' SALEEM AKHTAR, J---The petitioner seeks leave to appeal against the judgment of the learned Judge of the High Court of Sindh whereby its High Court Appeal against the judgment of the learned Single Judge dismissing its application under section 34 of the Arbitration Act was rejected.
2. Respondent No,1 was engaged as a sub-contractor by the petitioner for constructing Attock Cement Factory owned by respondent No,2 This agreement contained the following arbitration clause:-- "40.1. All disputes of any nature arising out of this agreement or in connection with it, which cannot be settled amicably within three (3) months may be submitted by either party to arbitration in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce in Paris with the following provisions: 40.2. The Arbitration Court will consist of three Arbitrators as follows each party will appoint one Arbitrator and these two Arbitrators will appoint the third. Arbitrator who will be also their Chairman.
Should the two Arbitrators appointed by the parties not agree upon the nomination of the third Arbitrator within 30 days after their nomination the third Arbitrator will be appointed by the President of the International Chamber of Commerce in Paris at the request of one of the parties.
' The parties desiring to submit a dispute to arbitration will give a written notice of this desire to the other party mentioning the name and address of the Arbitrator appointed by it. The party who receives such a notification will appoint an Arbitrator within one month (1) from the receipt of the notification or otherwise the second Arbitrator will be appointed at the request of the first party by the President of the International Chamber of Commerce in Paris.
40.3. The Arbitration Court will decide by majority vote. The Arbitrators will take into consideration any dispute or difference arising between the parties and their award will give reason for their decision and the Arbitrators will endeavour to give their award within three (3) months after the appointment of the Arbitration Court.
40.4. The decision of the Arbitration is final binding.
40.5. The Arbitration Court will be seated in Paris.. However, no Arbitration or legal proceedings arising under this Article will be started by the Sub-Contractor until the MECHANICAL ACCEPTANCE of the termination of this Agreement.
40.6. Notwithstanding the commencement of arbitration proceedings the parties shall continue to perform their obligation with due diligence under this Agreement."
' As dispute arose between the petitioner and the respondents in respect of the work executed by respondent No,1, the latter filed suit bearing No,919/1985 in which the petitioner and respondent No,2 were cited as defendants and relief was claimed against them jointly and severally. Respondent No,1 had claimed recovery of amount of Rs,1.80 crores, which by amendment was raised to Rs,3.15 corers and injunction. The petitioner filed an application under section 34 of the Arbitration Act before the learned Single Judge for stay of proceedings in the suit. The application was rejected with the following observation:-- "I am therefore satisfied that the provision of foreign arbitration clause in the agreement does not necessarily require the Court to stay proceedings and refer the dispute to the arbitration when it causes inconvenience to the parties and when the evidence is not available in the country where the arbitration is agreed to be held. Admittedly in the present case the contract was entered into in Pakistan where the defendants had agreed to perform the construction work of a huge cement factory. The entire evidence is located in Pakistan. The plaintiff as well as defendant No,2 both reside in Pakistan. In these circumstances to carry the entire burden of this litigation to Paris before the Arbitrators will be most inconvenient and expensive for both of them. The defendant No,1 also does not reside in France. It will also be inconvenient and expensive for him to proceed before the Arbitrators at Paris as admitted by him. The plaintiff has already joined defendant No,2 as a party who will ultimately be the person for whose benefit the cement factory has been constructed and shall have to pay for the same to the plaintiff although through defendant No, 1 . In these circumstances to compel the plaintiff to seek his remedy at the forum which is situated at Paris will not only cause inconvenience, unreasonable expenses and hardship to the plaintiff but will so cause the loss of valuable foreign exchange to Pakistan. Under these circumstances I am of the clear view that the stay of the suit and reference to the Arbitrator in accordance with the agreement would not be in the interest of justice. Hence I do not propose to stay the suit and to refer the matter to the arbitration. C.M.A. Not.3727/86 is therefore dismissed."
' High Court Appeal against this order was dismissed by the impugned judgment.
3. Mr. Muhammad Sharif, the learned counsel for the petitioner contended that the parties had entered into an agreement with open eyes containing a foreign arbitration clause and therefore they are bound to honor it and further that the ground of inconvenience raised for refusal to grant stay is not legally justified as in the facts and circumstances of the case, no inconvenience or injustice will be caused to respondent No,
1. From a perusal of the clause quoted it seems clear that arbitration is to he conducted in accordance with. The Rules of Conciliation and Arbitration of International Chamber of Commerce at Paris. The International Chamber of Commerce has been agreed upon in specified situation to perform the duty to nominate Chairman or the second Arbitrator as the case may be through its President. The International Chamber of Commerce itself has not been made an Arbitrator. It can thus be said that the agreement has been made in Pakistan between a foreigner and a Pakistani party prescribing their own method of appointing Arbitrator as provided therein, who will conduct the proceedings according to the Rules of the International Chamber of Commerce and the proceedings will be held at Paris. Therefore, for all practical purposes, the International Chamber of Commerce has been associated in the mechanism of appointment of Chairman or Arbitrator and that its rules were to be followed.
4. By entering into an agreement and referring the dispute to an arbitration, the jurisdiction of the Court is not ousted. The Court has the jurisdiction to entertain suits for adjudication of claims of parties containing arbitration clause, but subject to the provision of law that the Court in its A discretion may stay such suits. Therefore, the Court has to consider whether discretion should be exercised in a particular case or not. Such discretion is to be exercised judicially, reasonably and taking into consideration all the facts and circumstances of the case. There has been great emphasis on the argument that once a party has knowingly entered into an agreement to refer the matter to arbitration, the stay should be granted to maintain the sanctity of the contract. However, such contracts are always subject to the law which controls the dealings and contracts between the parties. In Bristol Corporation v. Aird (John) & Co. (1913 A.C. 214 (260)) while dealing with such argument it was observed that "it must be remembered that these arbitration clauses must be taken to have been inserted with due regard to the existing law of the land, and the law of the land, applicable to them is, as I have said, that it does not prevent the parties coming to the Court, but only gives to the Court the power to refuse its assistance in proper cases. Therefore, to say that when we refuse to stay action we are not carrying out the bargain between the parties does not fairly describe the position, we are carrying out the bargain between the parties because that bargain to substitute for the Courts of the land a domestic tribunal was a bargain into which was written, by reason of the existing legislation. The condition that it should only be enforced if the Court thought it a proper case for its being so enforced". In Muhammad Hanif v. Eckhardt & Co.
Marine GmbH (PLD 1983 Karachi 613) one of us (Mr. Justice Saleem Akhtar) refused to stay the proceeding as the entire evidence was at Karachi and it would be inconvenient to carry it to Paris.
This order was upheld in Eckhardt & Co. Marine GmbH, West Germany and another v. Muhammad Hanif (PLD 1986 Karachi 138) and petition for leave to appeal against it was dismissed. Naimuddin, J. (as he then was) after review of judgments from various jurisdictions in a very illuminating and exhaustive judgment laid down the principles for granting or refusing to grant stay of proceeding of a suit with which we agree and approve. Appeal against it was dismissed by this Court. (See PLD 1993 SC 42). In exercise of discretion the Court has to take into consideration various factors for deciding whether stay should be granted or refused. It is now judicially recognised as can B be seen from M.A. Chowdhry v. Mistusi S.K. Lines Ltd. And 3 others (PLD 1970 SC 373), Eckhardt & Co. (PLD 1986 Karachi 138) and Russel on the Law of Arbitration, 19th Edition at page 194 (quoted with approval in M.A. Chowdhry) that inter alia the facts that in what country the evidence is situated or readily available, the balance of inconvenience to the party causing denial of justice or that it would be unfair to stay the proceeding have always been considered for exercise of discretion. Same view has been taken in certain English cases referred in the above judgments and also by the Indian Supreme Court in Michael Golodetz and others v. Serajuddin & Co. (AIR 1963 SC 1044). Applying the above principles on the present case, we find that the dispute between the petitioner and respondent No,1 is in respect of constructing cement factory in Pakistan. The entire evidence, which may be of voluminous nature relating to the building contract would be readily available in Pakistan and it would be most inconvenient to carry it to Paris along with the witnesses and may be. Arbitrators to be nominated by the parties. Taking into consideration the facts and circumstances of the case, in our view, the High Court in exercise of its original as well as appellate jurisdiction, has properly exercised discretion and we find no valid ground to interfere with it.
5. Another aspect which had also influenced the learned Single Judge was that the suit had been filed against the petitioner and respondent No,2 claiming payment jointly and severally from them.
During the hearing it transpired that before the learned Single Judge in the application filed by respondent No,1 under Order XII, rule 6, C.P.C., the petitioner seems to have taken the plea that the amount claimed is payable by respondent No,2 and not by the petitioner. Therefore, there is likelihood of conflicting claims between two defendants in respect of the same liability and for the claim made. By respondent No,
1. In these circumstances, as likelihood of conflict of decision cannot be ruled out, the suit cannot be allowed to be stayed in respect of the petitioner and to proceed in respect of respondent No,2.
6. The learned counsel for the petitioner has referred to M/s. Uzin Export and Import Enterprises for Foreign Trade v. M/s. M. Iftikhar & Co. Ltd. (1993 SCMR 866) and contended that when a dispute arose between a previous subcontractor and the petitioner, the Court had allowed the arbitration to continued in Pakistan. The stay was granted in, peculiar facts and circumstances enumerated there which do not exist in the present case. Such plea can be accepted if the parties agree.
However, in the present case, there is no such agreement and the Court will be reluctant to substitute any term in the agreement between the parties without their consent. Furthermore, according to the agreement in the referred case dispute was to be referred to arbitration of the International Chamber of Commerce in Paris. In the present case, there does not exist such foreign arbitration clause. The presence of respondent No,2 in the field changes the situation completely.
Leave refused.
1096 SCMR 696 [Supreme Court of Pakistan] Present: Saleem Akhtar, Manzoor Hussain Sial and Muhammad Munir Khan, JJ MACDONALD LAYTON & COMPANY PAKISTAN LTD.---Appellant versus UZIN EXPORT-IMPORT FOREIGN TRADE CO. and others---Respondents Civil Appeal No, 571 of 1992. Decided on 17th January, 1996.
(On appeal against the judgment of the High Court of Sindh, Karachi dated 5-5-1992 passed in HCA No, 207/1988).
Civil Procedure Code (V of 1908)--- ----O.XII, R. 6---Constitution of Pakistan (1973), Art. 185---Letters exchanged between parties forming basis of decree in terms of O.XII, R. 6, C.P.C. Granted by High Court---Division Bench of High Court setting aside such decree in appeal---Validity---Decree in terms of O.XII, R. 6, C.P.C.--- Essentials--Provision of O.XII, R.
6. C.P.C. Provides summary and speedy remedy in cases where admission was made by defendant in pleadings or outside the same---In order to attract provision of O.XII, R. 6, C.P.C. Admission should necessarily by unequivocal, clear, unconditional and unambiguous---Such admission should not only be in respect of amount (where dispute related to payment of money) but liability to pay the same to plaintiff---Court while deciding such application for grant of decree must exercise its discretion in judicial manner and subject to qualification regarding maintainability of suit on any legal objection going to the very root of the matter--Court should not grant decree on admission without resorting to objections raised---Objections to grant of such decree having been raised by defendants to maintainability of suit, discretion for grant of application in terms of O.XII. R.
6. C.P.C. Should not have been exercised by High Court---Finding rendered by Division Bench setting aside decree of Single Bench being unexceptionable, were maintained in circumstances.
[pp. 699, 7001 A, B & C Tahilram Tarachand v. Vassumal Deumal and another AIR 1926 Sindh 119; Premsuk Das Assaram v. Udairam Gungabuz AIR 1918 Cal. 467; Izzat Khan and another v. Ramzan Khan and others 1993 MLD 1287 and Kassamali Alibhov v. Sh. Abdul Sattar PLD 1966 (W.P.) Kar. 75 rel.
Fazal Ghani Khan, Advocate Supreme Court and S.M. Abbas, Advocate-on-Record (absent) for Appellant.
Muhammad Sharif, Advocate Supreme Court for Respondent No, 1.
M. Jamil Khan, Advocate Supreme Court and Muzaffar Ali Khan. Advocate-on-Record for Respondent No,2.
Dates of hearing: 16th and 17th January, 1996.
' SALEEM AKHTAR, J.---This direct appeal challenges the judgment of the learned Judges of the Division Bench of the High Court whereby appeal against the order passed by the learned Single Judge granting appellant's application under Order XII, rule 6, C.P.C. Was set aside and the said application was dismissed.
2. The impugned judgment had disposed of appeal arising from the order of the learned Single Judge granting decree under Order XII, rule 6, C.P.C. And another application filed by the respondent No,1 under section 34 of the Arbitration Act, which was dismissed. The present appeal refers only to judgment in respect of application under Order XII, rule 6,, C.P.C. The respondent No,1 had engaged the appellant for construction of Attock Cement Factory at Hub. Respondent No,1 is a foreign company to whom the contract had been awarded by respondent No,2. Respondent No,1 engaged the appellant as a subcontractor and an exhaustive contract containing all the terms and conditions was executed between the parties. None of the parties have filed this contract and the same has not been brought on record. Dispute arose between the appellant and the respondents and the former filed Suit No,919/1985 for recovery of money and injunction. From the photo copy of the plaint produced during hearing by the learned counsel for respondent No,2 it seems that Mr. M.A. Khokhar had signed the plaint and such averment that he was Managing Director and had been authorised to do so by the plaintiffs' charter and Board resolution was also mentioned in. Para. 16 of the plaint. Respondent No,1 filed application under section 34 of the Arbitration Act. An application for amendment of the plaint was also filed, which was allowed on 11- 5-1987 and the amount claimed by the appellant was enhanced. The appellant filed an application dated 17-3-1987 under Order XII rule 6, C.P.C., alleging that during the pendency of the suit, respondent No,1 admitted the appellant's running dues as contained in its letters which were annexed with the application and read as follows:-- 4517/28-7-1987.
' M/S MACDONALD LAYTON CO. LTD.
' Re. Final Bill ' Dear Sir, ' We submit you attached hereinafter the 22nd and Final Bill for civil works done at Attack Cement Plant, Lasbela, checked and approved for the net payable amount of Rs,4,771, 962.
' Thanking you, we remain Yours faithfully UZIN EXPORT IMPORT REPRESENTATIVE (Sd.)
Rusu Gh. M.Sc."
4241/7-2-1987 ' M/S. MACDONALD LAYTON & CO. LTD.
' Site Re: Interim Certificate No, 21 for Dec. 1986 ' Dear Sir, ' We submit you hereinafter the 21st Interim Certificate for the month December 1986, for civil works, checked and approved for the amount of 4,399, 688 Rs, ' which is to be paid to you.
' Thanking you, we remain, Yours faithfully UZIN EXPORT IMPORT (Sd.)
Rusu Gh. M.Sc.
' Month's turnover 2,83,626/-"
' Both the respondents resisted the claim and filed counter-affidavits. It was pleaded that these letters do not amount to admission within the meaning of Order XII, rule 6, C.P.C., and they were merely in discharge of duties under the contract. It was also pleaded that the amounts mentioned in these letters do not form part of the claim in the suit and that in fact the claim had been rejected by respondent No,1 . Respondent No,2 denied its liability stating that it is not an admission on their behalf. Respondent No,1 also filed written statement in which it was pleaded that the claim is premature, and suit is not maintainable particularly on the ground that the plaint has not been signed by any authorized person as provided by law. The learned Judge in Chamber granted the application, but in appeal filed against it, by the impugned judgment it was set aside.
3. Mr. Fazal Ghani Khan, learned counsel for the appellant contended that the plaint was signed and verified by an authorized person and further that the admission being unqualified attracts Order XII, rule 6, C.P.C. Order XII, rule 6, C.P.C. Provides a summary and speedy remedy in cases where admission is made by the defendant in the pleadings .Or outside it, but in order to attract this provision it is necessary that the admission should be unequivocal, clear, unconditional and unambiguous. Such admission should not only be in respect of the amount but the liability to pay the same as well to the plaintiff. The Court in deciding such application exercises its discretion which is regulated by the well-recognized principles. In this regard, reference can be made to Tahilram Tarachand v. Visual Deumal and another (AIR 1926 Sindh 119) wherein it has been held that to pass judgment on admission of the defendant is within the discretion of the Court which should be exercised in judicial manner and is not a matter of right. However, if it involves questions which cannot be conveniently disposed of in an application, the Court may exercise discretion in rejecting the application. Reference can be made to Premsuk Das Assaram v. Udairam Gungabux (AIR 1918 Calcutta 467). Same view has been taken in Izzat Khan and another v. Ramzan Khan and others (1993 MLD 1287), a Full Bench decision of the Sindh High Court.
4. Another principle which regulates the exercise of discretion is that even if an admission has been made, but it is subject to qualifications regarding maintainability of the suit or any such legal objection which goes to the very root of it, then it would not be proper exercise of discretion to grant decree on such admission. In this regard reference can be made to Kassamali Alibhoy v. Sh.
Abdul Sattar (PLD 1966 (P.W.) Karachi 75) in which Justice A.S. Faruqui, laid down the rule in the following words:-- "Shortly put the question is this. When a defendant makes an admission on a point of fact but asserts that the claim is not recoverable in the suit because of the legal objections raised therein, can the Court then take the factual admission as an unqualified one and pass a decree on that admission? Having given my careful consideration to the question I have reached the conclusion that the answer to it must be in the negative. An admission in order to be made the basis of a decree under Order XII, rule 6, of the C.P.C. Must be unqualified and unconditional. Therefore, when factual admission is accompanied with a qualification that the suit itself is not maintainable or that the claim suffers from a legal difficulty, it cannot be said that the admission is unqualified. When such a legal defense is raised the consideration of it must wait until the suit itself comes to be tried.
The Court cannot in such a case proceed under Order XII, rule 6 of the C.P.C."
' Mr. Muhammad Sharif, learned ASC has contended that the letters on the basis of which decree on admission is being sought do not in clear and unequivocal terms constitute admission. Taking the defense into consideration it seems that the letters have to be read with reference to the terms of the contract under which a procedure must have been provided to regulate issuance as well as payment under the certificate. It also does not clearly show that the amount is payable by respondent No,1 or respondent No,2. This aspect can only be determined by looking into the terms of the contract which, none of the parties have filed.
5. The other ground on which the appeal must fail is that objections to the maintainability of the suit have been raised. Although Mr. Fazal Ghani Khan has taken pains to place before us the authorities to show that the plaint has duly been signed by an authorized person and also has referred to the resolutions of the company, according to Mr. Sharif even the resolution is to be looked into whether it is properly, legally and according to the articles of association duly passed by the Board of Directors. Considering all these facts it seems that the discretion for grant of application under Order XII, rule 6, C.P.C. Should not have been exercised by the learned Single Judge. The appeal is dismissed with no order as to costs.