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Petitioner: Ch. FAZAL MUHAMMAD VS Respondent: PAKISTAN through Secretary, Ministry of Defence, JUDGMENT
Court Name: Sindh High Court Judge(s): Syed Hassan Azhar Rizvi Title:Ch. FAZAL MUHAMMAD vs PAKISTAN through Secretary, Ministry of Defence,
JUDGMENT
Reported As: 2011 MLD 502 Result: Order accordingly Judgment JUDGMENT ' SYED HASAN AZHAR RIZVI, J.---By this order I intend to dispose of the petition filed by petitioner. The brief facts of the case are that having succeeded as the highest bidder in the tender dated 8-12- 1962, the plaintiff was granted a lease of land dated 18-3-1963 for the purpose of quarrying, measuring 754.2 acres, situated at Survey No,272 in Hyderabad Cantonment by the Military Estate Officer, Karachi, after confirmation of the Ministry of Defence, for a period of 4 years between 1-4- 1963 to 31-3-1967 at an advance yearly rent of Rs,1,300. On 4-6-1965 certain contractors of the Government and staff of Pakistan Public Works Department (hereinafter Pak PWD) engaged in the construction of the Hyderabad Airport, approached road, car parking and other related civil works, not only encroached upon the demised land, and forcibly removed quarrying material, belonging to the plaintiff and stacked on the demised land, but also demolished the record and the shelter of the staff, scattering all important documents. Those of the plaintiff's staff who were present on the site, were beaten and a cash amount of Rs,570 was snatched away. The plaintiffs strongly objected to the removal of his quarrying material from the site, and also reported the incident to the MEO, Karachi Circle, vide his letter dated 23-7-1965, seeking payment (amounting to Rs,129,569) for the losses sustained by him along with royalty charges. In response to the plaintiff's complaint, the MEO vide its letter dated 27-7-1965 addressed to Chief Engineer PWD, reported the losses sustained by the plaintiff, invited the same to conduct an enquiry with respect to these losses, and recommended the payment to the private contractors be withheld pending inquiry and settlement of the dispute. The plaintiff has also lodged a report with the City Police Inspector, Hyderabad on 26-7-1965 against the private contractors, which report was forwarded to the S.H.O. Latifabad on
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28-7-1965. Vide letter dated 25-2-1967 the MEO/Defendant No,4 informed the plaintiff that the issue of claim for material forcibly taken by the PWD Contractors should be settled/recovered not from the MEO but from the PWD Contractors itself. Pursuant to the letter dated 30-4-1969 of the Deputy, Sub-Administrator, Martial Law Head Quarters, Sub-Sector B, Hyderabad Division, an Enquiry Committee was constituted, vide its report dated 2-7-1969 reached the conclusion that PWD Contractors had in fact interfered with the lawful possession of the demised land. The Chief Engineer (South) Pak PWD, based on the Enquiry Report of AME (Army) Hyderabad nominated by Defence Department, confirmed in his letter dated 22-2-1975 to the Section Officer W&R Division, Islamabad, that the plaintiff's claim of Rs,123,872 as assessed by E.E. Central Civil Division, Pak, PWD Hyderabad was correct. On 11-11-1975 the Superintendent Engineer Pak PWD vide his letter to the Executive Engineer, Central Civil Division, Hyderabad informed that the Government of Pakistan was pleased to sanction a sum of Rs,123,872 to Ch. Fazal Muhammad as compensation and Cheque was to be drawn by the plaintiff. It was noted that in addition thereto, further material was being quarried from the site and the Ministry was requested to verify the claim of the plaintiff and issue necessary orders and funds for the settlement of the plaintiff's claim. Vide letter dated 12-12-1975 the Cantonment Executive Officer Hyderabad appointed a panel of arbitrators under intimation to the Pak PWD and the MEO. The Arbitration Panel was composed of (1) Mr. S.A.I. Zaidi Superintendent: Engineer Mechanical Circle, Sindh, (2) Mr. J.B. Leghari Superintendent: Engineer, Irrigation, Retd, GOR Colony Hyderabad and (3) Mr. A.R. Khan, Concurrent, Audit Officer, Airport Development Agency Ltd, Karachi. The Arbitrators on 9-2-1976 gave their award in favour of the petitioner for Rs,860,406 plus 13% interest at bank rate to be calculated from 1-7-1965. The plaintiff filed a suit in the Court of Civil Judge Hyderabad being F.C. Suit No,299 of 1977 against PWD officials under section 14 of the Arbitration Act for making the Award the rule of the Court. Since there was no stay from Appellate Court therefore, on 9-4-1978 the learned Arbitrator filed Award in the lower Court. Since on 9-3-1978 the respondent Pak PWD were not present in the said Arbitration proceedings, therefore, Arbitration proceedings were ordered afresh and by consent of parties Mr. Abu Saeed was appointed as Arbitrator expressed his inability to act as Arbitrator. Since no payment of this amount was made to the plaintiff, the plaintiff moved the First Civil Judge, Hyderabad for a decree on the award, who referred the matter back to arbitration on the request of Central Division PWD. The Arbitrator Mr. Riaz Hussain Shah, Director Design Building, thus appointed under the Court order, confirmed, vide his letter, dated 9-4-1978, the award of the earlier arbitration panel and recommended to pay the compensation to the plaintiff on the rates prevailing in the market at the given time. The award was made rule of Court vide order dated 8-9-1983. Thereafter the defendants Nos.2 and 3 filed application under section 12(2), C.P.C. Dated 31-3-1985 in this Court, seeking to set aside the order dated 8-9-1983 and Award dated 9-2-1976 was set aside by the Court of Senior Civil Judge, Hyderabad, vide order dated 26-5-1986. After hearing the parties vide order dated 26-5-1986 the 1st Senior Civil Judge, Hyderabad allowed the application under section 12(2), C.P.C. Filed by the defendants in F.C. Suit No,299 of 1977 Execution Application No,11/1984 declared the order dated 8- 9-1983 to be invalid having no force of law. Against the order dated 26-5-1986 the petitioner filed Revision Application No,254 of 1984 before this Court. The plaintiff approached the defendants for redressal of his grievances, but to no avail. Eventually the Government of Pakistan, Public Works Department vide its Office Memorandum 728/283, Legal dated 17-5-1995, through the Chief Engineer (South) Pak PWD, Karachi, appointed Mr. S.A. Nizami as Sole Arbitrator for purpose adjudicating upon the dispute between the plaintiff and the Civil Aviation Authority by virtue of the fact that the approaching road from Latifabad to Airport, Hyderabad, at the relevant time under administrative control of Civil Aviation Authority. Copies of the Memorandum were duly sent to the Secretary Ministry of Defence, Civil Aviation Authority (CAA), Pak PWD and the plaintiff. Mr. Muhammad Aslam, Deputy Military Estafe Officer for the defendant No,1 and the defendants Nos.2
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and 3 through Mr. Bhatti, appeared before the Sole Arbitrator. The Arbitrator Mr. S.A. Nizami thus appointed summed up his award on 30-8-1995 awarding the plaintiff a sum of Rs,34,71,620 plus 10% mark-up from the year 1965 as against the Ministry of Defence/defendant No,1 with the right to recover the amount from the Pak PWD/defendant No,2 and CAA/defendant No,3. Thereafter the MEO Hyderabad vide its letter dated 12-9-1995 informed the Director ML&C Karachi about the dispute enclosing the copy of the subject Award with remarks of favourable consideration. Furthermore the Assistant Deputy Ministry of Defence on 18-10-1995 wrote to the Station Officer Works Division Islamabad, requesting for release of the payment to the plaintiff. Ministry of Defence Rawalpindi vide its letter dated 8-11-1995 the GOP Works Division for release of the amount to them, so that the same may be paid to the plaintiff. 1. On 7-9-1996. The sole Arbitrator Mr. S.A. Nizami filed the petition under section 14(2) of the Arbitration Act along with Award in this Court. Notices were issued to the claimant/plaintiff and the respondents by this Court. 2. On 31-10-1996 Objections on the Award as well as about the jurisdiction of this Court were filed on behalf of defendant No,2/ Executive Engineer of Pak PWD who also raised objection that the learned sole Arbitrator Mr.S.A. Nizami was appointed to adjudicate upon dispute existing between the plaintiff and Civil Aviation Authority, jurisdiction of this Court as the matter relates to Hyderabad as such original jurisdiction is vested with the Senior Civil Judge, Hyderabad instead of High Court of Sindh at Karachi. According to the defendant/Pak PWD the learned Arbitrator misconducted by awarding the amount of Rs,860,405 which amount had already been awarded by the Arbitrator Mr. Riaz Hussain. The Award given by Mr. Riaz Hussain Shah referred to above was set aside by the Senior Civil Judge, Hyderabad in Suit No, 299 of 1977 vide order dated 26-5-1986 and the present plaintiff has filed Revision Application No,254 of 1986 in this Court against the aforesaid orders against PWD. In the Objections to the Award it was stated by defendants that Arbitrator cannot consider 'earlier award regarding the same matter which does not exist being set aside by the learned Senior Civil Judge, Hyderabad. 3. That the present plaintiff/claimant filed a Counter Affidavit to the memo of petition of the defendant No,2/Pak PWD on 30-4-1998. On 30-4-1998 the claimant/plaintiff filed application C.M.A. No,4524/1998 under section 17 of the Arbitration Act, 1940 and has prayed to pronounce the judgment according to the Award dated 30-8-1995 and pass a decree accordingly by making the Award Rule of the Court. The matter was heard by this Court on 20-8-1998, Mr. Mustafa Lakhani, Advocate appearing for defendant No,3/Civil Aviation Authority stated that the award has been given against the defendant No,1, but the learned Arbitrator stated in the Award that the amount paid by the defendant No,1 is to be recoverable from the defendants Nos.2 and 3. Mr.Mustafa Lakhani, Advocate has further stated that when the Arbitrator entered on reference, defendant No,3 filed their objections in which they took the plea that there was no privity of contract between the defendant No,3 and the claimant and that they were not party in the Arbitration Agreement at any stage. Vide order dated 20-8-1998 this Court modified the Award to the extent that, "defendant No,1 would be able to recover the amount awarded in this award from the defendants Nos.2 and 3" is to be deleted. With this modification this award was made rule of the Court and the suit was decreed in terms of the award. 4. Against the aforesaid judgment and decree passed by this Court on 20-8-1998 whereby the Award of the Sole Arbitrator was made rule of the Court, Federation of Pakistan through Secretary, Ministry of Defence filed J.M. No,48 of 1999 under section 12(2), C.P.C. For setting aside. That application was filed on the grounds that, "(1) that there was no agreement between the applicant and the parties of the suit; (2) the applicant was not party in the arbitration proceedings nor the arbitrator served any notice on the applicant; (3) the applicant was not party in the suit nor summons were served upon him and, (4) the decree was obtained by fraud".
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5. By detailed order dated 25-4-2005 Mr. Justice Rahmat Hussain Jafferi as the Lordship then was allowed the said J.M. No,48 of 1999 and observed that "after considering the material available on the record, I am of the considered view that the essential requirements for passing the award were not available in the matter. As the award is void and passed without jurisdiction, therefore, it is liable to be set aside." 6. Against the order dated 25-4-2005 in J.M. No,48 of 1999 the plaintiff/claimant filed HCA No,138 of 2005 before this Court the Division Bench of this Court comprising of Mr. Justice Mujeebullah Siddiqui as he then was and Mr. Justice Faisal Arab on 26-9-2006 passed an order the relevant portion is the same is as under:- "We modify the impugned order dated 25-4-2005. The operative part of the impugned order contained in paragraph 14 to the effect that the judgment and decree dated 20-8-1996 is set aside. The case is remanded to the learned Single Judge for fresh hearing of the application submitted by the Arbitrator under section 14(2) and application under section 17 submitted by the Appellant. The title of the applications shall be suitably amended so as to describe respondent No,1 properly. Notices shall be served on all the parties providing opportunity to file objections. Thereafter, the learned Single Judge shall hear the objections and pass any order envisaged under the provisions of sections 15, 16 or 17 of the. Arbitration Act." 7. On behalf of the Executive Engineer, Central Civil Division, Pak PWD, Hyderabad and the Chief Engineer (South) Pak PWD, Karachi, the defendant filed objections to the Award dated 30-8-1995 under sections 16, 17, 26-A of the Arbitration Act, 1940. 8. On 10th January, 2007 the defendants Nos.1 and 4 through the Standing Counsel filed objections to the Award dated 30-8-1995 under sections 16, 17, 26-A and 30 of the Arbitration Act, 1940 pursuant to the order dated 26-9-2006 in High Court Appeal No,138 of 2005. 9. The learned counsel for the plaintiff Mr. Kamal Azfar on 27-2-2007 filed reply to the objections filed by the defendants Nos. 1 to 4. On 31-3-2007 the defendant No,4 filed Counter to Reply to Objections to Award dated 30-8-1995 filed by the Advocate for the plaintiff. On 3-5-2007 learned counsel for the plaintiff filed reply to Counter to Reply to Objections filed by defendants Nos.1 to 4. 10. I have heard Mr. Kamal Azfar, learned counsel for the plaintiff Mr. Kamal Azfar, learned counsel for the plaintiff has argued the matter at length and has also filed synopsis of arguments on behalf of the plaintiff. Mr. Kamal Azfar, learned counsel for the plaintiff while denying the defence taken by the defendants submits that there is no valid Arbitration Agreement, and that in the absence of the same, any proceedings conducted are in contravention of the provisions of the Arbitration Act, 1940 he referred to PLD 1977 page 644 Mst. Shamim Akhtar v. Najma Baqqi and others, relevant page 651, wherein it is held that, "there is no requirement of any formal written arbitration agreement and that letters unilaterally written by respective parties appointing their arbitrators, read together, constitute a valid arbitration agreement for purposes of reference of a dispute to arbitration. The same would constitute an arbitration agreement within the meaning of section 2(a) of the Arbitration Act, 1940 to uphold a reference made to arbitration." While refuting the defence contended by the defendants in their objection that there was no valid reference to arbitration, and that accordingly the proceedings thus entered upon are, irregular, illegal and without an unlawful authority and further Ministry of Defence and Military Estate Officer did not authorize the Arbitrator to enter upon and an adjudication of the dispute, Pak PWD had no authority to nominate/ appoint the arbitrator without the permission/consent of Government. Mr. Kamal Azfar, learned counsel for the plaintiff urged that the defendants Nos.1 and 4 acquiesced in the appointment of the arbitrator, with full knowledge of all the circumstances, and thereafter fully participated in the proceedings before the Arbitrator. The defendants were notified by the Reference dated 17-5-1995 and submitted to the jurisdiction of the sole arbitrator, Mr. S.A. Nizami appointed vide letter dated 17-5- 1995 of the Chief Engineer (South) PWD, and fully participated in the Arbitration proceedings before
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him, the Deputy MEO Hyderabad has filed a statement before the Learned Arbitrator, which the defendants Nos.1 and 4 have not placed on the record. 11. Learned counsel for the plaintiff has placed reliance upon a case of Neelakantan and Brothers v. Supdt. Eng, National Highway reported in 1988 4 SCC 462 (paras. 2 and 3), wherein it is held that, "if the parties to the reference either agree beforehand to the method of appointment, or afterwards acquiesce in the appointment made, with full knowledge of all the circumstances, they will be precluded from objecting to such appointment and invalidating subsequent proceedings. Attending and taking part in the proceedings with full knowledge of the relevant fact will amount such acquiescence."Learned counsel for the plaintiff further argued that it is of crucial importance to appreciate that none of the defendants raised any objection at the pertinent time to the appointment of the arbitrator but in fact completely submitted to the jurisdiction of the same. The objections filed by the defendant No,3 (the Civil Aviation Authority) to the Arbitration proceedings were also not pressed and after the announcement of the Award, the defendants Nos.1 and 4 wrote letters dated 12-9-1995, 18-10-1995 and 8-11-1995 to the Director ML&C Karachi, Station Officer Works Division, Islamabad and Government of Pakistan Works Division, requesting release of funds for purposes of effecting an early settlement of the plaintiff's claim. It is further contended by the learned counsel for the plaintiff that the subject Award was only objected to when the application J.M. No,48 of 1999 was presented in this Court. It is submitted that it is together puzzling how the defendants having submitted to the jurisdiction before the Arbitrator could be permitted to raise a belated challenge or objection to the appointment of the same. The learned counsel for the plaintiff submitted that defendants cannot at a point when they have seen the subject award going against them cannot be allowed to prevail over the deliberation of the learned arbitrator. He has placed reliance qn the following cases:-- (1) Sh. Saleem Ali v. Akhtar Ali reported at PLD 2004 Lahore 404. (2) Prasun Roy v. The Calcutta M.D. Authority report as AIR 1988 SC 205. (3) N. Chellappan v. Sec. Kerala State Electricity Board and another report as (1975)1 SCC 289; and, (4) Rupiter General Insce. Co. Ltd. v. Corp. Of Calcutta reported as AIR 1956 Calcutta 470. 12. Learned counsel for the plaintiff has further argued that none of the defendants have, to date, in principle denied the fact that the materials belonging to the plaintiff were removed from the demised land and used in the construction of the Airport at Hyderabad. Access road, car parking etc. Quite to the contrary, as is amply evident from the correspondence to the record as referred to, the defendants have in fact confirmed that the claim of the plaintiff is correct. Furthermore all three: the report of the Enquiry Committees dated 2-7-1969, the Award dated 9-4-1978 of Mr. Syed Riaz Hussain, and the Award dated 30-8-1995 of Mr. S.A. Nizami have confirmed the genuineness of the plaintiff's claim. 13. According to the submission of the learned counsel for the plaintiff that the real bone of contention rather, all along, has remained the question of which of the Government Department/Departments is/are liable for the settlement of the plaintiff's claim. According to the learned counsel for the plaintiff it is unfortunate and ironic that despite having repeatedly confirmed the genuineness of the plaintiff's claim, the attempt of each department to ascribe responsibility for payment of the claim to another department, have meant that the claim of the plaintiff who is by now and 86 years old man, remains unsettled to date. 14. It was contended by the plaintiff's counsel that all the defendants are vicariously liable for the unauthorized acts of the contractors of PWD, and all arguments with respect to the dispute being solely between the plaintiff and the private contractors of PWD, to the complete exclusion of the Federal Government Departments are wrong both in fact and in law. Learned counsel for the plaintiff further submits that CAA (the defendant No,3) is a subsidiary department of Ministry of Defence, under the Pakistan Civil Aviation Authority Ordinance, 1982, and for the acts of which the
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defendants Nos.1 and 4 remain vicariously liable. The defendants are jointly and severally liable for making the payments of the plaintiff on account of so-called loss/theft of quarried material belonging to the plaintiff, and from the demised land. 15. Learned counsel for the plaintiff further contended that this Court has competent jurisdiction to make the subject Award Rule of the Court and any objection in respect to the jurisdiction of this Court is rendered meaningless in view of the reference to arbitration being made at Karachi and the defendants participated in the arbitration proceedings conducted at Karachi. 16. Learned counsel for the plaintiff urged that the learned Arbitrator has not based his valuation of loss of the plaintiff claim on the report of AME Hyderabad and that the same has not been set aside by the Court. Learned counsel for the defendant has wrongly in their objection submitted that Arbitrator has made gross error in calculating and assessing the loss of the plaintiff on the ground that the Arbitrator based his valuation of the loss of the plaintiff on the report of AME(A) Hyderabad, which report has been set aside by the Court of 1st Senior, Civil Judge, Hyderabad on 26-5-1986 -in F.C. Suit No,299 of 1977. 17. While arguing on the objections of the defendant on the Award with respect to any misconduct on the part of the Arbitrator and gross legal errors on the Award, the learned counsel for the plaintiff submitted that the objections of the defendants are vague and unsubstantiated by any real evidence and are altogether are misconceived and devoid of any force. Finally learned counsel for the plaintiff argued that it is the duty of the Court to give every reasonable intendment in favour of an Award and lean towards upholding rather than vitiating the same. Learned counsel for the plaintiff further argued that it is a settled rule of construction of award that an award should be construed liberally and in accordance with common sense, and read in a manner that it can be given effect, and not in such manner which would nullify the efforts of the arbitration and this Court is not to act as an Appellate Court while adjudicating upon the legality of an Award. 18. Learned counsel for the plaintiff has placed reliance on the following judgments:- (I) Indian Appeals Vol. III, Page 209 Chowdhri Murtaza Hossein and Mussumat Bibi Bechunnissa, wherein it is held that, "the appellant, having a clear knowledge of the circumstances on which he might have founded an objection to the arbitrator proceeding to make their award, did submit to arbitration going on; that he allowed the arbitrators to deal with the case as it stood before them, taking his chance of the decision being more or less favourable to him; and that it is too late for him, after the award has been made, and on the application to file the award to insist on this objection to the filing of the award." (II) 1956 AIR Calcutta page 470, relevant page 472, wherein it is held that, "It is necessary to state at the outset that Courts do not favour this kind of contention and conduct of an appellant who participates in arbitration proceedings without protest and fully avails of the entire arbitration proceedings and then when he sees that the award has gone against him he comes forward to challenged the whole of the arbitration proceedings as without jurisdiction on the ground of a known disability of a party. That view of the Court is ably stated by the Editor of the 15th Edition of Russell on the Law of Arbitration at page 295 in the following terms: "Although a party may by reason of some disability be legally incapable of submitting matters to arbitration that fact is not one that can be raised as a ground for disputing the award by other parties to a reference who were aware of the disability. If one of the parties is incapable the objection should be taken to the submission. A party will not be permitted to lie by and join in the submission and then if the suits its purpose attack the award on that ground. The presumption in the absence of proof to the contrary will be that the party complaining was aware of the disability when the submission was made."
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"In such cases what the Court does not to pronounce on question whether the award or the arbitration proceedings was void but it prevents the point being taken by a party to challenge the award if being aware of the disability of the other party he did not take such objection on that ground at the stage when the matter was referred or submitted to arbitration. There is no reason why such principle should not be applied here." (III) 1975 Supreme Court Cases page 289 relevant page 294, wherein it is held that; "As we already said, paragraph 5 of the order in O.P. No,11 of 1972 leaves no room for…
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