Order with signature of Judge
1. For hearing of CMA No.8758/2007
2. For hearing of CMA No.8759/2007
3. For hearing of CMA No.9998/2007
4. For hearing of CMA No.865/2008
Date of hearing: 18-4-2008
Mr. Faisal Kamal, Advocate for the Plaintiff
Mr. K.B. Bhutto, Advocate for Defendant No.1
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This suit No.1357/2007 has been filed by Surgeon Munawar Ali Memorial Trust and Mrs. Durai Now Fatima Chishti Mujahid against Health Vision a society registered under the voluntary Social Welfare Agencies (Registration and Control) Ordinance 1961 through its General Secretary Dr. Muhammed Shafiq Thahim as Defendant No.1, Salani Welfare International Trust as Defendant No.2 and Province of Sindh through Home Secretary as Defendant No.3 for Declaration, Recovery and Permanent Injunction.
The case of the plaintiffs is that plaintiff No.1 is a charitable trust, which runs the Surgeon Munawar Ali Memorial Hospital situated at Plot No.159 Bahadurabad, of Sirajuddolah Road, Karachi. This property was allotted to and was owned by late Surgeon Munawar Ali, the father of the plaintiff No.2. He had from his own funds established the said hospital in which the present Trustees of the plaintiff legal heirs of Surgeon Munawar Ali had made investments and improvements from time to time. After the death of late Surgeon Munawar Ali the entire property along with construction thereon devolved upon his legal heirs. The plaintiff No.2 was appointed the Administrator of the property by order dated 06-9-2007 passed by the Sindh High Court in miscellaneous application No.95/2007. Plaintiff No.2 is the co-owner as well as co-trustee of the property. It is the case of the plaintiff that Dr. Shafiq Thahim, General Secretary of defendant No.1 had approached the plaintiffs and had offered his expertise for operating the plaintiff trust property i.e. the hospital in a more viable manner. The parties had entered into an agreement dated 01-8-2003, which is basically a licensed agreement, inter alia as, the plaintiff trust is also sharing certain portions of the hospital premises with defendant No.1. The property is in the joint possession of the plaintiffs as well as defendants. It is the case of the plaintiff that since last about two years prior to the filing of the suit the defendant No.1 had started gross violation of several clauses of the said agreement dated 01-8-2003 including non-payment of service charges for the use of said hospital premises since October 2005 till date. The plaintiffs have further stated in their plaint that cleanliness and hygiene of the hospital premises has been totally neglected with dump of garbage and un-kept garden. The top floor of the hospital has been converted into lockup for psychiatric and violent patients, which is causing nuisance for the neighbour hood. Huge arrears of electricity have been accumulated. Once the electricity was disconnected for sometime and, but, on serious protest from plaintiff’s side somehow or the other the defendant No.1 managed to get the connection restored. It is further stated that the defendant No.1 has made structural changes without written permission from the trust breaking down the laboratory and making unauthorized structure in the compulsory open space. It is stated that due to aforesaid breaches of the terms and conditions of the agreement the plaintiff No.1 through his counsel served a legal notice dated 17th June 2006 upon the defendant No.1 whereby the agreement dated 01-8-2003 was terminated with immediate effect and the defendant was called upon inter alia to clear the arrears of service charges and vacate the hospital premises within 30 days of receipt of the said notice and thereafter the present suit was filed on 10-10-2007.
On 29-10-2007 the Court has passed order, appointing Commissioner to examine the suit premises and submit his report along with the photographs in support of his report. The Commissioner has submitted his report according to order sheet dated 08-11-2007, the summon issued to the defendants No.1&2 were received duly served, but no one had appeared on behalf of the defendant. The report of the Commissioner was taken on record subject to all just exceptions.
By order dated 11-1-2008, the Court has again appointed Commissioner to inspect the said premises and to report with regard to any changes made after his earlier inspection, he was also directed to obtain the record of Psychiatric patients admitted in the hospital. By order dated 06-2-2008, the second report of the Commissioner was taken on record subject to all just exceptions with observations that the same will be considered at the appropriate stage. On 17-3-2008, four applications viz. CMA No.8758/2007 under Order 39 rule 1&2 CPC, 8759/2007, under Order 39 rule 1&2 CPC, CMA No.9998/2007 under Section 34 of Arbitration Act and CMA No.865/2008, under Section 94 CPC were fixed for hearing and I had heard Mr. Faisal Kamal, Advocate and Mr. Ahmed Pirzada the learned Additional Advocate General, Sindh. During the course of the arguments Mr. K.B. Bhutto, the learned Advocate for Defendant No.1 appeared and informed the Court that he was busy in another Court and as such he needs some tome to reply the contentions of the Advocates for the plaintiff as well as Mr. Ahmed Pirzada. Time was granted and matter was adjourned to 09-4-2008. On this date case was adjourned for want of time to 18-4-2008 when all the four applications mentioned above were listed for hearing. Mr. K.B. Bhutto at the very outset told the Court that he will argue CMA No.9998/2007 under Section 34 of the Arbitration Act and will not argue other applications as it will amount to entering into defence, which will prejudice his case. He states that he has not filed written statement, counter affidavit to any application as he does not want to enter into defence and claims that this suit is barred under Section 34 of the Arbitration Act. Mr. Bhutto has drawn the attention of this Court to the agreement dated 01-8-2003, which is at Page 79 of the Court file. He states that Clause-23 of the agreement is arbitration clause. He stated that only those paragraphs of the plaint concerning the dispute, which falls within arbitration clause No.23 of the agreement dated 01-8-2003 should be taken into consideration while deciding application under Section 34 of the Arbitration Act, 1940. He has referred to Para-4, 5, 6 and 9 of the plaint. He argued that Para-6 of the plaint states that agreement was terminated on 17-6-2006. Mr. Bhutto disputes termination on the ground that it is always a dispute and even termination is governed by clause 23 of the agreement, which provides arbitration. He argued that Para-9 of the plaint also speaks about dispute as it says that defendant No.1 has no authority. He has further argued that suit No.1166/2007 was already in field when the present proceedings were initiated despite of status quo order operating in the suit. The suit was before the VII Civil Judge East at Karachi. This fact has been mentioned in Para-10 of the plaint. He states that the present suit is the improved version of previous suit. He repeated his arguments mentioned earlier that he has not filed written statement or any counter affidavit as the same is amount to step in defending the suit and he loose the benefit of Section 34 of the Arbitration Act, 1940, which will vanish in such circumstances. Upon the question by the Court that whether he is licensee or a tenant, he replied that he does not want to disclose at this stage his stand on the controversy regarding status of defendant No.1 as licensee or as tenant because even a disclosure by the defendant No.1 at this stage will amount to defending the proceedings, which the defendant is not ready to do at any cost unless his application under Section 34 of the Arbitration Act is decided first. He has argued that Arbitration Act is for the public policy providing private forum to the parties in order to curtail Court proceedings. Mr. Bhutto had relied upon CLC 1990 Page 47. Mr. Bhutto had concluded his arguments by praying that the suit may be referred for arbitration to the Arbitrator as per Clause-23 of the agreement.
Mr. Faisal Kamal, Advocate on behalf of the plaintiffs in his reply arguments had stated that regarding paragraph No.10 of the plaint he has clearly mentioned that the suit is pending and he will withdraw the same. In support of his arguments he has relied upon PLD 1983 SC Page 344, relevant portion at Page 351 and 353. He has argued that new suit had included a para in respect of Bank fraud. He has argued that mere withdrawal of the suit will not amount to res judicata because the withdrawal was not on merits. He has argued that in the counter affidavit to this application the plaintiffs had clearly stated that Clause-23 is not an arbitration clause. It is vague and not specific. In support of his arguments he has relied upon 2003 YLR Page 1109 and 1112 E and 1997 CLC Page 1177 relevant portion at Page 1180 A. He has further stated that in the document called agreement nowhere word “agreement” has been used. The word “Arbitrator” has not been used, but the word “Umpire” has been used. He has stated that though word “Umpire” finds place in Arbitration Act, but it is in the circumstances when both parties appoint their respective Arbitrators and the Arbitrators reach on conflicting findings. He has argued that the word “Umpire” used in the present agreement is in different context and is vague as far as Arbitration Act is concerned. He has referred to Section 8 of the Arbitration Act. He has stated that the word “Arbitration” or “Arbitrator” has not been used in this agreement. Moreover the Arbitration can be only between the parties to the contract. In the present case Salani Trust and Government of Sindh are not the party to the contract. He has relied upon MLD 1993 Page 993. Mr. Faisal Kamal has argued that through this suit he has sought cancellation of agreement between Salani Trust and Dr. Shafiq. He has drawn the attention of the Court towards the psychiatric record, which is on pages 79 to 2003. He has referred to the notice of the plaintiff’s lawyer to defendant No.2 and has drawn the attention of the Court towards the Para No.2 of the notice, which speaks about the violation of terms and conditions of the agreement and default in payment of service charges, it also speaks about cancellation of the agreement vide notice dated 17-6-2006. Ann.G-1 to the plaint at Page 99 of the Court file is the memorandum of understanding (cooperation agreement). Mr. Faisal has argued about violation of clause-13 of the agreement as the premises was subletted to Salani Trust, who is the contesting party to this suit. He has stated that during inspection by the Commissioner the representative of Salani Trust were present. The Commissioner had omitted their names and such objections have been filed by him, which are on the record. He further states that defendant No.1 has not made any payment to the plaintiff since October 2005. During arguments he has relied upon MLD 1993 Page 993, MLD 1992 Page 2245, 1970 SCMR Page 234. In reply Mr. Bhutto has relied upon CLC 1990 Page 47.
Replying to the contentions of Mr. Faisal Kamal, Mr. Bhutto has stated that case law given by Mr. Faisal Kamal is not applicable. Section 10 of the Arbitration Act is applicable and not Section 8. Referring to Page 99 Ann.G-1 to the plaint he states that Dr. Shafiq had not signed the agreement. The legal position is that agreement not signed is not a concluded contract or agreement and has no legal evidentiary value and it cannot be used against any one without prejudice.
I have heard both the parties at length and have perused the entire record. In this case Court has passed several orders including order dated 29-10-2007 in which the Court has ordered that the defendant No.1 is restrained from parting with the possession of the Hospital with the defendant No.2. The inspection has been ordered twice by the Court, which was conducted and reports have been submitted, which are on record. There is a third party viz. Salani Trust as well as Government of Sindh. The word “Arbitration” or “Arbitrator” has not been used in the agreement and instead word “Umpire” has been used, which has totally different meanings. The defendant No.1 is not disclosing his status as to whether he is a tenant or a licensee. The agreement, which is subject matter of this case has already been terminated by one party. In such circumstances when agreement itself is a disputed document, its arbitration clause has no sanctity and cannot be invoked. Moreover one party has argued to the extent that in the document called agreement nowhere word “agreement” has been used. Word “arbitrator” has also not been used.
In the circumstances mentioned above I am of the firm opinion that application under Section 34 of the Arbitration Act is not maintainable and is dismissed. However, it is open for the parties to get an issue framed on this point at the trial stage and lead evidence if so advised.
CMA No.9998/2007 is dismissed with no order as to cost.