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Civil Revision No. 1308 of 1975, decided on 16th March 1976.
--S. 34‑Arbitration‑Stay of legal proceedings‑Arbitrator, bias in Civil Court holding that named Arbitrator (Resident Engineer of defendants) having already adjudged plaintiff's works and conducted supervision at site as employee of defendants rendered himself unfit to act as arbitrator‑Resident Engineer referred to having been transferred later and succeeded by others, arguments in judgments of lower Courts about bias of Resident Engineer or about his being a witness, or his having taken certain decisions, held, not correct in circumstances and of no effect.‑[Arbitration].
Ss. 31 & 33‑Jurisdiction‑Dispute as to factum or validity of contract‑Arbitrator has no jurisdiction to decide‑However wide terms of arbitration agreement, such dispute, held, cannot be held to be within arbitration clause of contract document‑Existence or validity of submission clause of arbitration agreement‑Can be decided only by a civil Court.‑[Jurisdiction].
The arbitration clause is confined to the dispute arising out of an agree ment and as such its language cannot include a dispute as to the factum or validity of the contract. The Arbitrator cannot have jurisdiction to decide this question. It is well settled that, however, wide the terms of an arbitration agreement may be a dispute to the existence or validity of the contract cannot beheld to be within the arbitration clause contained in the contract document. The arbitration clause being part and parcel of the agreement itself, the denial of the factum of the contract is a denial of the submis sion clause and the denial of the jurisdiction of the Arbitrators. The existence or validity of the submission clause can, therefore, be decided only by a civil Court.
East India Trading v. Badat & Co. A I R 1959 Bom. 414 ; Shiriram Hanutram v. Mohanlal & Co. I L R 1940 Bom. 249 ; Jai Narain Babu Lal v. Naraindas Jaini Mal I L R 3 Lah. 296 ; Ramlal v. Haribux A I R 1934 Cal. 796 and Birla Jute Manufacturing Co. Ltd. v. Dulichand Paratapmall A I R 1953 Cal. 450 ref.
Ss. 31, 33 & 34‑Decision on question of existence or validity of contract or submission clause‑Not a step in suit but a step in proceeding of application under S. 34‑Question hence, held, can be decided before adjudication of application under S. 34‑Application under S. 34 to be dismissed if inquiry result in finding question of factum or validity of contract in plaintiff's favour and proceedings to be stayed if found otherwise unless some legal hurdle bars such course.
There is no bar to the decision of the question of existence or validity of the contract before adjudication of an application under section 34 of the Arbitration Act, 1 940. Only those persons are debarred under section 34 from applying under that section who take any steps in the proceedings of the suit. But any steps in the proceedings of the application under ‑section 34 are not within the ambit of this bar. A decision on the question of existence or validity of a contract or of the submission clause is consequently not a step in the suit but is a step in proceedings of such application only. It is, therefore, a question which can be decided before the adjudication of the application under section 34. May be that the same step may be a step to suit as well as a step in proceeding of application but so long as it remains a step in proceeding of application under section 34, it is immune from being treated as bar to the maintainability of such application. The result is that if as a result of inquiry into the question of factum or vali dity of the contract the Court gives a finding in favour of the plaintiff, it must dismiss the application. If on the other hand it gives a finding against the plaintiff, it shall stay the proceedings unless there is some other legal hurdle in the exercise of discretion in favour of the defendant.
Ss 33 & 34‑Jurisdiction‑Question about existence or validity of contract‑Can be decided by civil Court in application under S. 34.‑[Jurisdiction].
Section 33 of Arbitration Act, 1940 provides that any party to an arbitration agreement desiring to challenge the existence or validity of an arbitration agreement or to have the effect of the same determined shall apply to the Court and the Court shall decide the question on affidavits. In view of this provision it is not difficult to hold that the Court can act under section 33 treating the application of the defendant under section 34 and reply of the plaintiff to that application as an invocation of the jurisdiction of the Court under section 33 of the Act. The Court can decide the question about the exist ence or validity of the contract in the application under section 34.
Heyman v. Darwins 1942 A C 356 ; ehagwandas Atmasing v. Atmasingh Jessaring A I R 1945 Bom. 494 ; Khusiram Benarsi Lal v. Hanutmal Boid and another 53 C W N 505 ; Birla Jute Manufacturing Co., Ltd. v. Dulichand Pratapmull A I R 1953 Cal. 450 ; Anderson Wright Ltd. v. Moran & Co. A I R 1953 S C 53 and C. M. Mathis Kutty v. Varee Kutty A I R 1950 Mad. 64 ref.
‑S. 33‑Arbitration agreement‑Validity of‑Agreement alleged to be signed under duress and thus under protest‑Words "under protest" alleged to be there in document but no such words found and letters not clearly written appearing to be part of executant's signatures Executant's Advocate signing document as attesting witness‑Docu ment, held, executed after seeking legal advice and not executed under coercion or protest.
--Contention that since defendants challenged tender submitted by plaintiff as forged plaintiffs would like question of forgery to be decided by public inquiry in civil suit‑Question of fraud relating to an agreement subsequently rendered‑Question no longer relevant after novation of agreement‑Contention, held, of no avail in circum stances.
Russell v. Russell (1880) 14 Ch. D 471 ; Printers (Mysor) Private Ltd. IT. Pothan Joseph A I R 1960 S C 1156 acid Abdul Qadir Shamsuddin v. Madhava A I R 1962 S C 406 ref.
Zaka‑ur‑Rehman Lodhi for Petitioners.
Rana Muhammad Sarwar for Respondent.
Dates of hearing : 3rd, 4th and 16th March 1976.
An application filed by the defendants‑petitioners under section 34 of the Arbitration Act for stay of proceedings of a suit filed by the plaintiffs -respondents was dismissed by the learned trial Court on the 20th of ‑November 1975. An appeal filed by the petitioners against that order was also dismissed by Mr. Muzaffar Hussain, Additional District Judge, Lahore by order dated 10‑12‑1975.
2. Hence this revision.
3. The facts are that a tender notice was published by the WAPDA in She daily Nawa‑i‑Waqt, Lahore dated 4‑12‑1974 inviting tenders for purchase from WAPDA of structure of the old Power House Building, Shahdara situated on the site of the present Gas Turbine Power Station. It was clarified in the notice that the description and particulars of the property which was to be sold was obtainable from the office. It was also stated that the successful purchaser shall have to demolish the building structure and to clear the site from all structural and other material e.g. girders, channels and the angle irons, G. I. C. sheets, roof terraces, bricks and concrete material as detailed in the documents maintained in the office. Size of the building was denoted as 258' x 121' x 60'. Tenderers were directed to make deposit of Rs. 20,000 as advance along with the tender.
4. According to the tender document the property consisted of three portions, namely, (1) Boiler House, (2) Turbine Hall, (3) Switchgear rooms and other rooms. The Boiler House was to be dismantled and cleared of all debris from ground floor to top. The Turbine Hall and Switchgear rooms and other rooms were to be dismantled and cleared from the first floor to top only. The work of dismantling and clearance of Hall including dismantlement, shifting and storing, where required by WAPDA, of the Mobile Crane and associated structures was to be done by the contractor. Switchgear and cables installed on the first floor of the Switchgear rooms were to be dismantled by WAPDA and were to be its property. The wire netting around the Switchgear was to be dismantled by the contractor and was to be the property of the contractor. It was further clarified that the following major equipments existed in the building in addition to the windows, doors, chequered plating, railing etc. :‑
(i) A Mobile Crane alongwith the crane rails and vertical girder supports.
(il) 6" x 6" K. V. Switchgear alongwith bus‑bars, cables etc.
(iii) Some old pipings.
It was stated that out of the above equipments, items (i) and (ii) will remain the property of WAPDA. The dismantling, however, of item (i) I.e. the Mobile Crane and associated structures will be done by the Contractor and that of the Switchgear and the associated equipment will be done by WAPDA through its own personnel.
4. The respondents submitted the highest tender of Rs. 20,25,555.99 only. There is, however, a note on this tender to the following effect :‑
"Note.‑‑Our bid prices are for the entire building from top to bottom= 258' x 121' x 60."
5. The plaintiffs' tender dated 20th December 1974, was accepted since it was the highest and a letter of intent was issued to them on 18‑3‑1975. The plaintiff started the work of dismantling. Very soon it was clear that they were interpreting the contract as allowing them to dismantle the entire building, including even the portions other than Boiler House, from top to bottom, although the tender was invited for dismantling the Turbine Hall and Switchgear House from the first floor level to the top. He‑ relied for this interpretation upon the note referred to in paragraph 4 which according to WAPDA is a later interpolation. This note appears to have come to the knowledge of the WAPDA when the plaintiff refused to sign the contract agreement which was prepared in accordance with the tender form which was the basis of invitation of tenders. There was some litigation also between the parties since the plaintiffs filed a suit for injunction. Eventually on the basis of certain negotiations, the value of the work to be done by the plaintiffs was reduced from over Rs. 20,00,000 to Rs. 13,50,000 only. On the 2nd of August 1975, the WAPDA wrote to the Resident Engineer that :‑
"Authority has decided to award dismantling and removal of Boiler House complete (i.e. from ground to top), Turbine Hall and Switchgear section from first floor to top to the contractor Messrs Abdul Raazak Muhammad Iqbal at a negotiated cost of Rupees thirteen lacs and fifty thousand (13.5 laps)."
An agreement was thereafter signed by the parties on the 12th of August 1975, which is in accordance with the original invitation to tender. Clause 30 of this agreement is the arbitration clause and is as follows :‑
"Clause 30.‑Any difference or dispute or cause of action arising in respect of this agreement shall be decided first by the Resident Engineer and his decision shall be binding on the Contractor subject to an appeal within 7 days against the said decision to the Chief Engineer Incharge."
6. The contract stipulates that out of the sum of Rs. 13.5 lacs, the contractor shall pay as first instalment Rs. 9,50,000 and shall lift the dismantled material of Boiler House complete and shall clear its debris. The second instalment Rs. 4,00,000 will be paid 20 days after depositing the first instalment and before lifting dismantled material from Turbine Hall and Switchgear rooms above the first floor.
7. The plaintiffs paid a sum of Rs. 9,50,000 but they appear not to have paid the second instalment in time. On the other hand they made their intention clear to take away the Crane, its accessories 6.6 K. V. Switchgear along with bus bars and cables etc. which according to the tender form and the agreement, remains the property of the WAPDA. Since the plaintiffs were not allowed to do this, they served a notice dated 24th October 1975, upon the WAPDA, in which they admitted that they had paid only a sum of Rs. 9,50,000 on 11‑8‑1975 (Le. a day before the execution of the agreement). It was, however, contended that they were made to sign the agreement under duress rather under threat of forfeiture of the above amount in case they failed to sign it. It was claimed that the signatures were affixed under protest. It was further claimed that the plaintiffs were authorised to take out material even from the foundation of the Boiler House building and the balance of Rs. 4.00,000 was liable to be paid only if the Crane, girders, accessories, Switchgear, bus bars, cables etc. were allowed to be removed by the plaintiffs. At the end it was suggested that if the Depart ment wanted to retain the Crane, its accessories 6.6" K. V. Switchgear along with dus bars and cables, then the value of the contract should be reduced from 13.50 lass by a further amount of Rs. 2.80 lacs.
8. The plaintiffs thereafter filed a suit for permanent injunction to restrain the defendants from interfering with their work at Shahdara Old Power House Building according to the original contract and also from restraining them from interfering with the rights of the plaintiffs to remove material of the entire building in dispute. The plaint is to say the least a document, extremely confusing. The reference is first made in it to the original tender which, according to the plaintiffs was not confined to the property detailed in the tender form but was for the entire building from top to bottom (258' x 121' x 60') and was for taking away its entire material. According to the plaintiffs this tender was accepted but the Resident Engineer with mala fide intention, started putting hurdles in the way of the plaintiffs in the execution of the work notwithstanding the instructions to the contrary given by the Member (Power), WAPDA. It is further stated that the plaintiffs proposed later on to the WAPDA that if it wanted to retain the lower portion of the Turbine Hall and Switchgear rooms, it could reduce the value by 45 per cent. The Resident Engineer then started negotiations for retaining the lower portion of Turbine and Switchgear blocks and on 2‑8‑1975 the Department agreed to charge Rs. 13.50 lacs for the Boiler House complete and first floor to the top of Turbine Hall and Switchgear rooms. It is pleaded that there was no intention to exclude Mobile crane grails, girders 6.6' K. V. Switchgears, bus bars, cables etc. Before entering into an agreement however, the plaintiffs were forced to pay on 11‑8‑1975 a sum of Rs. 9.50 lacs and on account of this he was made to sign under duress the contract dated 12‑8‑1975, since they were told that if they did not sign the agreement, the amount of Rs. 9.50 lacs would be forfeited. It is complained in para. 16 that the plaintiffs were not being allowed to dig under the ground‑floor, the foundations of the Boiler House, thus causing them further loss to the tune of Rs. 2.00 lacs which is the value of the material lying in the foundations. It is also .complained that the Resident Engineer has taken into custody the crane Birders, its accessories etc. and 6.6' K. V. Switchgear alongwith bus bars, cables etc. Notwithstanding the fact that it is admitted that the plaintiffs had agreed by negotiations to the reduction of the value of the contract to Rs. 13.50 lacs, their claim in the plaint is based upon the old alleged contract, by which according to the plaintiffs, their tender for demolition of the entire building from top to bottom was accepted.
9. The WAPDA submitted an application under section 34 for stay of the suit in view of the Arbitration clause in paragraph 30 of the contract dated 12‑8‑1975. This application was resisted on the grounds (1) that the defendants had taken steps in the proceedings by applying on 15‑11‑1975 for time for filing the written statement; (2) that the contract was invalid for the reason that under the powers of delegation, the Resident Engineer Shahdara Town, was never delegated with the powers of disposal of WAPDA property ; (3) that the Resident Engineer who is a signatory to the contract :s partial and is biased against the plaintiffs ; (4) that the Resident Engineer is a party to the contract and is also a witness, as such he cannot be a Judge of his own cause and (5j that the contract was vitiated since it was executed under duress and misrepresentation.
10. The learned trial Court dismissed the application on the ground that clause 30 of the contract which was being invoked for the purpose of the petition was itself under attack in the suit and the Resident Engineer to whom the reference was required to be made is a witness to the agreement and is likely to be biased. The plaintiff's contention that the WAPDA had taken any steps in the proceedings which debarred them from applying under section 34 did not find favour with the learned Court. The learned Appellate Court held that the suit could not be stayed since it was yet to be determined whether the agreement was executed by the plaintiffs according to law and this question could not be decided by the arbitrator. The Court also held that the Resident Engineer of WAPDA has already adjudged the work of the plaintiffs and conducted the supervision at the site as an employee of the WAPDA. From this the Court Grew a conclusion that the Resident Engineer may be holding certain views and notions about the plaintiffs and thus he has rendered himself unfit to act as an arbitrator.
11. Regarding the last ground. the learned counsel for the petitioners stated at the bar that the Resident Engineer who had signed the contract dated 12‑8‑1975 is no more a Resident Engineer of this Power House. In fact two Resident Engineers have since been transferred. This statement of fact was not controverted by the " learned counsel for the plaintiff respondents. The argument in the judgments of the learned Courts below about the bias of the Resident Engineer or about his being a witness or about his having taken certain decisions are not, therefore, correct and do not hold good.
12. The only question that remains to be considered is whether the allegation that the contract was executed under duress is a bar to the stay of proceedings under section 34. In this connection, the learned counsel for the respondents laid much emphasis on the note in the original tender in support of his contention that the tender was for the building from top to bottom. But this question is no more relevant in view of the admitted position that by fresh negotiations between the parties the value of the contract was reduced by more than Rs. 6.00 lacs and the plaintiffs had agreed to dismantling and removal of the Boiler House Building from ground to top and they had further agreed to the demolition of Turbine Hall and Switchgear section not from the ground‑floor to the top, but from the first floor level to the top. In view of this admitted position, any reference to the original alleged contract was irrelevant. However, I cannot help observing that it looks odd that a Contractor may give a tender for work for which no tender was ever invited. In this connection, the argument of the learned counsel for the petitioners that the note is an interpolation or that the contract was never based on this note appears to have force. Even on the basis of this note the respondent cannot claim to have made any offer for a Mobile Crane, Switchgear and old pipings, which, according to the tender form, were to remain the property of the WAPDA because the note only clarifies that the bid price is for the entire building from top to bottom. It is, however, unnecessary to dwell on this aspect of the case, in view of the legal position that having agreed to slash the price down to Rs. 13,50,000 there was novation of the contract even according to the respondents.
13. The whole burden of the arguments of the learned counsel for the respondent is that in case of challenge to the existence of the contract, which includes the Arbitration clause, the matter cannot be referred to the Arbitrator since he has no jurisdiction to decide this question. He relied ,upon East India Trading v. Badat & Company A I R 1959 Bom. 414 Shiriram Hanuiram v. Mohanlal & Co. I L R 1940 Bom. 249, Jai Natain Babu Lal v. Naraindas Jaini Mal I L R 3 Lah. 296, Ramlal v. Haribux A I R 1934 Cal. 796, Birla Jute Manufacturing Co. Ltd. v. Dulichand Paratapmall A I R 1953 Cal. 450.
14. It is unnecessary to deal with the dicta laid down in the authorities cited by the learned counsel, since I agree with the argument that arbitration clause is confined to the dispute arising out of an agreement and as such its language cannot include a dispute as to the factum or validity of the .contract. The Arbitrator cannot have jurisdiction to decide this question. It is well settled that however wide the terms of an arbitration agreement may be a dispute to the existence or validity of the contract cannot be held to be within the arbitration clause contained in the contract document. The arbitration clause being part and parcel of the agreement itself, the denial o the factum of the contract is a denial of the submission clause and the denial of the jurisdiction of the Arbitrators. The existence or validity of the submission clause can therefore be decided only by a civil Court.
15. But this is not sufficient for the dismissal of the application under section 34 of the Arbitration Act. In this connection the question arises whether the civil Court can decide this matter in the trial of such application. Rana Muhammad Sarwar, Advocate, gave me full assistance on that question and I must show my appreciation for his candour in placing before me the authorities which have taken a view contrary to what he canvassed. He argued that this question amounts to allowing the defendant to take steps in the proceedings. He referred to section 34 which provides that where any party to an arbitration agreement or any 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. Rana Muhammad Sarwar urged that if a person is once proved to have taken any steps in the proceedings, he is debarred from preferring an application under section 34. In this state of law it is not possible to allow an applicant under section 34 to prove the validity of the contract, it would be permitting him to take steps in the proceedings since the same would be the main issue in the suit from which the relief may flow. This would be granting an immunity to the petitioner from the effect of taking steps in the proceedings as provided in section 34.
16. This argument although attractive at first sight, is fallacious. There is no bar to the decision of the question of existence or validity of they contract before adjudication of an application under section 34. Only' those persons are debarred under section 34 from applying under that section who take any steps in the proceedings of the suit. But any steps in the proceedings of the application under section 34 are not within the ambit of this bar. A decision on the question of existence or validity of a contract or of the submission clause is consequently not a step in the suit but is a step in proceedings of such application only. It is, therefore, a question which can be decided before the adjudication of the application under . section 34. May be that the same step may be a step in a suit as well as ' step in proceeding of application but so long as it remains a step in proceeding of application under section 34, it is immune from being treated as bar to the maintainability of such application. The result is that if as a result of inquiry into the question of factum or validity of the contract the Court gives a finding in favour of the plaintiff, it must dismiss t ht application. If on the other hand it gives a finding against the plaintiff, it shall stay the proceedings unless there is some other legal hurdle in they exercise of discretion in favour of the defendant. May be that the decision on the issue of factum or validity of the contract may render it unnecessary to frame that issue in the main suit after dismissal of the application under section 34 but that factor does not militate against the jurisdiction of the Court to decide that matter as an issue in the application under section 34 of the Arbitration Act.
17. This question may be considered from another point also. Section 32 of the Arbitration Act bars a suit involving a declaration about the existence, effect or validity of Inter alia an arbitration agreement. Section 33 provides that any party to an arbitration agreement desiring tot challenge the existence or validity of an arbitration agreement or to have the effect of the same determined shall apply to the Court and the Court shall decide the question on affidavits. Iii view of this provision it is not, difficult to hold that the Court can act under section 33 treating the application of the defendant under section 34 and reply of the plaintiff to that application as an invocation of the jurisdiction of the Court under section 33 of that Act.
18. The object of the law is not to defeat the agreement by a mere attack, however insubstantial and unreasonable, on the factum or validity of the contract. In Heyman v. Darwins 1942 A C 356 Lord Porter observed as follows :-
"This does not mean that in every instance in which it is claimed that the Arbitrator has no jurisdiction the Court will refuse to stay an action. If this was the case such a claim would always defeat an agreement to submit disputes to arbitration, at any rate until the question of jurisdiction has been decided. The Court to which an application for stay is made is put in possession of the facts and arguments and must in such a case make up its mind whether the Arbitrator has jurisdiction or not as best it can on the evidence before it. Indeed, the application for stay gives an opportunity for putting these and other considerations before the Court that it may determine whether action shall be stayed or not."
In Bhagwandas Atmasing v. Atmasing Jessasing A I R 1945 Bom. 494 it was held by a Division Bench of that Court after referring to sections 32, 33 and 34 of the Arbitration Act that :‑
"The defendant, who applies for a stay under section 34 has to say that there is an arbitration agreement. If the plaintiff says that there is no agreement, that issue arises between the parties. There is nothing in section 34 to prevent the Court from deciding that issue, to enable it to pass an order under that section . . . . .
A Single Judge of the Calcutta High Court held in Khusiram Benarsi Lai v. Hanutmal Boid and another 53 C W N 505 that when it was patent that the objection to the validity of the contract was not genuine and raised in good faith but only a device to avoid arbitration, the Court would act properly in exercising its discretion in favour of deciding the issue on the application by way of deciding the validity of the agreement and if the decision went against the plaintiff he would have only to thank himself. That course might particularly be adopted in a case where the suit included other claims which would be within the arbitration agreement, if the agreement subsisted and when the basic objection to the validity of the contract, and of the agreement as a part of it, appeared to be disingenuous and frivolous. Although it was observed in Birla Jule Manufacturing Co. Ltd. v. Dulichand Pratapmull A I R 1953 Cal. 450 that it was difficult to accept even this dictum without further consideration but while deciding the case the Division Bench acted upon the same principle. It was observed in the latter case that the suit not only asked for a declaration that the contract was void ab lnitio but also alternatively, for a declaration that the contract had become frustrated and for a declaration and adjudication of the rights of the parties. These last two matters fell within the jurisdiction of the Arbitrator, if it was found that there was a valid arbitration agreement. It was, therefore, held that :‑
"A stoppage of the arbitration proceedings till the question of jurisdiction has been decided in the suit cannot, I apprehend, be avoided, but when there are other questions raised by the suit, there is no reason why the plaintiff should be allowed to avoid arbitration even with regard to them, if jurisdiction is found. The proper course to adopt in such a case is either to keep the application under section 34 pending till the question of jurisdiction is decided in the suit or to make a conditional order. The latter appears to me to be the more convenient course."
The appeal was allowed with the directions in these terms.
19. The dictum laid down in Khusiram Benarsi Lal v. Hanutmal Boid anal another found approval of the Supreme Court of India in Anderson Wright Ltd. v. Moran & Co. AIR1953SC53. Acting in that principle the Supreme Court remanded the case to the High Court for decision on the question whether the plaintiff was signatory to the agreement. The decision of' the application under section 34 was to follow the decision on this matter.
20. Another case is C. M. Mathu Kutty v. Varee Kutty A I R 1950 Mad. 64. In that case the trial Court refused to record evidence on the question of existence or validity of the contract before deciding the application under section 34. It was held that there was no prohibition against the civil Court deciding this, matter. It was observed that :‑‑
"The very foundation for the jurisdiction of the Court to stay the trial. of a suit under section 34 is the existence of an arbitration agreement. The applicant comes to Court and asserts that there is such an agreement while the other side either disputes the truth of such an agreement or admitting its truth pleads that it is invalid by reason of other vitiating circumstances which are open under law for the objector to raise and prove. I do not see any reason why in that event when the question was raised and the validity of the jurisdiction of the Court depends upon the result of its decision on that question, the Court should not try that issue. Section 33, in my opinion gives an independent right to a person who wishes to challenge the existence or validity of an arbitration agreement or award and to anticipate the other side and to initiate proceedings to have those questions determined beforehand. It does not in my opinion prohibit the Court acting under section 34 of the Act from deciding a question which is raised before it for its decision and the decision on which alone would depend the exercise of its jurisdiction. From this point of view it seems to me that the learned subordinate Judge was not justified in preventing the plaintiff from adducing evidence on the question of fraud and misrepresentation put forward by him. If necessary, the counter filed by the plaintiff may be treated as an application under section 33 but I think even this is not required."
These authorities support my finding that the Court can decide the] question about the existence or validity of the contract in the application" under section 34.
21. Now the main claim of the respondent is to the ownership of a mobile crane, girders, accessories etc., 6.6' K. V. Switchgear, angle bars etc., and the material under the foundations below the ground floor. These matters can be decided by the Arbitrator if the respondent's plea about the Invalidity of the arbitration agreement is repelled. Tae only question therefore to be decided is whether the plaintiff had executed the contract under duress. Prima facie this plea is frivolous. The case of the plaintiff is that he had signed the document under protest. The learned counsel also argued that the words "under protest" were very much there in the document. Failing to find any such words, I sought the assistance of the learned counsel for the respondents to show me those words. After seeking instructions from his client he pointed out that the letters "ZAIR E EHTJAJ" were'. written along with the signature. He stated that these letters stood for "ZAIR E EHTJAJ . These letters are also not clearly written. They appear to be a part of the signatures of the representative of the respondents an cannot prima facie show that the document was signed under protest. There is one other important consideration and that is that one Advocate of the respondents also signed this document as an attesting witness which tends to prove that the document was executed after seeking legal advice. There is one other factor and that is that the contract is in accordance with the tender form filled up by the respondents. These circumstances justify the apprehension that the attack on the contract may be for the purpose of defeating the submission clause. In these circumstances, I consider that it is a fit case in which the question of existence or validity of the contract should be determined before deciding the application under section 34.
22. The learned counsel for the respondents argued that since the defendants were challenging the tender submitted by the plaintiffs as being a forged document, the plaintiffs would like the question of forgery to be decided by a public inquiry in the civil suit. In this connection he referred to Russell v. Russell (1880) 14 Ch. D 471 and Printers (Mysore) Private Ltd. v. Pathan Joseph A I R 1960 S C 1156. In the first case it was held by Jessel M. R. that in a case where fraud is charged, the Court will in general refuse to send to arbitration if the party charged with the fraud desires a public inquiry. The Supreme Court of India in the latter case held that in exercising its discretion under section 34, the Court should not refuse to stay the legal proceedings because one of the parties to an arbitration agreement is unwilling to go before an Arbitrator and in effect wants to resile from the said agreement, nor can stay be refused merely on the ground that the relation between the parties to the dispute have been embittered or that the proceedings before the Arbitrator may cause unnecessary delay as a result of the said relation. It may not always be reasonable or proper to refuse to stay the legal proceedings merely because some questions of law would arise in resolving the dispute between the parties. On the other hand, if fraud or dishonesty is alleged against a party, it may be open to the party whose character is impeached to claim that it should be given an opportunity to vindicate its character in an open trial before the Court rather than before the domestic tribunal, and in a proper case, the Court may consider that fact as relevant for deciding whether stay should be granted or not. This view was confirmed in Abdul Qadir Sham suddin v. Madhava AIR1962SC406.
23. This argument has not impressed me. I have already held that any reference to the above note added to the original tender (that the tender was being submitted for the entire building from top to bottom), is not relevant after the admitted novation of the agreement. The question o fraud is not, therefore, relevant.
24. The learned counsel then urged that there is another question about the authority of the Resident Engineer to execute the document on behalf of WAPDA. But this point can be raised by the plaintiffs as a ground of attack on the factum of the contract. The Court will no doubt have to consider in addition whether after having taken advantage of the contract the petitioners can challenge it on this ground.
25. The learned counsel lastly argued half‑heartedly that the defendants- petitioners had consented to the proceedings by seeking adjournment. Factually this is incorrect. It appears from the order dated the 15th November, 1975, that the counsel for the defendants appeared on that date. e was given a copy of application submitted by the plaintiffs under Order XXVI, rule 4 and the case was adjourned to 25th November. 1975 by the Court for its reply. The adjournment was sought on the 25th of November, 1975, by Mr. Zaka‑ur Rahman Lodhi, Advocate. who appeared for the first time before the Court. But the application under section 34 had already been submitted on the 18th of November. 1975. This point, therefore. does not arise.
26: 1 allow this petition with costs, set aside the orders of the learned Courts below and remand the case for decision of the question whether the contract dated the 12th August, 1975 was not executed voluntarily by the plaintiffs or the same was in any manner invalid. If the answer to this question be against the plaintiffs, the trial Court shall stay the proceedings under section 34 of the Arbitration Act.
S. A. H. Petition allowed case remanded.
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