of 1988 wherein the first part of order of Civil Judge was challenged before District Judge. Learned District Judge held the appeal as being nct competent because appeal under section 39 of the Act was not maintainable. The plea taken by appellant before District Judge was that there were two business Enterprises, one 'Saleem Medical Store' and the other 'Saleem Electronics'. Since the original suit was in respect of Saleem Medical Store and not Saleem Electronics, therefore, according to appellant, same could not have been referred to the arbitrators, and the proceedings could not have been ordered to be stayed. This plea has also been taken in this petition. However, the learned District Judge held that appeal against the stay of proceedings under section 34 of the Act in the circumstances of the case was not competent under section 39 of the Act because if the subject-matter does not form part of the arbitration agreement then the only course open was to file an appeal under normal law. Reliance was placed on the case of Mubarik Cotton Factory v. Messrs General Agencies, Multan as reported in PLD 1980 Baghdadul Jadid page 1. I have gone through the aforesaid judgment and have read the relevant observations. The ratio as concluded in the said judgment was that section 34 of the Act applies where a party to an arbitration agreement commences legal proceedings against any other party to the agreement "in respect of any matter agreed to be referred". It was further held that it does not apply where the dispute is about matters which have not been "agreed to be referred". Whether Saleem Medical Store formed part of the agreement or not to be referred to the arbitration, after business styled as Saleem Electronics came into existence, is a question of fact to be determined after going through the agreement executed between the parties on 28-10-1981 (Annexure A to Petition No, 103 of 1988). For purpose of reaching such conclusion the agreement had to be considered by the District Judge to see whether reference to arbitration is about matters which have been agreed to be referred or not in the agreement mentioned hereinabove. This will also determine E the competency of the appeal. Since the learned District Judge did not discuss this factual aspect, therefore, the conclusions reached by him vide order dated 30-6-1988, are not sustainable in law, the same are, therefore, set aside but the case is remanded back to the District Judge, Quetta to dispose of this appeal according to law.
' The two petitions Nos. 103 and 113 of 1988 are thus disposed of in the aforesaid terms with no orders as to costs.