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Petitioner: Pak Airlift Aviation Services VS Respondent: Gulf Air B.S.C. & another
Court Name: Sindh High Court Judge(s): Syed Hassan Azhar Rizvi Title: Pak Airlift Aviation Services vs Gulf Air B.S.C. & another Case No.: Suit No.1494 of 2020 Date of Judgment:2021-01-20 Reported As: 2021 SHC 464 Result: N/A
Judgment ORDER SYED HASAN AZHAR RIZVI, J. Plaintif f has filed the present suit for declaration and injunction against the defendants. Plaintif f 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 affidav it whereas representative of the defend ant 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 plaintif f 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 adopt ed 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".
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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 plaintif f. On that date learned counsel for the plaintif f 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 plaintif f 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 plain tiff 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 af fidavit of the plaintif f. 3. Brief facts of the case are that the plaintif f was appointed as Cargo Sales Agen t (CSA) for Pakistan with effect from 01-06-201 1 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 01-10-201 1 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 plaintif f 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 Plaintif f 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 territo ry 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 Agre ement", it was agreed that the sales offices to be provided by the Plaintif f 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 Plaintif f 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 plaintif f appointed staff as per list of staff. Copy thereof is enclosed as annexure "P/5" with MoP. Cargo Amendment Agreement between the plaintif f 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 Plaintif f entered into the "CGSA Agreement", pursuant to which the Plaintif f 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 Plaintif f wish to formally amend the term in accordance with the terms and conditions of the said Third Agre ement. As per Article 2.1 of the said Third Agreement, the Defendant No.1 and the Plaintif f 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 Plaintif f 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 Plaintif f in its interest to participate in the tender . Plaintif f immediately confirmed its interest. Copies of the both emails received by the plaintif fs from the defendant No.1 and the reply sent by the plaintif fs are enclosed as annexure "P/7" with MoP. Thereafter COVID-19 Pandemic was spreading
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from February 2020 in all over the world and during the COVID-19 Pandemic the plaintif f 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 Plaintif f 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 Plaintif f sent the required documents to the Defendant No. 1 and informed the Defendant No. 1 through email. Copy of the said email is annexe d hereto and marked "P/9" with MoP. Thereafter , on 08-07-2020 the Plaintif f received email from the Defendant No. 1 wherein it was requested that the Plaintif f may arrange to renew the current Bank Guarantee (BG) upto 06.06.2021 to cover the extension period and the plaintif f 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 plaintif f 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/1 1" with MoP . On 09.09.2020 the Plaintif f's Cargo System Access ID were blocked and the Plaintif f 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 Plaintif f that due to contract expiry issue and till its sorted out, she will reopen plaintif f'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 plaintif f and the defendant No.1 exchanged correspondence with each other through email. Finally on 14.09.2020, the plaintif f 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 Plaintif f 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. Plaintif f 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 plaintif f 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 plaintif f, 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 plaintif f'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 plaintif f in the plaint that the plaintif f's outstanding performance and meeting the targets / budgets, the plaintif f 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 plaintif f but in fact the plaintif f has over achieved the target every year. Report reflecting the target and actual performance of the plaintif f 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 plaintif f 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 Plaintif f to cover even salaries of the staff, which situation is still not back to normal but the Plaintif f 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. Plaintif f 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 Plaintif f 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. Plaintif f supported the Defendant No. 1 by providing its prime property in Gulberg, Lahore on subsidized rental of Rs.2,22,872/-per month
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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 good will 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 Plaintif f to reduce the rent of the property , which was accepted by the Plaintif f, 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 plaintif f has been tarnished in the business circle and thus the Plaintif f's Chief Executive and higher senior staff have suffered mental torture and agony therefore, the plaintif f 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 plaintif f 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 plaintif f as its General Sales Agent for Cargo Sales in Pakistan and entered into "CGSA Agreement" between the plaintif f and defendant No.1 and the same was valid from 01.10.201 1 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 plaintif f 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 plaintif f 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 Plaintif f 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 Plaintif f 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 plaintif f 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 plaintif f was expired on 08.09.2020 and hence the defendant No.1 blocked ID of the plaintif f. It was further mentioned in the affidavit, that the plaintif f filed present suit maliciously in contravention of the Article 34 of the "CGSA Agreement" whereby the plaintif f has to approach for arbitration. It is further stated in the affidavit that the initiation of the legal proce edings in the present suit is in breach of contractual commitment on the part of the plaintif f and the suit is liable to be stayed. 5. Plaintif f filed counter affidavit to the application of the defendant No.1 bearing CMA No.10744/2020 on 05.11.2020 wherein the plaintif f 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 plaintif f, 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 plaintif f 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 clear ly 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 plaintif f from the defendant No.1 before blocking of the IDs of the plaintif f 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 plaintif f and as such the plaintif f had no remedy but to approach this Court and get the restraining orders against the defendant No.1 and the plaintif f 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. Plaintif f further stated
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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 plaintif f 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 plaintif f, 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 plaintif f has been referred to. 7. I have heard Mr. Rasheed A. Rizvi, learned counsel for the plaintif f, 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 plaintif f, who has also filed written syno psis 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 plaintif f 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 plaintif f. 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" plaintif f established Head Office at Karachi and other offices at Lahore, Islamabad, Peshawar , Sialkot and Multan. The services rendered by the plaintif f 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 plaintif f and defendan t No.1. Learned counsel further submitte d 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 plaintif f. He further contended that the defendant No.1 kept the plaintif f in dark after a sudden closure of Cargo System Access IDs on 09.09.2020 without issuance of any notice and when the plaintif f came to know through its market sources that the defenda nt No.1 unlawfully and illegally contracted with the defendant No.2 as its General Sales Agent for region of Pakistan. Learned counsel for the plaintif f urged that the plaintif f 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 plaintif f does not believ e in downsizing and retained all its employees during the COVID-19 complete shutdown period. He has further contended that the action of the defend ant No.1 have seriously harmed the reputation of the plaintif f in the sector and have caused stress and anxiety to the plaintif f's Chief Executive and higher senior staff. Learned counsel for the plaintif f has further submitted that the plaintif f has good prima facie case and balance of convenience lies in favour of the plaintif f and irreparable loss has been caused to the plaintif f 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 applica tion 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 plaintif f, the agreement containing the arbitration clause is inoperative and incapable of
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being performed the same has already expired on 08.09.2020. Learned coun sel for the plaintif f 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 Cour t and then to drag the plaintif f in a lengthy ,…
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