2013 M L D 1083
[Balochistan]
Before Jamal Khan Mandokhail and Ghulam Mustafa Mengal, JJ
MUHAMMAD RABANI and 5 others ---Appellants
Versus
Agha ARSHAD through Imran Ali and another ---Respondents
C.M. Appeal No.15 of 2012, decided on 24th January, 2013.
(a) Arbitration Act (X of 1940) ---
----Ss. 34, 41(b) & Second Schedule ---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2 ---
Arbitration agreement ---Power to stay legal proceedings ---Scope ---Powers of the court under the
Second Schedul e of the Arbitration Act, 1940, could be exercised by issuing an interim order for
the preservation and safety of the subject matter ---Mere filing of an application under S.34 of the
Arbitration Act, 1940, or even stay of the proceedings and referring the matter to the Arbitrator
should not preclude the Trial Court from dealing with the injunction application.
(b) Arbitration Act (X of 1940) ---
----S.34---Expression "Any other step into proceeding" ---Connotation ---Expression was not
relatable to any st ep, action or inaction taken by the defendant during the proceedings of interim
applications but was applicable only to the proceedings of the main case.
Syed Ayaz Zahoor for Appellants.
Naseebullah Tareen for Respondent No.1.
Ayaz Sawati for Respondent No.2.
Date of hearing: 26th December, 2012.
JUDGMENT
JAMAL KHAN MANDOKHAIL, J. ---Facts of the case are that the respondent No.
1/plaintiff filed a suit for a specific performance of an agreement dated 31st May, 2007 and
recovery of an am ount of Rs.60,08,307 (rupees sixty lacs eight thousand three hundred and seven
rupees only) along with an application under Order XXXIX, Rules 1 and 2, C.P.C., against the
appellants and respondent No.2 in the Court of Civil Judge -VII, Quetta. The trial Co urt on the
first date of hearing i.e. 21st June, 2012 passed an interim restraining order against the appellants
and the respondent No.2. The appellants and the respondent No.2 filed an application under
Section 34 of the Arbitration Act, 1940 (hereinafter referred to as the 'Act') with a request to stay
the proceedings and to refer the matter to the Arbitrator as per clause -28 of the Arbitration
agreement. At the same time, the appellants feeling aggrieved from the interim injunction order,
preferred the i nstant appeal.
2. The learned counsel for the appellants states that in presence of the application for stay of
the proceedings filed by the appellants and the respondent No.2, the trial Court should not have
extended the order impugned. He stated that e ven otherwise while granting the restraining order,
the trial Court has failed to take into consideration the three ingredients for the grant of stay i.e.
prima facie case, irreparable loss, and balance of inconvenience. He further stated that the
agreemen t does not preclude the appellants from appointing the respondent No.2 as their agent
therefore, there was no occasion for the trial Court to pass the restraining order. The learned
counsel for the respondent No.2 supported the contention of the learned co unsel for the
appellants.
3. On the other hand, the learned counsel for the respondent No.1 opposed the contention
and stated that the appellants have violated the terms and conditions of the agreement, therefore,
the respondent No.1 has a prima -facie ca se. If the applicants are not restrained, the respondent
No.1 will suffer irreparable loss and will face inconvenience. The learned counsel further stated
that there is no bar on the trial Court for proceeding and deciding the injunction application, even
if the application under section 34 of the Act, is filed. The learned counsel states that the order
impugned is interim in nature and it has not so far been confirmed, therefore, the appellants
should have wait for the final decision upon the application u nder Order XXXIX Rules 1 and 2
C.P.C. filed by the respondent No.1.
4. We have heard the learned counsel for the parties and have gone through the record. To
deal with the jurisdiction of this Court for the grant or refuse an injunction, it may be observ ed
that under section 41(1) of the Act, the Code of Civil Procedure 1908, is applicable, Clause (b) of
the Act, provides that the Court shall have, for the purpose of, and in relation to an arbitration
proceedings, the same power of making an order in resp ect of any of the matters set out in the
second schedule of the Act, for the purpose of, and in relation, to any proceedings before the
Court. The aforesaid provision of the Arbitration Act, read with the second schedule of the Act
inter alia empowers the Court to grant or refuse an interim injunction. It is because of the fact
that the Arbitrator(s) or the Arbitration Tribunal does not have the power to deal with the request
of an interim injunction, as the Provision of Civil Procedure Code, 1908 are not a pplicable to the
arbitration proceedings. The powers of the Court under the Second Schedule of the Act, can be
exercised by issuing an interim orders for the preservation and safety of the subject matter of the
dispute, Thus, mere filing of an application under section 34 of the Act or even stay of the
proceedings and referring the matter to the Arbitrator shall not preclude the trial court from
dealing with the injunction application. The fact that by invoking the jurisdiction under section
34 of the Act, the court would not become functus officio, if an interim relief claimed, falls
within the scope of section 41 of the Act.
5. The defendant can contest an injunction application, can file an application for setting
aside an ex parte order or decree, or c an file an application for the appointment of a Receiver.
The same does not disentitle the defendant from claiming stay of a suit and request for referring
the matter to the arbitrator. The expression "Any other step into proceeding" used in section 34
of the Act, is not relatable to any step, action or inaction taken by the defendant during the
proceedings of interim applications, such expression is applicable only to the proceedings of the
main case, hence, the objection is overruled. As regards the remai ning grounds of the appellants,
suffice it to observe here, that since the application has not been decided finally and the
impugned order is interim in nature, therefore, we are not inclined to dilate upon the same. The
appellants may raise all these obje ctions before the trial Court, which should be decided in
accordance with the Provisions of Order XXXIX. Rules 1 and 2 C.P.C.
Thus, in view of above, the appeal is accordingly dismissed. The trial Court is directed to
decide the application finally in a ccordance with law, after providing opportunity of hearing to
both the parties.
AG/32/Q Appeal dismissed.This judgment is reproduced from a publicly available source for informational purposes and does not constitute legal advice. If you believe this listing contains an error,
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