HIGH COURT OF EAST PAKISTAN
Civil Rule Nos. 643 & 644 of 1969
Decided On: 25.06.1970
Appellants: Hafiz Jute Mills Ltd.
Vs.
Respondent: Tribunal of arbitration, Narayanganj Chamber of Commerce & Industry & ors.
**Hon’ble Judges:**Maksum-ul-Hakim and Fazle Munim, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Rafiqul Huq
For Respondents/Defendant: Md. Fazlul Karim
Catch Words
Mentioned IN
JUDGMENT
Maksum-ul-Hakim, J.
-
These two rules are directed against the judgment dated 31.3.69 passed by the Subordinate Judge, 2nd Court, Dacca, in Title suits Nos. 108 and 109 of 1963 whereby the petitioner’s suits were dismissed with costs. The facts are similar in both these two rules and the parties are the same and they arise out of one judgment passed by the trial Court. Common questions of law and fact have been raised in these two rules and as such they are disposed of in this one judgment. The facts giving rise to these rules are as follows : The petitioners received two notices on 23.4.68 from the Registrar of the opposite party No. 1 wherein information was given that the opposite party No. 2 applied for arbitration of two disputes with the petitioner regarding the default made by the petitioner in complying with the terms of the contracts being numbered as KJBS/286 and KJBS/287 dated 15.11.67. The petitioner was directed in the aforesaid notices to file statements of their eases by 3.5.68 in the Case Nos. G-13 and G-16 of 1963.
-
Opposite party No. 2 complained to the opposite party No. 1 that the petitioner did not supply the goods as per alleged contracts and thereby caused loss to the opposite party No. 2 and accordingly, opposite party No. 2 required opposite party No. 1 to arbitrate the disputes between the petitioner No. 2, as per terms of those contracts.
-
In reply to these notices the petitioner denied having ever entered into any arbitration agreement with the opposite party No. 2 and accordingly challenged the jurisdiction of opposite party No. 1 to arbitrate into such allegations. It was further claimed that no oral or written agreement was entered into by the parties which could give rise to such a right to arbitrate in a dispute of this nature and as such the opposite party No. 1 had no jurisdiction to proceed with these arbitration cases. In spite of this protest by the petitioner, the opposite party No. 1 insisted to proceed with the arbitration cases. Accordingly, the petitioner filed the abovementioned suits under section 33 of the arbitration Act for declarations that no arbitration agreement existed between the petitioner and the opposite party No. 2 which gave jurisdiction to opposite party No. 1 to proceed with the aforesaid arbitration cases and also for permanent injunction restraining the opposite party No. 1 to proceed with the arbitration cases.
-
The trial court after considering the papers filed and the argument advanced by the parties held that section 33 of the arbitration Act could be availed of only by the persons who are parties to an arbitration agreement and as the petitioner denied having entered in the arbitration agreement itself and challenged its existence also as such the suit filed under section 33 of the arbitration Act were not maintainable at the instance of the petitioner. Other issues framed in the suits were not decided, as there was no necessity for the same after the decision of the first issue.
-
This decision of the trial Court has been challenged in these two revision cases.
-
Mr. Rafiqul Huq, the learned Advocate for the petitioner has contended that the trial Court acted illegally and with material irregularity in the exercise of his jurisdiction in holding that a person, who challenges the existence of the arbitration agreement, cannot be permitted, to file a suit under section 33 of the arbitration Act. He has contended that a person, who denies to have entered into any arbitration agreement, is also entitled to file such a suit. Mr. Fazlul Karim, the learned Advocate for the opposite parties, however, has contended that the view taken by the trial Court is perfectly legal and is supported by a decision of this Court in the case of Tafazzal Hossain Akon vs. Sakeluddin Akon and others PLR 4 Dacca 599.
-
Section 32 of the arbitration Act lays down that no suit shall lie on any ground, whatsoever challenging the existence, effect or validity of an arbitration agreement or award, it is further provided in this section that the only procedure for setting aside, amending and modifying any arbitration agreement or an award, can be done by following the procedure laid down in the arbitration Act. It is clear from the provisions of this section that filing of a civil suit as permitted under section 9 of the Code of Civil Procedure concerning an arbitration agreement or award has been expressly barred by this section. It is obvious, therefore, that we must look to the provisions of the arbitration Act for securing a redress concerning questions of existence, effect or validity of an arbitration agreement or award. Such a challenge is to be founded on other provisions of this Act. The following section, i.e. section 33 provides that any party to an arbitration agreement or any person claiming under him is permitted to challenge the existence, validity or effect of an arbitration agreement or an award can do so by filing an application supported by affidavit. The question that has arisen now is what is the correct meaning of the words “any party to an arbitration agreement” occurring in section 33 of the arbitration Act. In our opinion, this section has to be read along with section 32 and if we do so it will be apparent that the terms “any party to an arbitration agreement” means any person who is alleged to be a party to an arbitration agreement. There is no reason or any necessity to give a strict and narrow interpretation to this clause. The interpretation which is in consonance to the spirit of the Act is to be given. If we read this clause and interpret it in its ordinary plain meaning, then it will be obvious that the section confers the jurisdiction, to file an application, to any person who is alleged or shown to be a party in the arbitration agreement, even though the applicant himself may not agree to the fact that he is a party to the arbitration agreement and the very purpose of his coming to the Court may be to set at rest the question relating to the existence of such an alleged arbitration agreement. To say that a party, who does not admit the existence of the arbitration agreement is debarred from filing an application under section 33 of the Act in our opinion, goes contrary to the plain meaning of the words used in the section itself which provides that such an application can be filed “to challenge the existence” of such an agreement. In view of the above we respectfully disagree with the observations of Mr. Justice Imam Hussain Chowdhury as expressed in the case reported in 4 P.L.R. Dacca 599.
-
This point, in our opinion, has now been settled beyond any controversy by a decision of their Lordships of the Supreme Court In the out of M/S. Badri Narayan Agarwala vs. Messers Pak Jut Balers Ltd. 1970 22 DLR SC 45-PLD 1970 SC 43. Mr. Justice Sattar, while delivering the judgment of the Supreme Court observed as follows : -
The provisions referred to above clearly permit a party to an arbitration agreement to challenge the existence of such an agreement by filing an application under section 33 of the Act….
The fact that the applicant denied to have signed the contract will not disentitle him to challenge it under section 33 as the words “any party to an arbitration agreement” in that section include a party who is alleged to be a party to an agreement, but who challenges the existence thereof.
- Mr. Fazlul Karim, the learned Advocate, however, has argued that this decision of the Supreme Court is only applicable in a case where signature in the arbitration agreement is questioned and the total existence of the arbitration agreement is not made an issue. In our opinion, this argument is not tenable, as will be apparent from the decision itself. At page 45 of the report, their Lordships noticed the ease of the respondent and stated :
It was contended that the appellant never entered into the contract as alleged by the respondent.
-
Moreover, the principle, in our opinion, cannot apply differently when different types of denials are taken relating to the very existence of the arbitration agreement. In view of the above, we find that the contention of the learned Advocate for the opposite-parties has no substance.
-
Mr. Fazlul Karim further contended that the petitioner also prayed for permanent injunction in the suit filed under section 33 of the arbitration Act. It is argued by Mr. Fazlul Karim that such an order of injunction cannot be granted in a proceeding filed under section 33 of the arbitration Act. He has relied on a decision reported in 23 C.W.N. 811. The trial Court, however, did not express any final opinion on this point and held that other issues need not be gone into, as it was found that the suits themselves were not maintainable. In view of the above observation, it is not proper that we should express any final opinion on this point. It will, however be necessary to remember that no rigid opinion was expressed in the above case on this point. Moreover, the provisions of law, as it was prevalent, in 1919 when the above decision was given, does not appear to be the same as in the present arbitration Act of 1940. In view of the above, we find that the trial Court acted illegally and with material irregularity in the exercise of its jurisdiction in holding that the suits were not maintainable at the instance of the petitioner who challenged the existence of the arbitration agreement and we accordingly set aside the order.
The Rules are accordingly made absolute and the cases are sent back to the trial Court for disposal in accordance with law and in the light of the observations made above. The petitioner will get cost of these rules which we assess at Rs. 170/-(Rupees one hundred and seventy only), in all.