ORDER SHEET

IN THE HIGH COURT OF SINDH, KARACHI.

 

                                          Suit No.1494 of 2020

(Pak Airlift Aviation Services Vs. Gulf Air B.S.C. & another)

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Date                           Order with Signature of Judge      _________________.                                                     

 

1.         For hearing of CMA No.10021/2020.

2.         For hearing of CMA No.10022/2020.

3.         For hearing of CMA No.10744/2020.

 

 

Dates of hearing:               10.11.2020,  12.11.2020, 17.11.2020, 20.11.2020 and 24.11.2020.

 

 

M/s. Rasheed A. Rizvi, Tahmas Rasheed Rizvi and Nabeel Ahmed Khan, advocates for the plaintiff.

 

M/s. Chaudhary Faisal Nawaz and Amna Salman, advocates for the defendant No.1.

 

Muhammad Imran Aslam, Finance Manager of the defendant No.2 Company.

 

                                                       _______________

 

 

SYED HASAN AZHAR RIZVI, J:-  Plaintiff has filed the present suit for declaration and injunction against the defendants. Plaintiff has filed two applications, one bearing CMA No.10021/2020 under Order XXXIX Rules 1 and 2 read with Section 151 CPC and another bearing CMA No.10022/2020 under Section 151 CPC. Both applications were fixed in Court on 07.10.2020 when order was passed for the issuance of notices upon defendants for 09th October, 2020. Both defendants were duly served. On 09.10.2020 Mr. Shahjahan, advocate appeared on behalf of defendant No.1 alongwith Aamir Akram Administration & Recruitment Specialist, Pakistan and Muhammad Imran Aslam, Manager Finance appeared on behalf of defendant No.2. Request for time was made on behalf of defendant No.1 for filing counter affidavit whereas representative of the defendant No.2 requested for time to engage their counsel. Time was granted to both the defendants and matter was adjourned to 22.10.2020 as suggested by the defendants counsel / representative. However, defendant No.1 was directed to immediately restore the ID of the plaintiff blocked on 09.09.2020.

 

2.         It transpired from the record that against the order passed in this suit on 09.10.2020, the defendant No.1 preferred High Court Appeal bearing No.191/2020 and by the order of the Division Bench of this Court dated 20.10.2020 said Appeal was dismissed. Concluding paragraph of the order passed in the High Court Appeal, referred to above, is being reproduced hereunder :-

“We see no cogent reason as to why a less tempered approach ought to be adopted by a Divisional Bench of this Court seized of an appeal against an interim order made on the Original Side. As such, keeping in view that the impugned Order is evidently interim in nature, we are not inclined to interfere at this stage.  The Appellant may contest the pending Application(s) before the learned single Judge and would be at liberty to move its own Application under Order 39 Rule 4 CPC if so desired or adopt any other legal course deemed expedient. As such, this High Court Appeal is to be dismissed, alongwith the listed miscellaneous application”.

 

On 17.10.2020 the defendant No.1 filed CMA No.10744/2020 under Section 4 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 but this fact was not disclosed by the counsel for the defendant No.1 at the time of hearing of High Court Appeal on 20.10.2020. On 03.11.2020 when the matter was fixed in Court learned counsel for the defendant No.1 stated that she has already provided copy of CMA No.10744/2020 to the learned counsel for the plaintiff. On that date learned counsel for the plaintiff stated that the documents as referred to in the CMA No.10744/2020 were not supplied to them whereupon learned counsel for defendant No.1 stated that all the documents which are referred to in aforementioned application are already enclosed alongwith MoP. Learned counsel for the plaintiff stated that he was under the impression that he will obtain photocopies of the documents referred to in the CMA No.10744/2020 therefore, he sought time to file counter affidavit. Two days’ time was allowed to the learned counsel for the plaintiff to file the counter affidavit. It was noted that alongwith the application bearing CMA No.10744/2020 filed by the defendant No.1 documents are shown to be attached as annexures but not a single documents has been enclosed with the application and its affidavit, even no reference of such documents as given in the plaint or any affidavit of the plaintiff.   

 

3.         Brief facts of the case are that the plaintiff was appointed as Cargo Sales Agent (CSA) for Pakistan with effect from 01-06-2011 for a period of 06 months or until the execution of Cargo General Sales Agreement whichever comes first. Later on, Cargo General Sales Agreement was signed and executed for the period of three (03) years from 01-10-2011 to 30-09-2014. Copies of both the said GSA Agreement are annexed hereto and marked "P/2A" and "P/2/8" with the plaint. Cargo General Sales Agency Agreement between the plaintiff and defendant No.1 was extended for further period of three (03) years from 01.10.2014 to 08.09.2017. Copy thereof is enclosed as annexure "P/3" with MoP.  In terms of Article 1.1 of the said "CGSA Agreement", Defendant No. 1 appointed the Plaintiff as its Sole General Sales Agent (GSA) for Cargo Sales in Pakistan and as per Article 1.2.1 of the said "CGSA Agreement", the defendant No.1 shall not appoint any other person, firm or company as its General Sales Agent (GSA) for Cargo Sales in the territory during the period of the said “CGSA Agreement”.  As per Article 3.1 of the "CGSA Agreement", the said "CGSA Agreement" shall be deemed to have commenced on 01.10.2014 and shall continue in full force and effect for a fixed term from and including the effective date to and including 08.09.2017. As per Article 34.2.2 of the "CGSA Agreement", the seat of legal place shall be Karachi, Pakistan. As per Schedule "C" to the said "CGSA Agreement", it was agreed that the sales offices to be provided by the Plaintiff in the Territory readily identifiable as offices of the Defendant No.1 pursuant to Article 4 of the said "CGSA Agreement". In terms of the said Schedule "C" to the said "CGSA Agreement", the Plaintiff established Head Office at Karachi and other offices at Lahore, Islamabad, Peshawar, Sialkot and Multan as per particulars disclosed in the list of Pakistan GSA Offices. Copy thereof is enclosed as annexure "P/4" with MoP. As per Schedule “C” to the said “CGSA Agreement” the plaintiff appointed staff as per list of staff. Copy thereof is enclosed as annexure “P/5” with MoP. Cargo Amendment Agreement between the plaintiff and defendant No.1 was further extended / executed for a period of three years from 09.09.2017 to 08.09.2020 (hereinafter referred to as “Third Agreement”). Copy thereof is enclosed as annexure “P/6” with MoP. As per Article A of the Third Agreement, Defendant No.1 and the Plaintiff entered into the "CGSA Agreement", pursuant to which the Plaintiff was appointed as the Sole General Sales Agent (GSA) of the Defendant No.1 for Cargo Sales in Pakistan for a period of three (03) years, which term expired on 08-09-2017. As per Article B of the said Third Agreement, the Defendant No.1 and the Plaintiff wish to formally amend the term in accordance with the terms and conditions of the said Third Agreement. As per Article 2.1 of the said Third Agreement, the Defendant No.1 and the Plaintiff agreed that with effect from 09-09-2017 the term of the said "CGSA Agreement", shall be extended for a further period of three (03) years commencing on 09.09.2017 and ending on 08.09.2020. According to Article 3.1 of the said Third Agreement, all other terms and conditions of the said "CGSA Agreement" shall continue with full force and effect without any other changes. On 15.03.2020, the Plaintiff received an email from the Defendant No.1 wherein it was stated that the current Third Agreement was due to expire on 08.09.2020 and as per the instructions of Bahrain Tender Board, any contract exceeding 5 years must go through Tender Process and asked the Plaintiff in its interest to participate in the tender. Plaintiff immediately confirmed its interest. Copies of the both emails received by the plaintiffs from the defendant No.1 and the reply sent by the plaintiffs are enclosed as annexure “P/7” with MoP. Thereafter COVID-19 Pandemic was spreading from February 2020 in all over the world and during the COVID-19 Pandemic the plaintiff received an email from the defendant No.1 on 07.05.2020 wherein it was stated that looking at the current COVID-19 situation, the Defendant No. 1 would be renewing the current contract for six (06) months from 09.09.2020 to 08.03.2021 and Tender will also be processed soon and further the Defendant No. 1 would like to know confirmation of the Plaintiff with a request to provide certain details as stated in the said email. Copies of both the said emails are annexed hereto and marked "P/8" with MoP. On 18.03.2020 the Plaintiff sent the required documents to the Defendant No. 1 and informed the Defendant No. 1 through email. Copy of the said email is annexed hereto and marked "P/9"  with MoP. Thereafter, on 08-07-2020 the Plaintiff received email from the Defendant No. 1 wherein it was requested that the Plaintiff may arrange to renew the current Bank Guarantee (BG) upto 06.06.2021 to cover the extension period and the plaintiff replied the email of the defendant No.1 on the same date. Copies of both aforesaid emails are enclosed as annexure “P/10” with MoP.  On 19.07.2020 the plaintiff sent Bank Guarantee (BG) to the defendant No.1 and informed the defendant No.1 by email, which was confirmed by the Defendant No.1 through email on 21.07.2020. Copies of both the said emails are enclosed as annexure “P/11” with MoP. On 09.09.2020 the Plaintiff's Cargo System Access ID were blocked and the Plaintiff was unable to access GF Software (Cargo Spot) for booking and operational matter. Upon inquiry through email, the Defendant No.1 informed through email that this was related to contract validity and therefore liaise with Aisha, concerned officer of the Defendant No. 1, to check with GF I.T. Then, the said concerned officer of the Defendant No.1 informed the Plaintiff that due to contract expiry issue and till its sorted out, she will reopen plaintiff’s IDs for one day to clear on hand and pending completion of airway bills and no fresh booking to be accepted. From 10.09.2020 to 13.09.2020, the plaintiff and the defendant No.1 exchanged correspondence with each other through email. Finally on 14.09.2020, the plaintiff received email from the defendant No.1 wherein it was stated that due to the current GSA / CSA new implemented procedure any contract cannot be extended if it is over 5 years and all should follow the new renewal process and therefore all the system access have been stopped. Ultimately, the Plaintiff came to know on 17.09.2020 that the Defendant No. 1 has illegally and unlawfully and in utter violation of the said "CGSA Agreement", the said Third Agreement and further renewal of contract on 07.05.2020, appointed the defendant No.2 CSA for Gulf Air Cargo in Pakistan. Plaintiff sent emails from 09.09.2020 to 30.09.2020 to the defendant No.1 but none of them was replied by the defendant No.1. Copies of emails from 09.09.2020 to 30.09.2020 sent by the plaintiff to the defendant No.1 are enclosed as annexure “P/12” with MoP. As Defendant No. 1 renewed the current contract for six (06) months from 09.09.2020 to 08.03.2021 in terms of its email dated 07.05.2020 enclosed as annexure “P/8” with MoP, as referred to above and accepted fresh Bank Guarantee (BG) from the plaintiff, the conduct of the defendant No.1 showing that the defendant No.1 resiled from its commitments by taking summersault. It was also averred in the plaint that the action of the defendant No.1 to block the plaintiff’s Cargo System Access IDs since 09.09.2020 was / is in utter violation of the said “CGSA Agreement”, the said Third Agreement and further renewal of contract on 07.05.2020. It was also submitted by the plaintiff in the plaint that the plaintiff’s outstanding performance and meeting the targets / budgets, the plaintiff has complete infrastructure in Karachi, Lahore, Islamabad, Peshawar, Sialkot and Multan including fully furnished and equipped offices, professional and trained human resource teams exclusive for GF Cargo and there was no complaint regarding the performance of the plaintiff but in fact the plaintiff has over achieved the target every year. Report reflecting the target and actual performance of the plaintiff is enclosed in annexure “P/13” available with MoP. It was further averred in the plaint that despite lockdown in Pakistan during COVID-19 Pandemic the plaintiff retained all the staff and offices in Pakistan. Despite the fact that since 22.03.2020 Pakistan's Air Space was closed and there was no income to the Plaintiff to cover even salaries of the staff, which situation is still not back to normal but the Plaintiff was/is committed to serve the Defendant No. 1 at the same standard with complete team and infrastructure based on commitment to extend the agreement terms. Plaintiff made huge investment not only in infrastructure but also in human capital to appoint professionals, train them and retain throughout the tenure to serve GF Cargo. Not only this, but the Plaintiff has also maintained very high standard in difficult time of COVID-19 and never reduced its staff while all other companies in the industry have either removed most of the staff or reduced their salaries or shut down their offices. Plaintiff supported the Defendant No. 1 by providing its prime property in Gulberg, Lahore on subsidized rental of Rs.2,22,872/-per month for show-casing GF Passenger office alongwith allowing GF Branding at the front elevation of the building without any additional cost as a gesture of goodwill and long term excellent relationship with the Defendant No. 1. It is further submitted in the plaint that due to COVID-19, the Defendant No.1 requested the Plaintiff to reduce the rent of the property, which was accepted by the Plaintiff, who reduced 50% rent for the month of April and 25% rent for the month 0l May 2020 and even then, the Defendant No. I has not yet paid rent of the said property since March 2020. It is also mentioned in the plaint that by the illegal and unlawful acts of the defendant No.1 the image and reputation of the plaintiff has been tarnished in the business circle and thus the Plaintiff’s Chief Executive and higher senior staff have suffered mental torture and agony therefore, the plaintiff is claiming damages against the defendant No.1 due to loss of their reputation, which cannot be determined in term of the money.

4.         Defendant No.1 on 17.10.2020 filed an application bearing CMA No.10744/2020 under Section 4 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 in this suit for the stay of the legal proceedings as referred to in the agreement entered into between the plaintiff and defendant No.1 containing arbitration clauses, the application is supported with the affidavit of Ahmed Ali Hajeeh Ramadhan authorized signatory of the defendant No.1. There is no denial of the fact that the defendant No.1 appointed the plaintiff as its General Sales Agent for Cargo Sales in Pakistan and entered into “CGSA Agreement” between the plaintiff and defendant No.1 and the same was valid from 01.10.2011 to 30.09.2014 and fresh “CGSA Agreement” was signed on 01.10.2014, which was valid upto 08.09.2017. It was further admitted by the defendant No.1 that the defendant No.1 informed the plaintiff via email dated 15.03.2020 that their agreement was due to expire on 08.09.2020. As per instructions from the Bahrain Tender Board (BTB) the next “CGSA Agreement” would be awarded through the tender process and if the plaintiff was interested, they can participate in the tender process. In paragraph No.6 of the affidavit in support of the application the defendant No.1 has referred to an email dated 07.05.2020 sent to the Plaintiff stating therein that they would be renewing the Third Agreement from 09.09.2020 to 08.03.2021 due to COVID- 19 situation and the tender will also be processed. It was further stated in the affidavit that the Plaintiff through email dated 18.05.2020  requested the Defendant No. 1 to consider the extension of agreement for a longer period than six (06) months. It further reveals from the affidavit filed on behalf of defendant No.1 that the defendant No.1 asked the plaintiff to renew the Bank Guarantee for the extension / renewal of “CGSA Agreement”. However, as no approval for extension / renewal of the “CGSA Agreement” was received from BTB therefore, Third Agreement between the defendant No.1 and plaintiff was expired on 08.09.2020 and hence the defendant No.1 blocked ID of the plaintiff. It was further mentioned in the affidavit, that the plaintiff filed present suit maliciously in contravention of the Article 34 of the “CGSA Agreement” whereby the plaintiff has to approach for arbitration. It is further stated in the affidavit that the initiation of the legal proceedings in the present suit is in breach of contractual commitment on the part of the plaintiff and the suit is liable to be stayed.

5.         Plaintiff filed counter affidavit to the application of the defendant No.1 bearing CMA No.10744/2020 on 05.11.2020 wherein the plaintiff has stated for extension period from 09.09.2020 to 08.03.2021 was clearly mentioned in email dated 07.05.2020 sent by the defendant No.1 to the plaintiff, which shows that the defendant No.1 extended period of contract in view of the Covid-19 situation around the globe. It was further stated in the counter affidavit that it was mentioned in the email that the tender will be processed soon, which shows that that the defendant No.1 had accepted the extension period and were making arrangements at their end to accommodate the plaintiff for the extension period. It is also mentioned in the counter affidavit that subsequent exchange of emails coupled with the deposit of the Bank Guarantee clearly form offer, acceptance and consideration. Hence, a valid agreement has come in operation. It is further stated in the counter affidavit that no intimation or notice was ever received by the plaintiff from the defendant No.1 before blocking of the IDs of the plaintiff on 09.09.2020 therefore, abrupt and unwarranted blocking of IDs by the defendant No.1 was an uncalled for and unforeseen action. It is further stated in the counter affidavit that the unwarranted blocking of IDs by the defendant No.1 raised legitimate lawful rights of the plaintiff and as such the plaintiff had no remedy but to approach this Court and get the restraining orders against the defendant No.1 and the plaintiff has not instituted the present suit in breach of contractual commitment but the defendant No.1 who had breached the professional commitment by to extending the contract as was promised through email dated 07.05.2020. Plaintiff further stated in the counter affidavit that arbitration clause in the agreement is neither enforceable nor applicable to the extension of contract agreed between the parties after exchange of emails between the parties started from 07.05.2020.

 

6.         Affidavit-in-rejoinder was filed by the defendant No.1 to the counter affidavit of the plaintiff on 09.11.2020 wherein Article 38 of the “CGSA Agreement” has been referred, which stipulates that any modification and amendments to the agreement (which would include an extension) shall only be effective and binding if approved in writing and signed by the parties. Therefore, any email communication between the parties mentioning possible extension to the agreement does not satisfy the requirement in Article 38 of the “CGSA Agreement” signed between the parties. In reply to the preliminary legal objections in the affidavit-in-rejoinder at para (d) the defendant No.1 stated that all the documents as mentioned/ referred in the affidavit are the same which were annexed with the plaint by the plaintiff, upon which the defendant No.1 also relies, as stated in the affidavit, and attaching the same documents again and again amounts to duplication and nothing else. This statement is patently false as in the affidavit in support of the application filed by the defendant No.1 documents were shown to have been attached and marked as annexures in the affidavit in support of application bearing CMA No.10744/2020 but no reference of such documents or their annexures with the plaint / pleadings of the plaintiff has been referred to.

 

7.         I have heard Mr. Rasheed A. Rizvi, learned counsel for the plaintiff, M/s. Faisal Nawaz and Amna Salman, learned counsel for the defendant No.1 and perused the material available on record.

8.         Mr. Rasheed A. Rizvi, advocate for the plaintiff, who has also filed written synopsis in this suit, contended that the defendant No.1 has miserably failed to deny, respond to or provide any explanation or answer to all the assertions, averments and claims of the plaintiff as mentioned in the plaint especially paras 10, 11, 12, 13, 20, 21, 22, 23, 26, 27, 31, 32, 33 and 44 of the plaint as well as accompanying application whereas the defendant No.2, who has been served and represented by Muhammad Imran Aslam, Finance Manager of the defendant No.2 but has failed to file any counter affidavit to any of the pending applications in this suit filed by the plaintiff. He has urged that the defendant No.1 is not entitled to take any benefit from their blatant abuse of process and failure to adhere to the procedure; this amount to admission on their part. Learned counsel has submitted that pursuant to the “CGSA Agreement” plaintiff established Head Office at Karachi and other offices at Lahore, Islamabad, Peshawar, Sialkot and Multan. The services rendered by the plaintiff to the defendant No.1 was beyond satisfaction therefore, “CGSA Agreement” was extended thrice by the defendant No.1 without having any minute complaint. He further contended that contract was extended from 09.09.2020 to 08.03.2021 and has referred to exchange of emails between the plaintiff and defendant No.1. Learned counsel further submitted that no condition for extension of contract for six months from 09.09.2020 to 08.03.2021 was imposed by the defendant No.1 except to renew the Bank Guarantee, that was got renewed by the plaintiff. He further contended that the defendant No.1 kept the plaintiff in dark after a sudden closure of Cargo System Access IDs on 09.09.2020 without issuance of any notice and when the plaintiff came to know through its market sources that the defendant No.1 unlawfully and illegally contracted with the defendant No.2 as its General Sales Agent for region of Pakistan.  Learned counsel for the plaintiff urged that the plaintiff has completed the infrastructure to carry out cargo services in Karachi, Lahore, Multan, Sialkot, Peshawar and Islamabad and properly trained professionals to provide exceptional services to its customers. The plaintiff does not believe in downsizing and retained all its employees during the COVID-19 complete shutdown period.  He has further contended that the action of the defendant No.1 have seriously harmed the reputation of the plaintiff in the sector and have caused stress and anxiety to the plaintiff’s Chief Executive and higher senior staff. Learned counsel for the plaintiff has further submitted that the plaintiff has good prima facie case and balance of convenience lies in favour of the plaintiff and irreparable loss has been caused to the plaintiff by the illegal termination of the extended contract from 09.09.2020 to 08.03.2021 and blocking of the IDs. He has also submitted that “CGSA Agreement” was extended and same was already expired on 08.09.2020. He has referred to Section 4(2) of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 which infers that on an application under sub-section(1), the Court shall refer the parties to arbitration, unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. Per learned counsel for the plaintiff, the agreement containing the arbitration clause is inoperative and incapable of being performed the same has already expired on 08.09.2020. Learned counsel for the plaintiff has further contended that as per Article 34 of the “CGSA Agreement”, the governing law, in case of any conflict will be the Law of England, whereas the Arbitration shall be referred to and finally resolved by arbitration under the Bahrain Chamber for Dispute Resolution (BCDR) and the seat, or legal place, of arbitration shall be Karachi, Pakistan. Per learned counsel, the subject process is very cumbersome to initiate, participate and/ or to obtain any decision / award. Moreover, due to COVID-19 Pandemic approaching the Bahain Chamber of Dispute Resolution is neither safe nor feasible. Learned counsel has also urged that the defendant No.1 has not initiated the process of arbitration before BCDR as the sole aim / goal of the defendant No.1 is to solicit an order suspending the operation of the interim order passed by this Court and then to drag the plaintiff in a lengthy, tiring Arbitration which is in-capable of being performed, based on the anomalies in the Arbitration clause, which incapable of being performed. Per learned counsel, the defendant No.1 has come to this Court by filing application with unclean hands. He has further submitted that the defendant No.2 is not the signatory of the Arbitration Agreement. Per learned counsel, the defendant No.1 has admittedly entered into the agreement with the defendant No.2 for same purpose after 08.09.2020. Learned counsel for the plaintiff has also referred to Section 28 of the Contract Act, 1872, which reflects that any clause in an agreement which oust jurisdiction of the local Courts cannot be enforced and as such the same is void to such an extent. He has further contended that as per Section 9 of the Civil Procedure Code, 1908, the local Courts are empowered to try all suits of civil nature unless barred expressly or impliedly. He has also referred to Section 23 of the Contract Act, 1872 and submitted that the Bank Guarantee which was renewed by the plaintiff on direction of the defendant No.1 for the period of extension of contract amounted to consideration and as such on the basis of elementary principles of Contract Law, a valid contract subsisted between the plaintiff and the defendant No.1. Per learned counsel, the filing of an appeal against restraining order passed in this Suit before a Division Bench of this Court amounts to taking of a positive step in the proceedings therefore, the defendant No.1 ought to be estopped from committing a summer-sault argument that this Court does not have any jurisdiction to entertain the case due to a Foreign Arbitration clause. Learned counsel for the plaintiff further contended that the plaintiff came to know on 17.09.2020 that the defendant No.1 has illegally and unlawfully and in utter violation of the “CGSA Agreement” appointed defendant No.2 as General Sales Agent. Learned counsel for the plaintiff further contended that the defendant No.1 has shown sheer malice, unprofessional and unethical attitude towards that plaintiff by blocking of IDs of the plaintiff and giving contract to the defendant No.2 while keeping the plaintiff in dark and hanging. Learned counsel for the plaintiff further submitted that the plaintiff owns and operates the Agency of the defendant No.1 and under operation of such agency have direct interest in the property which forms part of the Agency. The plaintiff has offices all over Pakistan alongwith trained and experienced team to operate services. Interest in the property as being a question of facts is to be determined based on the actual / present status of the agent and the principle and the interest in the property can be developed overtime and if such an interest in the property of the Agency is created the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest. He further submitted that the application filed by the defendant No.1 for staying the matter of the present suit bearing CMA No.10744/2020 is to be dismissed while injunction application filed by the plaintiff is to be allowed and the interim order passed earlier is to be confirmed. In support of his submissions, he has placed reliance upon the cases reported in PLD 1972 Karachi 119, 1986 CLC 1408 Karachi, 1999 MLD 2881, PLD 1970 SC 373, PLD 1978 Karachi 273, PLD 1985 Karachi 745, 1996 SCMR 690, PLD 1986 Karachi 01, 1984 CLC 1643 and PLD 1952 Dacca 22.

 

9.         M/s. Chaudhary Faisal Nawaz and Amna Salman, advocates for the defendant No.1 argued the matter and filed written synopsis. Learned counsel for the defendant No.1 in support of his application submitted that the contents of paras-2, 3, 4 and 10 of the affidavit in support of application under Section 4 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 are not denied by the plaintiff in its counter affidavit and he contended that they have highlighted / replied the same in paragraph No.8, 9 and 16 of their affidavit-in-rejoinder. Learned counsel for the defendant No.1 has placed reliance upon Article 38 of the “CGSA Agreement” dated 01.10.2014 at page-203 and submitted that any modification of this agreement was only be effective and binding if approved in writing and signed by an authorized representative of each party therefore, per learned counsel any email communication between the parties mentioning a possible extension to the Agreement does not satisfy the requirement in Article 38 of the “CGSA Agreement”. Learned counsel further submitted that the defendant No.1 with regard to the email communicated between the parties stated that extension of agreement was under discussion and the same was subject to approval from Bahrain Tender Board and same was not finalized and has not been taking the shape of an amendment agreement and signed by both the parties in confirmation with Article 38 of the “CGSA Agreement” dated 01.10.2014 at page 199 and referred to different articles / clauses of the agreement. He urged that the Court under the obligation to stay the proceedings of this suit and to refer the matter for arbitration. He has referred to cases reported in 2013 CLD 291 and 2015 CLD 1655. Per learned counsel, the appeals preferred in the aforementioned cases have been dismissed by the Honourable Supreme Court of Pakistan and the judgments in the cited cases were upheld. Learned counsel for the defendant No.1 submitted that interim order passed by this Court should have not been passed for the reason that Rules of Arbitration of the Bahrain Chamber for Dispute Resolution as in Article 26, provides for interim measures for protection and gives power to the Arbitration Tribunal to give an injunctive relief, hence the plaintiff instead of approaching this Court should have approached the Arbitration Tribunal and would have sought the injunctive order from the Tribunal in light of 2011 Act and interim order dated 09.10.2020 directing the defendant No.1 to unblock the IDs of the plaintiff may be recalled and the matter be referred to the arbitration. Learned counsel for the defendant No.1 has referred to case reported in 2019 MLD 856. Per learned counsel, the impugned order was passed on the basis of expired contract which was even otherwise not enforceable under Section 21(a) and (d) of the Specific Relief Act and an injunction cannot be granted under Section 56 Clause (f) of the Specific Relief Act. To support his contention he has placed reliance upon the case reported in PLD 1965 SC 83. Per learned counsel for the defendant No.1, for grant or refusal of temporary injunction the Court has to see that all the three ingredients i.e prima facie case, balance of convenience and irreparable loss must exist in favour of the party to whom the injunction is to be granted. He has referred to the case reported in 1998 SCMR 376. Learned counsel has submitted that the defendant No.1 entered into an agreement with the defendant No.2 on 14.09.2020 whereas the plaintiff filed present suit on 07.10.2020. At the time of filing of the present suit the IDs of the plaintiff were already blocked and the interim order dated 09.10.2020 regarding unblocking of the IDs of the plaintiff amounts to create new situation instead of maintaining the status quo on the date when the party concerned approaches to the Court. He has also placed reliance upon the case reported in 1997 SCMR 1508.

 

10.       I have given due consideration to the arguments advanced by the learned counsel for the parties, perused the material available on record as well as case laws cited by them with their assistance.

 

11.       There is no denial from either party that the plaintiff was the Cargo Sales Agent of the defendant No.1 from 01.06.20111 and the “CGSA Agreement” was extended from 01.10.2011 to 30.09.2014, then from 01.10.2014 to 08.09.2017 and again on 09.09.2017 to 08.09.2020. It reveals from the email sent by the defendant No.1 on 15.03.2020 (enclosed as annexure “P/7” at page-229) that any contract exists for five years must go through the Tender process. Another email of the defendant No.1 dated 07.05.2020 (enclosed as annexure “P/8” at page-231) reflects that looking at the current COVID-19 situation, the defendant No.1 was renewing the current contract for six (06) months (9th September 2020 to 7th March, 2021) and it was mentioned therein that the tender will also be processed soon. Plaintiff has also sent email on 08.05.2020 to the defendant No.1 (enclosed as annexure “P/9” at page-233) wherein the plaintiff requested to extend the contract for a longer period than six months, which will allow the plaintiff to ends in better way in the situation of Covid-19 appears longer than expected. Another email dated 08.07.2020 (enclosed as annexure “P/10” at page-237) wherein it is mentioned that the defendant No.1 were processing the renewal as agreed for six months and kept the plaintiff posted once the approval from BTB is received and informed the plaintiff to arrange renewal of Bank Guarantee upto 6th June, 2021 to cover extension period. On 19th July, 2020 before expiry of the contract the plaintiff confirmed through email that they have sent the Bank Guarantee to the defendant No.1. Photocopy of email is enclosed as annexure “P/11” at page-239 with MoP. Exchange of emails and their contents are not denied by either party to this suit and even there is nothing on record that the defendant No.1 has ever informed the plaintiff for not renewing the contract for six months from 09.09.2020 to 08.03.2021 or even to consider to appoint defendant No.2 as their Cargo Sales Agent. During the arguments learned counsel for the defendant No.1 has produced a photocopy of the Cargo Sales Agency Agreement entered into between the defendant No.1 and defendant No.2  bearing Contract No.87704, which was commenced on 15.09.2020. Article 27 thereof is relating to applicable law and jurisdiction, which is being reproduced hereunder:-

            “Article 27   Applicable Law and Jurisdiction.

27.1    This Agreement shall be governed by and construed in accordance with the laws of Pakistan.  

 

27.2    Any dispute arising under or in connection with this Agreement shall be subject to the exclusive jurisdiction of the court of Pakistan to which the parties to this Agreement hereby submit.

 

27.3    Notwithstanding the above, the parties agree that should any disputes arise under this Agreement they shall first endeavor to amicably resolve same through good faith negotiations between themselves.

 

 

12.       It is surprising to note that the defendant No.1 neither informed the fact of entering into the agreement with the defendant No.2 from 15.09.2020 till 14.09.2021 in the pleadings of the memo of High Court Appeal bearing H.C.A. No.191/2020 nor in the application bearing CMA No.10744/2020 filed by the defendant No.1. It appears that the defendant No.1 deliberately and intentionally suppressed / concealed this material fact not from this Court but also from the Appellate Court.

13.       Bare reading of Article 27 of the agreement entered into between the defendant No.1 and defendant No.2 it appears that it does not contain arbitration clause, which may be removed due to global scenario of spreading Covid-19 all over the world. Defendant No.1 strongly emphasis for referring the matter to the arbitration but the defendant No.1 made no effort to initiate arbitration proceeding during pendency of the agreement.

 

14.       As a matter of fact, if contentions and pleadings of the defendant No.1 are to be considered, according to the defendant No.1  there exists no relationship or agreement between the plaintiff and defendant No.1 after 08.09.2020 whereas the plaintiff’s claim is that the defendant No.1 has extended the period of agreement for six months from 09.09.2020 to 08.03.2021. Keeping in view of the Covid-19 situation all over the world as referred to in repeated exchange of emails between the plaintiff and the defendant No.1 with reference to the agreement, then referring the matter to the arbitrator and to stop proceeding of the present suit would be a futile exercise. On one hand the defendant No.1 and defendant No.2 have entered into a fresh agreement as referred to above, whereby agreement shall be governed by and construed in accordance with the law of Pakistan on the other for the extension of agreement from 09.09.2020 to 08.03.2021 the instance of the defendant No.1 is to refer the matter to the arbitrator. As per emails dated 15.03.2020 (Annexure “P/7”) of the defendant No.1, which contains that instructions of Bahrain Tender Board (BTB) any contract exceeds five years must go through the Tender process. In the instant case the plaintiff sought extension only for a period of six months from 09.09.2020 to 08.03.2021 for which no permission of Bahrain Tender Board in terms of email is required.

15.       Cases law referred / cited by the learned counsel for the defendant No.1 are not applicable directly relating to the matter in issue and the same are distinguishable from the case in hand.

16.       For the foregoing reasons, the application bearing CMA No.10744/2020 filed by the defendant No.1 is hereby dismissed and the interim order already passed on 09.10.2020 shall remain in operation upto 08.03.2021. Consequently, CMAs No.10021 and 10022 of 2020 filed by the plaintiff stands disposed of accordingly.

 

                                                                                                              JUDGE

Dated:    .01.2021.