' The appellant filed a suit for recovery of Rs, 25,33,000 against the respondents. In the plaint it was alleged that respondent No,3 suggested that a business be done in partnership. Consequently, a business of Sheep Casings was started in terms of agreement dated 29-1-1989 between the appellant and respondent No,3. For the purpose, the appellant first gave a sum of Rs,10,00,000 and then an additional amount of Rs,33,000 was also given to the said respondent. Thereafter, because of shortage of funds, the respondent No,3 requested the appellant for a loan of Rs,10,00,000. Consequently, the said amount was advanced to the respondent No,3 in cash vide an agreement, dated 6-4-1989. However, this amount was not returned and the respondent No,3 promised that he will consider the said amount as an investment in the business and would pay profit separately @ Rs, 35,000 per month; that without the consent of the appellant, the respondent No,3 included respondents Nos. 1 and 2 as well in the business and in fact handed over the business to them which resulted in differences between the parties. Accordingly, it was decided that the appellant should leave the partnership and the respondent No,3 promised to pay a sum of Rs,25,33,000 to him; that the appellant agreed and the respondent No,3 before leaving for Saudi Arabia gave him a cheque for Rs,10,00,000 drawn on Bolan Bank Limited, Hussain Agahi Road, Multan while respondent No,2 gave him a cheque in the sum of Rs,15,33,000 drawn on Askri Bank Limited, Abdali Road, Multan. These cheques were issued in full and final settlement of the matter, however, both the cheques were bounced on presentation which led to the filing of the present suit. This suit was put up before the learned Civil Judge, Multan on 4-9-1999. On the said date while the suit was being ordered to be relisted, learned counsel for respondent No,2 filed a Power of Attorney and also an application under section 34 of the Arbitration Act, 1940 praying for stay of proceedings in the suit. A copy of the application was handed over to the appellant and the case was adjourned for reply and arguments as well as for service of the remaining respondents to 21-9-1999. On this date, the learned Civil Judge was absent and the official of the Court adjourned the case to 28-9-1999 for notice to the remaining respondents. On 28-9-1999 counsel for the appellant and counsel for respondent No,2 were present. Relay to the application was filed and the case was adjourned to 30-9-1999 for service of remaining respondents. On 30-9-1999 another learned counsel filed his Power of Attorney for respondents 1, 2 and 4 while Malik Muhammad Safdar, Advocate put in appearance for respondent No,3. Another application on behalf of respondent No,3 was also filed under section 34 of the said Act. This application was also replied. The learned trial Court vide an order, dated 29-10-1999 allowed the said application and stayed the proceedings in the suit.
2. This F.A.O. Was admitted to regular hearing on 11-11-1999 and notices were issued to the respondents. The F.A.O. Came-up on 25-1-2000 when respondent No,2 appeared in person while Mr. Asif Iqbal, Advocate put in appearance for Malik Jaffer, Advocate stated to be learned counsel for the respondents. All the said persons reported that a compromise has been affected and also filed an agreement to the said effect in the Court. However, I thought it proper to record the compromise in presence of Mr. Malik Muhammad Jaffar, Advocate learned counsel for the respondents and adjourned the case to the next date. On 26-1-2000 none appeared for the respondents and the case was ordered to be relisted on 16-2-2000 as records were not available.
On 16-2-2000 also none appeared for the respondents and the case was adjourned for today. I find that apart from the happenings on 25-1-2000, the respondents have been served notices for today.
No one has turned up on their behalf and as such they are proceeded against ex parte.
3. Learned counsel for the appellant contends that no case for stay of proceedings under section 34 of the Arbitration Act, 1940 had been made out in the present case.
4. I have gone through the records. The learned trial Court has not only held that there is an arbitration clause but has further held that Muhammad Sikandar Bhutta is the agreed sole arbitrator. It has further been held that the disputes are covered by the arbitration clause, and has referred the parties to the said arbitrator. I am unable to agree with the said findings of the learned trial Court. I find that as alleged in the plaint in the first instance, an agreement to start the proposed business in partnership was effected on 29-1-1999. It is true that in this agreement, it was provided that in case of disputes, the same shall be referred to the arbitration of Muhammad Sikandar Bhutta son of Raheem Bakhsh Bhutta. However, thereafter the parties entered into a regular partnership Deed and this deed speaks that it is being executed so as to record all the terms of partnership settled between the parties in writing. This deed was executed on 6-4-1999 and clause (15) thereof provided that dispute arising would be referred to the arbitration in accordance with law. There is no mention of Mr. Sikandar Bhutta in this document. To my mind, this latter document has the effect of superseding the previous agreement and it could not be held that the parties agreed to appoint Muhammad Sikandar Bhutta who is none else than defendant/respondent No,1 in the suit as an arbitrator.
5. I have also gone through the application dated 4-9-1999 filed by Muhammad Dilawar respondent No,2 as also die one filed on 30-9-1999 by Noor Muhammad respondent No,3. I do not find mention of any dispute therein which covered by alleged arbitration clause and is liable to be referred to arbitration. To my mind it is a requirement of law that a party seeking stay of proceedings under section 34 of the said Act, must state a dispute in the application which is preferable to arbitration so as to enable the Court to determine as to whether the dispute has arisen which needs to be referred to arbitration in accordance with the agreement between the parties. Reference be made to the case of "Novelty Cinema, Lyallpur v. Firdaus Films and another"
PLD 1958 (W.P.) Lah.
208.
6. The learned trial Court also lost sight of the fact apparent on the face of record that the suit had been filed against four persons. There is a specific allegation in the plaint that the cheque in the sum of Rs, 15,33,000 was issued by respondent No,2. There is also specific allegation against the respondent No,4 that the goods of the respondents 1 to 3 are in possession of respondent No,4. It is but evident on record that none of the other defendants apart from the respondent No,3 are party to the partnership deed, dated 6-4-1999. Learned counsel has cited the case of "Industrija Masinal Traktora v. Bank of Oman Ltd. And 2 others" 1992 M LD 2245 in support of the proposition that where all the parties to the suit are not parties to the alleged arbitration agreement, proceedings cannot be stayed under section 34 of the Arbitration Act, 1940.
7. I also find that the learned trial Court has passed the impugned order without any conscious application of mind at all. He has proceeded to refer the parties to arbitration by Muhammad Sikandar Bhutta who is himself defendant No,1 in the suit and a brother of respondent No,3. Apart from the fact that the said respondent No,1 is not mentioned as an arbitrator in the partnership deed which is a latter document. It is rather improper to refer the parties to a co-defendant in the suit so closely related to one of the parties. I have already stated above that the applications under section 34 of the said Act filed by respondents 2 and 3 respectively do not disclose a dispute referable to an arbitration. The very case set up in the plaint was that the partnership deed stood dissolved and the suit amount was to be paid to the appellant towards settlement of his share in the business. There is nothing on record in denial of the said averment of the appellant and in absence of any such denial forthcoming it will be assumed for the moment that the alleged agreement of partnership deed come to an end as alleged in the plaint. Clause (15) of the Partnership deed provides two modes of settlement of disputes; one mutual and other through arbitration according to law. It is appellant's case that the amount was to be paid as a result of mutual settlement of the parties and if he proves the said averment then there is no question of any arbitration.
8. For all the reasons stated above, this F.A.O. Is allowed. The impugned order, dated 29-10-1999 of the learned trial Court is set aside. The parties shall appear before the learned trial Court on 14-3- 2000 when the record of the suit will be summoned and the learned trial Court shall proceed with the suit expeditiously keeping in view its Roster.