These Revision Applications are based on two successive suits filed by the respondent, Columbia Enterprises, bearing F.C. Suit No. 330 of 1988 and, subsequent Suit No. 144 of 1988 wherein the present applicants, Hyderabad Municipal Corporation, applied for stay of proceedings under section 34 of the Arbitration Act, pursuant to an Arbitration Clause in para 19 of the Agreement inter partes dated 5-7-1988.
2. In the first mentioned suit, plaintif f Columbia Enterprises had pleaded that, in virtue of the above agreement, it had obtained rights for the collection of Octroi Toll Tax, Market tax, Transit pass fees and Road toll fees from the Hyderabad Municipal Corporation from 6-7-1988 to 6-7-1989 (the year 1988-89). The contract was of the value of Rs. 8,28,20,000. Plaintif f deposited 10% by way of bid amount viz. a sum of Rs.82, 82,000 vide Pay Order dated 5- 7-1988. Like sum was also paid by the plaintif f to be adjusted in the last instalm ent, falling due in June, 1989.
Possession of all Octroi posts was handed over to the plaintif f at 00.00 hours on the night falling between the 5th and 6th of July, 1988. Per clause 6 of the agreement daily instalments in the sums of Rs. 2,26,906.10 were payable by the plaintif f towards the contract. Plaintif f averred that, at the time of execution of the agreement, he was forced to sign the same, even though several of its terms and clauses were not acceptab le to him, being in contravention of the West Pakistan Municipal Committees (Octroi) Rules, 1964 and, in particular , as payments, under such Rules, were to be on monthly rather than day to day basis, as provided in the agreement. It was pleaded that on 27-8- 1987 plaintif f received a letter postulating that daily instalments from 18-8-1988 to 27-8-1988 had not been paid, whereupon he made approaches to the defendant corporation saying that such payment could not be made on account of holidays following upon the demise of General Mohammad Ziaul Haq and other gazetted holidays for Ashoora Muharram, and that due payment would be made within a day or two. However , the defendant Corporation persisted in the cancellation of contract without any intimation or show cause notice to the plaintif f.
Even otherwise, it was said that the Mayor Hyderabad Municipal Corporation was not legally competent to cancel the contract, without issuance of Show-Cause Notice to the plaintif f and without obtaining approval from the Council. It was next said that under the agreement between the parties the Corporation could only levy penalty at Rs.500 per day of default. The plaintif f also urged that in the event of any disputes between the parties the matter was referable to arbitration. Cause of action was stated to arise on 27-8-1988 when the contract was cancelled and again when the Corporation took forcible possession of the Octroi posts on the night between the 27th and 28th of August, 1988. Declaration in the suit was sought to the effect that the plaintif f was a lessee, that cancellation of the contract and his dispossession were unlawful and void, and that the provision for payment of daily instalments was bad. Permanent Injunction was claimed restraining implementation of the cancellation and a Mandatory Injunction was prayed for re-delivery of Octroi posts to the plaintif f. Suit No. 330/1988 seems to have been filed on 28-8-1988.
Where after on an application under S.34, of the Arbitration Act, being submitted, on or about 31-8-1988 and Counter and Rejoinder Affidavits having been exchanged in relation thereto, such application was granted by the learned IV Sr. Civil Judge, Hyderabad on 17-9-1988 and the suit was stayed, against which, Civil Appeal No.199/1988 was taken and, on 30-121988, was allowed by the III Additional District Judge, Hyderabad. Revision Application No.154/1988 is directed in relation to such proceedings and was admitted to regular hearing by my learned brother Salahuddin Mirza, J. on 20-101988.
3. The subsequent suit of Columbia Enterprises, viz Suit No.144 of 1988, seems to have been filed on 26-9-1988, more or less on the same pleas but the prayer therein was directed for Declarati on and Injunction, regarding re- auctioning of the Octroi rights, following upon cancellation of plaintif f's agreement. In such suit also an application under section 34 of the Arbitration Act was filed by the Hyderabad Municipal Corporation and was allowed by another Civil Judge namely , the VI Extra Joint Civil Judge, Hyderabad, on 31-10-1988. An appeal, being Civil Appeal No. 244/88, was taken and was allowed by the same learned Appellate Judge namely , the III Additional District Judge, Hyderabad on 10-1-1989, from which Revision Application No.45/1989 arises.
4. In the last mentioned Revision Application on 23-2-1989 I issued pre-admission notice to the respondents and also directed that the earlier Revision Application, on the same question between similar parties, viz R.A. 154 of 1988 be also placed for hearing with such Revision Application. On three occasions, thereafter , adjournments were sought on behalf of the respondent but were, reluctantly allowed. On the fourth date none appeared for the respondent but the case was adjourned. On the adjourned date viz. 11-4-1989, at around 1-00 p.m. no representation having still been made from the side of the respondent, I heard the two Revision Applications and reserved the same for orders for 13-4-1989. Due to belated submission of list of citations from the side of the applicant orders could not be announce d on 13-4-1989, but, Mr. Rajpar , learned counsel for the respondent, appeared and submitted a list of citations and wanted some more time to add to such list. While orders continued to be reserved, learned counsel were permitted to add to their respective lists of citations.
5. The principal ground on which the learned Lower Appellate Court set aside the Orders of Stay of proceedings under Section 34 of the Arbitration Act was that the application in that behalf did not expressly state the dispute in relation to which Arbitration in preference to proceedings in the suit was sought. While in Civil Appeal No.199 of 1989 no attempt was made by the present Applicant to amend the application under section 34 of the Arbitration Act, in the subsequent appeal viz. Civil Appeal No. 244 of 1988 an application under Order VI Rule 17 C.P.C. was submitted for amendment but the learned Appellate Court observed that its "bands' were "cut" to decide the matter otherwise than earlier adjudicated by him. The application under Order VI Rule 17 C.P.C. was, therefore, dismissed and, as recapitulated above, the appeal was allowed.
6. The difficulty confronted in these proceedings regarding specific pleading of a dispute in order to succeed for a stay of suit, pursuant to the provisions in section 34 of the Arbitration Act, 1940, seems to arise, basically , from a decision of Kaikaus, J., as he then was, in the case of Novelty Cinema v. Firdous Films (PLD 1958 Lahore 208) wherein the Honourable Judge, inter alia, observed that in relation to an application under Section 34 of the Arbitration Act the applicant "has to satisfy the Court firstly that there is an agreement to refer and secondly that the suit relates to any matter agreed to be referred, that is, there is a dispute between the parties which is covered by the agreement. Unless this is shown, the suit cannot be stayed." The learned Judge further observed that a mere refusal to pay would not constitute a dispute. Since the applicant in the cited case did not satisfy these requirements that constituted one of the reasons for which the appeal was disallowed. Based on the dicta of Kaikaus, J. there are several decisions authored by my learned brother Saleem Akhtar , J., namely Mohammad Yousuf v. Mohammad Ali (1983 CLC 1498), Zohra Begum v. M/s. Abdur Razzak & others (1984 CLC 1643), M/s. Cosmo-politan Development Company v, M/s. So. Di. Me (1987 MLD 2832), and Syed Arshad Ali v. Sarwat Ali Abbasi (1988 CLC 1350).
7. It is uncontrovertible that an application under section 34 of the Arbitration Act, which lacks in due details causes avoidable inconveniences and difficulties, all around. It is, undoubtedly , to be expected that such an application should categorically state either in itself or through the affidavit in support of it A that there is an Arbitration Agreement, which covers the dispute in suit, applicant's response to the dispute, without embarking upon details, and an expression of willingness, at all material times, on the part of the applicant to go to arbitration in order that the dispute be resolved. However , in the event, such particulars are missing, to take a view that the application is to be dismissed on that score alone may be too technical an approach. Likewise, speaking with utmost respect, a requirement of details of the dispute, on the part of the applicant for stay of procee dings, on pain of refusal of relief may, also, be unwarranted on the language of section 34 of the Arbitration Act. Thus Chakra= vartti, C.J., in a Division Bench case from Calcutta jurisdiction, namely , Sudhangsu Bhattachargee v Rup-Lekha Pictures (AIR 1954 Calcutta 281) said that, in relation to an application under section 34 of the Arbitration Act, all that a Court is required to see is whether the plaintif f in the suit, sought to be stayed, is a party to the arbitration agreement, whether the person making the applicati on is also such party and, lastly , whether the suit is "in respect of any matter agreed to be referred". It was further said that Section 34 does not refer to what the defendant says, but speaks only of, legal proceedings commenced "in respect of any matter agreed to be referred". Such reference, according to the learned Chief Justice, appeared to be to the constitution of the legal proceedings as laid in the plaint. In another case from Indian Jurisdiction viz. Andhra Cooperative Spinning Mills v. C. Sriniyasan (AIR 1958 Andhra Pradash 158), a Division Bench of the Andhra Pradesh High Court, opined that where the submission to arbitration is governed by a written contract, the terms of that contract must be looked into when a question arises as to whether the arbitration clause governs the dispute. Recourse must be had to the language used to determine whether the clause embraces any question which may arise between the parties, in any-way relating to the contract. Such a dispute would be deemed to arise under the contract for the purposes of the arbitration clause, if recourse is to be had to the terms of the contract itself for establishing the claim of one party or negativing that of the rather . In a Division Bench case from West Pakistan jurisdiction, decided on 24-4-1969, namely , G.M. Pfaff A.G. v, Sartaj Engineering Company Limited (PLD 1970 Lahore 184), Mushtaq Hussain, J., as he then was, observed that there is not particular form of applica tion provided under Section 34 of the Arbitration Act and, therefore. if it could be demonstrated that the relevant party made it clear to the Court that it was refusing to submit to its jurisdiction because there was a subsisting arbitration agreement between the parties, which required submission of the particular dispute to arbitration, such party would be deemed to have discharged its duty of making an application and the fact that no application was made under Section 34, aforesaid, would be immaterial. In the case of Universal Life and General Insurance Company Ltd. v. Ejaz Mahmood (PLD 1978 Lahore 475) Khalid Mahmood, J., said that if the Court is satisfied that plaintif f in the suit and the defendant, making an application for stay of the suit, are parties to an arbitration agreement and the suit is in respe ct of any matter agreed to be referred, a prima facie duty is cast upon the Court to act upon such agreement and burden lies on the plaintif f to make out a sufficient reason why the matter should not be referred to arbitration and not on the defendant to show that no such reason exists. Again, in a case from West Pakistan jurisdiction, viz. M/s. Gill and Co, v. M/s Samad Aziz and Co. (PLD 1961 Karachi 700), Inamullah, J. as he then was, came to the conclusion that refusal to pay money , on breach of contract, was a dispute within the meanings of section 34 of the Arbitration Act, thereby recording a dif ferent view than that which found favour with Kaikaus, J. in the case of Novelty Cinema.
8. It appears to me that where parties agree to a domestic forum, such as a tribunal for arbitration, and one of them approaches the Court for relief, in a dispute covered by the arbitration agreement, and the other party , in response, seeks stay of the suit under Section 34 of the Arbitration Act, every endeavour has to be made by the Court to determine, on the material before it, whether the dispute in the suit is covered by the agreement to refer. It is true that to stay the suit is discretionary with the Court but the exercise of discretion, which is judicial, must be in favour of upholding and giving effect to the agreement, all things being equal, rather than in bye-passing it. For the purpose of determining whether the dispu te is so covered, the essential material to be seen is the plaint in suit and the arbitration agreement involved in the suit or pleaded for seeking its stay. The plaint must obviously contain a cause of action, since no suit would lie without such a cause. Cause of action , in turn, consists of a right or combination or group of rights and the violation or threatened violation thereof on the part of the defendant. If such cause of action is claimed to fall within the ambit of the arbitration clause, all that the defendant is required to show is that there is such an arbitration clause covering the dispute in suit, that he seek s stay of proceedings in the suit and, further , that he is and has been ready and willing to go to arbitration for determination of the dispute agitated in the suit covered by the arbitration clause. Of course, this must precede the taking of any steps in the suit, on the part of the defendant. If such elements are present, without going into technicalities, the suit is to be stayed, for the object of law and all interpretations thereof, is to advance the course of justice and no technicality , howsoever well grounded, unless the same spells out a bar clearly and unequivocally , can come in the way of a just and fair interpretation of a legal provision. With great respect, therefore, I am unable to subscribe to the views of Kaikaus, J. followed by my learned brother Saleem Akhtar , J., in the reported case law above referred.
9. Coming to the instant disputes, plaintif f itself has relied on the agreement dated 5-7-1988 between the parties and itself pleads that such agreement contains an arbitration clause with regard to which defendants, Hyderabad Municipal Corporation, however , are said not to have made resort and preferred to cancel the contract, without due recourse to arbitration.
10. I am, therefore, constrained to conclude that the arbitration clause in the Agreement, involved in the relevant suits, governs the disputes between the parties, arising from or relative to such Agreement, that such disputes were agitated in the two suits, and that stay of suits were duly sought and properly granted by the trial Courts. In relation to the plea that the Hyderabad Minicipal Corporation cancelled the Agreement, allegedly , bidding good bye to the arbitration clause therein, the learned Lower Appellate Court has found that the Agreement, in such background, no longer subsists. That, too, is an erroneous view of the law. Mere cancellation of an Agreement, containing an arbitration clause, does not give rise to putting to an end to the arbitration clause. It is, consistently , so held. My learned brother Saleem Akhtar , J. in the case of M/s. Ahad and Zaidi v. Pakistan Steel Mills Corporation (1983 CLC 1598), repelling the contention that, after cancellation of contract the defendant could not invoke the arbitration clause therein, observed that even, following upon cancellation of the main Agreement the arbitration clause continues to remain in force and capable of invocation. Confusion in such context, usually , arises on analogy that since in cases, where the whole contract is questioned as void or non-existent or frustrated, an arbitration clause, if part thereof, can equally be so. But, it is such cases alone, because, the existence or validity of the whole Agreement is in question that stay of proceedings under section 34 of the Arbitration Act, cannot be resorted to, the arbitration clause being part thereof and the analogy cannot be extended to cases of mere cancellation of an Agreement of which arbitration clause is only an incidental part and would, in spite of cancellation of the Main Agreement, cover the disputes arising thereunder .
11. A word now about the willingness of the applicant to abide by the arbitration clause, a question of equity codified in Section 34 of the Arbitration Act. I am of the view that mere cancellation of the Agreement by the applicant unilaterally would not conclusively show and exhibit its unwillingness to go to arbitration, when the suits were commenced. It may or may not be, an erroneous exercise of power , on the part of the applicant, but still remains a question to be determined on arbitration.
12. Another aspect of the case was the request, incorporated in an application moved by the applicant in proceedings wherefrom RA. No.44 of 1989 has arisen. In that case the learned Lower Appellate Court declined such application on the ground that since he passed an earlier Order in analog ous proceedings and since the applicant did not model its conduct of proceedings in accord therewith, he was unable to countenance the prayer for amendment. This also seems to have been an unwarranted exercise of jurisdiction. If an application for amendment, under Order VI R. 17 C.P.C, is moved at any stage of the proceedin gs it should, unless equities are otherwise or there is some good reason for summary rejection, be decided on merits. Indeed in the case of Novelty Cinema itself Kaikous, J., while concluding the judgment, observed that he would have been prepared to consider an application for amendment in relation to the application for stay but none was moved. Since the application under Order 6 Rule 17 C.P.C. was duly based and sought to rectify the purported errors, if any, it should have been allowed. The matter , having reopened in Revision, I would allow it now .
13. In the result, bulk of the errors involved being jurisdictional, Revision Application No. 154 of 1988 is allowed and F.C. Suit No.330 of 1988, pending in the Court of the IV Senior Civil Judge, Hyderabad, is stayed. CMA 1294/88 directed to seek interim stay of the Appellate Order , having served its purpose, also stands disposed of.
14. In relation to R.A. No.45 of 1989, in which pre-admission notice was issued and which was directed to be heard with R.A. No.154/88, the only distinctive point is that the applicant, Hyderab ad Municipal Corporation, was attempting to re-auction the contract in suit following upon the cancellation of the Agreement between the parties.
Such aspect is also covered by the Arbitration Clause. On admitting this Revision Application, I proceed to allow it also and stay Suit No. 144 of 1988 pending in the Court of VI Extra Joint Civil Judge, Hyderabad under Section 34 of the Arbitration Act. In so far as C M A No. 181/88 is concerned which seeks stay of the impugned order , the same also having served its purpose, stands disposed of.