ARSHAD ALI Versus SARWAT ALI ABBASI

ORDER

1. This is an application under section 34 of the Arbitration Act for stay of the proceeding in the suit. The plaintiff has filed suit for rendition of accounts and recovery of money on the allegations that in May 1981 the defendant approached the plaintiff for carrying on business of construction jointly. On 24‑12‑1981 the parties had entered into an agreement of partnership for carrying on the construction work, which was specified in the agreement. This agreement contains an arbitration clause that in case of any dispute between the parties the matter shall be referred to an arbitrator or arbitrators to be appointed by the parties decision of the arbitrator or arbitrators shall be final and binding between the parties.

2. After completion of the project the parties continued to work in partnership for other projects undertaken by them. It seems that there arose dispute between the parties in respect of which they' carried on correspondence. In the letter, dated 29‑7‑1985 the plaintiff stated that the defendant may refer the accounts to an Accountant or refer to arbitrator to whom record and accounts books may be given and the accounts may be finalized. But it seems that the defendant did not accept this proposal as there is no letter on the record nor any statement has been filed stating that this offer was accepted by the defendant. The plaintiff then filed the present suit.

3. Mr. Yousuf Zai the learned counsel for the defendant has contended that there is an agreement between the parties which can be spelt out from this letter and, therefore, the matter should be referred to the arbitrator. The existence of arbitration agreement has been denied by the plaintiff. Admittedly the arbitration clause in partnership agreement, dated 24‑12‑1977 was restricted to the dispute regarding project mentioned in it. It could be extended in respect of future works provided the parties would have agreed and specifically incorporating the arbitration clause. The defendant has only referred to plaintiff's letter referred above in which he wanted the accountant or the arbitrator to settle the accounts, but as the defendant did not accept this offer it became immaterial and it never ripened into an agreement. In these circumstances in my view there is no arbitration agreement between the parties.

4. The learned counsel for the defendant further contended that as the parties had carried on new business in terms and condition of the agreement, dated 24‑12‑1981 all its terms were operative. It is possible that impliedly the terms and conditions of agreement date 24‑12‑1981 may have been applied‑to the new transactions but by mere implication an arbitration clause cannot be incorporated in fresh agreement. If an arbitration clause is required to be incorporated in another agreement specific mention should be made to it. Referenc can be made to 1912 A C 1 and P L D 1983 Kar. (?)

5. Mr. Amir Malik the learned counsel for the plaintiff has contended that the defendant was never ready and willing for arbitration and therefore he has not fulfilled the pre‑condition for grant of such an application. It is true that in the correspondence prior to filing the suit the defendant has not shown any interest in arbitration but after filing the suit he seems to have shown his readiness and willingness but as observed earlier there is no arbitration agreement and, therefore, the question of readiness is of no consequence.

6. In the application under section 34 and affidavit the defendant has not stated the dispute between the parties and mere reference has been' made to the arbitration clause. This by itself is sufficient to cause dismissal of the application. Reference can be made to PLD 1958 Lah. 208. The application is dismissed.

7. H.B.T./A‑264/K Application dismissed