1983 C L C 1630
[Karachi]
Before Saeeduzzaman Siddiqui and Fakhruddin H. Shaikh, JJ
Sh. MUHAMMAD MATIN-Appellant
versus
MRS. KHORSHED DOSU MARKER AND 8 OTHERS-Respondents
High Court Appeal No. 100 of 1981, decided on 11th November, 1982.
(a) Civil Procedure Code (V of 1908)-
---O. I, r. 10-Joining as plaintiff-Order of High -Court allowing res pondents to join as plaintiffs
in suit challenged on ground that no con sent was given by counsel for grant of application of
intervenors and that intervenors were not party to arbitration clause in lease agreement in
question and therefore they had no locus standi to be impleaded as party in arbitration
proceedings-Question of consent not very re levant when consent relates to point of law to be
decided on its own merits irrespective of consent of counsel and whether intervenors who were
not parties to arbitration clause, were entitled to be joined as parties in arbitration proceedings
being purely legal question, a Court if holds that strangers are not entitled to be impleaded as
parties, then in spite of consent of counsel, claim of intervenors can be rejected.
(b) Civil Procedure Code (V of 1908)-
--O. I, r. 10-Joining as plaintiff-Appeal-Consent of counsel on a point of law being not binding
on his client, appeal against order passed on this ground, held, cannot be held to be not
maintainable.
(c) Civil Procedure Code (V of 1908)---
--O. I, r. 10 read with Arbitration Act (X of 1940), S. 31(3)-Joining as plaintiffs - Question
whether strangers not being parties to arbitra tion agreement can maintain application under O. I,
r. 10, C. P. C. for being joined as parties simply on ground that during pendency of proceedings,
they had agreed to purchase property from owners being such parties to arbitration
proceedings-Held, application of strangers fox being joined as party does not relate to conduct of
arbitration proceedings nor does it arise out of arbitration proceedings and as such it cannot be
argued that application of-Strangers to arbitration agree ment for being joined as parties to
proceedings before Arbitrator can be said to fall under subsection (3) of S. 31.
Indra Narayan Kundu v. Nani Gopal Banerjee A I R 1946 Cal. 426 ref.
(d) Civil Procedure Code (V of 1908)--
--- O. I, r. 10-Joining. as plaintiffs-Sale agreement executed in favour of intervenors does not
confer any right - upon' them except to file suit for specific performance against vendors if later
refuses to perform their part and by virtue of sale-agreement intending pur chasers do not acquire
any vested right in property itself and they acquire right only against intending vendors to
maintain a suit either for specific performance or for damages for breach of contract.
Z.U. Ahmed for Appellant.
Mushtaq Ahmed Memon for Respondents.
Dates of hearing : 10th and 11th November, 1982.
JUDGMENT
FAKHRUDDIN H. SHAIKH, J.-This is a High Court Appeal from the order of learned Single
Judge of this Court in C.M.A. No. 2839/1981 in Suit No. 254/1975 dated 5th October. 1981. By
this order the learned Single Judge had granted the above C.M.A. which was for joinder of
respondents Nos. 6 to 9, the intervenors, as parties to the suit. The brief facts of the case which
led to the filing of the said C.M.A. may be briefly stated as under :
Respondents No s. 1 to 5 had granted lease for a period of 20 years in favour of the present
appellant and three others by a registered document dated 3rd June, 1943, in respect of a plot of
land bearing Survey No. 7/1 Sheet No. RB-8 measuring 2,864 Sq. Yards situated at Bunder
Road, Karachi. In fact the lease was granted by predecessor-in-interest of res pondents Nos. 1 to
5. These respondents have alleged that the said lessees have failed to comply with certain
conditions of the lease due to which they had become liable to eviction from the property in
question. The conditions, which the said lessees including appellant Shaikh Muhammad Matin,
are alleged to have violated are specified in para. 6 of the memo. of appeal, Respondents Nos. 1
to 5, therefore, invoked arbitration clause of the said lease agreement and made application under
section 20 of the Arbitration Act to this Court with the prayer that the matter may be referred to
the Arbitrators. This application was registered as Suit No. 255/75, and was disposed of by order
dated 9th October, 1977 when the matter was referred to the Arbitration of Mr. Mohsin
Tayyabali and Mr. S.M. Raza. In the meantime Mr. S. M. Raza died and an appli cation was
moved on behalf of the plaintiff for appointment of another Arbitrator in his place. At this stage
the respondents Nos. 6 to 9 filed application under Order 1, rule 10, C.P.C.
2. Respondents Nos. 6 to 9 have claimed that they have agreed .to pur chase the suit property
from the plaintiffs i.e. the present respondents Nos. 1 to 5. They, therefore, filed the application
being C.M.A. No. 2839/81 praying that they may be joined as plaintiffs in the suit. This
application was not contested by the plaintiffs /respondents Nos. 1 to 5. The defendant/ appellant
Sh. Muhammad Matin and others had filed counter-affidavits opposing the application of the
intervenors for being joined as plaintiffs. However, the learned Single Judge in the impugned
order stated that non of the defendants had filed counter-affidavits and that the learned counsel
for the defendants including the present appellant had not objected to the application. Therefore,
the application was allowed by the impugned order dated 5th October, 1981.
3. This order has been challenged on behalf of, the appellant on the ground that no consent was
given by the counsel for the grant of the application of the intervenors and that the intervenors
were not party to the arbitration clause in the lease agreement in question, therefore, they had no
locus standi to be impleaded as parties in the arbitration proceedings.
4. So far as the question of consent is concerned, Mr. Z. U. Ahmed learned counsel for the
appellant has argued that neither any consent was given for the grant of the application nor it is
correct that the intervenor's application was not contested by filing objections. He has on the
contrary drawn our attention to the objections filed to the intervenors' application on behalf of
the present appellant who has also filed an affidavit in support of the objections. It has, therefore,
been argued that the observations of the learned Single Judge that no objections have been filed
to the intervenors' application are not correct. It appears that the counsel who represented the
appellant and other co-lessees before the learned Single Judge did not point out the objections
and the counter-affidavits which were very mach on the file of Suit No. 254/1975.
5. It may be stated here that appellant Muhammad Matin has also filed a separate suit being Suit
No. 115/81 against the present plaintiffs for specific performance of sale agreement in respect of
the same property. This suit was based on a clause in the original lease deed that if the
respondents intended to sell the property in question, the appellant and the co-lessees shall have
the first option to purchase the same. In this suit also the present intervenors i.e., respondents
Nos. 6 to 9 had filed an application for being Joined as a party. Mr. Z.U. Ahmed learned counsel
for the appellant has stated that it was in that suit that concession was made in favour of grant of
the intervenors, application and that since both the suits were fixed on the same date, hence
perhaps, due to misunderstanding, the learned Single Judge recorded the consent of the counsel
in the present 'salt also in respect of grant of the application of the intervenors (respondents Nos.
6 to 9).
6. In our view the question of consent is not very relevant when the consent relates to a point of
law which is to be decided on its own merit irrespective of the consent of the counsel. The
question involved in the present case is whether the intervenors who were not parties to the
arbitra tion clause, were entitled to be joined as parties in the arbitration proceedings. This is
purely a legal question and if the Court ultimately holds that the strangers are not entitled to be
impleaded as parties in arbitration pro ceedings, then in spite of the consent of the learned
counsel in support of plea of the intervenors, the claim of the intervenors can be rejected. The
consent of counsel on a point of law is not binding on his client. The appeal, therefore, cannot be
held to be not maintainable on the ground that the impugned order was a consent order.
7. The point in question which falls for determination is whether strangers who are not parties to
an arbitration agreement, can maintain an application under Order I, rule 10, C.P.C. for being
joined as parties simply on the ground that during the pendency of the proceedings, they had
agree to purchase the property in question from the owners i.e., one of the parties to the
arbitration proceedings. It may be stated that Suit No. 254/75 was registered on an application
filed by respondent Nos. 1 to 5 under section 20 of the Arbitration Act. Under this section what
the Court is required to do is to decide the question of existence of the arbitration agreement and
if it comes to the conclusion that the arbitration agreement existed, then it shall make a reference
to the Arbitrators appointed by the parties whether in the agreement or otherwise or appointed by
the Court itself under subsection (4) After reference of the case to the Arbitrators, the Court
becomes functus officio except for limited purposes envisaged by the Act such as enlarging time
for making award or filling up vacancy of an Arbitrator created by death of an Arbitrator or
otherwise, so far as the arbitration proceedings are concerned ; because after the reference, the
arbitration "shall proceed in accordance with, and shall be governed by, the other provisions of
this Act so far as they can be made applicable", according to subsection (5) of the Arbitration
Act. In this connection reference may be made to the case of Indra Narayan Kundu v. Nani
Gopal Banerjee, (A I R 1946 Cal. 426) in which Edgley, observed as under
"Once a dispute goes to arbitration the authority of the Court to pro ceed with the suit is
suspended and it cannot, so long as the reference stands, deal with the subject-matter of the
reference."
In this connection Mr. Mushtaq Ahmed Memon learned counsel for the respondents has referred
to subsection (3) of section 31 of the said Act, which provides that all applications regarding the
conduct of arbitration proceeding or otherwise arising out of such proceedings shall be made to
the Court where an award has been or may be filed and to no other Court. It has been argued that
the application of the intervenors is covered by the above subsection and that the Court is
competent even after making the reference, to pass an order on the intervenors' application. We
are unable to agree with the learned counsel. Application of the intervenors for being joined as a
party does not relate to conduct of arbitration proceedings not does it arise out of the arbitration
proceedings. Therefore, it cannot be argued by any stretch of imagination that application of
strangers to arbit ration agreement, for being joined as parties to proceedings before the
Arbitrator can be said to fall under subsection (3) of section 31.
Mr. Mushtaq Ahmed Memon learned counsel for the respondents has further argued that the
intervenors are interested parties inasmuch as they have agreed to purchase the disputed property
from respondents Nos. 1 to 5 and that they are likely to be affected by any award which is made
by the Arbitrators. 1t has further been argued that the intervenors have become persons claiming
through owners of the property by virtue of the sale agree ment and, therefore, any award which
is made against the owners shall be binding upon the intervenors and as such they are entitled to
be heard on the principle of natural justice before an award is made by the Arbitrator. We are
unable to agree with Mr. Mushtaq Ahmed Memon. The sale agreement executed in favour of the
intervenors, does not confer any right upon them except to file a suit for specific performance
against the vendors if the latter refuse to perform their part. By virtue of the sale agreement the
intending purchasers do not acquire any vested right in the property itself. They acquire right
only against the intending vendors to maintain a suit either for specific performance or for
damages for breach of contract. We are unable to subscribe to the view that by virtue of the sale
agreement in their favour, the intervenors have acquired an interest in the property in question or
that they have stepped into shoes of the intending vendors i.e., respondents Nos. 1 to 5.
In view of this legal position we are unable to agree with the learned Single Judge that the
intervenors namely, respondents Nos. 6 to 9 were at all necessary parties or were entitled to be
joined as parties in the proceedings before the Arbitrators. The appeal is, therefore, allowed and
the application of the intervenors for being joined as parties to the proceedings is dis missed ; but
in the circumstances of the case there shall be no order as to, costs.
M. Y. M. Appeal allowed.
