1. The defendant filed application under section 34 of the Arbitration Act, 1940 to stay the suit proceedings.
2. In the application the defendant stated that plaintiff booked the suit shop by an application dated 25-4-1992 in total sale consideration of Rs,35,00,000 and paid Rs,9,90,000 only up to 11-1-1996. The defendant alleged that possession was handed over in the month 'of January, 1996 on, the promise that plaintiff will pay the balance sale consideration within two years. Since defendant failed to pay balance amount in spite of several reminders, the defendant No,1 cancelled the allotment of suit shop and asked the plaintiff to seek relief through arbitration proceedings stipulated in the contract of the sale in respect of the suit shop.
3. Clause 17 of the Contract reads as under:-- "All disputes between the builders and the allottees relating to the shop shall at first be mutually settled. If they fail to do so it shall be referred to the authority for arbitration and the decision of the authority shall be final and binding on both the parties."
4. The plaintiff filed counter-affidavit and alleged that defendant had taken adjournment several times for filing written statement and counter-affidavit and as such application is not maintainable. It is further alleged that Proposed arbitrator "the authority" has not been described or defined in the contract and such application is liable to be dismissed. The defendant had not filed rejoinder affidavit.
5. The learned Advocate for the defendant argued that the terms "disputes shall be referred to the authority for Arbitration and the decision of the authority shall be final ..." The term "authority" means "Pakistan Defence Officers Housing Authority". He drew my attention to clause (19) of the contract, which reads as under:-- "Besides the above terms and conditions the orders and instructions of the authority issued from time to time in this regard shall be followed strictly."
6. The learned Advocate submitted that term "authority" has been defined in Pakistan Defence Officers' Housing Authority Order, 1980, and Articles 2(b) and 4 of the President's Order No,7 of 1980 read as under:-- "2(b) ' Authority' means the Pakistan Defence Officers' Housing Authority established under Article 4."
7. "4. Establishment of the Authority.---(1) Upon the commencement of this Order, there shall be established an Authority to be known as the Pakistan Defence Officers' Housing Authority for carrying out the purposes of this Order.
(2) The Authority shall be a body corporate, having perpetual succession and a common seal, with power, subject to the provisions of this Order, to acquire and hold property, both movable and immovable, and shall by the said name sue and be sued."
8. The learned counsel argued that dispute between parties should be referred to Pakistan Defence Officers' Housing Authority for arbitration as provided in clause 17 of the Contract, and proceedings of the suit be stayed. He further submitted that application under section 34 of the Arbitration Act has been filed without taking steps in the proceedings.
9. Mr. Mustafa Lakhani, learned Advocate for the plaintiff, on the other hand, conceded that application has been filed without taking any step in the proceedings but vehemently argued that arbitration clause is vague and uncertain as the term "authority" has not been defined in the contract between the parties and as such matter cannot be referred for arbitration. He further submitted that plaintiff had filed the suit for specific performance to execute sub-lease in respect of the shop and damages of Rs,50,00,000 against defendants Nos.1 and 2. Since allegation of mala fide hostility has been made against defendants Nos.1 and 2, the dispute cannot be referred for arbitration and application under section 34 of the Arbitration Act is liable to be dismissed.
10. Arbitration agreement has been defined under section 2(a) of the Arbitration Act, as a. written agreement to submit present or future difference to arbitration, whether an arbitrator is named therein or not.
11. An arbitration agreement an arbitration clause in an agreement is like an agreement between the parties, which required that same should be executed with the free consent of parties competent to contract and section 29 of the Contract Act provided that "an agreement, the meaning of which is not certain, or capable of being made certain, are void".
12. The contracting parties must be shown to be at ad idem with reference to the essential terms of the contract and, therefore, if there is any vagueness or uncertainty incapable of being made certain the contract fails for vagueness.
13. Keeping in view above principle now I take up arbitration clause 17 of the agreement which has already been reproduced hereinabove.
14. It appears that said clause provided that all disputes between parties relating to shop shall first be mutually settled and if they fail to do so, it shall be referred to authority for arbitration and the decision of the authority shall be final and binding on both the parties. The term "authority", to whom dispute is to be referred as arbitrator hasp not been defined in the agreement.
15. Article 2(b) of the Pakistan Defence Officers' Housing Authority Order, 1980 defined "authority" means the Pakistan Defence Officers' Housing Authority.
16. It appears from Article 4 that Authority constituted by Order 7 of 1980 is not a person, but a body corporate and the management of said body corporate vests in the Governing Body which consists of the Secretary-General, Ministry of Defence, as Chairman, Vice-Chiefs of Staff of three services or one principal staff officer from each of the three services to be nominated by the respective Chiefs, etc. A corporate body is a legal person and cannot act as arbitrator as its constitution can be, changed ar any time and only a natural person/persons can act as an arbitrator so as to hear the parties and give decision/award after applying mind to it.
17. In the President's. Order 5 of 1957 (K.D.A. Order, 1957) the term "Authority" has been used for Karachi Development Authority.
18. In Sindh Buildings Control Ordinance, 1979, the term "Authority" has been defined as any body corporate or council or any department of such body corporate, etc. appointed by Government under said Ordinance.
19. In reply to my query the learned counsel for the defendant stated that plan of the project in which shop in question is situated has been approved by the. Cantonment Board, who has to supervise the construction.
20. Terms. "Competent Authority" has been defined by Ordinance XLIV of 1989 Cantonments (Amendment) Ordinance as the Chief of the Army Staff or any other officer appointed by the Federal Government to be the Competent Authority in respect of one or more cantonments or class of cantonments.
21. The arbitration clause in the agreement is vague, uncertain and parties are not ad idem about the definition of the term "authority", as to which authority has to act as arbitrator and even otherwise a corporate body cannot act as an arbitrator. The application under section 34 of the Arbitration Act is liable to be dismissed also on the ground that defendant No,2 was not party to the agreement between plaintiff and defendant No, 1 .
22. For the foregoing reasons I dismiss the application under section, 34 of the Arbitration Act with no order as to costs.