This revision petition under section 115, C.P.C. Has been filed by Muhammad Ilyas Khan petitioner to call in question the judgment and decree, dated 21-12-1992 passed by Additional District Judge, Sialkot, whereby, the order, dated 30-4-1988 passed by the Civil Judge, Sialkot, rejecting the suit for dissolution of partnership, instituted by Ihsan Elahi Mughal, was set aside.
2. The facts giving rise to the present revision petition are that Ihsan Elahi Mughal, plaintiff (respondent herein) entered into a partnership deed, dated 1-6-1985 to carry on business of import and sale of surgical instruments, at Chicago U.S.A. Or at such place or places the partner might agreed upon, and in pursuance of this agreement the plaintiff Ihsan Elahi Mughal supplied goods from Sialkot to the petitioner/defendant in U.S.A. Who received the same but did not make payment of the bills on due dates. The plaintiff/respondent not only processed all the goods to him but also incurred expenditures thereon. The petitioner/defendant misappropriated the goods and failed to render the account of the same on repeated requests of the plaintiff. As such the plaintiff claimed that the partnership business had totally failed, destroyed and could not be carried on.
The plaintiff prayed for the dissolution of the partnership deed and a decree in the following terms:-
(a) for a declaration that the partnership stands dissolved. In the alternative for dissolution of the partnership. For taking of accounts of partnership.
(b) for appointment of a receiver; and
(c) any other relief which the Court deems proper.
' On 29-2-1988 the petitioner/defendant filed an application under section 34 of the Arbitration Act read with section 151, C.P.C., wherein, it had been contended that the agreement contained a clause No,12. According to which, all disputes, controversies etc. Between the parties shall be referred to the Arbitration. In the light of this arbitration clause of the agreement it was asserted that the matter be referred to Arbitrator at the Polesh Chamber of Foreign Trade in Warsaw, and so the suit shall not be maintainable. After getting reply from the plaintiff the Court rejected the suit under Order VII, Rule 11, C.P.C. Vide order, dated 30-4-1988.
3. Feeling aggrieved the respondent preferred an appeal and the learned Additional District Judge, Sialkot, vide judgment and decree, dated 21-12-1992 accepted the same, set aside the order of the trial Court and remanded the case to the trial Court for decision afresh.
4. Learned counsel for the petitioner contended that the appellant Court acted in the exercise of its jurisdiction illegally and with material irregularity, while reversing the findings of the learned trial Court, and that application under section 34 of the Arbitration Act was filed by the present petitioner, without taking any step of proceedings of the Court. He further contended that initially the case was adjourned for submission of Wakalatnama on behalf of the petitioner/defendant. He argued that the Appellate Court committed illegality by holding that the petitioner took all steps in the proceedings and no clear cut undertaking was shown by him. He further submitted that the defendant/ petitioner entered appearance and applied for a copy of the application, so it could not be said to have taken steps in the proceedings and also the adjournment given by the lower Court for submission of power of attorney by the counsel of the petitioner/defendant would not have been treated to participation in the proceedings by the petitioner/defendant. He added that the Appellate Court also committed illegality while holding that reference of the matter be made to Foreign Tribunal for arbitration as per clause of the partnership deed, would have created hardship for the respondent/plaintiff. As he would not be able to pursue his case properly and that this finding was clearly given in violation of the law laid down by superior Court in Island Textile Mills.
Ltd. Karachi v. Techno expert and another 1979 CLC 307.
5. On the other hand learned counsel for the respondent/plaintiff forcefully controverted the arguments of the learned counsel for the petitioner, and supported the judgment of the First Appellate Court contending that the petitioner/defendant had waived his right for the stay of proceedings and sending the matter to Arbitration. He further contended that the petitioner/defendant did not apply to the Court for the reference of the matter to arbitration at the earliest opportunity, when he appeared before the Court.
6. I have heard the arguments of the learned counsel for the parties anxiously and studied the record minutely.
7. To begin with, relevant statutory provisions may be referred to section 34 of the Arbitration Act, 1940 provides that:- "Where any party to an arbitration agreement or any other person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the.
Judicial Authority before which the proceedings are pending to stay the proceedings; if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the application was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings."
8. From the language of the statute' it is quite clear that any party to the proceedings, may at any time before filing a written statement or taking any step in the proceedings can apply to the Court for referring the matter to the Arbitration and the defendant is under legal obligation to apply to the Court for referring the matter to the Arbitration must without any ado and before submitting to the jurisdiction of the Court inform the Court in an unequivocal terms that he is going to insist upon the implementation of the Arbitration Clause, but where the party/defendant appears in the Court, obtains adjournments for filing written statement such party deemed to have waived his right and proceedings could not be stayed. Reliance can be placed in this respect on--
(i) Sadhan Kumar Bhattacherjee v. Sunil Kumar Bhattacherjee and others AIR 1948 Cal. 59,
(ii) New Bengal Shipping Company v. Eric Lancaster Stump PLD 1952 Dacca 22,
(iii) Muhammad Idris and others v. Tobarak Hossain PLD 1965 Dacca 260,
(iv) Mubarik Cotton Factory v. Messrs General Agencies, Multan PLD 1980 BJ 1,
(v) Akbar Cotton Mills Ltd. v. Messrs VES/Ojuanojq Obtedinenije Tech/Amesh Export and another 1984 CLC 1605,
(vi) Messrs ASLO Marines Ltd. v. M.T. Magda and another PLD 1985 Kar. 745,
(vii) Eckhardt & Company Marine GMBH, West Germany and another v. Muhammad Hanif PLD 1986 Kar. 138,
(viii) Uzin Export Import Enterprises v. Iftikhar & Company Ltd. PLD 1986 Kar. 1,
(ix) Messrs Alazizia Industries Uch Sharif Road, Ahmadpur East v. Messrs Alfalah Insurance Company Ltd. And 4 others PLD 1993 Lah.
306.
9. In case of New Bengal Shipping Company v. Eric Lancaster Stump PLD 1952 Dacca 22 (supra) the defendant asked for adjournment-of the case to file written statement and after that the defendant applied to the Court for the stay of the proceedings and his application was rejected on the ground that it was not filed at the earliest possible opportunity and the Honourable Judges of the Dacca High Court observed as under:-- "On adjourned date defendant filed two applications one for further time for filing written statement and the other under section 34 of the Arbitration Act for staying the suit. Objection petition was not confined to question of jurisdiction. It contained grounds on merits of case and was without reservation and all this amounts to step in proceedings and the suit was not stayed.
10. In Muhammad Idris and others' case PLD 1965 Dacca 260 (supra), a Division Bench of Dacca High Court relying on New Bengal Shipping Company v. Eric Lancaster Stump of Singapore held that: "An application for time to file written statement to certain circumstances might be regarded as amounting to steps in the proceeding within the meaning of section 34 of the Arbitration Act and in this Muhammad Idris's case the petitioners did not ask for stay before taking any step in the proceedings and it was held that the filing of written statement is surely a kind of step taken in the proceedings and a prayer for time to put in written statement for the purpose of contest is surely another kind of step within the meaning of section 34 of the Arbitration Act."
11. In case of Mubarik Cotton Factory PLD 1980 BJ 1 (supra) it was held that:-- "an early application for extension of time to file written statement amounts to taking step in the proceedings and in this case ex parte proceedings were ordered and the defendant applied to set aside the ex parte proceedings through an application which was set aside on 15-9-1968 and thereafter, the application for stay was filed and during the pendency of the stay application adjournments were obtained thrice on 15-1-1968, 31-1-1968 and 16-2-1968 for a compromise. His Lordship Mr Justice Abdul Shakoor-ul-Islam who became the Chief Justice of the Lahore High Court afterwards; observed that while getting the adjournments on stay application for a compromise the party had submitted, to the ' jurisdiction of the Court' and ' did not' insist upon the implementation of the Arbitration Clause and thereafter, the party was not entitled to ask for stay of proceedings."
12. In case of Akbar Cotton Mills Ltd. 1984 CLC 1605 his Lordship Mr. Justice Saeed-uz-Zaman Siddiqui, Judge of Sindh High Court (now Honourable Chief Justice of Supreme Court of Pakistan) observed that:- "a party applying under section 34 of the Arbitration Act does not have a right to obtain stay of legal proceedings in Court. Such an order purely discretionary and in appropriate cases, the Court may refuse to stay the proceedings in spite of an arbitral clause in the agreement between the parties which provided for reference of dispute to arbitration. No doubt the Court has to exercise this discretion in a judicious manner but the discretion conferred on the Court can neither be curtailed nor circumvented by means of agreement between the parties. It is true that ordinarily when a party has entered into an agreement of which the arbitral clause is an integral part, he should not receive assistance from the Court, if he resides from it, but this does not mean that even in a case where the Court is satisfied that the very purpose and object of the arbitration would be frustrated or it is not likely to be achieved it will stay the legal proceedings and direct that parties to have recourse to arbitral clause. No doubt one of the commonly understood object of inserting an arbitral clause in commercial agreements is to avoid expenses and the conventional delays experienced in Court of law but the paramount and avowed object of the arbitration still remained the same namely the resolution of dispute between the parties is a fair, just and impartial manner.
This letter stated objected cannot be sacrificed in the name of less expensive and speedy mode to settle the dispute between the parties. Therefore, where the Court finds that a party to the dispute is not likely to get a fair, just or impartial treatment of his cause in arbitration proceedings it may refuse to stay the legal proceedings in Court brought in contravention of the arbitral clause in the agreement under section 34 of the Arbitration Act.
12-A. In the present case the petitioner/defendant's counsel appeared in the Court on 5-1-1987 and filed his memo. Of appearance and requested for adjournment of the case for filing his power of attorney and written statement. The power of attorney of the counsel for the petitioner/defendant was filed on 27-2-1988 and requested for adjournment of the case for filing written statement. The case was adjourned for 6-3-1988 subject to the payment of costs. On that date the learned Presiding Officer of the Court was not present and the Reader adjourned the case to 9-3-1988. On that date application under section 34 of the Arbitration Act for stay of legal proceedings in the Court was filed. It means that the petitioner defendant submitted himself to the jurisdiction of the Court and obtained adjournments for filing of the written statement. These adjournments were a step into the legal proceedings as held in the cases referred to above. The dictum laid down in the said cases is applicable on all four of the present case. The application under section 34 of the Arbitration Act was not filed before the filing of the written statement or taking any other steps in the proceedings. Following the principle settled in the cases referred to above that applying for time to file written statement is an expression "taking any other step in the proceedings" in accordance with the provisions of section 34 of the Arbitration Act, 1940.
13. The petitioner/defendant had failed to apply to the Court to refer the matter to arbitration before filing of the written statement or taking any other steps in the proceedings. The contention of the learned counsel for the petitioner that the lower Appellate Court acted in the exercise of its jurisdiction illegally and with mala fide and that application under section 34 of the Arbitration Act was file quite in time without any delay is misconceived.
14. The second contention of the learned counsel for the petitioner that the agreement was executed by the parties and Arbitration Clause was inserted in the agreement by both the parties willingly and consciously through a foreign Tribunal and no party could rigour out from the arrangement on the plea of inconvenience. This argument was settled in case of Akbar Cotton Mills Ltd. 1984 CLC 1605 (supra) where in the agreement there was an Arbitration Clause that the dispute between the parties would be referred to Arbitral Tribunal in Moscow, his Lordship Mr. Justice Saeed-uz-Zaman Siddiqui (now Chief Justice of Supreme Court of Pakistan) observed that: "In view of the above discussion I am of the view that in spite of the fact that at the time the plaintiff entered into agreement, dated 7th August, 1970 without defendant No,1 they were aware that in the event of dispute or a claim by them in respect of the agreement, the dispute is to be referred to Arbitral Tribunal in Moscow, they were entitled to show in the application under section 34 of the Arbitration Act filed for stay of their suit, that commencement of the arbitration proceedings in the foreign country would result in an ex parte decision against them as all evidence in respect of the dispute is available at the place where legal proceedings is filed and that either by reasons of impracticability or the restrictions imposed by the government in matter of providing foreign exchange to individual citizen it would be impracticable, impossible for them to produce evidence before the Foreign Arbitral Tribunal. If the Court is convinced, after hearing the parties in this behalf that the aforesaid reasons do exist it may refuse to stay the legal proceedings in such circumstances under section 34 of the Arbitration Act.
' The second contention of the learned counsel for the petitioner is also repelled.
15. The lower Appellate Court taking into consideration the legal and factual aspects of the case reversed the findings of the trial Court committed no illegality, and learned counsel for the petitioner has failed to point out any other illegality or jurisdictional defect in the impugned judgment, which calls for no interference.
' For the foregoing reasons, there is no force in this revision petition which is dismissed.
Revision .