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Petitioner: NATIONAL HIGHWAY AUTHORITY VS Respondent: M/s. CHINA PETROLEUM ENGINEERING JUDGMENT
Court Name: Islamabad High Court Judge(s): Miangul Hassan Aurangzeb Title:NATIONAL HIGHWAY AUTHORITY vs M/s. CHINA PETROLEUM ENGINEERING
JUDGMENT
Reported As: PLJ 2017 Islamabad 400 Result: Appeal dismissed. Judgment JUDGMENT Through the instant appeal under Section 39 of the Arbitration Act, 1940 ("the 1940 Act"), the appellant, National Highway Authority, impugns the judgment & decree dated 20.04.2015, passed by the Court of learned Civil Judge (West) Islamabad, dismissing the appellant's Objection Petition under Sections 30 and 33 of the 1940 Act against the arbitration award dated 25.06.2007, and making the said award a rule of Court. 2. The facts essential for the disposal of this appeal are that on 06.04.1993, the appellant and the respondent (M/s. China Petroleum Engineering Corporation) entered into a contract for the construction of additional carriageway (Chablat - Nowshera, Section N-5) ("the Contract"). Under the terms of the said contract, M/s. A.A. Associates, Planners and Consulting Engineers was appointed as the Engineer for the Project. Under the terms of the Contract, the respondent and the Engineer worked out a Job-Mix Formula ("JMF"). The contract provided for the use of an asphalt additive called Cellulose Fibers in the asphalt base course mix. Subsequently, after discussions between the appellant, the respondent and the Engineer, it was decided not to add Cellulose Fibers in the asphalt base course mix. Therefore, the JMF jointly worked out by respondent and the Engineer did not include the use of Cellulose Fibers. 3. Vide letter dated 11.06.2001, the appellant instructed its officers to recover an amount of Rs, 31.200 Million from the respondent for not using Cellulose Fibers in the asphalt base course mix in the road works. Aggrieved by the said instructions of the appellant, the respondent, in accordance with clause 67 of the contract, raised this dispute with the Engineer vide letters dated 11.08.2001; 30.08.2001 and 14.09.2001. The Engineer vide letter dated 02.10.2001 expressed its inability to give a
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decision on the matter. As the Engineer did not give any decision, the respondent, vide notice dated 16.01.2002, requested the appellant to have this matter resolved through arbitration in accordance with clause 67 of the Contract. The appellant was also requested to concur in the appointment of a sole arbitrator for this purpose. At this stage, it is pertinent to reproduce herein below the said clause 67 of the contract:-- "67. Settlement of Disputes 67.1 Engineer's Decision If a dispute of any kind whatsoever arises between the Employer and the Contractor in connection with, or arising out of the contract or the execution of the Works, whether during the execution of the Works or after their completion and whether before or after repudiation or other termination of the Contract, including any dispute as to any opinion, instruction, determination, certificate or valuation of the Engineer, the matter in dispute shall, in the first place, be referred in writing to the engineer, with a copy to the other party. Such reference shall state that it is made pursuant to this Clause. No later than the eighty-fourth day after the day on which he received such reference the Engineer shall give notice of his decision to the Employer and the Contractor. Such decision shall state that it is made pursuant to this Clause. Unless the Contract has already been repudiated or terminated, the Contractor shall, in every case, continue to proceed with the Works with all due diligence and the Contractor and the Employer shall give effect forthwith to every such decision of the Engineer unless and until the same shall be revised, as hereinafter provided, in an amicable settlement or an arbitral award. If either the Employer or the Contractor be dissatisfied with any decision of the Engineer or if the Engineer fails to give notice of his decision on or before the eighty-fourth day after the day on which he received the reference, then either the Employer or the Contractor may, on or before the seventieth day after the day on which he received notice of such decision, or on or before the seventieth day after the day on which the said period of 84 days expired, as the case may be, give notice to the other party, with a copy for information to the engineer, of his intention to commence arbitration, as hereinafter provided as to the matter in dispute. Such notice shall establish the entitlement of the party giving the same to commence arbitration, as hereinafter provided, as to such dispute and; subject to Sub-Clause 67.4, no arbitration in respect thereof may be commenced unless such notice is given. If the Engineer has given notice of his decision as to a matter in dispute to the Employer and the Contractor and no notification of intention to commence arbitration as to such dispute has been given by either the Employer or the Contractor on or before the seventieth day after the day on which the parties received notice as to such decision from the Engineer, the said decision shall become final and binding upon the Employer and the Contractor. 67.2. Amicable Settlement Where notice of intention to commence arbitration as to a dispute has been given in accordance with Sub-Clause 67.1, arbitration of such dispute shall not be commenced unless an attempt has first been made by the parties to settle such dispute amicably. Provided that, unless the peirties otherwise agree, arbitration may be commenced on or after the fifth-sixth day after the day on which notice of intention to commence arbitration of such dispute was given, whether or not any attempt at amicable settlement thereof has been made. 67.3. Arbitration Any dispute in respect of which:-- (a)the decision if any, of the Engineer has not become final and binding pursuant to Sub-Clause 67.1, and (b) amicable settlement has not been reached within the period stated in Sub-Clause 67.2, and shall be finally settled, unless otherwise specified in the Contract, under the Rules of Conciliation
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and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed under such Rules. The said arbitrators shall have full power 'to open up, review and revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer related to the dispute. Neither party shall be limited in the proceedings before such arbitrators to the evidence or arguments put before the Engineer for the purpose of obtaining his said decision pursuant to Sub- Clause 67.1. No such decision shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrators on any matter whatsoever relevant to the dispute. Arbitration may be commenced prior to or after completion of the works, provided that the obligations of the Employer, the Engineer and the Contractor shall not be altered by reason of the arbitration being conducted during the progress of the Works. 67.4 Failure to Comply with Engineer's Decision Where neither the Employer nor the Contractor his given notice of intention to commence arbitration of a dispute w'.thin the period stated in Sub-Clause 67.1 and the related decision has become final and binding, either party may, if the other party fails to comply with such decision, and without prejudice to any other rights it may have, refer the failure to arbitration . in accordance with Sub-Clause 67.3. The provisions of sub Clauses 67.1 and 67.2 shall not apply to any such reference." (emphasis added) 4. These were the circumstances in which the respondent filed W.P.No, 2978/2001 before the Hon'ble Lahore. High Court, Rawalpindi Bench, against the appellant's said notice dated 11.06.2001. The prayer-clause in the said writ petition is reproduced herein below:-- "It is, therefore, prayed that the impugned order dated 11.06.2001 be declared to be void, illegal, without lawful authority and consequently of no legal effect. It is further prayed that the respondent be restrained from making any recovery from the petitioner on the basis of the impugned order till final order on this petition." 5. Vide order dated 24.09.2001. the Hon'ble' High Court restrained recoveries from the respondent until the next date. This matter was adjourned on a number of occasions without specifically extending the operation of the said ad-interim relief. However, on 25.02.2004, it was ordered that the operation of the stay order will continue till the decision of the writ petition. Vide order dated 30.03.2004, the said writ petition was disposed of in the following terms:-- "Mian Saif-ur-Rehman, Advocate, learned counsel for the respondent-National Highway Authority states that the Respondent National Highway authority will strictly follow the terms of the contract. Their right of deduction will be subjected to a decision by the arbitrator. Meanwhile, no recovery shall be effected from the petitioners. In case the matter is not referred to the arbitration the National Highway authority can proceed for the recovery, certainly, in accordance with the terms of the contract. Disposed of with agreement of the learned counsel for the parties." 6. On 28.04.2004, the respondent filed an application under Section 8 of the 1940 Act before the Colift of learned Civil Judge Islamabad, praying for the appointment of an arbitrator in accordance with the provisions of the 1940 Act as envisaged in the contract dated 06.04.1993. The dispute which the respondent wanted to be referred to arbitration was whether Rs, 31.200 Million or any lesser amount was recoverable by the appOant from the respondent on account of not. using Cellulose Fibers in the asphalt base course mix in the road works. Vide order dated 22.04.2006, the learned Civil Court, appointed Brig. Safdar Hussain Awan as a sole arbitrator and referred the matters in dispute between the appellant and the respondent for his determination. The learned sole arbitrator is said to have received the said order of the learned civil Court on 10.05.2006. Vide a detailed and well reasoned arbitration award dated 25.06.2007, the learned sole arbitrator decided the disputes referred to him in inter, alia the following terms:- "48. Having taken into consideration all the facts, evidence and arguments, I am firmly of the
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opinion that the claims of NHA against CPECC, HCL and SKB, respectively amounting to Rs, 31.200 Million, Rs, 206.632 Million and Rs, 80.446 Million, are barred by time and hence not recoverable. None of the parties had claimed the costs, bence none is payable to any. 49.NHA, at its end, may look into the circumstances ander which it has suffered financial loss on .account of inability to recover amount from the three concerned contractors for non use of Cellulose Fibre in the Asphaltic Base Course, and how did it fail to raise its claims even after 11 June 2001 when it eventually did become alive to its entitlement and when it" would have been quite in time to do so; Factually, the recoveries on account of non use of Cellulose Fibre should have been affected right with effect from the time that the first running payment for laying of Asphaltic Base Course was made in case of each of 'the seven contracts, which was at a time around 1995." 7. On 08.10.2007, the appellant filed an objection petition under Sections 30 and 33 of the 1940 Act before the learned civil Court and prayed for the setting aside of the arbitration award dated 25.06.2007. Vide judgment & decree dated 20.04.2015, the learned civil Court dismissed the said objection petition and made the arbitration award dated 25.06.2007 a rule of Court. Furthermore, it was held that Rs, 31.200 Million or a lesser amount is not recoverable by the appellant from the respondent on account of non-use of Cellulose Fibers in the asphalt base course mix. It is against the said judgment & decree dated 20.04.2015 that the appellant has preferred the instant appeal. 8. Learned counsel for the appellant submitted that the learned trial Court erred by passing a judgment & decree in terms of the arbitration award dated 25.06.2007 and dismissing the appellant's objections under Sections 30 and 33 of the 1940 Act; that the learned arbitrator had erred by holding that the appellant's claim was barred by time; that the Hon'ble Lahore High Court had restrained the appellant from recovering Rs, 31.200 Million from the respondent for not using Cellulose Fibers in the road works; that the period between 24.09.2001 (when the injunctive order was passed) and 30.03.2004 (when Writ Petition No, 2978/2001 was disposed of) has to be discounted and excluded from the limitation period for instituting proceedings for the recovery of the said amount; that the learned trial Court had erred by not giving the appellant the benefit of Section 15 of the Limitation Act, 1908; that the learned arbitrator did not decide the claim of the appellant on merits and unlawfully spurned it as barred by time; that even if the appellant had not sought the benefit of Section 15 of the Limitation Act, 1908, in the proceedings before the learned arbitrator and the learned trial Court, the same should have been nonetheless extended to him; that even without an objection petition, it was obligatory upon the learned trial Court to scrutinize the arbitration award to see that it does not suffer from any invalidity. In making these submissions, the learned counsel for the appellant placed reliance on the cases of A. Qutubuddin Khan vs. Chec'Millwala Dredging Co. (Pvt.) Ltd. Steel House, Karachi (PM 2014 SC 95C), North-West .Frontier Province Government, Peshawar through Collector, Abbotabad and another vs. Abdul Ghafoor Khan through Legal Heirs and two others (PLD 1993 SC 418), M/s. Awan Industries Ltd vs. The Executive Engineer, Lined Channel Division and another (1992 SCMR 65), and Kashmir Corporation Ltd vs. Pakistan International Airlines (PLD 1995 Karachi 301). 9. Learned counsel for the appellant further submitted that the appellant had filed an application under Section 12(2), C.P.C. against the judgment and decree dated 20.04.2015 before the learned trial Court; that a judgment and decree in terms of an arbitrator award can be challenged through an application under Section 12(2), C.P.C., if the same was vitiated by fraud or misrepresentation; and that under the decision of the learned trial Court on the said application, these proceedings should either be stayed or adjourned sine die. In making these submissions, the learned counsel for the appellant placed reliance on the cases titled as Happy Family Associate through Chief Executive vs. Messrs Pakistan International Trading Company (PLD 2006 SC 226), Muhammad Yasin vs. Sh. Haif Ahmed and 14 others (1993 SCMR 437), Raja Wali vs. Mansha Ahmed (PLD 1996 Lahore 354), and Mrs. Rukhsana Parveen vs. Syed Shabahat Hussain Naqvi (2007 CLC 1247).
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10.On the other hand learned counsel for the respondents submitted that as the appellant had filed an application under Section 12(2), C.P.C. before the learned trial Court against the judgment and decree dated 20.04.2015, he was precluded from filing the instant appeal; that two remedies against the same judgment and decree could not have been availed by the appellant; that on this score alone, the appeal is liable to be dismissed; that the appeal is barred by time; that on 20.04.2015, the impugned judgment was passed; that on 14.05.2015, the appellant applied for the certified copy of the said judgment; that the certified copy of the said judgment is prepared and delivered on 28.05.2015; that the appeal was filed on 11.07.2015; that an office objection was raised on 14.07.2015, and the appeal was returned, and was re- filed on 02.11.2015; and that Article 156 of the Limitation Act, 1908, provides for limitation period of ninety days for an appeal under Section 39 of the Arbitration Act. In making these submissions, the learned counsel for the respondent placed reliance on the cases as Tanveer Siddiqui and another vs. Muhammad Rashid (2010 YLR 1851), Syed Jammat Ali Shah and others vs. Investment Corporation of Pakistan Ltd, Karachi (1989 MLD 3931), Lahore .Development Authority vs. Muhammad Rashid (1997 SCMR 1224), Collector Land Acquisition Abbotabad and others vs. Fazal-ur-Rehman and others (2009 SCMR 767), and Province of Punjab through Secretary, Local Government and Community Development, Lahore and three others (2014 CLC 417). 11.On the merits of the case, learned counsel for the respondent submitted that vide interim order dated 24.09.2001, passed in W.P.No, 2978/2001, the Hon'ble Lahore High Court had restrained the appellant from making recoveries from the respondent, but had not restrained the appellant from instituting legal proceedings for the recovery of Rs, 31.200 Million due to the Cellulose Fibers not being used by the respondent in the road works; that on 28.04.2004, it was the respondent who filed an application under Section 8 of the 1940 Act for the reference of the said dispute to arbitration; that the perusal of the arbitration award reveals that the learned arbitrator was cognizant of the said orders dated 24.09.2001 and 30.03.2004, passed by the Hon'ble Lahore High Court in W.P.No, 2987/2001; that the learned arbitrator had framed an issue on whether the NHA's claim is maintainable and time barred; that this issue was decided against the appellant and its claim was held to be time barred; that the arbitration award is detailed and well reasoned and called for no interference by the learned trial ,Court; that as the learned arbitrator had not committed any misconduct in the arbitration proceedings, the learned trial Court correctly dismissed the appellant's objections against the arbitration award dated 25.06.2007, by passing a judgment & decree in terms thereof. In making these submissions, the learned counsel for the respondent placed reliance on the cases of National Highway Authority vs. Zarghoon Enterprises (Put.) Ltd. (2015 MLD 746), Mian Corporation through Managing Partner vs. Messrs Lever Brothers of Pakistan Ltd. through General Sales Manager, Karachi (PLD 2006 SC 169), Muhammad Farooq Shah vs. Shakirullah (2006 SCMR 1657), Pakistan Steel Mills Corporation, Karachi vs. Messrs Mustafa Sons (Pvt.) Ltd, Karachi (PLD 2003 SC 301), and Federation of Pakistan through Secretary, Ministry of Food, Islamabad and others vs. Messrs. Joint Venture Kocks K.G.IRIst (PLD 2011 SC 506). 12.In rejoinder, the learned counsel for the appellant submitted that no notice had been issued by the office to the appellant or its counsel regarding the office objection; and that the office did not indicate a date by which the office objections were to be removed and the appeal re-filed. Learned counsel placed reliance on the cases of Province of Punjab through District Collector Lodhran and six others vs. Muhammad Khalid Khan (2005 CLC 1083), and Mat. Sabiran Bi vs. Ahmad Khan and another (2000 SCMR 847). 13.I have heard the arguments of the learned counsel for the parties and have perused the record with their able assistance. 14.I propose first to deal with the objection raised by the learned counsel for the respondent that the appeal filed by the appellant was barred by time. The learned counsel for the contesting
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parties were in agreement that the limitation period for an appeal under Section 39 of the 1940 Act is ninety days computed from the date of the order appealed from. The judgment and decree impugned in the appeal was passed on 20.04.2015. The record shows that the appellant applied for its certified copy on 14.05.2015. This copy was prepared and delivered to the appellant on 28.05.2015. The appeal was filed on 11,07.2015, and was returned with an office objection on 14.07.2015. This appeal was then re-filed on 02.11.2015. Now, if the period between 14.07.2015 (when the office objection was raised and the appeal returned) and 02.11.2015 (when the appeal was re- filed) is not excluded, the appeal would certainly be barred by time. Perusal of the office objection (Diary No, 942/2015) dated 14.07.2015 issued by the Assistant Registrar and Deputy Registrar (Judicial) of this Court reveals that the office did not stipulate a period within which the office 'objections have to be removed. The period within which the office objections were required to be removed has been left blank. The office objections taken are (1) that page 7 of the petition has to be re-typed because it is not legible due to cutting and correction, (2) that the file is not arranged according to the index/rules and (3) that the attested power of attorney had not been filed. Now, it is not disputed that originally the appeal was filed within time. The above mentioned office objections are not such as would render the very appeal incompetent. In other words, as per these office objections, the appeal did not suffer from any fatal defect. These objections were at best ministerial in nature. As the appeal was originally filed within time but was deficient in some respects, and these deficiencies were cleared by the appellant before. re- filing the appeal, the appeal cannot be held to be time barred particularly when the office did not indicate a time within which the deficiencies had to be cleared. I feel that the appellant cannot be penalized for the inaction of the office by not fixing a period within which the office objections were required to be removed. The record is also silent as to any notice issued by the office to the appellant for the removal of the office objections. 15. In the case of Mst. Sabiran Bi vs. Ahmad Khan and another (2000 SCMR 847), it has been held as follows:- "Thus, in view of above discussions we are inclined to hold that once a suit, appeal or revision has been presented before the authorized officer of the Court within the prescribed period of limitation, it cannot be treated barred by time for the reason that the office has noted defects in the proceedings which have not been removed by the concerned party or his Advocate, and in such- like situation the Presiding Officer of the Court at the best can consider the maintainability of proceedings in view of the provisions of Order VII, Rule II or identical 'provisions available in the Code of Civil Procedure or the law under which the proceedings were instituted. It is also important to note that parties/Advocates are also not absolved from their duty to remove the office objections within the stipulated period prescribed by the concerned authorized officer subject to the condition that specific notice has been served upon the party or Advocate to do the needful. Even if after notice the defect is not removed the case shall be listed for non-prosecution before the Presiding Officer who may in his discretion allow time to comply with objections of office." 16.In the case of Farman Ali vs. Muhammad Ishaq & others (PLD 2013 SC 392), it has been held as follows:-- "6. The upshot of the above discussion is, that where a revision petition has been filed within time, but the office objection(s) points out certain deficiencies in respect of the institution, for all intents and purposes, it shall be deemed to have been instituted within the period of limitation and where the petitioner does not remove the office objections and make up the deficiencies in the time provided by the office, the matter shall be placed before the Court on the judicial side and the Court shall decide about the fate of the petition in accordance with law, and as per some of the guidelines provided in the preceding part of this judgment." 17.In the case of Muhammad Boota vs. Basharat Ali (PLD 2014 Lahore 01), it has been held at
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paragraph 11 of the report as follows:-- "11. In view of above discussion, we are of the opinion, that the appeal is originally filed within prescribed limitation period but was returned due to office objections which could not be removed within given time and when the office objections finally removed the prescribed period of limitation for filing appeal elapsed, will not render the appeal barred by time. In the present case, as originally the appeal was filed on 20.04.2013, which was within the prescribed period of limitation of 90 days and only because office objection was removed on 02.05.2013, will not make the appeal barred by time, therefore, preliminary objection raised by the learned counsel for the respondent is over ruled." 18. It is only in cases where the delay in re-filing of an appeal, after an office objection, is far in excess of the period fixed by the office within which the appeal was to be re-filed after clearing the objections, that the Courts refuse indulgence in entertaining such appeals. For instance, in the case of Commissioner of Income Tax/Wealth Tax, Companies Zone, Islamabad us. Mls. Dreamland Motels (Pvt)Limited (2012 PTD 976), a…
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