' MUNAWAR ARMED MIRZA, C J.--This petition is directed against order dated 28-6-1995 passed by learned Additional District Judge-I, Quetta.
2. Relevant facts briefly mentioned are, that petitioner during year, 1988 obtained business loan from Habib Bank Ltd., Panjgoor. To secure said amount apart from executing bypothecation deed and other documents, petitioner got his business stock/goods insured with respondent No,
1. It is the case of petitioner that "Fire Policy" of insurance regarding goodsin-trade was renewed for one year from 1st July 1992 to 1st July 1993 vide No,EWI/QTA/GEN/FP-708/8/92 (26324) on 5th August, 1992. Unfortunately business premises of petitioner caught fire towards on 18-2-1993 and goods lying inside were burnt. Matter was immediately reported and F.I.R. No17/1993 lodged with Police Station Panjgoor. According to petitioner clause 12 of the Fire Policy specifically provided settlement of dispute through arbitration. For convenience said clause is reproduced hereunder:-- "12. If any difference rises as to the amount to be paid under this Policy (liability being otherwise admitted) such difference shall be referred to the decision of an Arbitrator to be appointed in writing by the parties in difference of if they cannot agree upon a single Arbitrator to the decision of two Arbitrators one to be appointed in writing by each of the parties within one calendar month after having been required in writing so to do by either of the parties or in case the Arbitrator do not agree of an Umpire appointed in writing by the Arbitrators before entering upon the reference. The umpire shall sit with the Arbitrators and preside at their meetings and the making of an Award shall be a condition precedent to any right of action against the company."
' Petitioner had demanded Rs,3,996,80 (Rupees three lacs ninety-nine thousand six hundred eighty). It is alleged that respondent No,1 had offered merely rupees thirty-nine thousand five hundred (Rs39,500) but factually paid Rs,12,000 (Rupees twelve thousand). Eventually petitioner towards 2nd January, 1994 filed an application under section 8/20 of Arbitration Act, 1940 before learned Civil Judge, Quetta. Respondent No,1 resisted the claim and filed detailed rejoinder on 24th March, 1994. By way of preliminary objection it was pleaded that Fire Policy pertained merely to cloth and other goods or stock was not covered by the same. Respondent No,1 has specifically asserted that details furnished by petitioner to local authorities did not disclose any loss of cloth, through fire. Respondent however has clearly mentioned that sum of Rs,39,500 was actually paid to petitioner towards final settlement of claim.
3. Respondent No 2 separately filed written reply repudiating the claim of petitioner. It was averred that respondent No,2 was unjustifiably impleaded in the matter. In para. 5 of the reply respondent No 2 clarified that a sum of Rs,39,500 was paid to petitioner through Cheque No, PF 4059089 dated 26-4-1993 towards full and final settlement of the claim. Learned Civil Judge-II, Quetta by means of order dated 29-8-1994 made a reference of dispute to sole arbitrator for settlement. The order is reproduced below:-- "29-8-1994. Learned counsel for the parties are present. Heard arguments of the learned counsel for the parties and carefully perused the case file and also seen objections filed by the respondents has no force as objections are overruled. The matter in dispute is referred to the arbitrator namely Malik Muhammad Ismail, Advocate. The parties are directed to deposit Rs,10,000 for arbitrator. The case file is handed over to the arbitrator and the arbitrator is directed to return the case file after making award within 2 months."
' Feeling aggrieved from above decision, respondent No,1 preferred Civil Revision No,168 of 1994 before learned Additional District Judge-I, Quetta After considering arguments advanced on behalf of the parties, Appellate Court accepted said petition vide order dated 28-6-1995, whereby above- referred order of trial Court was reversed and original application concerning reference to Arbitration filed by petitioner directed to be dismissed. Operative portion of the judgment is reproduced below:- "In present case there exists an insurance policy/agreement between the parties executed on 5-8- 1992 for a period of one year i,e, 1-7-1992 to 1-7-1993. On the basis of the same the respondent/applicant has sought appointment of arbitrator and referring the dispute to him for making an award. The perusal of insurance policy in question reveals that it is specifically mentioned in the same that the property insured on the stock of cloth only. No other articles are insured under this policy. In view of the same no dispute as per insurance policy existed between the parties for settlement of which arbitrator is required to be appointed. The learned trial Court has erred in holding that the matter in dispute is referred to the arbitrator. Furthermore the learned trial Court has also not specified the dispute referred to the arbitrator for submitting his award which is not proper.
' In view of above application the revision petition is accepted. The order of trial Court made on 29- 8-1994 is set aside while the application is dismissed."
' Aggrieved from above decision present Constitution petition was filed on 6th July, 1995.
4. Mr. Muhammad Riaz Ahmad learned counsel for petitioner emphatically urged that business- premises of petitioner undisputedly caught fire and stock lying therein completely got burnt. F.I.R.
No 17/1993 was lodged with Police Station Panjgoor without delay. He argued that the trial Court had rightly referred the dispute for settlement through arbitration but appellate authority has acted illegally in reversing said decision. Learned counsel contended that impugned order suffered from patent illegality and had been passed in excess of authority vested in Appellate Court.
Reliance was placed on (i) PLD 1978 Karachi 908 and (ii) unreported judgment of this Court in Civil Revision No 94 of 1992 Muhammad Mirwani v. M/s. East West Insurance Co. And another decided on 28-5-1992. Mr. Muhammad Riaz Ahmad further argued that impugned order is non-speaking and do not correspond to requirements of Order XX, C.P.C., therefore, was illegal and defective.
Reference was made to PLD 1975 Lahore 1385.
5. Mr. K.N. Kohli learned counsel for respondent vehemently opposing the petition canvassed that Insurance Policy issued by respondent No 1 expressly pertains to loss regarding 'stock of cloth' only.
He emphatically argued that details of loss submitted by the petitioner to police and local authorities while reporting the incident is clearly reflected from Annexure 'C'. According to learned counsel absolutely no dispute within the purview of clause 12 of the Insurance Policy existed which could be referred for `arbitration'. It was argued that decision of Appellate Court was quite proper and justified. Reference was made to (i) 1987 CLC 2063 and (ii) AIR 1981 Delhi 430, Mr. Kohli maintained that impugned judgement was well reasoned, therefore, objection from petitioner's side had no substance.
6. Mr. Abdus Samad Dogar, Advocate adopted arguments advanced by Mr. Kohli and further submitted that respondent No,2 had been unnecessarily impleaded. He, however, claimed special costs.
7. We have carefully examined available record in the light of arguments advanced by learned counsel for parties. We feel that pivotal question for resolving present controversy on the admitted documents and facts would be whether dispute liable for reference to arbitration, exists between the parties. It is pertinently noticeable that Fire Policy No,26324 renewed on 5-8-1992 for one year commencing from 1-7-1992 till 1st July, 1993 expressly mention articles insured and covered by said policy. There is no dispute that business-premises of petitioner caught fire on 18-2-1992. However important feature of the present case is that Insurance Policy specifically mentions about Stock of Cloth which has been protected against fire. Thus unambiguously contractual obligation between the parties are regulated by term of Insurance Policy. It therefore has to be seen where business stock/goods apparently not covered by Fire Insurance Policy can be subject-matter of reference within the purview of clause (12) of the Policy reproduced above.
It hardly needs any elucidation that for invoking jurisdiction under section 20 of the Arbitration Act essential requirements would be: (i) Existence of arbitration agreement, (ii) it must relate to subject-matter of contract and (iii) differences between parties concerning said agreement should arise needing settlement. Minute examination discloses that in the instant case agreement of Fire Insurance Policy between the parties raising dispute regarding loss of business stock/goods due to fire requiring settlement exists. Needless to say that making of reference for settlement through arbitration is a judicial act requiring conscious application of mind, as regards scope of controversy. It certainly cannot be deemed a mechanical process to automatically follow, merely when proceedings for 'arbitration' are initiated. Therefore, for making the reference, it becomes obligatory to ascertain whether said dispute pertains to 'subject matter' of the Arbitration Agreement or seem to be extra contractual relating to goods/articles which may not be covered by 'Fire Policy'. Bare perusal of Fire Insurance Policy relied upon by petitioner for asserting claim, shows that merely Stock of Cloth in business-premises was protected and covered, whereas other articles/goods fell beyond scope of contract between the parties. We are therefore, persuaded to observe that arbitration clause does not extend to dispute concerning subject matter which is obviously extra contractual and totally unrelated.
' In this view we derive considerable guidance from the observation in cases (i) C.I.T. Corporation v.
Trading Corporation Pakistan 1987 CLC 2063, (ii) Food Corporation of India v. P.L. Junejo AIR 1981 Delhi 43 and Manzoor Construction Co. Ltd. v. University of Engineering & Technology, Taxila 1984 CLC 3347.
8. Looking to the stand taken by learned counsel for petitioner requiring reference of dispute for settlement through arbitration for the above reasons in our opinion has no force. The case-law referred by him is also inapt keeping in view peculiar circumstances of this case. M/s. Central Insurance Corporation v. Khyber Taxtile Mills PLD 1978 Karachi 908 which relate to dispute where Fire Policy also extended to general losses incidental or consequential of fire is dearly distinguishable from controversy in this petition.
' Similarly unreported judgment, referred above contains dispute whether coal had caught fire on account of extraneous factors or was automatically combustible. In above-referred decisions dispute existing between the parties directly flows from the terms of the contract and inter se resoponsibility of parties certainly involves principle distinct from instant case.
9. From the above discussion we feel that in order to resolve main dispute subject-matter of contract is most vital and essential. Fire-policy in this case explicitly mentions about only "Stock of Cloth", in the business premises. Therefore, articles/goods other than 'cloth' cannot be deemed subject-matter of dispute. The terms of contract and provision of law are crystal dear. Accordingly reference for assessing loss, to arbitration concerning goo4/articles mentioned in Annexure 'C' which does not contain 'Cloth' would obviously be unjustified.
10. Adverting to next contention it may be seen that learned Additional District Judge has appropriately dealt with above-referred aspects and conclusions in the impugned judgment are well reasoned which therefore, does not warrant any interference. The objection concerning defective judgment is also without substance.
' Resultantly petition having no merits, is dismissed, with no order for costs.