80 (DB) Quetta
Present: Jamal Khan Mandokhail and Ghulam Mustafa Mengal, JJ.
MUHAMMAD RABANI, SALES DIRECTOR DALDA FOOD (PVT.) LTD.,
& others--Appellants KARACHI
C.M. Appeal No. 15 of 2012, decided on 24.1.2013.
----Ss. 34 & 41--Civil Procedure Code, (V of 1908), O. XXXIX, Rr. 1 & 2--Interim restraining order--Jurisdiction of High Court for grant or refuse an injunction--Violated terms and conditions of agreement--Validity--Arbitrator(s) or Arbitration Tribunal does not have power to deal with request of an interim injunction, as provision of CPC are not applicable to arbitration proceedings--Powers of Court under Second Schedule of Act, can be exercised by issuing an interim orders for preservation and safety of subject matter of dispute--Mere filing of an application under Section 34 of Act or even stay of proceedings and referring matter to Arbitrator shall not precluded trial Court from dealing with injunction application--By invoking jurisdiction under Section 34 of Act, Court would not become functus-officio, if an interim relief claimed, falls within scope of Section 41 of Act. [P. 82] A
----O. XXXIX, Rr. 1 & 2--Arbitration Act, (X of 1940), S. 34--Interim restraining order--Violated terms and conditions of agreement--Defendant can contest an injunction application can file an application for setting aside an ex-parte order or decree or can file application for appointment of receiver--Not disentitled from claiming stay of suit and request for referring matter to arbitrators--Validity--Since application had not been decided finally and impugned order was interim in nature--Appellants might raise all these objections before trial Court, which should be decided in accordance with provisions of Order XXXIX Rule 1 and 2, CPC--Appeal was dismissed. [P. 82] B
Mr. Naseebullah Tareen, Advocate for Respondent No. 1.
Mr. Ayaz Sawati, Advocate for Respondent No. 2.
Date of hearing: 26.12.2012.
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 amount 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 CPC, against the appellants and Respondent No. 2 in the Court of Civil Judge-VII Quetta. The trial Court 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 slay the proceedings and to refer the matter to the Arbitrator as per clause-28 of the Arbitration agreement. At the same lime, the appellants feeling aggrieved from the interim injunction order, preferred the instant 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 extend the order impugned. He stated that even otherwise while granting the restraining order, the trial Court has failed to lake 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 agreement 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 counsel 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 case. 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 under Order XXXIX Rules 1 and 2, CPC 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 observed 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 respect 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 applicable 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 precluded 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 can 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 remaining 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 objections before the trial Court, which should be decided in accordance with the Provisions of Order XXXIX Rule 1 and 2 CPC.
Thus, in view of above, the appeal is accordingly dismissed. The trial Court is directed to decide the application finally in accordance with law, after providing opportunity of hearing to both the parties.
(R.A.) Appeal dismissed