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Petitioner: Major Muhammad Nouman VS Respondent: Usman Habib and another
Court Name: Islamabad High Court Judge(s): Miangul Hassan Aurangzeb Title: Major Muhammad Nouman vs Usman Habib and another Case No.: W.P.No.1090/2018 Date of Judgment:2018-09-19 Reported As: 2018 IHC 112 Result: Petition Allowed
Judgment MIANGUL HASSAN AURANGZEB, J:- Through this judgment, I propose to decide writ petitions No.1090/2018 and 1091/2018, since they entail common questions of law and fact. The contesting parties to the said petitions are common. 2. Through writ petition No.1090/2018, the petitioner (Major Muhammad Nauman) impugns (i) Order dated 18.04.2017, whereby the Court of the learned Civil Judge, Islamabad, dismissed the petitioner 's application for setting-aside the order dated 21.05.2016, whereby the petitioner was proceeded against ex-parte ; and (ii) Order dated 12.02.2018, passed by the Court of the learned Additional District Judge, Islamabad, dismissing the petitioner 's civil revision petition against the said order dated 18.04.2017, passed by the learned Civil Court. 3. Through writ petition No.1091/2018, the petitioner impugns order dated 12.02.2018, passed by the Court of the learned Additional District Judge, Islamabad, dismissing the petitioner 's civil revis ion petition against the learned Civil Court' s order and decree dated 11.05.2017, whereby the arbitration award dated 03.10.2016 was made a rule of Court. 4. The record shows that on 29.11.2014, the petitioner and respondent No.1 (Usman Habib) entered into a contract for the construction of the former 's house on plot No.11, Street No.1, Sector E, D.H.A., Phase-I, Islamabad, for a total consideration of Rs.13,900,000/-. The construction was to be completed by 28.11.2015. After the house was partially constructed, disputes and differences arose between the petitioner and respondent No.1. Clause 2.12 of the said contract, is reproduced herein below:- "2.12 All disputes, controversies, or other claims arising in connection with this agreement or the breach, termination or invalidity thereof and which will be settled by good faith negotiations and arbitration as nominated and agreed mutually by both the parties." 5. On 28.11.2015, respondent No.1 filed an application under Section 20 of the Arbitration Act, 1940 ("the 1940 Act") praying for the disputes between the petitioner and respondent No.1 arising from and related to the said contract to
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be referred to arbitration. Furthermore, respondent No.1 had prayed for the appointment of an arbitrator. The petitioner contested the said application by filing a written reply on 12.04.2016. 6. On 21.05.2016, the petitioner was proceeded against ex- parte. On 31.05.2016, the learned Civil Court, allowed respondent No.1's application under Section 20 of the 1940 Act, and referred the disputes between the petitioner and respondent No.1 to arbitration. On 17.06.2016, Mr. Muhammad Wajid Hussain Mughal, was appointed by the learned Civil Court as the sole arbitrator. On 03.10.2016, the learned arbitrator rendered the award holding respondent No.1 entitled to recover an amount of Rs.4,502,000/- from the petitioner along with the costs of litigation and the arbitration proceedings. Perusal of the said arbitration award shows that respondent No.1 had appeared in the arbitration proceedings on 16.08.2016 but subsequently absented himself, causing the learned arbitrator to proceed ex-parte against him. 7. After the arbitration award was rendered, the petitioner , on 17.10.2016, filed an application for setting-aside the order dated 21.05.2016 whereby the petitioner had been proceeded against ex-parte by the learned Civil Court . Vide order dated 18.04.2017, the learned Civil Court, dismissed the said application primarily on the ground that it had been filed beyond the limitation period provided by law. Furthermore, it was held that the petitioner had failed to file objections to the arbitration award within a period of 30 days from the date of the filing of the award. The said order dated 18.04.2017 was assailed by the petitioner in revision petition No.20/2017 before the Court of the learned Additional District Judge, Islamabad. Vide order dated 12.02.2018, the said revision petition was dismissed. It was held by the learned revisional Court that since the order dated 18.04.2017 was an interim order , and since the arbitration award had already been made a rule of Court, the said order dated 18.04.2017 had ["lost its validity" ]. The petitioner has assailed the said order dated 12.02.2018 in writ petition No.1090/2018. 8. As mentioned above, vide order and decree dated 11.05.2017, the said arbitration award was made a rule of Court. The said order and decree were assailed by the petitioner in revision petition No.21/2017 before the Court of the learned Additional District Judge, Islamabad. Vide order dated 12.02.2018, the said revision petition was dismissed. The learned revisional Court held inter-alia that the petitioner should have assailed the order and decree dated 11.05.2017 in an appeal instead of a revision petition; that the limitation period for filing an appeal was 30 days, whereas the limitation period for filing a revision petition was 90 days; that the petitioner had filed the revision petition only to save himself from being non-suited by not filing an appeal within 30 days; and that the revision petition was beyond the pecuniary jurisdiction of the learned revisional Court. The said order dated 12.02.2018 has been assailed by the petitioner in writ petition No.1091/2018. 9. Ms. Shireen Imran, learned counsel for the petitioner , after narrating the events leading to the filing of the writ petitions, submitted that the reason why the petitioner was unable to tender appearance before the learned Trial Court on 21.05.2016 was because on the said date, he was performing his duties as a soldier in the Pakistan Army; that the petitioner 's counsel could not appear before the learned Civil Court on the said date because of her preoccupation in other Courts; that the learned Civil Court did not take into consideration the petitioner 's pleadings in his reply to respondent No.1' s application under Section 20 of the 1940 Act before referring the matter to arbitration; and that there is no limitation period provided by law for filing an application for the recall of an order whereby a defendant/respondent is proceeded against ex-parte. 10. Learned counsel for the petitioner further submitted that the learned Civil Court erred by making the award dated 03.10.2016 a rule of Court; that even though the petitioner did not file objections under Section 30 of the 1940 Act to the award, it was obligatory upon the learned Trial Court to have scrutinized the award in order to determine as to whether or not it suffered from any invalidity; that the learned Revisional Court erred by not appreciating that an order to make the award a rule of Court was not appealable under Section 39 of the 1940 Act; that the limitation period for filing such an appeal is ninety days and not thirty days as erroneously held by the learned Revisional Court; and that the learned Revisional Court erred by not appreciating that the order and decree dated 11.05.2017 was an unreasoned order and did not show any application of mind by the learned Civil Court to the contents of the award. Learned counsel for the petitioner prayed for the writ petitions to be allowed. 11. On the other hand Mr. Izzat Khan, learned counsel for respondent No.1, subm itted that the concurrent orders passed by the learned Courts below do not suffer from any jurisdictional infirmity; that the petitioner and his counsel
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were most negligent in defending the proceedings before the learned Civil Court as well as the learned arbitrator; that in the said proceedings, the petitioner had, at first, tendered appearance and subsequently absented himself without any plausible explanation; that if the petitioner was busy in performi ng his duties as a soldier on 21.05.2016, there was no reason for his counsel not to have tendered appearance before the learned Civil Court on the said date; that the said order dated 21.05.2016 merged in the order dated 31.05.2016, whereby the learned Civil Court, allowed respondent No.1's application under Section 20 of the 1940 Act and referred the matter to arbitration; that since the petitioner did not file an appeal against the said order dated 31.05.2016, he is estopped from belatedly challenging the order dated 21.05.2016, whereby he was proceeded against ex-parte; that on 07.10.2016, the learned Civil Court, gave an opportunity to the petitioner to file objections to the arbitration award by 25.10.2016; that the petitioner's negligence continued unabated, because he did not file objections to the award dated 03.10.2016; that in such circumstances, the learned Civil Court, was correct in making the said award a rule of Court; that instead of filing an appeal against the order and decree dated 11.05.2017, the petitioner preferred a revision petition and that too before a wrong forum; and that the learned Revisional Court was correct in dismissing the petitioner's revision petitions. Learned counsel for respondent No.1 prayed for the writ petitions to be dismissed. 12. I have heard the contentions of the learned counsel for the contesting partie s, and have perused the record with their able assistance. 13. The facts leading to the filing of the instant petitions have been set out in sufficient detail in paragraphs 2 to 8 above, and need not be recapitulated. 14. It is not disputed that the petitioner had contested respondent No.1' s application under Section 20 of the 1940 Act by filing a written reply . Thereafter , on 21.05.2016, the petitioner was proceeded against ex-parte by the learned Civil Court. This was before respondent No.1' s application under Section 20 of the 1940 Act was allowed, vide order dated 31.05.2016. The petitioner did not file an appeal against the order whereby the said application was allowed and the matters-in-dispute between the parties were referred to arbitration. The award was rendered on 03.10.2016, whereas the petitioner had filed the application for the recall of the said order dated 21.05.2016 on 17.10.2016. In other words, the applicatio n for the recall of the order whereby the petitioner was proceeded against ex-parte was filed not just after respondent No.1' s application under Section 20 of the 1940 Act was allowed but also after the award was rendered by the learned arbitrator . No plausible explanation was put forth by the learned counsel for the petitioner for not filing an application for the recall of the said order dated 21.05.2016 before the matter was referred to arbitration or before rendering of the award. In these circumstances, I am of the view that the learned Civil Court was correct in dismissing the petitioner 's application for the recall of the order whereby he was proceeded against ex-parte . 15. Although limitation period has been prescribed for setting-aside an ex-parte decree, no limitation period has been prescribed for setting-aside an order whereby a defendant/respondent is proceeded against ex-parte. The limitation period for filing such an application is three years under Article 181 of the Schedule to the Limitation Act, 1908. However, it is well settled that a defendant/respondent who is proceeded against ex-parte is not debarred from appearing and participating in the proceedings at a subsequent stage. Reference in this regard may be made to the judgments in the cases of Hashim Khan Vs. National Bank of Pakistan (1992 SCMR 707) and Police Department Vs. Javid Israr (1992 SCMR 1009). In the case at hand, after being proceeded against ex-parte, the petitioner made no effort to join or participate in the proceedings. 16. The petitioner could not expect the learned Civil Court to put at naught the reference to arbitration as well as the entire arbitration proceedings simply because the petitioner chose to file an application for the recall of the order , whereby he was proceeded again st ex-parte with an inordinate delay . It was within the discretion of the learned trial Court whether or not to allow an application for the recall of the order , whereby a defendant/respondent was proceeded against ex-parte . The conduct of the applicant is to be taken into consideration and would be most relevant while such discretion is being exercised. Given the delay with which the application for the recall of the order dated 21.05.2016 was filed by the petitioner, and given the fact that the petitioner did not come up with a good cause as to why he or his counsel could not tender appearance before the learned Civil Court on 21.05.2016, I do not find any arbitrariness or unreasonableness in the order dated 18.04.2017, passed by
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the learned Civil Court dismissing the petitioner's application for the recall of the order dated 21.05.2016. Consequently, writ petition No.1090/2018 is dismissed. 17. As regards writ petition No.1091/2018, I first propose to decide the question whether the order dated 11.05.2017, passed by the learned Civil Court, whereby the award dated 03.10.2016 was made a rule of Court was appealable under Section 39 of the 1940 Act, or revisable under Section 115 C.P.C. Section 39(1)(xi) of the 1940 Act provides a right of appeal against an order "setting aside or refusing to set-aside an award". An award can be set-aside either on the application of a party under Section 30 of the 1940 Act, or by the Court on its own motion. Either way, an order setting-aside an arbitration award is appealable. The question of a refusal by a Court to set-aside an award would arise only if an application to set-aside an award is filed by a party aggrieved by the award. If no such application or objections to the award are filed, and the Court passes an order making the award a rule of Court, such an order is not appealable. 18. In the case at hand, it is an admitted position that after the said award was rendered, the petitioner did not file objections to the award dated 03.10.2016 under Section 30 of the 1940 Act despite having been afforded opportunities for doing so by the learned Civil Court. Therefore, the order dated 11.05.2017, whereby the said award was made a rule of Court cannot be termed as an order "refusing to set-aside an award" . This being so, it is held that the said order dated 11.05.2017 was not appealable under Section 39 of the 1940 Act. However , the petitioner could have filed a revision petition against the said order . 19. It ought to be borne in mind that Section 17 of the 1940 Act bars an appeal against a decree passed following a judgment pronounced according to the award except on the ground that it is excess of, or not otherwise in accordance with the award. In the case at hand, the learned Civil Court has not just passed an order in terms of the award dated 03.10.2016 but also a decree. It was not even the petitioner's case before the Revisional Court that the order and decree dated 11.05.2017, passed by the learned Civil Court was in excess of the award or not in accordance with the award. Therefore, the order and decree dated 11.05.2017 was not appealable under Section 17 of the 1940 Act. 20. In view of the above, the Court of the learned Additional District Judge erred by holding that the order and decree dated 11.05.2017 was appealable. The said Court also erred by not appreciating that since no objections had been filed by the petitioner before the learned Civil Court for the setting-aside of the award, the question of "refusing to set-aside an award" did not arise. Consequently, I have no hesitation in holding that the revision petition filed by the petitioner against the order and decree dated 11.05.2017 was maintainable. In holding so, I derive guidance from the law laid down by the Hon'ble Supreme Court in the case of Tribal Friends Co. Vs. Province of Balochistan (2002 SCMR 1903). In the said case, objections to an arbitration award were filed beyond the limitation period provided by law. The Court rejected the objections and made the arbitration award a rule of Court by passing a judgment and decree in terms thereof. The party aggrieved by the judgment and decree filed a revision petition, which was allowed by the Hon'ble High Court of Sindh, and the award was set-aside. The Hon'ble Supreme Court allowed the appeal on merits against the judgment of the Hon'ble High Court but held that a revision petition against the judgment and decree in terms of the arbitration award was competent under Section 115 of the Code of Civil Procedure, 1908. Paragraph 7 and the relevant portions of paragraphs 8, 9 and 10 of the said report, are reproduced herein below:- "7. The appellant's Advocate has contended that both appeal and revision were not maintainable. In support of this contention the learned counsel submitted that appeal could be filed under section 39 (1) (vi) against the order refusing to set aside the award. As there was no objection before the Court question of refusal to set aside did not arise and thus section 39(1)(vi) will not be attracted. The contention seems to be that the objection to the award filed by the respondent was barred by time, therefore, there was no objection before the Court and thus question to refuse to confirm the award did not arise. The contention is not tenable. Section 39 (1) (vi) contemplates appeal against an order where the Court refuses to set aside the award. Such an order can be passed where objection has been filed by the parties. The question is whether an objection which is barred by time can be equated with a situation where no objection has been filed at all. Any party challenging the award can file objections which may be rejected or accepted. If it is rejected on merits or on the ground that it is barred by time it will amount to dismissing the objection and thus there will be an order refusing to set aside the award. The learned counsel referred to
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Nilkantha S. Nigachatti v. Sommena Nigashettis & Son AIR 1962 SC 66, where it was observed that if any party fails to file objection the question of setting aside the award does not arise and no appeal is maintainable under section 39. This rule is not applicable to the present case where objection was filed though claimed to be barred by time. Distinction has to be made where no objection has been filed and where objection though filed is barred by time. In the latter situation the Court has to pass an order holding that objection to the award being barred by time is dismissed and consequently refuse to set aside the award. In such a case there is a composite order against which appeal under section 39(1)(vi) can be filed. Therefore, on this particular ground maintainability of the appeal cannot be challenged. 8. Now, we will consider whether revision application can be filed against any order passed by the Court under the Arbitration Act. For the purpose of filing appeal section 17 and section 39 can be pressed in service. The question is if any order is not covered by section 17 and section 39, Arbitration Act section 115, C.P.C. can be pressed in service section 41, Arbitration Act makes Code of Civil Procedure applicable to the proceedings of arbitration before the Court subject to the provisions of Arbitration Act. Therefore, Code of Civil Procedure will be applicable to arbitration proceedings in Court except where such application is expressly excluded by the Act or Rules framed under section 44 of the Arbitration Act. Section 23, subsection (2) provide that where matter is referred to Arbitration the Court shall not deal with such matter except as provided by the Arbitration Act. Likewise section 32 bars any suit on any ground whatsoever for decision upon the existence effect or validity of an arbitration agreement or award except as provided by the Act. Where any Act is made applicable to any case or procedu re than all the procedures and remedies available under that Act can be invoked provided their applicability has not been excluded. The learned Single Judge while holding the revision application maintainable observed as follows:-- "That though in the event when decree is passed on the basis of award, according to section 17 of the Arbitration Act appeal is not maintainable yet on the pointation of apparent illegality, lack of jurisdiction of violation of law or established procedure, same can, however, be challenged by way of revision petition within the purview of section 115, C. P. C." The applicability of section 115 of C.P.C. has not been completely excluded. In cases where remedy has been provided by appeal within the framework of the Arbitration Act revision application will not lie but in cases where these provisions do not apply the revisional jurisdiction of the High Court under section 115, C.P.C. can be invoked. Where in cases no appeal is provided and the Court has exceeded jurisdiction, acted without jurisdiction, committed material irregularity in the conduct of proceedings, passed order in violation of principles of natural justice and the same cannot be assailed under the provisions of the Arbitration Act and the High Court may exercise its supervisory jurisdiction under section 115, C.P.C. on an application made by any party or suo moto. It should be borne in mind that the proceedings relating to arbitration are to be governed and regulated by the Arbitration Act. The applicability of C.P.C. is in terms of section 41 and subject to the provision of the Arbitration Act. The respondent had filed revision application against the order passing a decree in terms of the award. Section 17 bars an appeal against a decree passed in terms of the award. In such circumstances in revision application a decree cannot be challenged on grounds set out in sections 30 and 33 of the Arbitration Act. ... 9...A revision application will be competent against order , judgment and decree on grounds specified in section 115, C.P.C., provided the same cannot be challenged in appeal. In a case where any award is sought to be challenged the revision will lie if only the case is not covered by sections 30/33 and 39 of the Arbitration Act. 10. After holding that the revision application was maintainable and court-fee was payable the learned Judge proceeded to consider the grounds on which the order of the learned Civil Judge has been held to be illegal. ..." 21. Since the petitioner had not filed objections to the award dated 03.10.2016, the question of refusal to set-aside the award did not arise. Further, since the Court of the learned Additional District Judge, in dismissing the petitioner's revision petition against the learned Civil Court's order dated 11.05.2017 had held that the said order was appealable, the order passed by the Court of the learned Additional District Judge was not in consonance with the law laid down by the Hon'ble Supreme Court in the case of Tribal Friends Co. Vs. Province of Balochistan (supra). It is not disputed that the petitioner had filed a revision petition against the order and decree dated 11.05.2017 within the limitation period of 90 days provided by law. Therefore, the impugned revisional order, to the extent of holding that the
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petitioner's revision petition against the said order was not competent, amounts to a jurisdictional error and is therefore, not sustainable. 22. Ordinarily, when this Court, in exercise of its jurisdiction under Article 199 of the Constitution, sets aside an order of a Court or a Tribunal, it remands the matter for a decision afresh in accordance with the law. In the case at hand, even though the order passed by the Court of the learned Additional District Judge has been found not to be sustainable, this Court cannot remand the matter to the said Court, since the said Court does not have the jurisdiction in pecuniary terms to entertain the revision petition against the order and decree dated 11.05.2017. The Court of the learned Additional District Judge could entertain revision petitions up to a pecuniary limit of Rs.25,00,000/- only. Given the value of the subject-matter of the reference or the proceedings before the learned Civil Court, the revision petition against the order and decree dated 11.05.2017 should have been filed before this Court and not Court of the learned Additional District Judge. 23. Section 4 of the Islamabad High Court Act, 2010, provides that the Islamabad High Court shall have, in respect of the Islamabad Capital Territory , original, appellate, revisional and other jurisdiction, as under the Constitution or the laws in force immediately before the commencement of the said Act, is exercisable in respect of the said territory by the Lahore High Court. Now it is not disputed that immediately before the commencement of the said Act, the High Court had appellate and revisional…
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