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Petitioner: A QUTUBUDDIN KHAN VS Respondent: CHEC MILLWALA DREDGING CO(PVT) LIMITED
Court Name: Supreme Court of Pakistan Judge(s): Khilji Arif Hussain, Sh. Azmat Saeed, Tasaddaq Hussain Jillani Title: A QUTUBUDDIN KHAN vs CHEC MILLWALA DREDGING CO(PVT) LIMITED Case No.: Civil Appeal No.319 of 2004 Date of Judgment:2014-04-03 Reported As: 2014 CLD 824, 2014 SCMR 1268 Result: Order accordingly
JUDGMENT
JUDGMENT SH. AZMA T SAEED, J.---This appeal by leave of the Court is directed against the judgment of the learned Division Bench of the High Court of Sindh, dated 19-3-2003, whereby an appeal filed by the respondent was accepted and the matter was remanded to the learned Single Judge. 2. Brief facts necessary for adjudication of the lis at hand are that it is the case of the present appellant that an agreement was executed between the parties in terms whereof the appellant was required to provide loaders and dumpers on rent to the respondent. The appellant claimed to have provided the said loaders and dumpers to the respondent, however , the rent thereof allegedly was not paid to the appellant. The said agreement apparently contained an arbitration clause, which was invoked by the appellant and arbitration proceedings commenced. An Award was announced by the Arbitrator , holding the appellant entitled to Rs.86,84,990 along with a sum of Rs.30,000 as costs of the arbitration. The original civil jurisdiction of the learned High Court of Sindh was invoked seeking to make the said Award the Rule of the Court. The matter was apparently resisted by the respondent and eventually disposed of by consent of the parties on 13-8-1998 in terms whereof the Award was set aside and both the parties were directed to nominate their respective Arbitrators, whereafter the de novo proceedings be conducted. The appellant nominated Mr. Shamshad Ahmed Khan, as his Arbitrato r. However , the respondent did not nominate its Arbitrator , whereafter the arbitration proceedings were conducted by Mr. Shamshad Ahmed Khan, as the sole Arbitrator . The respondent did not file a reply to the claim and was eventually proceeded against ex parte by the Arbitrator . An award was announced, which was filed before the learne d High Court of Sindh on 14-11- 1998 for making it a Rule of the Court. 3. The learned High Court of Sindh issued notice to the respondent, which was apparently served on 24-12-1998 and it filed objections to the Award on 3-2-1999. The learned Single Judge of the High Court of Sindh seized of the
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matter , vide Order dated 14-7-1999 dismissed the objections, filed by the respondents, as being barred by limitation and proceeded to make the Award the Rule of the Court, vide Order dated 5-9-2000. 4. Being aggrieved, the appellant filed a High Court Appeal before the learned Division Bench of the High Court i.e. H.C.A. No.31 1 of 2000, which was contested by the present appellant. However , vide impugned judgment, dated 19-3-2003, the said appeal was accepted, the Order of the learned Single Judge was set aside and the case was remanded for decision afresh on merits. Whereafter the present appellant invok ed the jurisdiction of this Court through Civil Petition for Leave to Appeal No.483-K of 2003 challenging the said judgment of the learned Division Bench of the High Court of Sindh dated 19-3-2003. 5. This Court vide Order dated 22-3-2004 granted leave to appeal in the following terms:-- "4. After hearing learned counsel for the petitioner and examining the record, we are inclined to grant leave to consider , inter alia, the following question of law:- "Whether the appellate Court did not correctly apply the ratio of Muhammad Tayab (supra) case in so far as it passed an order of remand for examination of the objections on merits generally instead of restricting the scope of adjudication to the nullity or invalidity apparent on the face of record." We order accordingly ." 6. We have heard Mr. Nadeem Qutub son of the appellant, present in person as well as the learned counsel for the respondent and perused the available record. 7. In pith and substance, it is the case of the appellant that the respondent despite notice did not file the objections to the Award within the time prescribed by law in this behalf, hence, the said objections were rightly dismissed by the learned Single Judge and made the Award the Rule of the Court. Therefore, in the circumstances, there was no occasion to set aside the Order of the learned Single Judge or remand the case to be decided afresh on merits. 8. The learned counsel for the respondent has controverted the contentions raised on behalf of the appellant and has defended the impugned judgment of the learned Division Bench of the High Court. It is further contended that even otherwise, the Court seized of the matter where an Award is sought to be made the Rule of the Court is required to apply its mind and not act mechanically as was done by the learned Single Judge. It is added that the Award was ex parte, invalid and contrary to record, hence, not sustainable in law. In support of his contentions, the learned counsel relied upon the judgment, reported as Muhammad T ayab v . Akbar Hussain (1995 SCMR 73 ). 9. In the instant case, an Award was filed in the Court. Notices were issued, in pursuance whereof, the respondent entered appearance and filed objections to the said Award. The said objections were filed beyond the period of limitation prescribed in law, and were held by the learned Single Judge to be barred by limitation. In the above circumstances, the Award was made the Rule of the Court. The respondent filed an Appeal, which has been accepted by a learned Division Bench of the High Court of Sindh by way of the impugned judgment and the case was remanded to the learned Single Judge. However , the finding of the learned Single Judge that the objections filed by the respondent were barred by limitation has not been set aside by way of the impugned judgment and such findings have not been challenged independently by the respondents before this Court. 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 of the Court are obviousl y judicial and not ministerial and it is now settled law that the absence of objections to such an Award does not absolve the Court of its responsibility to examine the same. In the instant case, the learned Single Judge, after concluding that the objections filed by the respondent were time barred, without conducting a judicial exercise of examining the Award qua its validity , made the same the Rule of the Court. Hence, its order in this behalf dated 5-8-2000 was not sustainable in law and was rightly set aside by way of the impugned judgment and the case remanded. 11. However , the real controversy inter se the parties pertains to the scope of the exercise to be undertaken by the learned Single Judge in post-remand proceedings. The scope of such exercise has been determined by the learned Division Bench of the High Court by relying upon the judgment of this Court, reported as Muhammad Tayab
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(supra ), which has been quoted in extenso. However , for ease of reference, the operative part of the said judgment is reproduced herein below:-- "(5) It is contended before us on behalf of the appellant that it was duty of the Court to have examined the award regardless of the fact whether objection s were filed or not as empowered under sections 17 and 30 of the Arbitration Act to find out whether the award was nullity because of invalidity of arbitration agreement or for any other reason. The Court could also have set aside the award in case of sole arbitrator and particularly when other party had no prior notice. In support of the contentions reliance is placed on the case of Messrs Awan Industries Ltd. v . The Executive Engineer , Lined Channel Division ( 1992 SCMR 65 ). (6) In the circumstances we are of the view that learned Single Judge in the High Court should not have refused to go into the merits of the case on the ground that objections were filed beyond stipulated time particularly in view of the plea taken by the appellant that he was not served with notice in the arbitration proceedings. We, therefore, set aside the impugned judgment in High Court appeal and also impugned order of the learned Single Judge making award rule of the Court and remand the case to learned Single Judge in the High Court to examine the record of the arbitration proceedings to find out whether the plea taken by the appellant about non-service of notice is justified or not. This seemingly can be done without going into the question of limitation as is observed in the ruling mentioned above. The Appeal is allowed in the terms stated above." The aforesaid judgment proceeds on the dictum of the earlier judgment referred to therein i.e. Messrs Awan Industries Ltd. .v. The Executive Engineer , Lined Channel Division (1992 SCMR 65), wherein the fact that the claim raised was barred by limitation was taken into account irrespective of the fact that no objection in this behalf had been taken. The Court observed as follows:-- "17. But, in his submissions, he ignored the provisions of section 17 of the Arbitrati on Act, which imposes a duty on Courts to see that there is no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award. This can be done by the Court suo motu, apart from the application which a party may make for either remiss ion of the award or its reversal. Where, therefore, an award is found to be nullity because of the invalidity of the arbitration agreement or, for any other reason, or the award is prima facie illegal and not fit to be maintained, the Court has power under section 17 of the Act to set it aside without waiting for an objection to award being filed or without considering any application for setting it aside, if there be any, and irrespective of the question whether or not any objection to the award was filed or whether the objection, if filed, was not within time. In such cases section 30, clause (c) of the Act is also attracted. ... (18) ............................................................................................................................. (19) ............................................................................................................................. (20) ............................................................................................................................. (21) ............................................................................................................................. (22) There is yet another objection which is apparent on the face of the record ... It is duty of the Court to see that the claim is within limitation period. Accordingly , it was also the duty of the Arbitrator to see that the claim before it was within the period of limitation, notwithstanding whether such a plea was taken or not. ..." 12. What emerges from the examination of the above quoted two judgments of this Court is that, even in the absence of objections, the Award may be set aside and not made a Rule of the Court if its 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 . 13. In view of the aforesaid, the impugned judgment dated 19-3-2003 is upheld to the extent that it set asides the Order of the learned Single Judge dated 5-8-2000 and remands the case. The objections filed by the respondent are time barred. The learned Single Judge in post-remand proceedings shall decide whether to make the Award the Rule of the Court after examining as to whether the said Award is a nullity or prima facie illegal or not fit to be maintained or suf fers from any other invalidity which is self-evident or apparent on the face of the record. 14. Resultantly , this Appeal is disposed of in the above terms. No order as to costs. Sd/- Tassaduq Hussain Jillani, C.J.
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Sd/- Khilji Arif Hussain, J. Sd/- Sh. Azmat Saeed, J. KHILJI ARIF HUSSAIN, J.---I have the privilege to go through the judgment rendered by my learned brother in the matter (Civil Appeal No. 319 of 2004) but with due deference to his lordship's opinion, I failed to persuade my self with the same and, therefore, handing down my reasons as follows. 2. This appeal with the leave of the Court is directed against the judgment passed by High Court of Sindh, Karachi whereby the learned Division Bench, while hearing the appeal under section 39 of the Arbitration Act, 1940 [herein after referred to as "the Act"], set aside the order passed by the learned Single Judge in Chambers of the High Court making award rule of the Court and remanded the matter to the learned Single Judge to decide afresh the same on merits, in light of the principle laid down by this Court in the case of Messrs Awan Industries Ltd. v. The Executive Engineer , Lined Channel Division (1992 SCMR 65 ) Brief facts.-- 3. Facts relevant for the purpose of decis ion of this appeal are that the appellant entered into an agreement with the respondent for providing loaders and dumpers on rent basis; since the respondent, despite supply of loaders and dumpers by the appellant, failed to make payment of his claim of rent, therefor e, the appellant, as per terms of the agreement between the parties, invok ed the arbitration clause of the agreement and nominated his Arbitrator . On failure of the respondent to appoint his Arbitrator , the Arbitrator appointed by the appellant proceeded ex pane against the respondent and announced its award, which was filed in Court for making it rule of the Court. After filing of the award in Court, notices were issued to the respondent, who filed objections against the said award under sections 30 and 33 of the Act, including the one that the agreement containing arbitration clause is a false and fabricated document. The learned Single Judge in Chambers of the High Court, after hearing the parties noted that the core issue for decision is whether the Exb.P1 is the correct terms and condition s of the agreement entered into between the appellant/plaintif f and respondent/defendant or C-A-1, one containing arbitration clause and other not, thus, it would be difficult at this stage to ascertain which is the genuine document, without recording evidence. Both the parties agreed that they are prepared to lead evidence. With the consent of the parties, the award was set aside and both the parties undertook to nominate their Arbitrators within two weeks time from the date of order with a right to raise objections before the Arbitrators and that the Arbitrators were to decide the matter on merits, according to law within two months. 4. After passing of the above order , on 3-8-1998, the appellant appointed Mr. Shamshad Ahmed. Khan as his Arbitrator vide letter dated 27-8-1998 and called upon the respondent to nominate his Arbitrator within 15 days, as ordered by the Court, otherwise his Arbitrator will act as sole Arbitrator under section 9(b) of the Act. The respondent, despite his undertaking to nominate his Arbitrator within two weeks' time from the date of the order , failed to nominate his Arbitrator . Resultantly , the Arbitrator nominated by the appellant acted as the sole Arbitrator . Despite issuance of notice by the Arbitrator , the respondent failed to appear before the sole Arbitrator , which resulted in ex parte proceedings against the respondent, which proceedings culm inated in award on 11-11-1998. Consequently , the sole Arbitrator at the request of the appellant filed the award before the Court for making it rule of the Court. 5. After filing of the award in Court, notices were issued to the respondent to file objections. Despite service of notice, the respondent failed to file objections within the time prescribed under Article 158 of the Limitation Act, and finally filed objections which were barred by 74 days. The learned Single Judge in Chambers of the High Court after hearing the parties made the award rule of the Court, while observing that the objections filed by the respondent on the face of it were barred by time and were already rejected vide order dated 14-7-1999 and no fresh objections were filed by the respondent/defendant. Feeling aggrieved, the respondent preferred High Court Appeal, which has been accepted by means of the impugned order . 6. The appellant has appeared in person and after taking us to various documents on record contends that the learned Single Judge in Chambers of the High Court has rightly made award rule of the Court but the learned
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Division Bench of the High Court through the impugned judgment, without taking into account the documents available on record, remanded the matter to the learned Single Judge to decide it afresh in light of principal laid down in the case of Messrs Awan Industries Ltd. (ibid). 7. Conversely , Khawaja Bilal, learned Advocate Supreme Court appearing for the respondent while supporting the impugned judgment contends that learned Single Judge in Chambers of the High Court made the award rule of the Court in a mechanical manner , without applying his mind to ascertain that whether the award is in accordance with law and does not suffer from any patent illegality . He has further argued that the agreement containing the arbitration clause between the parties is a forged and fabricated document. According to him the award was obtained by the appellant in collusion with the Arbitrator without service of notice upon the respondent; in support of his contention,-the learned counsel relied upon the judgment in the case of Muhammad Tayab v. Akbar Hussain (1995 SCMR 73) and Awan Industries Ltd. v. Executive Engineer (1992 SCMR 65). The learned counsel has lastly contended that Arbitrator filed the award in Court on its own without any request by the parties. 8. I have taken into consideration the arguments advanced by the parties' counsel and have also perused the available record in light of their submissions. Scope of Section 17 of the Arbitration Act.-- 9. In order to appreciate the contention of the learned counsel for the respondent that before making the award rule of the Court, the learned High Court ough t to have applied its mind and could have set aside the award, even if no objections were filed, in terms of section 17 of the Act, it would be appropriate to reproduce herein below sections 17, 30 and 33 of the Act:-- "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 re-consideration 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 pronounce d 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. 30. Grounds for setting aside award.---An award shall not be set aside except on one or more of the following grounds, namely . (a) that an Arbitrator or umpire has misconducted himself or the proceedings; (b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35; (c) that an award has been improperly procured or is otherwise invalid. 33. Arbitration agreement or award to be contested by application. ---Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavit: Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit." 10. An award may be corrected or modifi ed under section 15 of the Act and it may be remitted for reconsideration under section 16 of the Act or it may be set aside under sections 30 and 33 of the Act on objections raised by any of the parties. While hearing the objections and examining the award, the Court cannot sit as a Court of appeal on the award rendered by the Arbitrator and substitute its own view for one taken by the Arbitrator . 11. It is settled principle of law that the award of the Arbitrator who is chosen judge of facts and of law, between the parties, cannot be set aside unless the error is apparent on the face of the award or from the award, it can be inferred that the Arbitrator has misconducted himself under sections 30 and 33 of the Act. However , even if no objection under sections 30 and 33 of the Act has been filed, the Court at the time of making award rule of Court can see that award does not suf fer from patent illegality . 12. While making award rule of the Court, in case parties have not filed objections, the Court is not suppose to act in mechanical manner , like post office and put its seal on it but have to look to award and if found patent illegality on face of it, can remit the award or any of the matter referred to Arbitrator for reconsideration or to set aside the
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same. However , while doing so, the Court will not try to find out patent irregularity , and only if any, patent irregularities can be seen on the face of award/arbitration proceedings like the award is beyond scope the reference or the agreement of arbitration was void agreement, or Arbitrator awarded damages on black marketing price, which is prohibited by law , award was given after superseding of the arbitration, etc., can set aside the same. 13. Section 17 of the Act is a general provision in its nature, whereas sections 30 and 33 of the Act are special provisions, providing the ground to set aside the award. The General Provision in same Statute, cannot operate to control specific provision. Reliance can be placed on Sher Ali Baz v. Secretary , Establishment Division (PLD 1991 SC 143 ), Muhammad Nawaz Sharif v . President of Pakistan (PLD 1993 SC 473 ). 14. Section 17 of the Act cannot be used as substitute of sections 30 and 33 of the Act or can be given overriding effect, making sections 30 and 33 of the Act redundant/meaningless. The award cannot be set aside on the ground which falls under sections 30 and 33 of. The Act, while exercising jurisdiction under section 17 of the Act. In this behalf, I am fortified with the judgment in the case of Madan Lal v. Sunder Lal (AIR 1967 SC 1233), wherein it has been held by the Indian Supreme Court that:- "10. Learned counsel for the appellant, however , urges that Section 17 gives power to the court to set aside the award and that such power can be exercised even where an objection in the form of a written statement has been made more than 30 days after the service of the notice of the filing of the award as the court can do so suo' motu. He relies in this connection on Hastimal Dalichand v. Hiralal Motichand (AIR 1954 Born. 243) and Saha & Co. v. Ishar Singh Kripal Singh (AIR 1956 Cal. 321 (FB). Assuming that the court has power to set aside the award suo motu, we are of opinion that that power cannot be exercised to set aside an award on grounds which fall under S. 30 of the Act, if taken in an objection petiti on filed more than 30 days after service of notice of filing of the award, for if that were so the limitation provided under Art. 158 of the Limitation Act would be completely negatived. The two cases on which the appellant relies do not in our opinion support him. In Hastima l's case, AIR 1954 Bom. 243, it was that "if the award directs a party to do an act which is prohibited by law or if it is otherwise patently illegal or void it would be open to the court to consi der this patent defect in the award suo motu, and when the court acts suo motu no question of limitation prescribed by Art. 158 can arise". These observations only show that the court can act suo motu in certain circumstances which do not fall within S.30 of the Act. Saha & Co.'s case, AIR 1956 Cal. 321 (FB) was a decision of five Judges by a majority of 3:2 and the majority judgment is against the appellant. The minority judgment certainly takes the view that the non-existence or invalidity of an arbitration agreement and an order of reference to arbitration may be raised after the period of…
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