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Civil Petition for Special Leave to Appeal No. 138‑K of 1979, decided on 4th July, 1979.

(On appeal from the judgment and order of the High Court of Sind, Karachi, dated 15‑5‑1979, in Suit No. 598 of 1978).

‑‑‑Art. 185(3)‑‑Arbitration Act (X of 1940), S. 34 Arbitration agreement‑‑Stay of legal proceedings‑‑Leave to appeal was granted to consider whether on facts and circumstances highlighted in petition and in view of various complicated and intricate questions involved, the case was fit one for being refused to arbitration.

Manzoor Ahmad Khan, Advocate Supreme Court and. Vakil Ahmad Kidwai, Advocate‑on‑Record for Petitioner.

Nemo for Respondents.

‑‑It is not necessary to go into the lengthly details of this case and for the purpose of the present order it is sufficient to mention that in a civil suit filed by the present petitioner, the defendant/ respondent No.1moved an application under section 34 of the Arbitration Act (X of 1940) praying that as in the relevant agreement between him and the plaintiff which constituted the basis of the suit there existed a clause, being clause No. XII which provided for referring all disputes in relation thereto to arbitration, therefore, the suit in the face of that clause should be stayed and the case be referred to the concerned arbitrator. The High Court (where the suit is proceeding on its original side) by its order, dated 15‑5‑1979 granted that application, stayed the proceedings of the suit, and referred the same to arbitration in terms of the aforesaid agreement. The plaintiff /petitioner has come up in a petition for special leave to appeal against the same to this Court.

2. After hearing the learned counsel for the parties we are of the opinion that the case involves substantial questions of law as to whether on the facts and in the over all circumstances highlighted in the petition, it was a fit case in which 'the High Court should have proceeded with the suit and should not have stayed or referred the same to arbitration. The case also involves construction of clause XII of the aforesaid agreement, as also resolution of other matters viz. that there were actually two' defendants in the suit whereas the agreement above mentioned was only between the plaintiff and defendant No.1and not defendant No.2 and as such it is for consideration whether arbitration clause could have been invoked so as to bind the third party viz. defendant No.2 with any Reward which may ultimately be given; that the property in dispute and evidence to be led were located in Pakistan whereas according to agreement the trial before the arbitrator was to take place in Russia; that according to the pleadings as contained in the plaint the plaintiff had alleged misrepresentation and fraud on the part of defendant /respondent No.1 in duping the plaintiff into the concerned contract on the specific consideration that the machinery supplied by them would give a definite and particular yield of production; and whether the matter of that nature which would involve examination of the aforesaid complicated and intricate factors and circumstances coupled with the objections earlier mentioned was fit one for being referred to the arbitration.

3. Leave to appeal is granted. Security Rs.1,000. A stay order was granted by this Court staying the proceedings before the arbitrator. The said stay order shall continue till further orders. The hearing of the appeal should be expedited.

M.I. Leave granted.

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