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Petitioner: (1) LTH JV (2) Mr. Bilal A. Khwaja VS Respondent: Pakistan Civil Aviation Authority & JUDGMENT
Court Name: Islamabad High Court Judge(s): Aamer Farooq, Mohsin Akhtar Kayani Title:(1) LTH JV (2) Mr. Bilal A. Khwaja vs Pakistan Civil Aviation Authority &
JUDGMENT
Reported As: 2017 IHC 154, 2021 PCTLR 1420, 2021 [M] CLR 1627 Result: Application Dismissed Judgment JUDGMENT MOHSIN AKHT AR KA YANI, J. By this single judgment, we intend to decide both the above mentioned appeals. 2. Through the instant ICAs, appellants have assailed the order dated 29.04.2016 passed by learned Singe Judge in Chambers in Civil Suit No.27/2016 whereby learned Judge has allowed the C.M. Nos.01 & 143 of 2016 with the following observations:- "13. For what has been discussed above, the instant application is allowed. The Defendant No.1 is restrained to act as a Member of the DRB. However , in order to ensure that the proceedings of the DRB are not affected, the Defendant No.2 may nominate another person to be appointed as a Member of the DRB till the adjudication of the suit." 3. Brief facts of the instant ICAs are that Pakistan Civil Aviation Authority invited bids for the construction of new Islamabad International Airport Project and the Authority accepted the bid for construction of new Islamabad International Airport Project (Package-8) from LTH Joint Venture (appellant in ICA No.313/2016) whereby an agreement was executed on 24.07.2008 in respect of Package-1 while agreement dated 14.09.2010 was signed for Package 8A. The agreement contains mechanism for dispute resolution under Clause 67 whereby 03 tier have been provided, in case of any dispute matter shall be referred to the Engineer for his decision under Clause 67 of Particular Conditions of Contract (hereinafter referred to as the "PCC"), any party may challenge the decision of the Engineer within specified period before the Dispute Review Board (DRB) pursuant to clause 67.2 of PCC, the decision of DRB is open to challenge before an Arbitration Tribunal pursuant to Clause 67.3 and 67.5 PCC. The contract agreement stipulates that DRB shall be constituted and shall remain in place during the term of contract agreement till such time that it has adjudicated upon all disputes referred to it as an adjudicatory forum. The agreement also imposes certain procedures and conditions upon the DRB called
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as Dispute Revenue Board Rules and Procedures. Mr. Bilal A. Khwaja (appellant in ICA No.286/2016) was nominated by LTH Joint Venture as one of the Members of DRB for both packages No.1 and 8-A. Pursuant to clauses of PCC, respondent No.1 (Civil Aviation Authority) signed declaration of acceptance as required under Rule 11 of DRB Rules and Procedures accepting his selection and undertaking to abide by Clause 67 of PCC. Mr. Bilal A. Khwaja sent an e-mail addressed to Faisal Chaudhry (Board Member), Richard Smyczek (Project Manager of LTH JV), Mushtaq Ahmed (Board Member), Mushtaq Soomro, Muhammad Javed (General Managers, Contract of LTH JV) and Mohammad Farrukh Aslam (Member) whereby the subject of that email dated 02.10.2014 was "Draft-DRB Decision of ED-11", Pakistan Civil Aviation Authority raised objection on the issuance of e-mail by Mr. Bilal A. Khwaja on the ground that it amounts to breach of trust and impartiality of Mr. Bilal A. Khwaja DRB Member whereas there is no express provision in the contract agreement regarding removal of DRB Member, therefore, a request was made to Project Director to review the matter with the aim to replace Mr. Bilal A. Khwaja for breach of his obligation under the contract agreement. 4. Mr. Bilal A. Khwaja responded to said letter and explained his position whereafter refused to resign from the position of DRB Member as a result of said event of distrust Pakistan Civil Aviation Authority having no other remedy except to file a civil suit, filed C.S. No.27/2016 with the prayer that Mr. Bilal A. Khwaja (DRB Member/appellant) has committed misconduct and breach of contractual obligations under the contract agreement, therefore, he may be removed. The suit was contested by the present appellants who are defendants in main suit whereafter the learned Single Judge in Chamber after hearing the parties decided the CM and restrained Mr. Bilal A. Khwaja/appellant to act as DRB Member, as a result of said order instant ICAs have been filed. 5. Appellant (Mr. Bilal A. Khwaja) argued that impugned order has been passed by learned Single Judge in Chambers while relying upon two emails dated 19.12.2015 which are contrary to record; that the impugned order is based upon 2002 CLD 120 [Karachi], ATCO Lab. (Pvt.) Limited versus PFIZER Limited and others", whereby nothing in separate has been suggested as to how the plaintiff will suffer irreparable loss or balance of convenience for granting of interim relief is available to the plaintiff; that Pakistan Civil Aviation Authority has not raised any objection regarding continuity of Mr. Bilal A. Khwaja as DRB Member, as Mr. Bilal A. Khwaja has passed decisions in relation to ED-11, ED-12 and ED-17 and the said disputes have been decided against Civil Aviation Authority by majority decision of DRB; that respondent authority has failed to identify any misconduct on the part of appellant Mr. Bilal A. Khwaja through which any delay has been caused or alleged; that the suit is not maintainable as it is based upon concealment of material facts; that the impugned order is silent as to how and under what circumstances the granting of injunction would be in public policy/public interest. 6. Learned counsel of LTH Joint Venture while appearing in ICA No.313/2016 argued that Pakistan Civil Aviation Authority (respondent) has approached the Court with an ordinate delay for the alleging misconduct against Mr. Bilal A. Khwaja for his draft individual decision on 02.10.2014 whereafter respondent without any protest and reservation participated and continued to attend the proceedings of DRB on several reference in which Bilal was acting as one of the Members; that respondent has also filed an application U/S 27 of the Arbitration Act, 1940 on 14.03.2016 before the learned Arbitrators Mr. Justice (R) Sair Ali and Mr. Justice (R) Athar Saeed (Arbitration Tribunal) on the same grounds during the pendency of arbitration proceedings regarding package No.1; that by raising such kind of disputes against the DRB Member by the respondent, the contractual obligations have been infringed as DRB proceedings have come to stand still which gives the respondents unfair advantage in dispute resolution process which has financial implication; that Pakistan Civil Aviation Authority participated in all proceedings of DRB without complaint hence they could not take a summersault as such kind of action is based upon malafide as Pakistan Civil Aviation Authority is trying to use the Court proceedings to replace LTH JV DRB Member by seeking specific performance which is not permissible under the law as well as under the terms of the contract; that Pakistan Civil Aviation Authority is put to strict proof for the allegations leveled by the respondent in their e-mail as well as in the civil suit and if the impugned order is not set-aside the LTH JV will suffer irreparable loss; that suit has been filed by unauthorized person as no legal authority or authorization is available on record;
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that learned Single Judge in Chambers while passing the impugned order has ignored the principles of safe administration of justice and even not considered the concept of irreparable loss. Learned counsel has relied upon 2002 CLC 120 "Atco Lab. (Pvt.) Ltd. versus Pfizer Limited and others", PLD 1975 [Karachi] 464 "Abdul Ghafoor Memon versus Mohammed and another", 2008 CLC 930 (D.B.) "Arbab Fazal Rauf and another versus Arbab Sajjad and 6 others", 2013 CLC 454 "Mst. Saeeda versus Province of Punjab and others", PLD 1979 Karachi 668 "M/s. Quality Builders Ltd. Versus M/s. J. P. Brockhoven V. V. Dredging Contractors and 9 others", 1984 CLC 440 (Adamjee Paper and Board Mills Limited versus Maritime Agencies Ltdd", PLD 2011 Karachi 185 "M/s Shakil Waqas & Co. and others versus General Manager/Marketing, Pakistan Railways and others", PLD 1970 Karachi 332 "Oil and Gas Development Corporation versus Ltd. Col. Shujauddin Ahmed", 1984 PLC 712 "Cotton Export Corporation of Pakistan Ltd. versus The Sind Labour Appellate Tribunal at Karachi and 2 others", PLD 1973 Karachi 234 "Aboo Noor Muhammad versus General Iron & Steel Works Limited", 1979 CLC 307 "Island Textile Mills Ltd. versus V/O Technoexpert and another", 2015 CLC 34, "Major (Retd.) Ahmed Nadeem Sadal versus Federation of Pakistan through Secretary Sport and others", PLD 1971 SC 550 "Khan Iftikhar Hussain Khan of Mamdot (represented by 6 heirs) versus M/s Ghulam Nabi Corporation Ltd.", 1987 CLC 367 "Abubakar Saley Mayet versus Abbot Laboratories and another", PLD 1966 SC 684 "M/s Muhammad Siddiq Muhammad Umar and another versus The Australasia Bank Limited", 2006 CLD 85 "National Insurance Corporation and others versus Pakistan National Shipping Corporation and others", 2005 CLD 1208 "M/s Razo (Pvt.) Ltd. versus Director Karachi City Region Employees Old Age Benefit Institution and others. 7. Learned counsel for respondent/Pakistan Civil Aviation Authority in both the appeals argued that the contract executed between Pakistan Civil Aviation Authority for construction of new Islamabad International Airport (Package-1 and Package 8A) on 14.09.2010 with LTH JV provides a dispute resolution mechanism in 3 tier in terms of clause 67 of PCC whereby a DRB was also constituted during the term of contract and all the members of DRB are bound by Appendix-M to the contract agreement which contains a declaration that every DRB Member is agreed to the DRB Rules and Procedures and accepted the same as part of bid. Learned counsel further argued that Bilal. A. Khwaja was nominated as Member of DRB on behalf of LTH JV who acted as Member of DRB however, he issued an e-mail to other DRB Members, Project Director of his own employer LTH JV and other officials with the title "Draft-DRB Decision of ED-11" which amounts to misconduct on his part and the same shows his personal motivated agenda to please his own employers in serious disregard to the rules and procedures of DRB; that Bilal A. Khawaja even after having knowledge of the objections of Pakistan Civil Aviation Authority /respondent has refused to acknowledge the same and continued to be the DRB Member, therefore, there is no other option left with Pakistan Civil Aviation Authority but to initiate the proceedings against DRB Member, Mr. Bilal A. Khwaja; that learned Single Judge in Chambers has rightly passed the order against Mr. Bilal A. Khwaja as if he continues to be DRB Member in terms of clause 67 of the Agreement it means that all the arbitration process in future will be jeopardized and the authorities will have to assail the conduct of DRB Member, hence, the respondent will suffer irreparable loss if the restraining order is set-aside. 8. Arguments heard, record perused. 9. Before proceeding with the instant ICAs, we have seen the objection raised byMr . Bilal A. Khwaja in his appeal at ground "A" where he has referred the relationship of learned Single Judge in Chambers with reference to his brother who is an employee of plaintif f/ Pakistan Civil Aviation Authority . In response to said objection we have asked Mr. Bilal A. Khwaja and learned counsel of LTH JV as to whether they raised the said objection before the learned Single Judge during the course of hearing of civil suit before passing of the impugned order . Mr. Bilal A. Khwaja and learned counsel for LTH JV stated that no such objection was raised. In our estimation if such objection would be raised before the learned Single Judge in Chambers, the honorable judge would have not heard the case. Even this kind of attempt is considered as an afterthought in order to dispute the Hon'ble Single Judge in Chambers or to raise concern rather amounts to an effort for creating a ground in appeal on the part of appellant, therefore, we depreciate such kind of practices as we have gone through the record and it has been observed that this matter remained fixed before learned Single Judge in Chambers on 28.03.2016, 13.04.2016, 19.04.2016, 25.04.2016, 26.04.2016
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& 29.04.2016, wherein Mr. Bilal A. Khwaja and learned counsel for LTH JV have not raised any such query, question or issue before the learned Single Judge in Chambers nor even pointed out the said fact, therefore, we believe that impugned order has been passed with great impartiality and there is no question to consider any bias against the appellants, hence, the objection is hereby turned down and could not be considered as a valid excuse on the part of Mr. Bilal A. Khwaja. 10. From the perusal of record it has been observed that Pakistan Civil Aviation Authority invited bids for construction of new Islamabad International Airport project for package 8A and package-1 whereby LTH JV has succeeded in getting the project through a bidding process and as a result of said bidding the agreement was executed on 24.07.2008 in respect of package-1 and agreement dated 14.09.2010 was signed for package 8-A. As per PCC it was agreed between the parties to resolve the disputes in terms of clause 67 of the agreement which is based upon 3 stages, Engineer's Decisio ns 67.1, Dispute Review Board 67.2, Arbitration Notice 67.3, Amicable settlement 67.4 and Arbitration 67.5 whereas the matter agitated before this Court is regarding the terms of DRB which is as under:- "67.2 Dispute Review Board A Disputes Review Board whose Rules and procedures has been set out in Appendix-M attached hereto, shall be constituted within eighty four (84) days of the commencement of the Works and shall comprise three (3) members ("Board Members") to be nominated, one each by the Employer and the Contractor and the third by the said two nominees with mutual consent, failing agreement, the nomination of the third member shall be made by the Pakistan Engineering Council at the request of either of the parties. If either the Employer or the Contractor be dissatisfied with any decision of the Engineer or if the Engineer fails to give notice in writing of his decision, the matter in dispute to the Disputes Review Board which shall, after giving fair hearing to both the parties, give its decision on the dispute referred to them within a period of eighty four (84) days from the date of reference of the said dispute to Dispute Review Board and convey the decision to each of the parties. Expenses in respect of the nominee of each party shall be borne by the respective party whereas those related to the third nominee shall be shared by the parties equally. If the Employer or the Contractor is dissatisfied with the decision of the Disputes Review Board, then the Employer or the Contractor, as the case may be, within a period of seventy (70) days of the receipt of such decision from the Dispute Review Board give notice in writing to the other party through the Engineer of his intention to commence arbitration as hereinafter provided Engineer of his intention to commence arbitration as hereinafter provided in Sub-Clause 67 (3). No arbitration in respect thereof may be commenced unless such notice is given." In view of above referred mechanism of DRB three members have to be appointed called Board Members whereas two members have to be nominated by the employer and the contractor and 3 one by the said nominees with the mutual consent. Mr. Bilal A. Khawaja was nominated by LTH JV who has executed the declaration appended with the agreement which provides certain conditions to be observed by the Board Members. 11. A dispute arose with Mr. Bilal A. Khwaja who issued an e-mail to Faisal Chaudhry (Board Member), Richard Smyczek (Project Manager of LTH JV), Mushtaq Ahmed (Board Member), Mushtaq Soomro, Muhammad Javed (General Managers, Contract of LTH JV) and Mohammad Farrukh Aslam (Membe r) whereas subject of this email was "Draft-DRB Decision of ED-1 1", the original e-mail alongwith contents is reproduced as under: "From: "Mr. Bilal A. Khwaja" <bakhwaja@yahoo.com> Date: 2 October 2014 4:53:00 pm GMT+5 To: Faisal Chaudhry <chfm100@hotmail.com >. Richard Smyczek <rick.smyczek@btinternet.corn>, Mushtaq Ahmed <Mushtaql ljanuary@hotmail.corn>, Mushtaq Smore <mushtaqa45@yahoo.corn>, Mohammad Farrukh Aslam <faslam2011@gmail.corn>, Muhammad Javaid <javaid200@gmail.corn> Subject: Draft -- DRB Decision on ED 11. Reply-To: "Mr. Bilal A. Khwaja" <bakhwaja@yahoo.corn>rd
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Dear Sir, Attached herewith please find the above. Happy reading over the Eid holidays. I will expect your input, if any , on the 9 of October , 2014. Regard, Mr. Bilal A. Khwaja Ahmed & Ahmed Engineering Contracts Consultants Procurement Advisors and Advocates Supreme Court of Pakistan Address: Hameedah Markez 106-C, Jami Comm St 1 1 Phase 7, DHA Karachi Phone: 009221-35889278(9) Cell: 0092321-8282243" The said E-mail has not been denied by Mr. Bilal A. Khwaja (appellant) as well as LTH JV in their written statements and written replies, the said e-mail created a disputed situation among the parties as the respondent Pakistan Civil Aviation Authority alleged that sending of said e-mail as "Draft-DRB Decision of ED.11" amounts to misconduct and clear breach of Bilal A. Khawaja's contractual obligation under clause 67 of PCC and clause 1(f), 9(c) and 9 (d) of DRB Rules and Procedures. 12. Respondent/Pakistan Civil Aviation Authority after raising objections on the conduct of Mr. Bilal A. Khwaja filed a civil suit before Islamabad High Court with the following prayer: In view of the foregoing, it is respectfully prayed that this Honorable Court may graciously; i) Declare that the impugned actions of Defendant No.1, including the sharing of draft decisions through emails dated 2 October , 2014, amount to misconduct and are a breach of his contractual obligations under the Contract Agreement to act as a neutral arbiter; ii) Declare that the refusal of Defendant No.2 to remove Defendant No.1 from the DRB after the issue of misconduct by Defendant No.1 was raised by the Plaintiff is a breach of Defendant No.2 's obligations under the Contract Agreement; iii) Direct Defendant No.2 to withdraw the nomination of Defendant No.1 as DRB member forthwith and to nominate an impartial DRB member in accordance with the Contract Agreement; iv) Restrain Defendant No.1 from continuing to act as a DRB member and taking any further actions as a DRB member forthwith. v) Grant damages to the Plaintiff for damage caused by the biased decisions rendered by Defendant No.1; vi) Grant costs to the Plaintiffs; and vii) Grant any other relief deemed fair and just under the circumstances." As there is no procedure provided under PCC to remove any of the DRB Member who committed misconduct or violated the terms of contract and rules of Dispute Review Board referred in Appendix M of the PCC, therefore, in order to understand the true intent of the rules referred in Appendix-M, we have gone through each and every rule and procedure referred in the instant ICAs with the help of learned counsel for the parties. Hence, in order to understand the concept of impartiality and transparency some of the key rules referred in the Appendix-M are hereby reproduced as under:- 1. Except for providing the services required hereunder, the Board Members shall not give any advice to either party or to the Engineer concerning the conduct of the Works. The Board Members: a) shall have no financial interest in any party to the Contract, or the Engineer, or a financial interest in the Contract, except for payment for services on the Disputes Review Board (hereinafter referred to as "the Board"); b) Shall have had no previous employment by, or financial ties to, any party to the Contract, or the Engineer, except for fee-based consulting services on other projects, all of which must be disclosed in writing to both parties to appointment to the Board; c) Shall have disclosed in writing to both parties prior to appointment to the Board any and all recent or close professional or personal relationships with any director, officer, or employee of any party to theth nd
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Contract, or the Engineer, and any and all prior involvement in the project to which the Contract relates; d) Shall not, while a Board Member, be employed whether as a consultant or otherwise by either party to the Contract, or the Engineer except as a Board Member, without the prior consent of the parties and the other Board Members; e) Shall not, while a Board Member, engage in discussion or make any agreement with any party to the Contract, or with the Engineer, regarding employment whether as a consultant or otherwise either after the Contract is completed or after service as a Board Member is completed; f) shall be and remain impartial and independent of the parties and shall disclose in writing to the Employer, the Contractor, the Engineer, and one another and fact or circumstance which might be such as to cause either the Employer or the Contractor to question the continued impartiality and independence required of Board Members; and g) shall be fluent in the English language. In addition to above conditionalties the procedure for conduct of hearing has been referred in clause -9 which is reproduced as under: "9. Conditions of Hearings: (a) (b) (c) During the hearings, no Board Member shall express any opinion concerning the merit of the respective arguments of the parties. (d) After the hearings are concluded, the Board shall meet privately to formulate its Recommendations. All Board deliberation shall be conducted in private, with all Board Members' individual view kept strictly confidential. The Board's Recommendations together' with an explanation of it's reasoning shall be submitted in writing to both parties and to the Engineer. The Recommendations shall be based on the pertinent Contract provisions, applicable laws and regulations, and the facts and circumstances involved in the dispute. e) The Board shall make every effort to reach a unanimous Recommendation. If this proves impossible, the majority shall decide, and the dissenting Board Member may prepare a written minority report for submission to both parties and to the Engineer." The above referred conditions and rules clearly demonstrate that a Board Member shall have no financial interest in any party to the contract nor having any personal relationship with any Director, Officer or employee of the party to the contract and not even allowed to engage in discussion but the most important provision is Clause 1-F where Board Member is directed to remain impartial and independent of the parties which should be considered as a key factor for any quasi judicial authority failing which the disputed question could not be resolved as the parties would lost their confidence upon the Adjudicator, Arbitrator, DRB Member for their neutrality in such like situation. 13. It is mandate of every judicial, quasi juridical system that while hearing any disputed case, proceedings, they have to prove their conduct through implied and express conduct to remain impartial especially when they have signed any declaration or taken any oath under any law or a contract through which they have appointed or notified. We have gone through the relevant clause 9 of Appendix-M regarding the conduct of hearing of DRB. It has specifically been provided that no Board Member shall express any opinion concerning the merits of respective arguments of the parties even otherwise clause 9-D put emphasis upon the Board to meet privately for formulation of its recommendations even all board deliberations shall be conducted in private in order to keep strict confidentiality. This concept of hearing requires a high standard of professional ethics and character of the Board Members who shall act fairly, honestly and diligently without having any interest with any of the parties. The reasons for imposing the very concept of confidentiality and impartiality in such like contracts is the key factor to resolve the disputes in a fair and transparent manner where no party can express their reservations regarding the Board Members or on the Arbitrators and if any such question is raised the basic appointment of Board Member or Arbitrator comes to an end as any interest of Board Member or for that matter
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any slightest mistake which gives rise to an impression that Member has some bias in its functioning creates a serious doubt on the entire mechanism of Clause 67 of PCC. 14. In such like situation where there is no procedure provided in the PCC to remove any DRB Member then we have to formulate our view on the basis of principles settled in the following case studies:- 1990 MLD 2010 [Karachi], "Design Group of Pakistan versus Clifton Cantonment Board" wherein it…
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