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High Court Appeal No.17 of 1984, decided on 1st February, 1987.

--S.4(b) [repealed by Arbitration (Protocol and Convention) Act (VI of 1937)]--Word "submission" used in S.4(b) of Act IX of 1899- Interpretation of--Literal interpretation of a word is the rule which could be departed from only, if any ambiguity is found in construing a word and not otherwise--Definition of word 'submission" in Act IX of 1899 was subject to the context--Even in those cases which were covered by the Act IX of 1899, if word "submission" was found to be used in the context of meaning an actual submission of a dispute to arbitrator, then definition of Act IX of 1899 would give way to meaning suggested by the context.--[Words and phrases].

P L D 1986 Kar. 138 ref.

--S.3--Words "submission", "pursuance" and "agreement" as used in S.3--Meaning, scope and mode of construction with reference to preamble and marginal note of S.3 and cl.(1) of Ist Sched. of the Act.

If there be ambiguity in construing the meanings of section 3 of Act VI of 1937, then the external aids of the preamble of the Act or marginal note of the said section or clause (1) of the Ist Schedule of the said Act or the definition of the word "submission" as contained in section 4(b) of Act IX of 1899 would be useful and relevant guides to ascertain the intention of the legislature in respect of the meanings of section 3 of Act VI of 1937. But if there is no ambiguity in the meanings and. the intention of the legislature is clear then no foreign aids should be employed to ascertain the meanings. Because if the language of the section is clear and conveys a particular meaning then the Court is not justified to adopt another meaning which would be more appropriate in the view of the Court or more in consonance with any treaty or the purpose of the Act If language is clear then the intention of the legislation is clearly ascertainable and it is not open to us to start speculating about the real intention of the: legislature and start finding external means to give the section a meaning which the Court considers more akin to the purposes of the Act.

The language of section 3 in the first instance negates the provisions of the Arbitration Act, 1940 and the Civil Procedure Code as far as this section is concerned. Then comes the relevant clause which is the centre of this controversy namely, if any party to a submission made in pursuance of an agreement to which the protocol as set forth in the First Schedule applies". If the word "submission" was to be construed literally then it would mean "reference to a decision or judgment by a third party"; or "referring a matter to arbitration". Thus, if literally construed, it means actual reference of dispute to the arbitrator. There is no difficulty at all and meanings are clear. But if "submission" was given the artificial or modified meaning of "an agreement to refer present or future disputes to arbitration or an arbitral clause only, then the difficulty starts and the words "made in pursuance of an agreement" start staring one in the face and the word "agreement" appears to be surplus or redundant. But since no redundancy can be attributed to legislature as held in PLD 1962 S C 90, therefore, the addition of the words "made in pursuance of an agreement" after the word "submission" had to be given some meaning as those words cannot be regarded as superfluous or meaningless.

Word "submission" cannot be regarded as mere arbitral clause as there is no warrant for the same because no such meaning is found in any dictionary or in any definition and hence its meaning as mere arbitral clause has to be rejected. If the original words are interpreted and the word "submission" is read in its ordinary dictionary meaning to mean "actual reference of a dispute to arbitration, then every word in the phrase becomes meaningful and the whole phrase reads as meaning "actual reference to arbitration made in pursuance of an agreement to which the protocol applies". Moreover, some meaning has to be assigned to the words "made in pursuance of Word 'pursuance' gives an idea of sequence in time and not merely a sequence in, the number of clauses of the same agreement.

Word "agreement" used in the first part of section 3 of the Act VI of 1937 cannot be merely restricted to "an agreement relating to commercial matters", but it should be read as the agreement to which protocol as set forth in the First Schedule applies. Reference to clause (1) of Ist Schedule shows that it recognizes the validity of agreement whether relating to existing or future differences, by which the parties to a contract agree to submit to arbitration all or any differences that may arise in connection with such contract relating to commercial matters. The emphasis is, therefore, on the arbitration part of the agreement and of course there is a further condition attached that differences which arise must relate to commercial matters. It is, therefore, obvious that the word "agreement" used in section 3 of Act VI of 1937 to which the protocol applies is essentially itself an agreement to submit to arbitration differences that may arise in connection with commercial matters of a contract. And, therefore, it cannot be regarded as an agreement relating to commercial matters only divorced from its main feature of being essentially an agreement to refer present or future differences to arbitration. Viewed in this light the controversial part of section 3 namely "submission made in pursuance of an agreement", if read to mean "an agreement, to submit present and future differences to arbitration, made in pursuance of agreement to refer present and future differences to arbitration in respect of commercial matters in a contract, would lead to absurdity and incongruity as it hardly makes any sense and makes the second part as superfluous. But on the other hand by merely substituting the meaning of the word "submission" with its dictionary meaning of "actual submission to arbitration", the whole clause makes sense and becomes coherent and reads like this "where there has been an actual submission to arbitration of differences in pursuance of an agreement providing for arbitration in respect of differences that may arise in connection with commercial matters of a contract". Meanings appear to be clear and unambiguous and whole clause is intelligible without rendering any words superfluous. If "submission" was made in pursuance of arbitration agreement then it would be obviously something different from a mere agreement to refer differences to arbitration and, therefore, it can only mean actual reference of the dispute to a named arbitrator and nothing else. There could be no other intention of the legislature as otherwise there was no sense in using the word 'submission'. If mere agreement of arbitration was intended then the words in section 3 should have been "If any party to a submission to which the protocol applies". Only in that case it could have been said that no actual reference to the arbitrator was necessary. But the wordings of the said section being what they are, they have to be construed as meaning that if any party to actual reference of a dispute to an arbitrator commences any legal proceeding then any other party may apply to the Court for stay of such proceedings. Therefore, actual reference being the sine qua non for such an application of stay, the application of stay would be incompetent if there was not an actual submission of the dispute to the named arbitrator.

A I R 1971 S C 1; (1965) 2 W L R 250; Dicey and Morris on The Conflict of Laws, 8th Edn., p.1075; Halsbury's Laws of England, Vol. 36, p.414 and Barras v. Aberdeen Steam Trawling and Fishing Co. Ltd. 1933 A C 402 ref.

--- Where meanings of words in, a statute are clear, effect, held, must be given to the same irrespective of the fact whether, they are completely in accord with the context or in slight deviation of same.

---S.3--Word "submission"--Effect of literal construction--Purpose of slight deviation from the protocol stated.

The protocol provides for stay of proceedings in Court in case there was contract between parties for arbitration of present or future differences in respect of commercial matters in a contract while the provision of section 3 if literally construed provides for stay of Court proceedings only if there was an actual submission of such differences to arbitrator and not otherwise. Therefore, the literal construction is not a complete go-bye to the protocol, but rather an effort to save the jurisdiction of a municipal Court in a case unless the parties have actually referred the dispute to the arbitration.

---S.3--Word "submission", meaning of--Word "submission" as used in S.3 of Act VI of 1937, held, would mean actual submission to arbitration and not a mere agreement to refer disputes between parties to arbitration.--[Words and phrases].

---S.34--Power of Court to stay legal proceedings in case of arbitration agreement between parties--Paucity of foreign exchange whether a relevant consideration in exercise of discretion--Trial Court, held, had jurisdiction to stay or not to stay suit where there was agreement between parties to refer dispute to arbitration--Where discretion exercised in favour of a party was based on consideration of paucity of foreign exchange in Pakistan, such exercise of discretion was justifiable and proper.

---S.3--Arbitration Act (X of 1940), S.34--Appellate jurisdiction of High Court--Grounds not raised before Trial Court--Effect--Factum of treaty between Pakistan and a Foreign State and discretion exercised by Court under S.34, Arbitration Act whether in accord with Islamic principles, having not been raised before Trial Court, held, could not be allowed to be raised by High Court in its appellate jurisdiction- Appeal being devoid of merit was dismissed in circumstances.

Khalid Farooq Qureshi with Khalil-ur-Rehman and Naseer Ahmad for Appellant.

Mansoor Ahmad Khan for Respondents.

Dates of hearing: 2nd, 3rd and 4th December, 1986.

-The appellant had felt aggrieved by the order of a Single Judge of this Court passed in Suit No.479/1979 on 6-2-1984, whereby the application made under section 34 of the Arbitration Act, 1940, by the appellant, was dismissed.

2. The relevant facts are that on 7-8-1970 a contract had been entered into between the appellant -and M/S. Sabena Textile Mills, the predecessor of the present respondent No.1 for the supply of a spinning unit by the appellant under a scheme known as "pay as you earn scheme". The price of the machinery was settled at 16, 48, 891 U.S. Dollars. There was an arbitration clause in the said contract providing for reference of disputes to arbitration at Moscow in case the defendant was the appellant or arbitration at Karachi in case the defendant was the respondent No.1.

3. Differences arose in respect of quality of machinery supplied by the appellant and respondent No.1 claimed that it was a defective machinery, which had caused losses to them. Some Correspondence was exchanged between the parties. The respondent No.1 filed Suit No.1755/75 for cancellation of documents and permanent injunction. Same was allowed to lapse. On 29-5-1979, the Respondent No.1 filed suit for recovery of Rs.4,42,33,555 against the appellant on account of the defective machinery supplied by the appellant. Permanent Injunction was also sought restraining the U.B.L. from paying the guaranteed amount of instalment to the appellant. It may be stated here that the injunction was granted, but eventually it was vacated and on that account the appellant is not at all aggrieved.

3-A. On 2-6-1979 an application was filed by the appellant under section 34 of the Arbitration Act, 1940 for the stay of the suit on account of the Arbitration Clause in the agreement. In the supporting affidavit it was also requested that action under section 3 of Arbitration (Protocol & Convention) Act VI of 1937 be also taken. The Respondent No.1 resisted the said application and filed the counter affidavit.

3-B. After hearing the parties the learned Single Judge dismissed the application under section 34 of the Arbitration Act on 6-2-1984 and hence this appeal. The last para of the impugned order giving the reasons is reproduced as follows:-

"In the case before me the Plaintiff categorically stated in sub-paras. 3 and 4 of paragraph 3 of their counter affidavit that the entire plant and machinery supplied by defendant No.1 are installed in Karachi, the relevant record which will be truckloads, is all at Karachi. The engineers, technicians, supervisors and workers who are relevant witnesses to depose about the operation of the machinery are all in Karachi and so also the workers who have worked thereon. That these witnesses in large number reside in Karachi and if arbitration proceedings before the foreign tribunal takes place all these evidence cannot be taken to Moscow both for reasons of impracticability as well as on account of restrictions of foreign exchange and involvement of heavy expenditure. These allegations in the counter affidavit of the plaintiff have gone absolutely unchallenged as no rejoinder affidavit in rebuttal was filed by defendant No.1. It is also not disputed before me that the Defendant No. 1, is engaged in extensive commercial activities in Pakistan and have their permanent representation here, besides their representation through U.S.S.R. Trade Representative in Pakistan. Iii consideration of above circumstances, I am of the view that it is a fit case in which stay of legal proceedings should be refused by the Court under section 34 of the Arbitration Act. I accordingly reject the application of Defendant No.1 under section 34 of the Arbitration Act but grant two months time to them to file their written statement. There will be no order as to costs."

4. The learned Single Judge also took note of the submission of the appellant that by reasons of section 3 of Act VI. of 1937 the Court should stay the proceedings in the suit in view of the Arbitration Clause as the word "shall" in section 3 was of mandatory effect.

The learned Single Judge did not give his decision whether the word "shall" in section 3 of Act VI of 1937 can be treated as "may", but he took the view that section 3 of Act VI of 1937 could be attracted in the case only if there had been an actual submission to arbitration in pursuance of the agreement and since there was no actual submission to arbitration in this case before the filing of the suit by the respondent No.1, therefore, the suit could not be stayed under section 3 of the said Act VI of 1937.

5. Mr. Khalid Farooq Qureshi, learned counsel for the appellant urged:

(i) that section 3 of the Arbitration (Protocol & Convention) Act, 1937 (Act VI of .1937) is applicable in the case and since it provides for a mandatory stay of the legal proceedings in Court, therefore, the suit of the respondent should have been stayed. He further submitted that the word 'submission' used in the said section means an agreement to refer and not actual submission to the arbitration.

(ii) Even as regards section 34 of the Arbitration Act the discretion in not staying the suit was not correctly exercised as the Court had no jurisdiction to deal with the suit

(iii) There is a treaty between U.S.S.R. and Pakistan for the constitution of Arbitral tribunals and reference thereto and the refusal to stay defeats the provisions of the treaty.

(iv) The discretion in not staying the suit was not exercised in accord with the Islamic principles which enjoins the adherence to the promise.

(v) The inconvenience in respect of production of evidence in respect of malfunctioning of machinery to be at Karachi was known to the respondent and hence they knew the situation in advance and yet they had agreed to have the arbitration at Moscow in their correspondence and, therefore, the suit should have been stayed and the arbitration should have been allowed to proceed.

Mr. Mansoor Ahmad Khan on the other hand replied that the discretion if exercised by the Court in not staying the arbitration proceedings is not open to interference by the Appellate Court unless it was exercised arbitrarily, perversely, contrary to legal principles and on basis of assumption not borne out by the record which was not the case in the present appeal. He relied upon P L D 1986 Karachi page 138. He further contended that section 3 of the Act VI of 1937 should not be applied in this case as there was not an actual submission to arbitrators of the dispute involved in this case by the parties and mere agreement to refer is not covered by the said section. His main emphasis was that the section should be interpreted literally by the Court and there was no ambiguity which could justify the use of other aids such as the preamble, or first schedule of the Act, in order to interpret the word 'submission'. He also submitted that the word 'shall' in section 3 of Act VI of 1937 should be construed as 'may' and, therefore, the Court has the discretion to stay the suit or not and once the discretion is exercised, then the same should not be interfered with.

The, appellant's counsel drew our attention to the preamble of Act VI of 1937 which provides as under:-

"WHEREAS Pakistan was a State signatory to the Protocol on Arbitration Clauses set forth in the First Schedule and to the Convention on the Execution of Foreign Arbitral Awards set forth in the Second Schedule, subject in each case to a reservation of the right to limit its obligations in respect thereof to contracts which are considered as commercial under the law in force in Pakistan;

AND WHEREAS it is expedient, for the purpose of giving effect to the said Protocol and of enabling the said convention to become operative in Pakistan to make certain further provisions respecting the law of arbitration: it is hereby enacted as follows."

He also referred to section 3 of the said Act which is reproduced hereunder:-

(3) Stay of proceedings in respect of matters to be referred to arbitration. "Notwithstanding anything contained in the (Arbitration Act, 1940), or in the Code of Civil Procedure, 1908, if any party to a submission made in pursuance of an agreement to which the Protocol set forth in the First Schedule as modified by the reservation subject to which it was signed by India applies, or any person claiming through or under him, commences any legal proceedings in any Court against any other party to the submission or any person claiming through or under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time after appearance and before filing a written statement or taking any other step in the proceedings apply to the Court to stay the proceedings; and the Court, unless satisfied that the agreement or arbitration has become inoperative or cannot proceed, or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings." (Underlining is mine).

His submission was that the word 'submission' used in section 3 should be interpreted as meaning the agreement of arbitration or otherwise the very purpose of enacting Act VI of 1937 would be frustrated. He elaborated that the purpose of the Act was to give effect to the protocol or arbitration clauses to which India had been a party and since the First Schedule of Act VI of 1937 has produced the protocol which referred to arbitration clauses, therefore the said protocol should be used for the purpose of interpretation of section 3 of the said Act, if the word 'submission' requires, interpretation. Clause (1) of the First Schedule is reproduced below:

"1. Each of the Contracting States recognises the validity of an agreement whether relating to existing or future differences between parties subject respectively to the jurisdiction of different Contracting States by which the parties to a contract agree to submit the arbitration all or any differences that may arise in connection with such contract relating to commercial matters whether or not the arbitration is to take place in a country to whose jurisdiction none of the parties is subject."

The submission in actual effect is that section 3 clearly provides a mandatory stay of the proceedings in Court where any party to a submission made in pursuance of an agreement to which the protocol set forth in the First Schedule as modified by the' reservation subject to which it was signed by India applies, or any person who was a party to that agreement has commenced any legal proceedings in any Court in respect of any matter agreed to be referred. According to him the word 'submission' should be interpreted as meaning an agreement to submit present or future differences to arbitration whether arbitrator is named therein or not. He emphasised that the marginal note of this very section provides for stay of proceedings in respect of matters to be referred to the arbitration and, therefore, the word 'submission' should be treated as meaning as agreement to refer the disputes to arbitration. He sought support from the definition of the word 'submission' as contained in section 4(b) of Indian Arbitration Act IX of 1899 which had provided as under:-

"'submission' means a written agreement to submit present or future differences to arbitration whether an arbitrator is appointed or not."

The Indian Arbitration Act IX of 1899 had continued to hold field upto 1937 although the procedure in regard to arbitration was provided in Code of Civil Procedure of 1908. The argument of the counsel appears to be attractive if literal construction was not resorted to and aids were applied to interpret the word "submission". Act IX of 1899 was an existing law in India in 1937 and Act VI of 1937 is an Act which is nearly at par with the purposes of Indian Arbitration Act, 1899 and hence the word "submission" used in Act VI of 1937 could, in case there was any ambiguity, be interpreted in the light of the word "submission" contained in then existing Act IX of 1899. There word "submission" clearly included an agreement to submit present or future differences to the arbitration. Therefore, argument is that in this light section 3 of Act VI of 1937 could not be interpreted in a manner to exclude the future differences and confined to those cases alone where actual submission of a dispute to an arbitrator has already taken place.

But the difficulty is that literal interpretation of a word is the rule and this rule can be departed from only if there is found any ambiguity in construing a word and not otherwise. Moreover we cannot lose sight of the fact that the definition of the word "submission" in Act IX of 1899 was subject to the context and, therefore, even in those cases which were covered by Act IX of 1899 if the word "submission" was found to be used in the context of meaning an actual submission of a dispute to arbitrator then the definition of Act IX of 1899 would give way to meanings suggested by the context.

The interpretation put forward by the appellant's counsel on the word "submission" in section 3 of Act VI of 1937 finds support from the minority view expressed by Remaswami J. in A I R 1971 SC 1 at page 17 where the learned Judge observed as under:-

" ....the expression "submission made in pursuance of an agreement" in section 3 of the Act must be construed in its historical setting. The word "submission" must, therefore, be interpreted to mean the arbitral clause itself and the word "agreement" as the commercial or the business agreement which includes or embodies that clause. In other words the word "submission" in the opening words of the section means an agreement to refer to arbitration and the words "the agreement to which the Convention set forth in the schedule applies" mean the business agreement or contract containing the arbitral clause."

This opinion was based upon the view of Scarman J. in (1965) 2 WLR 250 at pages 262-263 in the 'Merak' case. Reference was also made in the above case to opinion of Dicey & Morris in the Conflict of Laws, 8th Edition page 1075 where the phrase "a submission made in pursuance of the agreement to which the said protocol applies" was treated to be meaning that the parties have agreed to submit their present or future disputes to the arbitration and the word "submission" was explained as including an agreement to refer. Mr. Justice Ramaswami had also observed at page 16 of the said judgment as under:-

" ....the expression "arbitration agreement" and the word "submission" are synonymous and connote the same idea."

The learned Judge refused to construe the words "submission" and "agreement" in their natural and grammatical meaning on the ground that taking a literal interpretation is not always the best method for ascertaining the intention of the parliament anti the better interpretation is that statute should be so construed as to prevent the mischief an, advance remedy for true intent of the makers of the statute. At page 19 of the said judgment it was observed as under:-

"When there is ambiguity in the language of the section it is the duty of the Court to adopt that construction which will effectuate the object of the Act and not nullify the intention of Parliament and make the provision devoid of all meaning."

However, the opinion of the majority judges in the above case i.e. A I R 1971 S C 1 is quite contrary to the opinion of Ramaswami J. The majority opinion was expressed by Grover J. for himself and Shah J. The para 16 and onwards of that judgment are quite relevant for the purpose of this appeal. Halsbury's Laws of England Vol. 36 page 414 has been quoted therein to the effect that there is presumption that the parliament does not assert or assume jurisdiction which goes beyond the limits established by the common consent of nations and statutes are to be interpreted, provided that their language permits, so as not to be inconsistent with the comity of nations or with the established principles of international Law. But this principle applies only where there is an ambiguity and must give way before a clearly expressed intention. If statutory enactments are clear in meaning, they must be construed according to their meaning even Though they are contrary to the comity of nations of International Law. It was further observed as under:-

"Once, the Parliament has legislated, the court must first look at the legislation and construe the language employed in it. If the terms of the legislative enactment do not suffer from any ambiguity or lack of clarity they must be given effect to even if they do not carry out the treaty obligations."

In the majority opinion in the above quoted judgment reference was made to Barras v. Aberdeen Steam Trawling and Fishing Co. Ltd: 1933 A C 402 to the effect that where an Act had been passed to give effect to the convention which was scheduled to it, the words employed in the Act had to be interpreted in the well established sense which they had in municipal law.

Mr. Justice Grover further observed as under:-

"If 'submission' means 'agreement to refer' or an 'arbitral clause' in a commercial contract, it makes the entire set of words unintelligible and completely ambiguous.

It was also observed in the above case by the majority judges as under:-

"If section 3 cannot be so read as to permit the meaning of the word 'submission' to be taken as an arbitral clause or an agreement to refer, the Courts would not be justified in so straining the language of the section as to ascribe the meaning which cannot be warranted by the words employed by the legislature. We are aware of no rule of interpretation by which rank ambiguity can be first introduced by giving certain expressions a particular meaning and then an attempt can be made to emerge out of semantic confusion and obscurity by having resort to the presumed intention of the legislature to give effect to international obligations."

In para. 28 the majority opinion is expressed as under:-

"23. Whatever way section 3 of the Act is looked at, it is difficult to reach the conclusion that 'submission' means an agreement to refer or an arbitral clause and does not mean an actual submission or completed reference, and that the word "agreement" means a commercial contract and not an agreement to refer or an arbitral clause."

It would also be useful for the purpose of this appeal to reproduce hereinbelow paragraphs 29 and 30 of the majority opinion in A I R 1971 S C 1 (12):-

29. Ordinarily, a party, which has entered into a contract of which an arbitral clause forms an integral part, should not receive the assistance of the Court when it seeks to resile from it. But in the present case a suit is being tried in the Courts of this country which, for the reasons already stated, cannot be stayed under section 3 of the Act in the absence of an actual submission of the disputes to the arbitral tribunal at Moscow prior to the institution of the suit. The only proper course to follow is to restrain the Russian Firm which has gone to the Moscow Tribunal for adjudication of the disputes from getting the matter decided by the tribunal so long as the suit here is pending and has not been disposed of."

"30. In this context, we cannot also ignore what has been represented during the arguments. The current restrictions imposed by the Government of India on the availability of foreign exchange of which judicial notice can be taken will make it virtually impossible for the Indian Firm to take its witnesses to Moscow for examination before the Arbitral tribunal and to otherwise properly conduct the proceedings there. Thus the proceedings before that tribunal are likely to be in effect ex parte. The High Court was, therefore, right in exercising discretion in the matter of granting an interim injunction in favour of the Indian Firm."

Let us now ourselves consider whether there is ambiguity in construing the meanings of section 3 of Act VI of 1937. If there is ambiguity, then the external aids of the preamble of the Act or marginal note of the said section or clause I of the Ist Schedule of the said Act or the definition of the word "submission" as contained in section 4(b) of Act IX of 1899 would be useful and relevant guides to ascertain the intention of the legislature in respect of the meanings of section 3 of Act VI of 1937. Pest- if there is no ambiguity in the meanings and the intention of the legislature is clear then no foreign aids should be employed to ascertain the meanings. Because if the language of the section is clear and conveys a particular meaning then the Court is not justified to adopt another meaning which would be more appropriate in the view of the Court or more in consonance with any treaty or the purpose of the Act. If language is clear then the intention of the legislation is clearly ascertainable and it is not open to us to start speculating about the real intention of the legislature and start finding external means to give the section a meaning which the Court considers more akin to the purposes of the Act.

The language of section 3 in the first instance negates the provisions of the Arbitration Act 1940 and the Civil Procedure Code as far as this section is concerned. Then comes the relevant clause which is the centre of this controversy namely, "If any party to a submission made in pursuance of an agreement to which the protocol as set forth in the first schedule applies". If the word "submission" was to be construed literally then it would mean "reference to a decision or judgment by a third party"; or "referring a matter to arbitration" as explained in Oxford Universal Dictionary p.1713. Even Law Lexicon by Iyer 1947 edition at p.1227 explains "submission" as 'that act by which parties refer any matter in dispute between them to the decision of a third person'. Thus, if literally construed, it means actual reference of dispute to the arbitrator. There is no difficulty at all and meanings are clear. But, if "submission" was given the artificial or modified meaning of "an agreement to refer present or future disputes to arbitration or an arbitral clause only, then the difficulty starts and the words "made in pursuance of an agreement" start staring one in the face and the word agreement appears to be surplus or redundant. But since no redundancy can be attributed to legislature as held in P L D 1962 S C 90, therefore, the addition of the words "made in pursuance of an agreement" after the word "submission" had to be given some meaning as those words cannot be regarded as superfluous or meaningless.

We cannot read 'submission' as mere arbitral clause as there is no warrant for the same as no such meaning is found in any dictionary or in any definition and hence its meaning as mere arbitral clause has to be rejected. If we read the word "submission" in this clause of section 3 as interpreted by the appellant's counsel, then the clause will read like this "if any party to an agreement to refer present or future disputes to arbitration, made in pursuance of an agreement to which the protocol set forth in the first schedule applies". But it does not make a coherent reading and the word "agreement" appearing second time would be mere duplication and will be completely useless. The judges who took the view that "submission" does not mean actual reference of the dispute to arbitration, took the stand that the word "agreement" in section 3 refers to agreement relating to commercial matters and the word "submission" means the arbitral clause in the said agreement. Why should we do this and why not allow the words to be interpreted literally as they exist. If the original words are interpreted and the word "submission" is read in it's ordinary dictionary meaning to mean "actual reference of a dispute to arbitration, then every word in the phrase becomes meaningful and the whole phrase reads as meaning "actual reference to arbitration made in pursuance of an agreement to which the protocol applies." Moreover, some meaning has to be assigned to the words "made in pursuance of". Word 'pursuance' gives an idea of sequence in time and not merely a sequence in the number of clauses of the same agreement.

Moreover the word "agreement" used in the first part of section 3 of Act VI of 1937 cannot be merely restricted to "an agreement relating to commercial matters" as interpreted by Scarman J. or Ramaswamy J. as referred to earlier. They have done so by reference to clause I. of the protocol. But with respect to them, they have referred only to a part of the protocol but not the whole of it and have, therefore, drawn incorrect conclusion. On the other hand, it should be read as the agreement to which protocol as set forth in the first schedule applies. Reference to clause I of Ist schedule shows that it recognizes the validity of agreement, whether relating to existing or future difference, by which the parties to a contract agree to submit to arbitration all or any differences that may arise in connection with such contract relating to commercial matters. The emphasis is, therefore, on the arbitration part of the agreement and of course there is a further condition attached that differences which arise must relate to commercial matters. It is, therefore, obvious that the word "agreement" used in section 3 of Act VI of 1937 to which the protocol applies is essentially itself an agreement to submit to arbitration differences that may arise in connection with commercial matters of a contract. And, therefore, it cannot be regarded as an agreement relating to commercial matters only divorced from its main feature of being essentially an agreement to refer' present or future differences to arbitration. Viewed in this light the controversial part of section 3 namely "submission made in pursuance of an agreement" according to the appellant's counsel would read as meaning, "an agreement, to submit present and future differences to arbitration, made in pursuance of agreement to refer present and future differences to arbitration in respect of commercial matters in a contract. Such reading of the under consideration clause of section 3 obviously leads to absurdity and incongruity as it hardly makes any sense and makes the second part as superfluous. But on the other hand by merely substituting the meaning of the word "submission" with its dictionary meaning of "actual submission to arbitration", the whole clause makes sense and becomes coherent and reads like this "where there has been an actual submission to arbitration of differences in pursuance of an agreement providing for arbitration in respect of differences that may arise in connection with commercial matters of a contract. "Meanings appear to be clear and unambiguous and whole clause is intelligible without rendering any words superfluous. If "submission" was made in pursuance of arbitration agreement then it would be obviously something different from a mere agreement to refer differences to arbitration and, therefore, it can only mean actual reference of the dispute to a named arbitrator and nothing else. There could be no other intention of the legislature as otherwise there was no sense in using the word 'submission'. If mere agreement of arbitration was intended then the words in section 3 should have been "If any party to a submission to which the protocol applies". Only in that case it could have been said that no actual reference to the arbitrator was necessary. But the wordings of the said section being what they are, they have to be construed as meaning that if any party to actual reference of a dispute to an arbitrator commences any legal proceeding then any other party may apply to the Court for stay of such proceedings. Therefore, actual reference being the sine qua non for such an application of stay, the application of stay would be incompetent if there was not an actual submission of the dispute to the named arbitrator.

Even Mr. Khalid Farooq Qureshi was not able to contend that literal meanings of the controversial parts of section 3 of Act VI of 1937 does not warrant the construction of the word "submission" as 'actual submission' of the dispute to arbitration and not "an agreement to refer present and future disputes to arbitration". He could not contend otherwise. In fact, both Scarman J. as well as Ramaswamy J. upon whose separate judgments he has relied, have conceded that literal meaning of word 'submission' in this clause is against their construction. But they have rejected the literal meaning as it makes nonsense of the protocol. But there is no justification to do so. If the meanings are clear then effect must be given to the same irrespective of the fact whether they are completely in accord with the protocol or in slight deviation of the same.

In our view it is- too harsh an expression to say that literal meaning of submission in section 3 makes non-sense of the protocol. As a matter of fact there would only be slight deviation from the protocol. The protocol provides for stay of proceedings in Court in case there was contract between parties for arbitration of present or future differences in respect of commercial matters in a contract while the provision of section 3 if literally construed provides for stay of Court proceedings only if there was an actual submission of such differences to arbitrator and not otherwise. Therefore, the literal construction is not a complete go-bye to the protocol, but rather an effort to save the jurisdiction of a municipal Court in a case unless the parties have actually referred the dispute to the arbitration.

The majority view expressed in A I R 1971 S C 1 that the word "submission" in section 3 of Act VI of 1937 should be treated as actual submission of dispute to arbitration had been taken in various High Courts of India starting from A I R 1956 Cal. 238 by Mukarji J. and then A I R 1957 Ca1.240 and reaffirmed by a Division Bench in A I R 1959 Cal. 8. The same view was also held in A I R 1965 Bombay 144 by Desai J. and now it has been followed by a Single Judge of our own High Court in the impugned judgment. A Single Judge of the Madras High Court and a Division Bench of the same High Court had also taken the similar view and their judgments have been affirmed in A I R 1971 S C 1. The same view was reiterated in 1982 P.S.C. 12 by the Supreme Court of India and it was held that besides existence of an agreement between the parties as envisaged in the first schedule, the existence of submission pursuant to an agreement was essential for attracting section 3 of Act VI of 1937. Therefore, it appears that in the Indian Subcontinent the view of Ramaswami J. is a lone voice. Of course he has the support of Scarman J. from U.K. but even then they make only two Judges as against twelve Judges who have expressed otherwise in India and Pakistan and in our view they have correctly held that the word h "submission" in section 3 of Act VI of 1937 means actual submission to arbitration and not a mere agreement to refer the disputes between the parties to arbitration.

The submission of appellant's counsel that the discretion under section 34 of the Arbitration Act was illegally exercised and that there was no jurisdiction in the trial Court to deal with the suit is not correct. The Honourable Single Judge had the jurisdiction to deal with the suit as it had been filed in respect of the matter which was within his jurisdiction. Moreover he had the discretion to accept or reject the application filed by the appellant for stay of the suit. The discretion exercised in favour of the respondent was based on relevant consideration, the most important of the same being that there was paucity of foreign exchange available in Pakistan and, therefore, it would be difficult for the respondent to obtain so much foreign exchange as to take all his witnesses to Moscow before the Arbitral Tribunal to prove that the machinery supplied by the appellant did not function according to the specifications or according to the promises or the understanding given by the appellant. The learned Judge was right in coming to the conclusion that there would be numerous witnesses involved and hence it is obvious that a great deal of foreign exchange would have been involved for this purpose. We have already noted that in A I R 1971 S C 1 the Indian Supreme Court had taken judicial notice of the fact that there was restrictions imposed by the Government of India on availability of foreign exchange which would have made it virtually impossible for the Indian firm to take its witnesses to Moscow for examination before the tribunal. Certainly similar judicial notice could be taken by the learned Single Judge in the present case in respect of the paucity of foreign exchange in Pakistan and we ourselves are clearly of the view that the foreign exchange position-in Pakistan is very acute and, therefore, it would be well-nigh impossible for the respondent to secure so much foreign exchange which would allow the expenses of the travel of a number of witnesses from Karachi to Moscow and their stay in hotels at Moscow. Moreover there would also be a great deal of inconvenience involved. It was correctly argued by the appellant's counsel that the respondent had not raised the question of convenience in its correspondence before the suit and had in fact sought the filing of arbitration proceedings at Moscow. But this could only deprive the respondent of taking of the question of convenience before the Single Judge and it would not deprive the respondent of bringing before the notice of the Court the difficulties involved in foreign exchange in this matter which may have escaped the notice in the correspondence. It was not possible to contend that there would be no difficulty in securing the exchange. Consequently the contention of the appellant's counsel in respect of illegal exercise of discretion by the Single Judge also fails.

The contention of the appellant's counsel that there was treaty between U.S.S.R. and Pakistan and refusal to stay the suit defeated the provisions of the treaty is a new submission raised before this Court which was not raised before the Single Judge and, therefore, we did not allow the counsel to raise this point hence the same is rejected. Similarly the point now raised in this appeal in the arguments by the counsel for the appellant that the discretion exercised under G section 34 of the Arbitration Act must be in accord with the Islamic principles which enjoin the adherence to the promise, is a new point raised by the appellant's counsel in this appeal and had not been taken before the Single Judge and, therefore, it is not allowed to be raised and hence rejected.

The result is that this appeal is found to be without merit and is hereby dismissed with costs.

A. A./V-3/K Appeal dismissed.

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