' This is an appeal under section 39 of the Arbitration Act, 1940, from the order of the learned trial Court dated 13-11-1989, refusing to stay the proceedings in a suit filed by the respondents under section 34 of the Arbitration Act, 1940.
2. The facts necessary for the disposal of this appeal are that the appellant had entered into a contract with the respondents on 12-10-1982 for the construction of a primary and high school building at Faiz Abad, Rawalpindi. On 25-2-1983, a suit for recovery of Rs, 6,50,000 was filed by the respondents against the appellant. It was alleged that though the work has been carried out in accordance with the contract by the respondents but a sum of Rs,4,42,623 on account of the final payment had been wrongly withheld by the appellant, despite the order of the Project Engineer and the approval of respondent No,2. A sum of Rs, 2,07,366.90 was also claimed as damages for non-payment of the amount due in time.
3. In response to the summonses issued by the learned trial Court the appellant appeared on 29- 3-1989 when a copy of the plaint was handed over to it and the case was adjourned for filing written statement to 3-5-1989. On that date an application under section 34 of the 1940 Act was filed by the appellant, praying that in view of the arbitration agreement between the parties, the proceedings in the suit be stayed. This application was dismissed by the learned trial Court vide its impugned order dated 13.11-1989 on the ground that the appellant by asking for time to file written statement on 29-3-1989 had taken step in the proceedings and was, therefore, not entitled to apply under section 34 of the Arbitration Act, 1940.
4. Learned counsel for the appellant contended that the summonses which were served upon the appellant were not accompanied by a copy of the plaint, which was handed over to the appellant on 29-3-1989 and as such adjournment on that day for filing of the written statement could not be considered as a step in the proceedings nor can the appellant be said to have acquiesced in the same. Reliance in this behalf was placed by learned counsel for the appellant upon Pakistan International Airlines Corporation v. M/s. Pak Saaf Dry Cleaners PLD 1981 SC 553.
5. Learned counsel for the respondents on the other hand has contended that the dispute raised in the suit was not covered by arbitration clause in the agreement between the parties inasmuch as there was no dispute regarding the amount payable to the respondents in view of the order of the Project Engineer and its approval passed by respondent No,2. According to the learned counsel, withholding of the specified and determined sum of money cannot be said to be a dispute falling under the arbitration clause. Reference in this connection was made to Messrs Gill & Co. (Karachi)
Ltd. v. Messrs Samad Aziz & Co. (PLD 1961 (W.P.) Karachi 700).
6. So far as the question as to whether asking for time to file a written Statement when a copy of the plaint has been supplied to a party, the same stands conclusively determined by the Supreme Court of Pakistan in Pakistan International Airlines Corporation's case (supra) in which it was ruled that in such circumstances, a party cannot be said to have acquiesced in the proceedings or taking a step therein so as to disentitle it to apply for stay of proceedings subsequently.
7. In the present case, it is also to be noticed that even on 29-3-1989, there was not the request of the appellant that it be granted time to file a written statement. On the other hand, it appears that as the appellant was being supplied a copy of the plaint for the first time, it was the Court which fixed the next date for filing written statement. Its application could not, therefore, have been rejected by the learned trial Court on this ground.
8. As regards the contention of learned counsel for the respondents that the dispute is not covered by the arbitration clause, it is totally devoid of any merit. Even if it is assumed that, though it has been disputed by learned counsel for the respondents, that the parties had agreed that an amount of Rs,4,42,623 was due and payable from the appellant still non-payment of that amount by itself was a dispute squarely covered by arbitration clause which is wide, all embracing and comprehensive in nature as would appear from its wording which is as under:-- "In case of any dispute arising or in connection with this agreement or in the interpretation of any clause of this agreement, the matter shall be referred to Arbitrator as per arbitration law enforced by the Government. The work under this agreement, unless rendered impossible by an act of God or viz major shall continue uninterrupted and no payment due to either of the parties shall be withheld on account of arbitration proceedings unless the same is the subject-matter of the dispute.
9. I cannot be urged with any seriousness that there was no dispute between the parties or that the same does not arise or is not in connection with the agreement between the parties dated 12-10- 1982. As a matter of fact, learned counsel for the appellant himself. Had to agree that it is under the aforesaid contract that he was claiming the payment of money. In Messrs Gill & Co. (Karachi) Ltd. v.
Messrs Samad Aziz & Co. (PLD 1961 (W.P.) Karachi 700), it was observed that refusal to pay a definite sum constitutes a dispute referable to arbitration.
10. Reliance of the learned counsel for the appellant on Novelty Cinema, Lyallpur v. Firdaus Films and another (PLD 1958 (W.P) Lahore 208) is wholly misplaced, for there is nothing in this judgment to show that the demand to pay money under the contract and denial thereof by the opposite party does not constitute a dispute between them. In fact discussion in para 3 of the report at pages 209/210 negates the argument being raised by the learned counsel for appellant.
11. On consideration of the wide import of the arbitration clause contained in the agreement, the inevitable conclusion is that the dispute raised in the suit is clearly covered by it. There was no reason as to why the proceedings in suit should not have been stayed under section 34 of the Arbitration Act, 1940.
' In view of what has been stated above, this appeal is allowed; the impugned order is set aside and it is ordered that the proceedings of suit filed by respondent No,1 against the appellant shall remain stayed.
' No order as to costs.