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Civil Miscellaneous Applications in Suit No. 383 of 1984, decided on 4th October, 1984.

‑‑‑ S. 34‑‑Stay of legal proceedings‑ ‑Expression "taking any other steps in proceedings" ‑‑Scope and meanings‑‑Party applying for stay of legal proceedings in Court under S. 34, held, must show that he had neither filed written statement in case nor had taken any step in proceedings‑ ‑Expression "taking any other steps in proceedings" in S. 34, being of general nature and having wide import, would include in its meaning any action by party which would amount to his participation in proceedings or its further progress and would also include any step by party which would show that he had acquiesced in jurisdiction of Court‑‑Steps taken by applicant seeking stay of proceedings clearly showing both acquiescence in jurisdiction of Court as well as participation in proceedings and promoting its further progress had disentitled applicant to seek stay of proceedings under S. 34.‑‑[Words and phrases].

1984 CLC 1605 and Chapel v North(1891) 2 QB 252 ref.

Kamal Azfer for Plaintiff (in Suit No. 383183 and for Defendant in Suit No. 559/83).

Sharif for Defendant (in Suit No. 383/84 and for Plaintiff in Suit No. 559/83).

This order will govern the disposal of CMA No.3377/84 in Suit

No. 383/1984 and CMA No.3947183 filed in Suit No. 559 of 1983. Before dealing with the above‑noted application I may state the following facts which are necessary for their disposal. Suit No. 559/83 was filed by Uzin Import Export Enterprises against M. Iftikhar & Co Ltd. in which Iftikhar & Co Limited preferred a counter claim which has been registered as Suit No. 383/84 after withdrawal of suit No. 559/83. For the sake of convenience I will refer plaintiff in suit No.559/83 and defendants in Suit No.383 of 1984 as "Uzin" and defendant in Suit No. 559/83 and plaintiff in Suit No. 383/84 as "Iftikhar" only.

Uzin were engaged by Attock Cement Company Pakistan Limited for construction of a cement plant at Lasbella. Uzin engaged Iftikhar as sub‑contractor to provide all construction plant machineries, vehicles etc. required for the expeditious and satisfactory completion of the work. Uzin alleged that they paid Rs.64.5 Million as advance mobilization charges to Iftikhar for purchase and import of construction plant and other machineries and vehicle. Uzin alleged in their Suit No. 559/83 that Iftikhar were attempting to remove the construction plant/ machineries/ vehicles which were provided for use at the Site and which under clause 20 of the Contract Iftikhar could not remove or sell until completion of project by Uzin. Uzin accordingly prayed for permanent injunction against Iftikhar restraining them from removing construction plant, machineries, vehicles or any part thereof or otherwise alienate charge or assign the same until the completion of project by Uzin. Uzin also claimed a temporary injunction against Iftikhar in identical terms in the suit which was granted by the Court on 15‑9‑1983 with notice to defendant. After service of notice of injunction application Iftikhar filed their counter‑affidavit as well as written statement containing the counter‑claim of Rs. 16,54,539 before the Additional Registrar (O.S) on 3‑10‑1983, copies whereof were supplied to Uzin on the same day and case was adjourned to 2‑11‑1983, for reply by Uzin to the counter‑claim of Iftikhar. The diary sheet of Additional Registrar (O.S) dated 3‑10‑1983 reads as under:‑

113‑10‑1983.

Notice U/O 39 R.1 & 2 CPC served on defendant.

Hearing in Court on 9‑10‑1983 C/A to the application filed and copy supplied;

2. Case is adjourned to 26‑10‑1983 when fixed for service of summons. Summons served on defendant on 15‑9‑1983 Today power filed by, M/s Orr: Dignem Advocates on behalf of defendant. Also written statement filed with counter‑claim, and copy supplied. Reply to C/claim within one month. Adjourned: 2‑11‑1983.

(Sd.)

Additional Registrar WS)

After the above order of the Additional Registrar (O.S.) the suit was called for hearing of injunction application in Court on 2‑11‑1983, but it was adjourned to 3‑11‑1983. On 3‑11‑1983 the learned counsel for the parties jointly requested the Court for time to discuss the matter to reach a compromise and on the same date Iftikhar submitted an application for amendment of his written statement /counter‑claim under Order XI, Rule 17, C.P.C. notice whereof was waived by Uzin. The following order was passed by the Court on 3‑11‑1983.

"Mr. Sharif for the plaintiff.

Mr. Kamal Azfer for the defendant.

The parties state that they are discussing some proposal for striking a compromise agreement and want time to explore the possibilities. By consnt of the two counsel case adjourned to 7‑11‑1983.

Mr. Kamal Azfer is filing an application under Order XI, R.17, Mr. Sharif waives notice. This matter may also be fixed by 7‑11‑1983.

Sd/‑3‑11‑1983

Judge.

The two applications, thereafter, came up for hearing in the Court on 10‑11‑1983, and the injunction application moved by Uzin was disposed of, in terms of a compromise statement filed before the Court. The application for amendment of written statement filed by Iftikhar was also granted by consent of the parties. In the meantime Uzin filed application under section 34 of the Arbitration Act on 8‑11‑1983, praying that the counter‑claim of Iftikhar be stayed. On 17‑5‑1984 Uzin filed application for unconditional withdrawal of their Suit No. 559/83 U/0 XXIII rule 1 CPC, which was opposed by Iftikhar but I allowed the withdrawal of Uzin's suit on 27‑5‑1984 and directed that the counter claim of Iftikhar be registered separately as a suit. As a result of my above order the counter‑claim made by Iftikhar in Suit No. 559/83 has been registered as Suit No. 383/1984. After registration of counter‑claim of Iftikhar as Suit No. 383/84 Uzin filed an application (CMA No. 3377/84) in Suit No. 383/1984 praying that the application under Section 34 of the Arbitration Act filed by them in Suit No. 559/83 may be transferred and placed in Suit No. 383/84. This application is opposed by Iftikhar on the ground that with the withdrawal of suit No. 559/83 the application under Section 34 of the Arbitration Act filed therein by Uzin also come to an end. The contention of the learned counsel for Iftikhar has not impressed me. In my order dated 27‑5‑1984, while allowing unconditional withdrawal of Suit No. 559/83 1 had directed that all incidental orders passed in respect of counter‑claim of Iftikhar shall survive. In these circumstances the application under Section 34 of the Arbitration Act filed by the Uzin to the counter‑claim of Iftikhar did not come to an end with the withdrawal of suit No. 559/83, 1. therefore, allow CMA No.337/84 filed by Uzin in Suit No.383/84 and direct that the application under Section 34 of the Arbitration Act filed in Suit No.559/83 by Uzin wilt be treated as part of Suit No.383/1984.

The application under Section 34 of Arbitration Act (CMA No.3947/83) filed in Suit No.559/83 is resisted by Iftikhar on the following grounds: ‑

(1) That the application under Section 34 of the Arbitration Act filed by Uzin is not maintainable in Law as Uzin themselves instituted legal proceedings (Suit No.559/83), in this Court in contravention of the arbitration clause in the agreement which shows that Uzin was not willing and ready to give effect to the Arbitration clause.

(2) That all evidence in the case is available at Karachi, while forum of arbitration proceedings is a foreign country and, therefore, it will be practically impossible for Iftikhar to produce all the evidence before the Arbitrator.

(3) That Uzin has taken steps in the proceedings since the filing of the counter‑claim by Iftikhar, and, therefore, they cannot be heard in support of their application under Section 34 of the Arbitration Act.

The learned counsel for Uzin in reply to the above contentions urged that the filing of the Suit No.559/83 by their client was in extreme and urgent necessity which did not debar Uzin from resisting legal proceedings by Iftikhar on the‑ground of existence of arbitration agreement between the parties. That counter‑claim made in Suit No.559/1983 by Iftikhar had no connection with the claim made in Suit No. 559/1983. That filing of Suit No. 559 of 1983, by Uzin is only relevant to determine whether Uzin were willing and ready to do all, that was necessary for the conduct of arbitration proceedings. With regard to objection of Iftikhar that all the evidence in the case is at Karachi, which cannot be produced before foreign arbitral forum named in the agreement and, therefore, stay should be refused in view of my decision in the case of Akbar Cotton Mills Limited reported as 1984 CLC 1605, the learned counsel for Uzin firstly stated that the facts of the reported case cited above are quite distinguishable from the facts of the present case and secondly, it is urged that it has not been laid down as a rule in Akbar Cotton Mills' case that whenever, the arbitration clause provided for arbitration in a foreign country and evidence is available in the country where legal proceedings is commenced the Court must as a rule refuse to stay the legal proceedings on the application under Section 34 of the Arbitration Act. It is not necessary to go into this last contention of the parties in the present case as in my opinion the present application can be disposed of on other contention raised by them.

As stated earlier the counter‑claim in Suit No.559/83 was submitted by Iftikhar on 3‑10‑1983 and the same day copy was supplied to Uzin. The Additional Registrar (O.S.) granted one month's time to Uzin on 3‑10‑1983 to submit their reply to the counter‑claim of Iftikhar but when the suit came up before the Court on 3‑11‑1983, the parties jointly took time from the Court upto 7‑11‑1983 to work‑up a compromise in the case. On the same date Iftikhar also submitted and application for amendment of their counter‑claim of which Notice was waived by Uzin. On 10‑11‑1973, when the matter again came up before the Court for hearing, the parties filed an application under section 151, C.P.C. dated 8‑11‑1983 which reads as under:‑

"It is respectfully submitted that the plaintiff and the defendant have reached a settlement as follows:‑

(1) That defendant agrees not to remove any constructional plant, or machinery and equipment etc (subject‑matter of injunction application) from the site for such period as it is required for the works. it is further agreed that EMM 30 batching plant may be removed after four months/120 working days V the slip forming of the remaining silos has been completed.

(2) The defendant undertakes to abide by clauses 20, 30, 32 and other provisions of the contract dated 29‑12‑1980. In the event the defendant fails to fulfil its contract obligations towards the plaintiff, the pliantiff will apply to this Hon'ble Court for appropriate orders.

(3) The defendant will file an amended counter‑claim, if any, as soon as possible. The plaintiff, however, reserves all its rights and defences in respect of the counter‑claim as it has not joined issue /proceedings on this point nor adverted to it during the hearing of the injunction application.

It is, therefore, respectfully prayed that this Honourable Court may be pleased to dispose of the application under Order XXXIX filed by the plaintiff and the application under Order VI, Rule 17 filed by the defendant on the above‑mentioned terms."

On the basis of above application the court disposed of the interim application filed by Uzin in Suit No.559/83 as well as the application for amendment of counter‑claim submitted by Iftikhar as follows:

" C.M.A. 3089/83.

Mr. Sharif for plaintiff.

Mr. Kamal for the defendant.

The two learned counsel have filed application that plaintiff and' defendant have reached some settlement which has been mentioned in the application. Mr. Sharif states that the application may be disposed of in terms of the application. Application filed today recording the compromise may be taken on record.

CMA No.3089/83 disposed of with no order as to costs.

Sd/‑10‑11‑198

3. Judge.

Mr. Sharif for Plaintiff

Mr. Kamal Azfer with Mr. Zaheer Riaz for the defendants. C.M.A. No.3763/83 Application granted by consent.

Sd/-

Judge"

It is quite clear from the above‑stated facts that besides instituting Suit No.559/83 in this Court seeking reliefs in respect of a dispute which arose under the contract which is subject‑matter of both the above suite and which contained an arbitration clause for settlement of all disputes arising under it; Uzin took following steps in the proceedings after filing of counter‑claim by Iftikhar. On 3‑11‑1983 Uzin joined Iftikhar in asking the Court for time to work up a settlement in the case and waived notice of application under Order VI, Rule 17, C.P.C. filed by Iftikhar "for amending the counter‑claim, On 10‑11‑1983, Uzin filed application dated 8‑11‑1983 jointly with Iftikhar in Court which shows an unconditional submission of parties, to the jurisdiction of this Court and intention, on the part of Uzin to contest the counter‑claim of Iftikhar. The above actions on the part of Uzin, in m3‑ opinion, amounted to taking of steps in the Proceedings within the meaning of section 34 of Arbitration Act, which disentitled them to stay of suit. It is settled law that the party applying for stay of legal proceedings in a Court under Section 34 of the Arbitration Act must show that he has neither filed written statement in the case nor has taken any step in the proceedings. The expression "taking any other steps in the proceedings" is of general nature and has a wide import. It would include in its meaning any action by the party which would amount to his participation in the proceedings or its further progress. It would also include any step by the party which would show that he has acquiesced in the jurisdiction of the Court. In the present case the steps taken by, Uzin so far show both their acquiescence in the jurisdiction of this Court as well as participation in the proceedings and promoting its ' further progress. The learned counsel for Uzin referred to the case, Chapel v. North (1891) 2 QB page 252 to contend that filing of a suit by a party in contravention of arbitration clause by him could not a bar for applying to stay the counter‑claim under Section 34 o the Arbitration Act. It is not necessary to examine here the above contention of learned counsel as otherwise I have reached the conclusion that the actions taken by Uzin in the case after filing of counter‑claim by Iftikhar, amounted to steps in the proceedings which disentitled Uzin to seek stay of proceedings under Section 34 of the Arbitration A ct.

I accordingly reject the application under Section 34 of the Arbitration Act, filed by Uzin but grant two months time to them to file their reply to the counter‑claim. There will be no order as to costs.

H . B . T . / U‑9 / K. Stay application rejected.

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