GHULAM MOHIUDDIN PARACHA and anothers vs AHMED NASEER KIIAWAJA

ORDER

1. ' The above application has been filed under section 34 of the Arbitration Act (X of 1940) for staying proceedings in the suit and referring the matter to arbitration in accordance with Article 20 (wrongly typed as Article 15) of the Deed of Partnership dated 2-7-1988.

2. ' Heard Mr. Ismail Kassim for the defendant and Mr. Hyder Raza Naqvi for the plaintiff.

3. ' The learned counsel for the plaintiff contended:

(i) The Arbitration clause contained in the Partnership Deed cannot be acted upon after dissolution of the partnership, as it stands superseded by the Deed of Dissolution and has become non- existent.

(ii) The said Arbitration clause is vague, inasmuch as no mode and method of arbitration has been provided for therein.

(iii) The defendants have taken other steps in furtherance of the proceedings in the suit, by having applied on 12-1-1994 and 9-3-1994 for time for filing written statement and are precluded from seeking reference of the dispute to arbitration under the arbitration clause.

4. ' In support of his contentions, learned counsel has relied on Khurshid Anwar v. Kaiser Arts & Crafts (1988 CLC 570). In the above authority, it has been observed as under:- "The cause of action in respect of relief retransfer/redelivery of the textile quota entitlement in favour of defendant No,1 as per contention of the plaintiff in the plaint accrued on 2-6-1984, namely, on the day when the application for the transfer of the said quota was signed by the plaintiff. This admittedly had been subsequent to the dissolution of the - partnership firm on 31-5- 1984 and hence the dispute could not by any stretch of reasoning be said to fall within the arbitration clause contained in the partnership deed dated 2-7-1983."

5. ' In the said judgment what was found by the learned Judge was that the dispute was beyond the scope of the partnership deed between the parties. In the present suit, the plaintiffs have alleged that they and the defendants were partners in the firm named and styled as Nowshera Koh-i-Noor Transport Company and that a bank account in the name of the firm was decided to be opened at National Bank of Pakistan, P.E.C.H.S. Branch, Karachi. According to the plaint, the parties dissolved the firm on 7-4-1993. It is then stated that on dissolution of the firm, plaintiff No,1 wrote to defendant No,1 to close the aforesaid account of the firm. The plaintiffs, however, subsequently came to know on inquiries made from the aforesaid-bank that the said account was riot a partnership account but a proprietary account in the name of defendant No,1. It was further learnt that defendant No,1 had in that account received a total sum of Rs,9,52,211,74 between 8-5-1993 to 6-7-1993 from the clients of Messrs Nowshera Koh-i-Noor Transport Company. The said amount was thus received after dissolution of the firm. It is thus the case of the plaintiff that the aforesaid bank account related to the partnership firm. The dispute therefore that has to be resolved is whether the aforesaid account was that of the partnership firm as alleged in the plaint. The dispute being thus relatable to the partnership, the arbitration clause contained in the partnership is attracted, despite the fact that the partnership firm has been dissolved. The authorities relied upon by the learned counsel for the plaintiff cannot be stretched to a general proposition to the effect that in case a partnership has been dissolved, the dispute between the parties although relates to the accounts of the partnership, would still be beyond the purview of the arbitration clause contained in the partnership deed merely because of the fact that the partnership firm stands dissolved. The first submission is therefore overruled.

6. ' It was next contended that the arbitration clause as contained in the partnership deed is vague as no mode or method of arbitration has been provided for therein. The said arbitration clause reads as under:-- "20. That in the event of any dispute arising between the partners regarding any interpretation or meaning of any clause or clauses of this deed or any account matter or any matter connected with this deed the same shall be referred to an Arbitrator appointed under the Arbitration Act prevailing at the time."

7. The reading of the aforesaid clause clearly shows that in case of a dispute in account matter or any matter connected with the Deed, shall be .Referred to an Arbitrator appointed under the Arbitration Act prevailing at the time. It clearly refers to appointment of a sole Arbitrator for resolving the dispute. The method that has to be adopted by the Arbitrator, it need not be said, would be the one as provided for under the Arbitration Act (X of 1940). This submission also being without any basis cannot be countenanced.

8. So far as the third submission is concerned, it was pointed out by the learned counsel for the defendants that in so far as defendant No,1 is concerned, time was sought for filing the written statement on 12-1-1994 and 9-3-1994 but in so far as defendant No,2 is concerned, Vakalatnama on his behalf was filed on 24-4-1994 and on that very day above application under section 34 of the Arbitration Act was filed on behalf of both the defendants.

9. ' Under the above circumstances, the application under consideration is maintainable by defendant No,2. The defendant No,2 cannot be deprived to have the matter referred to domestic Tribunal as agreed upon between the parties. The said application on his behalf is maintainable beyond any doubt whatsoever. If the matter is to be referred to the arbitration for one of the defendants and such defendant cannot be deprived of his legal right, it would be only just and proper and in consonance with equitable principles of judicial dispensation that technicalities in the way of such defendant should not be allowed to come. The application is therefore allowed.