Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Official Citation: 2025 IHC 448
Court / Jurisdiction: Islamabad High Court
Year of Decision: 2025
Decision Date: 2025-06-23
Parties: Capital Development Authority vs Habib Rafique (Private) Limited
Ruling Summary: This decision was rendered by the Islamabad High Court on 2025-06-23, officially reported as 2025 IHC 448. In this matter between Capital Development Authority and Habib Rafique (Private) Limited, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as 2025IHC448
Court Name: Islamabad High Court Judge(s): Muhammad Azam Khan, Khadim Hussain Soomro, Inaam Ameen Minhas Title: Capital Development Authority vs Habib Rafique (Private) Limited Case No.: FAO No. 07 of 2022 Date of Judgment:2025-06-23 Reported As: 2025 IHC 448 Result: Appeal Disposed of
JUDGMENT
JUDGMENT INAAM AMEEN MINHAS, J:- Through the instant appeal, the appellant/Capital Development Authority ("appellant CDA") impugns the Arbitration Award dated 20.08.2018 and the order and decree dated 18.12.2021 ("Impugned Order") passed by the learned Civil Judge 1st Class Islamabad (West) ("Trial Court"), whereby the objections filed by the appellant CDA were dismissed and the arbitration Award was made rule of the Court in terms of the findings of the learned Sole Arbitrator. 2. The facts, in brief, leading to the filing of the instant appeal are that pursuant to a Letter of Acceptance dated 09.05.2011, the respondent/Claimant i.e. M/s Habib Rafiq Pvt Ltd. ("respondent") was awarded a contract by the appellant CDA for the construction of 104 family suites for members of the Parliament, including 500 servant quarters, at an agreed contract price of Rs.2,728,451,079/-, with a stipulated completion period of 910 days commencing from 23.05.2011 and ending on 18.11.2013, as formalized by an agreement dated 23.10.2011. Following commencement of the work, various disputes arose between the parties, inter alia, withholding of mobilization advance, extension of time, delayed issuance of drawings, belated valuation of variations, unauthorized instructions, imposition of liquidated damages, termination of contract and encashment of guarantees, which culminated in the filing of a civil suit by the respondent and the grant of interim relief by the learned Trial Court. Subsequently, the parties executed a Deed of Settlement dated 22.05.2015, agreeing to refer eight specific disputes, as detailed in paragraphs B and H of the Settlement Deed, to arbitration under Clause 67.3 of the Conditions of Contract, with the appointment of Mr. Justice Nasir Aslam Zahid (Retired) as Sole Arbitrator by mutual consent. The arbitration proceedings were duly conducted, evidence was led and the learned Sole Arbitrator
---
## Page 2
rendered his award on 20.08.2018, which was filed before the learned Trial Court on 11.09.2018. On the same day, notices were issued to the parties. The notice was served upon the appellant CDA on 12.09.2018, however, no objections were filed within the statutory period of 30 days as prescribed by Article 158 of the First Schedule to the Limitation Act, 1908; instead, objections were filed belatedly on 30.10.2018, accompanied by an application for condonation of delay on the ground of non- availability of essential documents. After the filing of the objections, the filling of the award remained the subject of extensive litigation up till the Honorable Supreme Court (it is appropriate to state that the award was initially filed before the learned Trial Court by the respondent's counsel rather than the arbitrator, leading to a series of applications and orders regarding the validity of filing, with the matter ultimately being regularized after the arbitrator's covering letter was placed on record). The Honourable Supreme Court upheld the order of the learned Trial Court dated 22.11.2019 vide order dated 25.03.2021 in Civil Petitions No. 3148 and 3149/2020. Therefore, the matter of filling of award was settled by the Honorable Supreme Court under the facts and circumstances of the case and the relevant law and subsequently the calculation for limitation from the initial day of filling of Award was also settled. 3. The learned counsel for the appellant CDA contended that the learned sole arbitrator erred in permitting CW-1, Mr. Shahid Rafiq, to introduce a substantial financial cost claim of Rs.1,280,355,958/- at the evidence stage, which was not part of the original statement of claim filed on 01.04.2016 and that the tribunal, without proper verification, computation or establishing contractual entitlement, proceeded to award Rs.640,177,979/- (plus Rs.3 million as costs) on the basis of this unpleaded claim. He further contended that the arbitrator improperly rejected the appellant CDA's counter-claim on technical grounds, holding it had not passed through the requisite contractual stages and failed to address the merits of disputes 7 and 8, despite the existence of engineer's decisions on record. Procedurally, the learned counsel for the appellant CDA highlighted that the award was initially filed before the learned Trial Court by the respondent's counsel rather than the arbitrator, leading to a series of applications and orders regarding the validity of filing of the award, with the matter ultimately being regularized after the arbitrator's covering letter was placed on record. The learned counsel maintains that the Civil Court, in its Impugned Order, dismissed the appellant's objections solely on the ground of limitation without examining the award for patent illegality or inconsistency with the contract, contrary to settled law, which requires judicial scrutiny of arbitral awards even in the absence of timely objections. It was further submitted that the sole arbitrator exceeded its jurisdiction by entertaining and awarding a claim not referred to arbitration under the settlement deed, failed to provide adequate reasoning or basis for the quantum awarded and disregarded the engineer's findings and the appellant's evidence, thereby rendering the award unsustainable in law. 4. Conversely, the learned counsel for the respondent contended that the objections filed by the appellant CDA against the arbitral award are not only time-barred under Article 158 of the Limitation Act, 1908 but also lack substantive merit; that the statutory period for filing objections is mandatory and cannot be extended by the Court, as consistently held in authoritative precedents and that the appellant's application for condonation of delay fails to establish any sufficient cause, particularly as the documents allegedly unavailable were always within the appellant's possession. On the merits, the learned counsel for the respondent maintained that the award was rendered after due consideration of the evidence and in accordance with the contract and the specific reference made pursuant to the settlement deed, which limited the scope of arbitration to eight defined disputes, thereby excluding the appellant's counter-claim, which was neither referred to the engineer nor included in the reference. He further submitted that the enhancement of the financial claim during the evidence stage was permissible, as it was neither objected to during arbitration nor precluded by law and that the arbitrator's assessment of compensation and
---
## Page 3
overheads was based on the evidence and contractual provisions, with the arbitrator acting as the final judge of facts and law. He emphasized that the Court, in reviewing an arbitral award, is not to act as an appellate forum or reappraise evidence but is confined to examining whether there is an error apparent on the face of the award or misconduct, neither of which is present in this case. He also pointed out that the matter of the filling of Award has attained finality up to the Honourable Supreme Court and that the learned Trial Court was correct in making the award rule of the Court, as no patent illegality or jurisdictional error has been demonstrated by the appellant CDA. 5. We have given anxious consideration to the arguments of the learned counsel for the parties and perused the record with their able assistance. 6. The facts leading to the filing of the instant appeal have been set out in sufficient detail in paragraph No.2 above and need not be recapitulated. 7. While considering the background of the appeal and the grounds raised by the parties, it reveals that following significant questions need adjudication by this Court:- (i) Whether the objections filed against the arbitration Award were rightly dismissed as time- barred without a substantive examination of the award itself? (ii) Whether the grounds raised for setting aside the Award in appeal merit consideration despite the dismissal of objections on the ground of limitation? 8. Therefore, this Court will first examine, whether the objections filed against the arbitral award were rightly dismissed as time-barred without a substantive examination of the award itself. The statutory framework applicable for adjudicating this question is the Arbitration Act, 1940 ("The 1940 Act"), particularly section 17, which is reproduced hereunder for ease:- "17. Judgment in terms of award. Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award." 9. The above referred section 17 imposes a direct and mandatory obligation upon the Court once an Award is submitted for making it a rule of Court. The statutory language does not envisage the Court acting as a mere conduit for converting the Award into a decree rather, the Court is required to perform an active judicial function. It mandates that the Court must examine the Award to determine whether there exists any ground for remitting it back to the arbitrator for reconsideration or for setting it aside. Only if the Court finds no legal flaw or procedural irregularity in the award, and after the expiry of the prescribed period for filing objections or upon lawful rejection of any objections filed, may the Court pronounce judgment in accordance with the award, thereby rendering it executable as a decree of the Court. Importantly, the Court's duty of judicial scrutiny is not contingent upon the filing of objections by either party, nor it is negated by the expiry of the limitation period for such objections. Even in the absence of objections or where objections are barred by time, the court remains under a legal obligation to examine the award on its own motion. The absence of objections does not absolve the Court from its responsibility to ensure that the award is not tainted by any apparent illegality, procedural irregularity, or violation of law. While deciding the objections filed to the Award, the learned Trial Court failed to appreciate the true import of the statutory mandate under Section 17 of the 1940 Act. 10. In the present case, the record demonstrates that the learned Trial Court failed to fulfill its legal obligation under Section 17 of the 1940 Act. The learned Trial Court made the Award rule of the Court solely on the ground that the objections filed by the appellant CDA were time-barred. The relevant portion of the Impugned Order is reproduced hereunder:-
---
## Page 4
"9. Learned counsel for objector/CDA argued that the court has to judge the matter on legal parameters even if the objections are not taken by the party. This court agrees with the submissions of learned counsel for the CDA but the fact remains that in the case in hand the submission of learned counsel for CDA/objector does not stand in consonance with available record because in this case objections have admittedly been filed by CDA. As such, it was necessary to have filed the objection petition within limitation period because the principle of law says that when a thing is required to be done in a certain way it is to be done in a certain way it is to be done in that way and in none other. 10. It further evinces from the record that this application for condonation of delay in Para No.2 thereof mentions that delay was caused due to unavailability of certain essential documents which were integral to current objection petition. This application, as such, does not specify which were those documents nor any such document is annexed with the objection petition/application for condonation of delay. Therefore, mere evasive submission in this regard without any specific supporting document cannot come to the rescue of the objector/CDA. The very filing of the application for condonation of delay, as a necessary corollary, contravenes the very argument of learned counsel for CDA that issue of Limitation is to be kept out of consideration. As such, this court cannot delve deep into the merits of the case because this court while taking the matter in the capacity of trial court cannot exercise of the powers of appellate court. Even otherwise, taking up the merits of the case and giving finding thereupon would be like taking the second step before taking the first i.e crossing the threshold of limitation under Article 158 of First Schedule of Limitation Act 1908. The matter must stop short here because the objector has failed to satisfy this court qua successfully crossing the bar of said Article 158 of First Schedule of Limitation Act 1908." 11. This approach is manifestly erroneous and contrary to the statutory framework, which confers a judicial, not ministerial, responsibility upon the Court. The Court's role under Section 17 of the 1940 Act is not that of a mere post office, mechanically endorsing the Award upon the expiry of the limitation period for objections rather the Court must exercise its independent judicial mind to ensure that the Award is free from any patent illegality, material irregularity or jurisdictional error. Even where no objections are filed, or objections are barred by limitation, the Court is still obligated to determine whether the award is legally sustainable, valid and free from manifest defects. In the instant matter, the record clearly reveals that the learned Trial Court did not undertake the essential judicial scrutiny required by law. It failed to assess the contents, fairness or legality of the award and did not determine whether the Award was within the bounds of the arbitrator's authority or in violation of any provision of law. Instead, the Court dismissed the objections on the ground of limitation and proceeded to make the Award rule of the Court without applying the standards mandated by law. This failure constitutes a miscarriage of justice and a deviation from the fundamental principles of due process and procedural fairness. For example, had the arbitrator awarded relief exceeding the contractual limits or involving a question beyond the scope of reference, such defect would have remained unaddressed due to the Court's inaction. 12. It is a settled principle in arbitration that while making an Award rule of the Court, in case parties have not filed objections, the Court is not supposed to act in a mechanical manner, like a post office but must subject the award to its judicial scrutiny. This however does not mean that a Court will sit in appeal over the Award and try to fish or dig out the latent errors in the proceedings or the Award. It only means that even in the absence of objections or time barred objections, the Award may be set aside and not made a rule of the Court, if it is a nullity or is prima facie illegal or for any other reason, not fit to be maintained; or suffers from an invalidity, which is self-evident or apparent on the face of the record. The Court's role is thus not purely procedural rather it involves a measure of judicial scrutiny to ensure that the Award does not suffer from any fundamental legal infirmities. This requirement is not merely a matter of judicial prudence but is rooted in statutory
---
## Page 5
mandate. The Court's obligation to examine the legality and enforceability of the Award before making it a rule of the Court is inherent in the statutory scheme governing arbitral proceedings. 13. The grounds / parameters for setting aside of an arbitration Award have been laid down by the Honourable Supreme Court in the case of Gerry's International (Pvt.) Ltd vs. Aeroflot Russian International Airline, (2018 SCMR 662), which also includes this principle of judicial scrutiny. The relevant portion is reproduced hereunder:- "8. The principles which emerge from the analysis of above case-law can be summarized as under:- (1) When a claim or matters in dispute are referred to an arbitrator, he is the sole and final Judge of all questions, both of law and of fact. (2) The arbitrator alone is the judge of the quality as well as the quantity of evidence. (3) The very incorporation of section 26-A of the Arbitration Act requiring the arbitrator to furnish reasons for his finding was to enable the Court to examine that the reasons are not inconsistent and contradictory to the material on the record. Although mere brevity of reasons shall not be ground for interference in the award by the Court. (4) A dispute, the determination of which turns on the true construction of the contract, would be a dispute, under or arising out of or concerning the contract. Such dispute would fall within the arbitration clause. (5) The test is whether recourse to the contract, by which the parties are bound, is necessary for the purpose of determining the matter in dispute between them. If such recourse to the contract is necessary, then the matter must come within the scope of the arbitrator's jurisdiction. (6) The arbitrator could not act arbitrarily, irrationally, capriciously or independently of the contract. (7) The authority of an arbitrator is derived from the contract and is governed by the Arbitration Act. A deliberate departure or conscious disregard of the contract not only manifests a disregard of his authority or misconduct on his part but it may tantamount to mala fide action and vitiate the award. (8) If no specific question of law is referred, the decision of the arbitrator on that question is not final however much it may be within his jurisdiction and indeed essential for him to decide the question incidentally. (9) To find out whether the arbitrator has travelled beyond his jurisdiction, it would be necessary to consider the agreement between the parties containing the arbitration clause. An arbitrator acting beyond his jurisdiction is a different ground from an error apparent on the face of the award. (10) The Court cannot review the award, nor entertain any question as to whether the arbitrators decided properly or not in point of law or otherwise. (11) It is not open to the Court to re-examine and reappraise the evidence considered by the arbitrator to hold that the conclusion reached by the arbitrator is wrong. (12) Where two views are possible, the Court cannot interfere with the award by adopting its own interpretation. (13) Reasonableness of an award is not a matter for the Court to consider unless the award is preposterous or absurd. (14) An award is not invalid if by a process of reasoning it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion. (15) The only exceptions to the above rule are those cases where the award is the result of corruption or fraud, and where the question of law necessarily arises on the face of the award, which one can say is erroneous.
---
## Page 6
(16) It is not open to the Court to speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. (17) It is not open to the Court to attempt to probe the mental process by which the arbitrator has reached his conclusion where it is not disclosed by the terms of his award. (18) The Court does not sit in appeal over the award and should not try to fish or dig out the latent errors in the proceedings or the award. It can set aside the award only if it is apparent from the award that there is no evidence to support the conclusions or if the award is based upon any legal proposition which is incorrect. (19) The Court can set aside the award if there is any error, factual or legal, which floats on the surface of the award or the record. (20) The arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. The arbitrator is a tribunal selected by the parties to decide their disputes according to law and so is bound to follow and apply the law, and if he does not do so he can be set right by the Court provided the error committed by him appears on the face of the award. (21) There are two different and distinct grounds; one is the error apparent on the face of the award, and the other is that the arbitrator exceeded his jurisdiction. In the latter case, the Courts can look into the arbitration agreement but in the former, it cannot, unless the agreement was incorporated or recited in the award. (22) An error in law on the face of the award means that one can find in the award some legal proposition which is the basis of the award and which you can then say is erroneous. (23) A contract is not frustrated merely because the circumstances in which the contract was made are altered. (24) Even in the absence of objections, the Award may be set aside and not made a Rule of the Court if it is a nullity or is prima facie illegal or for any other reason, not fit to be maintained; or suffers from an invalidity which is self-evident or apparent on the face of the record. The adjudicatory process is limited to the aforesaid extent only. (25) While making an award rule of the Court, in case parties have not filed objections, the Court is not supposed to act in a mechanical manner, like a post office but must subject the award to its judicial scrutiny. (26) Though it is not possible to give an exhaustive definition as to what may amount to misconduct, it is not misconduct on the part of the arbitrator to come to an erroneous decision, whether his error is one of fact or law and whether or not his findings of fact are supported by evidence. (27) Misconduct is of two types: "legal misconduct" and "moral misconduct". Legal misconduct means misconduct in the judicial sense of the word, for example, some honest, though erroneous, breach of duty causing miscarriage of justice; failure to perform the essential duties which are cast on an arbitrator; and any irregularity of action which is not consistent with general principles of equity and good conscience. Regarding moral misconduct; it is essential that there must be lack of good faith, and the arbitrator must be shown to be neither disinterested nor impartial, and proved to have acted without scrupulous regard for the ends of justice. (28) The arbitrator is said to have misconducted himself in not deciding a specific objection raised by a party regarding the legality of extra claim of the other party. (29) some of the examples of the term "misconduct" are: (i) if the arbitrator or umpire fails to decide all the matters which were referred to him; (ii) if by his award the arbitrator or umpire purports4 to decide matters which have not in fact been included in the agreement or reference;
---
## Page 7
(iii) if the award is inconsistent, or is uncertain or ambiguous; or even if there is some mistake of fact, although in that case the mistake must be either admitted or at least clear beyond any reasonable doubt; and (iv) if there has been irregularity in the proceedings. (30) Misconduct is not akin to fraud, but it means neglect of duties and responsibilities of the Arbitrator." 14. This judicial obligation is further reinforced by the authoritative pronouncement of the Honourable Supreme Court in the case of A. Qutubuddin Khan vs. Chec Millwala Dredging Co. (Pvt.) Limited, (2014 SCMR 1268) , in which the judgment of the Division Bench of the High Court was upheld, whereby the case was remanded to Single Judge of High Court since the Single Judge, after concluding that objections filed by respondent-company were time barred, without conducting a judicial exercise of examining the Award qua its validity, made the same rule of the Court. The Honorable Supreme Court upheld the Division Bench's direction that the Single Judge in post-remand proceedings should decide whether to make the Award rule of the Court after examining as to whether the said award was a nullity or prima facie illegal or was not fit to be maintained or suffered from any other invalidity, which was self-evident or apparent on the face of the record. It is pertinent to reproduce the relevant portions:- "10. In view of the above, the obvious question that floats to the surface is that in the eventuality that an Award was filed in the Court and objections thereto are either not filed or if filed found to be barred by limitation, whether the Court is to mechanically make such an Award, the Rule of the Court. The powers vested in the Court to make an Award the Rule…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.