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Petitioner: M. IFTIKHAR & COMPANY (PVT) LTD VS Respondent: PAKISTAN. STEEL MILLS LTD
Court Name: Sindh High Court Judge(s): Anwar Mansoor Khan Title: M. IFTIKHAR & COMPANY (PVT) LTD vs PAKISTAN. STEEL MILLS LTD Case No.: Suit No,1717 of 1997 Date of Judgment:2001-09-27 Reported As: 2002 YLR 1494 Result: N/A
Judgment ' This is an application under section 14 of the Arbitration Act, 1940 (hereinafter referred to as the Act of 1940) whereby the sole arbitrator has filed the award in Court, in the said application, however, upon filing, the sole arbitrator has stated that the Pakistan Steel be directed to deposit in Court their share of the fee, due to the arbitrator before any application of any party challenging the validity of award or otherwise is entertained. An application being C.M.A. No,784 of 1998 was filed by the respondents namely Pakistan Steel Mills Ltd.: seeking directions to supply copy of the application under section 14(2) alongwith award so as to enable the defendants to file their objections to the said award. On 4-8-1998, an order was passed on the said application, dismissing the same, on the ground that the application had become infructuous as, the objection had already been filed. Before I proceed to deal with the merits of the arbitration award, it is important to thrash out the positions taken up by Mr. Akhtar Ali Mehmood, Advocate for Pakistan Steel, as to whether the application under section 14(2) filed by the arbitrator could be deemed to be an application within the meaning of law and the objection of Mr. Bilal A. Khawaja for the Plaintiff whether the objections filed thereto were valid, within time and could be accepted. 2. The facts as propounded by Mr. Akhtar Ali Mehmood are that, in 1992, Mr. Fakhruddin G. Ibrahim who was appointed as sole arbitrator entered reference on the basis of an order passed by this Court on 13-12-1990 in Suit No,511 of 1987. The proceedings concluded on 12-7-1997. It is stated by Mr. Akhtar Ali Mahmood that on 15-7-1997, the arbitrator fixed his fee at Rs,3.5 million requiring, the parties to pay the same equally. On 27-9-1997, the arbitrator issued a notice under section 14(1) of the Act of 1940 for announcement of award. The award was announced on 6-11-1997. A copy of the award was, however, not delivered to the respondents as, the arbitrator claimed lien thereon, on the ground, that Pakistan Steel, the defendant herein failed to settle the arbitrator's fee. It is stated
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that on 7-11-1997 Pakistan Steel addressed a letter to the arbitrator that, the copy of arbitration award had not been received by them. The arbitrator on 1-12-1997, wrote back to state that he would not supply the copy, however, the same could be collected by Pakistan Steel, upon paying their share of fee for arbitration. In view of the refusal to pay their share of fee, and aggrieved by the arbitrator's claiming lien on the arbitration award, the said defendants filed a Judicial Miscellaneous Application No,4 of 1998 praying, inter alia, that the, arbitrator be directed to deliver the award, to the petitioner and that the Court determine a reasonable fee. The application was ordered to be heard along with the main case-. 3. Upon the arbitrator' filing the application under section 14(2) on 23-12-1997, notice under section 14(2) was received by the defendants on 21-1-1998. According to Mr. Akhtar Ali Mehmood, the matter was fixed before the Additional Registrar on 27-1-1998 when the Vakalatnama was filed and it was, at that point in time that the defendant was informed / of the arbitrator's objection, that he has claimed lien on the said award and that a copy thereof, ought not, therefore, be delivered to the' said defendant, till such time they pay their share of fee to the arbitrator. However, the defendant on 28-1-1998, moved an application for a certified copy of award, which copy was received by the respondent on 13-2-1998 and objections were filed on 9-3-1998. . Mr. Akhtar Ali Mehmood, Advocate states. That the time for receiving the certified copy is. Liable to be excluded. According to him the time shall run from 13-2-1998 and not from the date of the service of notice of filing the award as provided under Article 158 of the Limitation Act, 1908. According to him the service could be said to be good only when he received the copy of the said award which was 13- 2-1998. According to him the objections were filed on 9-3-1998 within the stipulated period of 30 days, as such the objections were within time. Mr. Akhtar states, that notwithstanding the fact of the receipt of notice, in fact, the filing of the application under section 14(2) is also improper and that, Article 158 would not be applicable to the provisions of subsection (2) of section 14 of the Arbitration Act which postulates, that when there is no dispute' with the arbitrator as regards the fee, costs and charges and upon payment thereof the award is liable to be filed. According to him, the award could only be filed under the provisions of section 14(2) which reads as under:-- "(2) The arbitrators or umpire shall at, the request of any party to the arbitration agreement or any ,person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration." ' Mr. Akhtar Ali Mehmood states, that the award could only be filed upon payment of the fees and charges due in respect of the arbitration and of the costs, and charges for filing the award. He says that if there was a. Claim of the arbitrator, ought not to have filed the award, till such time, the claim is settled and that, if the party choosing to enforce the award requires the arbitrator to file the same, he ought to have made the entire payment to the arbitrator. According to him, once the award is filed in Court, it will be deemed, that the arbitrator has foregone his right on the amount and the entire amount be deemed to have been paid. Otherwise also, if the lien according to him had, been exercised, filing in Court would amount to waiver of the lien on the award. According to Mr. Akhtar Ali Mehmood, the provision of section 38 of the Arbitration Act is clear, that if in case of arbitrator or umpire refusing to deliver his award except on the payment of fees demanded by him, the Court may on an application in this respect, direct the arbitrator or umpire to deliver the award to the applicant on payment into Court, by the applicant of fees demanded and shall, after such inquiry as the Court deems fit, further order that, out of the money so paid into Court, there shall be paid to the arbitrator or umpire by way of fees such sums as the Court may consider reasonable. According to Mr. Akhtar Ali Mehmood, the award was filed directly by the arbitrator and not on orders of this Court and upon the award having been filed it is liable to be delivered to the said defendant and has further stated was delivered on 13-2-1998.
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4. Mr. Akhtar Ali Mehmood further argues that under rule 282 of Sindh Chief Court Rules, it is provided that the arbitrators or umpire shall cause the award or a signed copy of it to be filed in Court by forwarding the same in a sealed cover to the Registrar (O.S.) in Form 12-B of Appendix ' A', requesting the same to be filed. According to him in Form 12-B Annexure ' A' to the Sindh Chief Court Rules, the words "at the request of" is included, which is clear evidence that the arbitrator ought to have stated as to who had required the award to be filed. According to him, the Form ought to have been filed alongwith the award and that, when the words "at the request of" is stated the party requesting should have made the payment, if any, to the arbitrator and in not doing so. Notwithstanding the fact, that subsequently claim was made such a claim was unlawful and, therefore, there would be no dispute in regard to payment of charges. Mr. Akhtar in this regards has referred to the case of Rahim v. Shahban and others (AIR 1935 Sindh 200) in which it was held. "If the arbitrator so wished he could have insisted upon payment of the fees before he patted with the award. But in view of what is stated in the award I am afraid I cannot help him. The Advocate who appears for arbitrator has argued that as in one of the cases decided by this Court under section 10, Civil P.C., it was held that as an arbitrator was also party to the proceedings filed under Indian Arbitration Act, but not a party to the suit, the suit should not be stayed. I am not concerned with an application for stay of the suit under section 10 and I do not propose to go into the question whether or not an arbitrator is a party to or interested in the proceedings under the Indian Arbitration Act while he is not a party,to the suit on the original cause of action. ' It is sufficient for me to observe that the award as it stands cannot be enforced as a decree so far as the arbitration fees go. The arbitrator has indubitably a right to file a suit for recovery of his fees as would appear from the ruling quoted by my brother Aston in J. Misc. No, 500 of 1921 and also from the case of Crampton & Holt v. Ridley & Co., (1887) 2 QB 48." ' He has further referred to the case of Shib Krishna Tarafdar v. Sunil Kumar Tarafdar (AIR 1949 Calcutta 189) wherein it was held as follows:- "(5) It was contended before us on behalf of the petitioner that the Court could not be powerless to grant some relief to the parties in a case like the present and that a party ought not to be allowed to nullify a reference by sheer recalcitrance and by refusing to pay the arbitrator's fees. That may be true, but the question before us is whether the law authorises the Court to grant relief in the particular form insisted on by the petitioner. It appears to us that the Arbitration Act addresses itself to this very question and prescribes a remedy which is not the remedy .Proposed by the petitioner. (6) The two relevant sections are section 14 (2) and section 38. Section 14(2) provides that the arbitrators or the umpire shall, at the request of any party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration, cause the award or a copy of it to be filed. It is clear that two conditions must be fulfilled, before an arbitrator can be compelled to file an award. -There must be a request by a party to the arbitration or a direction by the Court, and secondly, the fees and costs of the Arbitrator must first be paid. The other provision in section 38 of the Act which lays down that if in any case an arbitrator or umpire refuses to deliver his award except on payment of the fees demanded by him, the Court may, on an application in this behalf, order that the arbitrator or umpire shall deliver the award to the applicant on payment into Court by the applicant of the fees demanded, and then Court should after further enquiry order that out of the money so paid, there shall be paid to the arbitrator by way of fees such sums as the Court may consider reasonable, subsection (2) of this section, however, provides that subsection (1) will not apply in a case where the fees have been fixed. There may be some question as to whether the present case is one where the fees have been fixed,' for all that has been fixed is the rate per sitting. But whether section 14 (2) applies to the present case or section 38 does, it is quite clear that, in either case, the applicant cannot have the award filed unless he pays of the balance
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of the fees due to the arbitrators. The Act, it appears to us, does not provide that if any of the parties does not pay his share of the arbitrators' fees, the Court has power to compel him to do so by means of an interim order at the instance of another party who has paid his share and wants to have the award filed. (7)Some further light on what the Act intends is thrown by two other sections of the Act, name'y, sections 18 and 41 (b), section 18 deals with the case where an award has been filed and a decree has been passed. But where some one of the parties, has been trying to defeat or delay or obstruct the execution of the decree passed upon the award, in a such case, the Court is specifically empowered by section 18 to pass interim orders that may be deemed necessary in order to meet the situation created. It is significant that the Act does not contain any corresponding provision for passing interim orders before the stage at which the award is filed. The other section (section 41) deals with the powers of the Court in relation to arbitration proceedings and it provides that the Court has power to make orders in respect of the matters set out in Schedule 2 to the Act. A reference to Schedule 2 shows that the matters there provided for are appointment of a receiver and granting of injunctions and taking certain other steps for the preservation of the property. It is again significant that the Act, when specifically providing for orders which the Court can pass in relation to arbitration proceedings, does not provide that it can, if necessary, pass orders directing parties to pay their proportionate shares of the Arbitrator's fees in order that the award may be brought on the record. In our opinion, there is no warrant in the Arbitration Act for any interim order by the Court, directing the parties to pay the arbitrator's fees. (8)................. (9) The Act, it appears to me, provides for two remedies and two remedies only. One is that the party who wishes the award to be filed can have his wish fulfilled by paying the costs himself. The recovery of the costs from the remaining parties must form the subject-matter of a separate proceedings or may perhaps be adjusted at the time of passing the final decree. The other remedy, it seems to me, is that if it is found that the arbitration is being brought to nothing by the recalcitrance of one of the parties who is refusing to pay his share of the arbitrators' fees, the person aggrieved may well-make that a ground for an application for superseding the reference. The plaintiff has had these remedies open to him and if he did not take advantage of either he cannot except the Court to grant him a third and a new kind of remedy." 5. Mr. Akhtar states that section 12(4) of the Limitation Act excludes the time spent in obtaining copies and refers to the judgment in Pakistan through General Manager Pakistan Railways v. Messrs. Q.M.R. Expert Consultants (PLD 1990 SC 800) in which it was held as follows:-- "9. In the above four cases, the Rangoon, Madras, Calcutta and Allahabad High Courts (first two cases were decided by Single Benches and the last two cases by Division Benches, it has been held that the time requisite for obtaining a copy of the award for filing objections is to be excluded under section 12 of the Limitation Act. We may point out that the above provisions refers to the requisite for obtaining of a certified copy of the order/judgment/award. In the present case the appellant had not applied for a certified copy of the award, but their Advocate was furnished with a copy of the award voluntarily by the Advocate for the respondent and, therefore, section 12(4) of the Limitation Act cannot be pressed into service." ' Mr. Akhtar Ali. Mehmood states that the arbitrator chose to file the award and that upon filing he has forgone his right. He has referred to the judgment in Inayatullah Khan v. Obeithillah Khan and others (1999 SCMR 2702) in which it was held:-- ' Even otherwise, this point could lose significance and nothing would turn on because in the latter part of this judgment we are going to hold that the arbitrators by themselves were not competent to file the award in Court as such filing of an award was not envisaged under section 14 of the Act
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because the arbitrators had neither been requested by any party to the arbitration agreement to file the award in Court nor had been so directed by the Court...." ' According to Mr. Akhtar, the claimants (M. Iftikhar & Company (Pvt.) Ltd.) has requested the arbitrator to file the award. He has done so without giving copy thereof to the defendants. According to him the arbitrator could not tile the award suo motu and could only be filed upon a request by one of the parties and which has been done in this case. According to him, the application 'being C.M.A. No,784 of 1998 was dismissed as infructuous by an order dated 4-8-199 the that branch had given him the certified copy' as foretasted, on 13-2-1998 and the objections were filed on 9-3-1998. Therefore, even if the award has been- filed properly, the objections are within time and are liable to be considered. 6. On these questions, Mr. Bilal A. Khawaja, Advocate on behalf of the claimant M.I.C. Traced the history. He stated that the controversy started between the claimant and the defendant in November, 1985 when, Mr. H.N. Akhtar was agreed to be appointed as sole arbitrator which was confirmed on 28-6-1986. In July, 1987 Mr. Akhtar was transferred and could not continue. Mr. Akhtar was agreed to be substituted in a meeting on 13-4-1989, when Major S.A. Bulchari was to act as arbitrator till decision notwithstanding the fact that he may or may not remain the Chairman of Pakistan Steel. 7. Mr. Bilal A. Khawaja, Advocate rebutting the arguments of Mr. Akhtar Ali Mehmood stated, that the objections were barred by time. He states that an application being C.M.A. No,784 of 1998 was moved With a prayer, that a direction be given to the office of this Court to supply a copy of the application and award. According to him, the application was presented on 6-2-1998 supported by an affidavit of Lt. Col. S. Aslam Zaidi, In charge Law, Pakistan Steel, According to him, note of the Law Department, written by the said Lt. Col. S. Aslam Zaidi who was Acting General Manager Law, dated 4-2-1998, written two days prior to the filing of the application categorically speaks of the award being available with them. I have perused the said application (C.M.A. No,784 of 1998) which was no doubt presented on 6-2-1998. Alongwith the said application is also a Note bearing No, Law/HC/Civ/98/106 dated 4-2-1998 in which it is pointed out:-- "4. In the subject case, copy of the Award is attached but the Court has so far not supplied the application and its Annexures including the Award to us apparently due to an application forwarded by Mr. Justice (R.) Farkhru, t G. Ibrahim addressed to the Court, with a copy to Pakistan Steel. 5. The Notice in the subject case was received on 21st January, 1998 and we should file the Objections to the Award by or before 20th February 1998." ' In the said note it is also written:- "7. This is a lengthy and time-consuming case for 'which due care is to be taken by all concerned and Objections to the Award need to be submitted well within the period of 30 days limitation i,e, by or before 20th February, 1998." Evidently, the said Lt. Col. (R.) S. Aslam Zaidi has stated that, the period of limitation would expire by or before 24-2-1998. Such is the position. The objections have been filed on 9-3-1998. According to Mr. Bilal. A. Khawaja as the objections have been filed by time, under Article 158 of the-- Limitation Act, 1908 (hereinafter referred to as the Act of 1908) which provides 30 days for the filing of the objections to the award from the date of service of notice of filing the award. Admittedly, the notice was served on 21-1-1998 and the time for filing the objections to the award, therefore, expired on 20-2-1998. Mr. Bilal states that section 5 of the Act of 1908 has not been made applicable to Article 158. According to him, therefore, the period provided by law cannot be extended. In the case referred to by Mr. Bilal being Standard Insurance Company Ltd., Multan v. Fazal Cotton Industry and another (2000 MLD 1564), it has be held, despite the fact that the Court had extende the period within which the objections the award could be filed and that as:-the Court was not competent to
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extend the prescribed limitation, none of its orders could directly or indirectly be construed to have granted extension in time for filing of the award. In the case of Burma Oil Mills Ltd., Karachi v. Messrs. Colony Textile Mills Ltd. (1980 CLC 512) the question of extension of time for filing of award under Article 158 was discussed and it was held:-- "....The fact of the matter is that on 19th July, 1978 they raised objections against the said award and thus their application under section 151 of the Code was for all intents and purposes, an objection petition against the subsequent award. Therefore, its competency had to be examined in the light of provisions of Article 158 of the Limitation Act, and since it was time-barred according to those provisions the learned Senior Civil Judge was justified in dismissing the same on the ground of limitation. It has also been noted by the learned Senior Civil Judge, with reference to the That Development Authority v. Nisar Ahmad Qureshi (PLD 1962 Lahore 830) that although the provisions of section 5 of the Limitation Act did not permit the Court to condone delay in such-like cases yet the petitioner had not made any prayer in that behalf," ' In the case of Akhtar Trading Co, v. Food Department and others (1991 CLC 258) the similar proposition has been taken and decided in the same manner, that time-barred objection to award cannot be taken into consideration. Mr. Bilal has referred to the diary sheet of the file dated 10-3- 1998 which categorically speaks of the objections to the award being beyond time a is an office note of the Additional Registrar dated 28-2-1998 reference of which is also made. It is stated in the said note:-- "In obedience to the Order of the Hon'ble Court dated 16-2-1998, directing the Additional Registrar (0.S.-I) to submit his reply to the application under section 151, C.P.C. (C.M.A. No, 784 of 1998) made by the counsel for the defendant for directing the office to provide copy of the application under section 14(2) and the Award to enable the respondent to file objections to the Award, if deemed appropriate, the undersigned submits as follows:-- ' It is submitted that the Award accompanied by an application under section 14(2) of the Arbitration Act was filed in this Hon'ble Court on 23-12-1997 in accordance with rule 282(1) of SCCR (O.S.) by the learned Arbitrator. For the purpose of this application, it is submitted that rule 280 SCCR (O.S.) provides that:-- 'A special case shall be forwarded to the Registrar (O.S.) accompanied by the documents or copies of the documents therein referred to. The Registrar (0.S.) shall fix a day for the appearance of the parties before him and issue a notice to the parties'. ' It is submitted that in accordance with the said rule, the notices of Award were issued to the parties, requiring them to file objections to the Award, if any. The said notice was served on the defendant on19-1-1998 and the application under reply has been made on 6-2-1998 despite the fact that the time limit as prescribed under the law is 30 days for filing objections to the Award from, the date of service of notice and not from the date of receipt of copy of Award. ' It is further submitted that there is no provision either in the Civil Procedure or Sindh Chief Court Rules (O.S.) under which the parties are entitled to have a copy of Award from the office. Even if it is presumed that a copy of Award was not supplied by the Arbitrator before filing of the Award, it was for the defendant to immediately apply for grant of certified copy of the Award without' loss of time and should have filed their objections within the time prescribed under the law, wherein the alleged plea for non-supply of copy of Award should have been taken as one of preliminary objections but the time for filing objectiong has since expired. The non-filing of objections in the absence of the copy of the Award, as stated in para. 5 of the application under reply does not justify the defendant for further extension of time to file objections to Award. ' It is respectfully pointed out that on 27-1-1998, the learned Arbitrator filed his objection, wherein he invited the attention of the Hon'ble Court to the effect that his fees have not been settled by the defendants and had requested the Hon'ble Court to direct the defendant to settle the Arbitrator's
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fees before further proceedings are taken in the matter, Statement may kindly be seen at flag "A". Reference to the diary of the A.R. Dated 27-1-1998. "Copy supplied to the defendant" is in respect of copy of Arbitrator's objection. ' From the above submissions, it is clear that the defendant is not entitled to have a copy of Award from the office." ' In view of the above, it is stated by Mr. Bilal A. Khawaja that the objections are barred by limitation therefore, the said objections cannot be taken into consideration. 8. Rebutting the argument that an award has not…
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