Present
Mr. Justice Mushir Alam, CJ
Mr. Justice Aqeel Ahmed Abbasi.
Date of hearing : 09.04.2012
Date of judgment : 10.08.2012
Appellant : Export Promotion Bureau through Mr. Khalid Anwer, Advocate
Versus
Respondents No.1&4 : Dadabhoy Padube Limited and Siddiqsons Industries (Pvt) Ltd. through Mr. Asim Iqbal, Advocate
Respondent No.2 : Hottaimi Bin Nehar Est. Jeddah through M/s Abid S. Zuberi alongwith M. Haseeb Jamali and Umer Lakhani, Advocates
Respondent No.3 : National Tent House, through Mr.Shoa-un-Nabi, Advocate
J U D G M E N T
Aqeel Ahmed Abbasi, J. Being aggrieved and dissatisfied by judgment and decree dated 18.10.1999 and 23.10.1999 respectively, as modified by order dated 22.12.1999 passed by the learned Single Judge in J.M.No.54 of 1995, the appellant has preferred instant High Court appeal. It is pertinent to note that in the first round of litigation before this Court this High Court Appeal was dismissed by a Division Bench of this Court vide order dated 6.4.2000 on the point of limitation. An appeal i.e. Civil Appeal No.872 of 2000 was preferred by the appellant before the Hon’ble Supreme Court, which was disposed of by consent of the parties on 27.5.2009 in the following terms:
“After hearing learned counsel for the parties at some length, they have agreed that the case be remanded to the High Court, for deciding it afresh on merits, including all legal and just objections. Order accordingly. The case be decided before 31st October, 2009. In the meantime, the Award will not be enforced till the decision of the High Court. Disposed of in the above terms.”
2. Brief facts as recorded by the learned Single Judge in the impugned judgment are that the respondent No.2 herein namely, Hottaimi Bin Nehar Est. (hereinafter referred to as H.B.N) submitted a proposal to the then President of Pakistan in the year, 1982, for setting up a Pakistan Display and Trade Center at Jeddah, Saudi Arabia for promoting and expansion of Pakistanis export in Saudi Arabia. Consequently, on March, 27th 1982, an agreement between H.B.N and Government of Pakistan was executed through which several terms and conditions were agreed between the parties. According to clause 24 of the said Agreement it was agreed that in the event of dispute between the parties, the matter shall be referred to arbitration under Pakistan Arbitration Act, 1940 (hereinafter referred to as the Act, 1940) and that the decision of the arbitration shall be final and binding on both the parties. However, it was not mentioned as to how many arbitrators were required to settle this dispute. The case of H.B.N was that it performed all its contractual obligations and responsibilities as per agreement dated 27.3.1982 but the Export Promotion Bureau, Ministry of Commerce, Government of Pakistan (hereinafter referred to as E.P.B) failed to perform its commitments/obligations arising therefrom. In the circumstances, the dispute between the appellant and respondent No.2 reached before the Federal Ombudsman, where, by consent of the parties on 9.3.1995 Justice (Retd.) Raja M. Khursheed Khan was appointed as sole arbitrator who passed the award dated 09.07.1995. Thereafter proceedings under Section 14(2) of the Arbitration Act, 1940 read with Section 282 of the Sindh Chief Court Rules (OS) were filed before the learned Single Judge in J.M.No.54 of 1995, who vide impugned judgment dated 23.10.1999 made the Award dated 9th July 1995 with modifications as rule of the Court in the following terms:
”(11) In view of the above discussion the award is made rule of the Court. Decree to follow in the following terms:
CLAIM OF HBN EST:
i) Accumulated rent from 1983-84 to 1986-87
with mark up of 10% (1988 to 92) $ 7,088,849/-
ii) Business Loss. $ 4,250,000/-
iii) Holding of Pakistani single
Country exhibition $ 233,722/-
Total $ 11,572,571/-
The plaintiff and other respondents are entitled to the following amount:-
NATIONAL TENT HOUSE
i) Principal Amount $ 252,290/60
ii) Traveling Expenses. $ 15,000/-
iii) Mark up @ 3% paid to
State Bank of Pakistan $ 102,196/63
Total $ 369,487/23
GOLDEN CARPET
i) Export and sale of proceeds of items SR 821,900/-
ii) Interest @ 10% of the total amount. SR 452,045/-
SR 1,273,945/-
SIDDIQUE SONS KARACHI
i) Outstanding against shipment $ 282,000/-
ii) Mark up paid to State Bank @ 3% $ 123, 080/-
iii) Export Incentives. $ 76,140/-
iv) Hotel Bills $ 12,500/-
v) Carpet sent to M/s HBN Est. $ 12,500/-
$ 506,220/-
DADABHOY (PVT) LIMITED
i) Principal $ 67,607/-
12) It is clarified that payment by EPB to HBN shall be made after deducting the amount to be paid to the exporters/Respondents.
HBN shall be paid the amount after affecting payment to the Pakistan exporters.
The parties in whose the award was passed shall also be entitled for 12% interest from the date of award till realization.
With the above modification Award dated 9th July, 1995, is made rule of Court.”
3. Learned counsel for the appellant has contended that the award passed by the learned Sole Arbitrator and the impugned judgment whereby the award with certain modifications has been made rule of the Court are erroneous in law and facts. It has been contended that the learned Arbitrator misdirected himself in law and facts, whereas award was based on misreading and non-reading of the evidence produced by the parties. Per learned counsel, the learned Single Judge has failed to appreciate that there was never any agreement between the appellant i.e. Export Promotion Bureau and the Pakistani exporters i.e. respondents No.1 and 3 to 5. It has been contended that all these parties had their own separate agency agreements with M/s Hottaimi Bin Nehar Est, whereas the only agreement to which the appellant was a party was the Memorandum of Agreement dated 27.3.82, which was solely and exclusively between appellant and respondent No.2 i.e. Hottaimi Bin Nehar Est. Per learned counsel, the respondents No.1 and 3 to 5 did not have any arbitration agreement with the appellant within meaning of the Arbitration Act, 1940. Hence, the entire purported arbitral proceedings ignored by the learned Single Judge while passing the impugned judgment. Learned counsel further argued that the learned Single Judge has failed to distinguish between an arbitration agreement on the one hand, and the appointment of an Arbitrator on the other. Per learned counsel, Clause 24 of the Memorandum of Agreement dated 27.03.82 was an arbitration clause. However, in order to activate this arbitration clause or agreement, the parties thereto i.e. the appellant Export Promotion Bureau and M/s Hottaimi Bin Nehar Est had to either agree to an arbitrator or follow the procedure laid down in the Arbitration Act, 1940 for this purpose. Per learned counsel, the learned Single Judge has fallen an error while applying principle of novation of contracts with reference to section 62 of the Contract Act, 1872, which was not attracted to the facts and circumstances of this case, as there was no agreement between the respective parties with regard to arbitration. It is contended that for a valid arbitration, a two-fold test must be satisfied; firstly, the defendant must in law be liable to the claimant, and secondly, there must be a valid arbitration agreement between the parties in respect of said claim, whereas in the instant case, neither of the said conditions is applicable.
4. Learned counsel for the appellant further argued that the entire alleged claim of each of the respondents No.1 and 3 to 5 was against respondent No.2 i.e. M/s Hottaimi Bin Nehar Est, Jeddah and not against the appellant. Per learned counsel, these claims arose in view of non-remittance of funds by M/s Hottaimi Bin Nehar Est. in respect of goods imported to Saudi Arabia, hence no liability whatsoever could have accrued against the appellant in these circumstances. It has been contended that the Centre was a joint venture between the appellant and respondent No.2 i.e. M/s Hottaimi Bin Nehar Est, who was liable to the respondent Nos.1 and 3 to 5, whereas the entire alleged claim of the said respondents arose in respect of their respective agency agreements with M/s Hottaimi Bin Nehar Est. Per learned counsel, the appellant cannot be saddle with the liabilities of M/s Hottaimi under the said agreement. Without prejudice to hereinabove objection, it has been further contended by the learned counsel for the appellant that both the learned Arbitrator as well as the learned Single Judge have committed an error as regards the payment of interest (mark-up) also. Per learned counsel, in view of the Hon’ble Supreme Court’s decision in the case of Ghulam Abbas v. Trustees of the Port of Karachi PLD 1987 SC 393, the Hon’ble Supreme Court divided the award of any possible interest (which includes markup) into three categories: (a) the period prior to the initiation of arbitration proceedings, i.e. before the date of the reference to the arbitrator, (b) interest pendente lite, and (c) the period from the date of the award to the date of the decree making the award the rule of the Court. Per learned counsel, the Hon’ble Supreme Court has held that for period prior to the initiation of arbitration proceedings, the question of grant of interest is a question of substantive law. The arbitrator does not himself have any power or jurisdiction to award any interest for such period if there is no such right by way of substantive law, as such right arises only if there is either: (i) an agreement, express or implied between the parties or (ii) mercantile usage or (iii)statutory provisions or (iv) any applicable equitable principle. Per learned counsel, none of the four conditions laid down by the Hon’ble Supreme Court are applicable in the instant case. Learned Arbitrator had no power or jurisdiction to award any interest (or markup) for the period prior to the date of the award. It is contended by the learned counsel that the power to award the interest or markup pendente lite or from the date of the award onwards, vests in the arbitrator alone and not in the Court. In the case of the respondent No.1, the learned Single Judge has also awarded interest from 1988 till the date of the decree, whereas both these purported awards are contrary to law. It is contended that in view of Section 29 of the Arbitration Act, 1940, the interest on award is to be decreed from the date of the decree at such rate as the court deems reasonable, to be paid on the principal sum as adjudged by the award and confirmed by the decree. Power of the Court to award interest is only in relation to the period after the decree, and not before. Per learned counsel, the learned Single Judge has failed to appreciate that the alleged claim each of the respondents No.1 and 3 to 5 based on either the admission of M/s Hottaimi Bin Nehar Est or on the putative failure of the appellant to deny the same. The learned Arbitrator and the learned Single Judge have held that the other respondents are to be paid from the sum awarded to M/s Hottaimi Bin Nehar Est as M/s Hottaimi is liable to the other respondents and not the appellant. While concluding the arguments, learned counsel for the appellant has prayed to allow the appeal and set aside the impugned judgment and decree dated 18.10.99 and 23.10.99 as modified by order dated 22.12.99.
5. Conversely, learned counsel for the respondents No.1 and 4 as well as learned counsel for the respondent No.3 have contended that the award is time barred as the agreement sought to be arbitrated is dated 27th March, 1982 and the arbitration took place in 1995, twelve years after the accrual of the cause of action. The award is ex-parte, since no adequate opportunity was granted to respondent No.1 for presentation of their pleadings. Per learned counsel, the arbitrator ignored the clauses 16 to 21 of the Memorandum of Agreement between the President of Pakistan through Export Promotion Bureau and M/s Hottaimi Bin Nehar. Per learned counsel, the arbitrator has failed to apply his mind to interpretation of clause 23 of the agreement, which completely granted immunity to respondent No.1 from involvement in the participation of the agreed scheme. It has been contended by the learned counsel that the arbitrator accepted the claim of the agreement without the claimant M/s Hottaimi Bin Nehar without recording the evidence. Per learned counsel, the appellant filed the present appeal on 27.03.2000 and a Division Bench of this Hon’ble Court dismissed the same in limine on 06.04.2002 alongwith listed applications for being hopelessly time barred. Per learned counsel, against the dismissal of appeal, the appellant preferred CPLA No.191-K of 2000 in the Hon’ble Supreme Court, which by order dated 01.08.2000 granted leave to appeal for consideration of the following questions:
(i) Whether the petitioner, Export Promotion Bureau was party to any arbitration agreement with respondent No.1 and 3 to 5?
(ii) Whether the claim of respondent No.2 before the Arbitrator was time barred on the face of it and could not be lawfully made Rule of the Court?
(iii) What is the legal effect of making an award without recording an evidence?
6. It has been argued by the learned counsel for the respondents No.1 and 4 as well as learned counsel for respondent No.3 that the Hon’ble Supreme Court vide order dated 27.05.2009 has remanded back the matter (CA No.872 of 2000) to this Hon’ble Court for deciding it afresh on merit including all legal and just exceptions with the above questions, Learned counsel for the respondents No.1 and 4 as well as learned counsel for the respondent No.3 has placed reliance on the following judgments:
1. Abdur-Rehman Munshi and others v. The Province of East Pakistan and others 1986 SCMR 275.
2. Joint Venture KG/RIST and 2 others v. Federation of Pakistan PLD 1996 SC 108
3. Mst. Khatoon Begum v. Barkat-un-Nisa Begum and 6 others PLD 1987 Karachi 132
4. Shori Lal v. Sardari Lal and another AIR 1963 Punjab 165
5. Lahore Development Authority v. M/s Khalid Javed & Co. 1983 SCMR 718
6. Ashfaq Ali Qureshi v. Municipal Corporation, Multan and another 1984 SCMR 597
7. Karachi Shipyard and Engineering Works Ltd v. Muhammad Aslam Khan PLD 1997 Karachi 635
7. Learned counsel for the respondent No.2 after having given the chronology of the proceedings in the instant case has raised an objection as to the maintainability of the instant High Court Appeal, for being hopelessly time barred. It is submitted by the learned counsel for the respondent No.2 that instant High Court Appeal is barred by Limitation as the impugned judgment by the learned Single Judge was passed on 23.10.1999 and an application for a certified copy was made on 23.11.1999 after the limitation period had passed. Subsequently, an application under section 152 for review was filed and an order was passed by the learned Single Judge in the presence of counsel for the appellant and others. Another application for a certified copy was filed after the period of limitation had expired on 13.01.2000 and though the copy was delivered on time, the memo of appeal was presented on 27.03.2000 without any plausible reason for this gross delay even though law demands that an appeal in such a case be filed within 20 days. In fact the appellant has consistently been negligent causing delays since the breach of contractual obligations to date. An extract from the judgment passed by the learned Division Bench of this Court, comprising of Mr.Justice Sabihuddin Ahmed and Mr. Justice Wahid Bux Brohi has also been referred which is reproduced hereunder for the sake of convenience:
“The record in the instant case shows that the appellant and their counsel have been consistently negligent at all levels. Their counsel did not appear before the Arbitrator on the date of hearing and appeared only on 18.05.1995 when the arbitrator was in the midst of writing the award and requested for two weeks time.
Luckily on an application made by another party the learned Single Judge decided to review his order on 22.12.1999 in the presence of the appellant’s counsel, thus bestowing another opportunity upon them to prefer an appeal but they failed to avail of the same and once again applied for a copy after the expiry of the limitation period on 13.01.2000.”
Per learned counsel, the time of limitation starts when the right to sue arises i.e. when the dispute takes place under Section 5 of the Limitation Act, the defaulting party has to account for the delay of each day because on expiry of period of limitation a valuable right is created in favour of the other party. In this regard, reliance has been placed on the following judgments
1. Messrs Progressive Engineering Associates v. Pakistan Steel Mills Corporation Ltd. 1997 CLC 236
2. Tribal Friends Co. V. Province of Balochistan 2002 SCMR 1903
3. Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority 1989 MLD 3131.
8. It has been further submitted that the Court does not act as an appellate body under Arbitration Act and the error should appear on the face of the award which should be discoverable by reading of the award in itself. A Full Bench of the Hon’ble Supreme Court in case of Abdul Ghani v. Saida Naim Hussain, reported as 1984 SCMR 597, has held that the Arbitrator is the judge of all matters arising in a dispute, be they of law or fact, and the Court is not to act as a Court of appeal sitting in judgment over an award. Furthermore, it is improper for the Court to scrutinize the award with the aim of discovering an error merely to set it aside. Per learned counsel, there is no reappraisal of evidence or material required, even if a different conclusion is reached. In support of his contention, the learned counsel for respondent No.2 has placed reliance on the following judgments:
1. Pakistan through General Manager, Pakistan Railways v. Messrs Q.M.R Export Consultants PLD 1990 SC 800
2. M/s Joint Venture KG/Rist v. Federation of Pakistan 1996 SC 108
3. Messrs World Circle Ltd. v. State Cement Corporation of Pakistan Ltd.1997 CLC 212 (Karachi)
4. Trading Corporation of Pakistan Ltd., Karachi v. Messrs Aslam Saeed & Co. and 3 others PLD 1973 Karachi 65.
9. Learned counsel further argued that the Arbitration Agreement was not barred by time under the Limitation Act as the dispute was referred to Arbitration within the limitation period when the dispute arose in 1989 and the process of appointing an Arbitrator began soon after, all parties consented to the Arbitrator appointed. Extract of the order dated 09.06.1995 related to this is reproduced below for convenience:
“During the process of this complaint all the parties (six in number) felt advised to give their consent before the Federal Ombudsman of Pakistan on 09.03.1995 to appoint me as a sole Arbitrator to make an award with regard to controversial issues involved under clause 24 of the agreement and learned Ombudsman gave approval of my appointment as Arbitrator vide order dated 15.03.1995.”
10. Per learned counsel, as per Section 37 of the Arbitration Act, the notice for the appointment of an arbitrator was issued which constitutes a beginning of a legal proceeding when a plaint is submitted to the Court and allows Arbitrator/Courts to decide when the limitation period starts and ends. In support of his contention reliance has been placed in the following judgments:
1. Pakistan Refinery Limited v. Pakistan National Shipping Corporation and 2 others 1986 CLC 2555
2. Messrs Progressive Engineering Associates v. Pakistan Steel Mills Corporation Ltd. 1997 CLC 236
3. Province of Balochistan through Secretary Communication and Works Department and another v. Mirza Abdul Hayee 1991 SCMR 1313
4. Messrs Alpha Contracting Company v. Messrs National Motors Ltd. 1984 CLC 3458
5. United Bank Limited v. Industrial Development Bank of Pakistan and 5 others 1985 MLD 1147
11. It has been further argued that in the case reported as Tribal Friends Co. v. Province of Balochistan 2002 SCMR 1903, it has been held that “there is no bar in law for the parties to agree for the settlement of their disputes by Arbitration even though the claim involved may be barred by time” clearly stating that arbitration can still proceed on the basis of the Arbitration Agreement before the Arbitrator. Further reliance in this regard has been placed on the following cases: Messrs Haji Muhammad Sharif-Atta Mohammed v. Messrs Khoja Mithabhai Nathoo and other PLD 1960 Karachi 10 and M/s Awan Industries Limited v. The Executive Engineer, Lined Channel Division and another 1992 SCMR 65.
12. It is submitted by the learned counsel for the respondent No.2 that an Arbitration Agreement should be in writing. Section 2(a) of the Arbitration Act, states that the Arbitration Agreement should be in written form but case law interpreting this section clearly state that correspondence between the parties manifestly stating the intention to go into arbitration is sufficient and the matter can therefore proceed into arbitration. Reference is made to the case of Messrs Hafiz Abdul Aziz Cotton Ginning Factory v. Messrs Haji Ali Muhammad Abdullah & Co. and another PLD 1966 Karachi 197 in which it has been held that a written agreement in terms of Section 2(a) of the Arbitration Act means any writing whether it is correspondence directly embodying the agreement to refer differences to arbitration or an application for membership of an organization necessarily implying such an agreement. Any writing or writings attributable to the parties which unmistakably proves their intention to refer their disputes to arbitration are satisfactory in terms of the provision of law. In the case of Tribal Friends Co. v. Province of Balochistan reported as 2002 SCMR 1903 also, it has been held that if the intention to refer the dispute to the Arbitration is manifest from the documents it amounts to an Arbitration Agreement. HBN and EPB had a written Arbitration Agreement as per Clause 24 of the Agreement dated 27.03.1982.
13. Per learned counsel, not only had the appellants participated in the arbitration proceedings, they never challenged the authority of the Arbitrator through objections etc. and therefore the Arbitration Agreement was valid and the Arbitration forum was a valid and legal arena for deciding of this dispute and they cannot challenge the same at this stage without any lawful justification. Reference in this regard is made to the case reported as Tribal Friends Co. v. Province of Balochistan 2002 SCMR 1903, which states: If arbitration was agreed to and not challenged, same cannot be challenged later. Further reliance has been made in the following judgments:
1. Mst. Shamim Akhtar v. Najma Baqai and 3 others PLD 1977 SC 644
2. Muhammad Hussain v. Ghulam Rasool and others 1983 SCMR 231
3. Messrs Sheikh Hussain Bux & Co. v. Messrs Zaib Tun Textile Mills Ltd. PLD 1981 Karachi 28
4. Qadir Bakhsh v. The State PLD 1981 Karachi 581
5. Messrs Ahmed Constructions v. Messrs Neptune Textile Mills PLD 1990 Karachi 26 and
14. It has been argued by the learned counsel for respondent No.2 that the award passed by the Arbitrator is a valid award and can not be declared as void for the following six main reasons, namely’
a) The Arbitrator was appointed with the consent of all the parties whose authority was not questioned or objected to at any stage by any of the parties, “where any party failed to file an objection then the question of setting aside the award would not arise and no appeal would be maintainable u/s 39 of Arbitration Act” (Tribal Friends Co. v. Province of Balochistan 2002 SCMR 1903).
b) The Arbitrator was not biased or prejudiced in any manner as he had been selected as the Arbitrator by an authority and with consent of the parties. Any claim to the contrary is a misrepresentation of the facts and an attempt to thwart and cripple the wheels of justice.
c) Non-recording of evidence does not vitiate the award. However, documentary evidence was thoroughly considered and the award was based on proper and lawful appreciation of evidence. Tribal Friends Co. v. Province of Balochistan 2002 SCMR 1903 (1920), 1990 MLD 1764, 1999 MLD 2773 (2777). The non-recording of evidence does not invalidate the Award primarily because an arbitration agreement is not bound by set rules of evidence and can even award damages without the recording of evidence (1990 MLD 1764), (PLD 1996 SC 108) and to state the contrary is a futile attempt to vitiate a valid legally pronounced award and to escape the liability that ensues from it. The award was based on documentary evidence which was thoroughly evaluated by the learned arbitrator. EPB itself failed to produce oral evidence. (2008 CLC 798, 1990 MLD 1764, 1981 CLC 311, 1999 MLD 2773, PLD 1996 SC 108).
d) The Arbitrator is not guilty of misconduct- S. 30 and 33, Brooke Bond case, PLD 1977 SC 237, 1987 Karachi 2198, 1998 Karachi 79, S.15, 16 and 30-Award, consent substituted from, legally bound by decision.
e) Error of law does not vitiate the award granted and does not substitute a finding. As per 1987 CLC 2198 a useless error on the face of the record cannot set aside an award. 2002 SCMR 1903, 1985 SCMR 597, 1968 SCMR 275. Arbitration Amendment Ordinance S. 3, S.26A-non speaking award AIR 1993 SC 2268. The award cannot be set aside if the arbitrator reaches a different conclusion. PLD 1974 Karachi 155, PLD 1980 Karachi 207, PLD 1973 Karachi 413. It is humbly prayed that EPB’s malafide intentions can be seen from the record which clearly indicates that EPB willfully delayed the matter of arbitration to ensure that this matter be prolonged indefinitely and to deprive the respondent No.2 of this legally guaranteed rights and has delayed payment for over 28 years.
While concluding the arguments, learned counsel has prayed that instant High Court Appeal besides being barred by limitation is liable to be dismissed on merits also, hence the same may be dismissed with cost.
15. We have heard the learned counsel for the parties and perused the record. In view of the remand order passed by the Hon’ble Supreme Court with the consent of the parties, we are of the view that instant matter is required to be decided afresh on merits, including all legal and just exceptions, which includes the objection regarding limitation. Admittedly, an agreement dated 27th March 1982 was executed between the President of Islamic Republic of Pakistan through Export Promotion Bureau, Government of Pakistan (the appellant) and Messrs Hottaimi Bin Nehar Est, Jeddah (Saudi Arabia) regarding (i) Establishment of Display Centre at Jeddah, (ii) Maintenance of Display Centre, and (iii) Trade by Hottaimi with Pakistani Exporters. Clause 24 of the agreement provided for an arbitration clause, which reads as follows:
“24. Any dispute arising out of this agreement shall be referred to arbitration under Pakistan Arbitration Act and the decision of the arbitration shall be final and binding on both the parties.”
16. It appears that the dispute arose pursuant to above said agreement between the contracting parties, whereas the other claimants i.e. the respondents in the instant High Court Appeal filed complaints before the Ombudsman of Pakistan regarding their grievance relating to their financial claims. M/s Hottaimi Bin Nehar through Mr. Mehboob Hussain Siddiq filed Complaint No.Reg-II/4413/94 (3861) before Ombudsman of Pakistan, whereas M/s National Tent House filed Complaint No.Reg-II/1522/94 through Mr. Anwar Ahmed, M/s Golden Carpet Industries filed Complaint No.Reg-II/6983/94 (3973), M/s Siddiq Sons Industries (Private) Limited through Director, Mr. Tariq Rafi filed Complaint No.Reg-II/6237/94 (3955) and M/s Dadabhoy (Private) Limited filed Complaint No.Reg-II/5084/930829 through Mr. Abdul Salam Dadabhoy, all against the appellant i.e. Export Promotion Bureau, Ministry of Commerce, Government of Pakistan. The dispute between M/s Hottaimi Bin Nehar and Export Promotion Bureau was required to be resolved by way of arbitration in view of the findings recorded on 22.12.1992 by the learned Ombudsman of Pakistan in Complaint No.Reg-II/8051/92 moved by M/s Hottaimi Bin Nehar through Mehboob Hussain Siddiqui. The appellant i.e. M/s Export Promotion Bureau, Ministry of Commerce, and Government of Pakistan were directed to finalize the appointment of an arbitrator within 10 days from the date of finding recorded on 22.12.1992. Some names of the arbitrators were suggested but parties did not agree on any arbitrator. However, by consent of the parties on 9th March 1995 Mr. Justice (Retd.) Raja Muhammad Khursheed, Ex-Chief Justice of the Supreme Court of Azad Jammu and Kashmir was appointed as Sole Arbitrator. All the parties filed their respective claims alongwith relevant documents before the learned arbitrator. Case of the respondents before the learned arbitrator was that the appellant i.e. Export Promotion Bureau, Ministry of Commerce, Government of Pakistan failed to perform its commitments/obligations arrived from the agreement dated 27th March 1982. M/s Hottaimi Bin Nehar Est filed its financial claim against Export Promotion Bureau for non-performance of their part of contractual obligation, which resulted in huge financial losses. Besides the claim of M/s Hottaimi Bin Nehar against the Export Promotion Bureau, Ministry of Commerce, Government of Pakistan, the other respondents also filed their claims through complaints before the Ombudsman of Pakistan, which were taken up for resolution by the Sole Arbitrator, by consent of the all the parties.
17. Memorandum of Agreement between the appellant and respondent No.2 dated 27.3.1982, spelt out in detail the following matters:-
(a) The facilities and services which would become available to the Pakistani Exporters.
(b) The various charges and commissions to be levied by the Saudi Pakistan Commercial Centre; and
(c) The role and responsibilities of the Export Promotion Bureau, Ministry of Commerce and Government of Pakistan.
M/s Hottaimi Bin Nehar claimed that he had performed all obligations and responsibilities as stipulated under the agreement but the appellant i.e. Export Promotion Bureau, Ministry of Commerce, Government of Pakistan failed to discharge their commitments and obligations as envisaged under clauses 6,7, 10, 11, 12 and 13 of the agreement. It has been further stated that the omissions and lapses on the part of the Export Promotion Bureau, Ministry of Commerce, Government of Pakistan has given the rise to the disputes and differences which required the matter to be referred to arbitrator in terms of clause 24 of the agreement but the appellant was not inclined to refer the matter to the arbitrator, therefore, a complaint before Federal Ombudsman of Pakistan was made by the respondent No.2 for redressal of their grievance through arbitration. The Government of Pakistan, on 9.10.1989 agreed to refer the disputes for arbitration but the appellant still showed reluctance to do so. Several names were proposed for the purpose of appointment of an arbitrator, however, on the one pretext or the other, the arbitrator could not be appointed. After due investigation, the learned Ombudsman, vide order dated 22.12.1992 observed that the act of agency complained against, constituted mal-administration. It was also held that it was a joint venture between Hottaimi Bin Nehar and Export Promotion Bureau, Government of Pakistan. The Export Promotion Bureau were directed to finalize the appointment of arbitrator and to start arbitration proceedings within 10 days from the date of issuance of the findings, however, no step was taken towards appointment of an arbitrator within stipulated period by the Government. Feeling aggrieved by such conduct of the appellant, the respondent moved another application to the Federal Ombudsman, Government of Pakistan on 26.6.93, wherein it was stated that inspite of clear directions the agency failed to appoint an arbitrator to resolve the controversy in hand. The respondent No.2 i.e. Hottaimi Bin Nehar Est. requested the Ombudsman of Pakistan to act as an Arbitrator himself and nominate some suitable functionary of his secretariat to act as an Arbitrator. The remaining respondents also moved applications with their respective claims against the appellant.
18. From perusal of the award, it has transpired that during the process of completion of the award, all the parties namely, (i) EPB, Ministry of Commerce, Government of Pakistan, (ii)M/s Hottaimi Bin Nehar Est, (iii) M/s National Tent House, Karachi, (iv) M/s Siddiq Sons Industries, Karachi, (v) M/s Dadabhoy Padube Ltd., Karachi and (vi) M/s Golden Carpets Industries Lahore, felt advised to give their consent before Federal Ombudsman of Pakistan on 9.3.1995 to appoint Mr. Justice (Retd.) Raja Muhammad Khursheed, Ex-Chief Justice of the Supreme Court of Azad Jammu and Kashmir, who was accordingly appointed as Sole Arbitrator between the parties. The learned Ombudsman gave approval of his appointment as an Arbitrator vide order dated 15.3.1995. This is how the case was heard and decided by the learned Arbitrator and was made rule of the Court with modification by the learned Single Judge of this Court vide impugned judgment.
19. From perusal of the detailed finding recorded by the learned Arbitrator, it is seen that on 2.5.95 all the parties concerned were provided an opportunity to present their case. For the said purpose a meeting was held at Kashmir House, Islamabad, which was duly attended by the following:
(i) Mr. Tahir Shaikh,
Director General, Export Promotion Bureau, Karachi.
(ii) Mr. S.K.S. Kazmi,
Deputy Director, EPB, Karachi.
(iii) Mr. Mehboob Hussain Sadiq,
for M/s Hottaimi Bin Nehar Est., Karachi.
(iv) Mr. S.A. Nazami, Advocate Counsel
for M/s H.B.N Est.
(v) Mr. Asghar Ali Bukhari,
Director (Finance), M/s H.B.N Est.
(vi) Mr. Javed Aslam Qureshi, Advocate,
Counsel for M/s Sdiddiq Sons, Karachi.
(vii) Mr. Qamar Zia,
for M/s Golden Carpets, Lahore.
(viii) Mr. Abdul Salam Dadabhoy,
Director M/s Dadabhoy Padube, Karachi
(ix) Mr. Anwar Ahmed,
M/s National Test House, Karachi.
Though the representative Mr. Tahir Shaikh, Director General, Export Promotion Bureau fully participated in the proceedings, however, since their counsel was not in attendance, on his request time was allowed to submit written statement within a period of two weeks. Nothing in writing was submitted by the appellant during the given period, whereas on 18.5.95 when the arbitrator received an application from one Mr. Qureshi, Advocate, learned counsel for Export Promotion Bureau whereby three weeks further time was sought to submit written arguments. In the interest of justice, learned arbitrator allowed further time to file written arguments before 23.5.95, however, inspite of repeated opportunities no written submissions were filed by the appellant or his counsel. Thereafter, the learned arbitrator proceeded to finalize the arbitration award keeping in view the terms of the agreement executed between the parties and on the basis of evidence produced in support of their respective claims.
20. It is pertinent to note that the appellant did not raise any objection as to limitation or appointment of Mr. Justice (Retd.) Raja Muhammad Khursheed Khan as Sole Arbitrator, nor even any rebuttal/written statement was filed by the appellant against the claim of the respondent, inspite of repeated opportunities. On the contrary, reference was made to the notice issued by the appellant to the respondent M/s Hottaimi Bin Nehar Est for termination of the agreement, which option prima-facie was not available to the appellant in terms of the provisions of the agreement executed between the parties. Moreover, the arbitrator has not allowed any claim of the parties after the date of the cancellation of the agreement. Learned arbitrator after having examined the financial claims of all the respondents minutely, reached to the conclusion that the appellant M/s Export Promotion Bureau, Government of Pakistan failed to abide by the commitments and violated the terms of the agreement executed between the parties, which caused financial losses and damages as detailed in the award. The claims, which were not substantiated through evidence by the respondents or were not admissible in fact and law, have duly been declined by the learned arbitrator in his award, whereas the award has been further modified by the learned Single Judge while making the award as rule of the Court. Learned counsel for the appellant has not been able to point out as to which of the financial claim of the respondents with reference to particular heads has been incorrectly allowed in the impugned judgment nor any material has been produced which may require this Court to interfere with the finding recorded by the learned arbitrator.
21. It will be advantageous to reproduce the relevant finding of the learned arbitrator with regard to fixing the liability and obligation of the parties arising from the joint venture, which reads as follows:-
“ In the light of the above stated facts, it becomes abundantly clear that SPCC Jeddah was a joint venture of EPB and M/s HBN Est. It is also obvious that Pakistani Exporters dispatched goods to SPCC not against L/Cs but on credit basis obviously on the clear understanding that the Centre was a EPB project. Besides EPB by its own commitments, referred to above, at various stages and times coupled with other factors detailed above has impliedly accepted the responsibility to clear the dues of the exporters. They cannot now be allowed to have a volta-face and say no on that score.
I am also of belief that the main cause of the failure of the SPCC Jeddah was the unbecoming attitude of the EPB (Government of Pakistan) in not fulfilling its commitments under various clauses of the agreement (Annexure A). It is unfortunate that SPCC was never allowed to function properly mainly because of EPB’s reluctance to fulfill its responsibilities and the commitments under the agreement.
It appears that EPB’s failure to perform his function under the agreement and especially EPB neglect to pay rent to M/s HBN Est. as expressly “guaranteed and confirmed” by them, resulted in M/s HBN Est. withholding payment to exporters. In the circumstances EPB (Government of Pakistan) is responsible to pay the following to M/s HBN Est.:-
i) Accumulated rent from 1983-84 to 1986-87
with mark up of 10% (1988 to 92) $ 7,088,849/-
ii) Business Loss. $ 4,250,000/-
iii) Holding of Pakistani single
country exhibition $ 233,722/-
iv) Damage to reputation and prestige
and mental anguish. $ 1,500,000/-
Total $ 13,072,671/-
The exporters are entitled to the following amount:-
NATIONAL TENT HOUSE
i) Principal Amount $ 252,290/60
ii) Traveling Expenses. $ 15,000/-
ii) Mark up @ 3% paid to
State Bank of Pakistan $ 102,196/63
iv) Business loss. $ 50,000/-
Total $ 419,487/23
GOLDEN CARPET
i) Export and sale of proceeds of items SR 821,900/-
ii) Interest @ 10% of the total amount. SR 452,045/-
Total SR 1,273,945/-
SIDDIQUE SONS KARACHI
i) Outstanding against shipment $ 282,000/-
ii) Mark up paid to State Bank @ 3% $ 123, 080/-
iii) Export Incentives. $ 76,140/-
iv) Hotel Bills $ 12,500/-
v) Carpet sent to M/s HBN Est. $ 12,500/-
vi) Business loss $ 125,000/-
Total $ 631,220/05
DADABHOY (PVT) LIMITED
i) Principal $ 67,607/-
ii) 1/2nd of the total claims (investor) $ 75,379/50
Total:- $ 142,986/50
22. From perusal of the provisions of the Arbitration Act, and the ratio of the judgment of the Hon’ble Supreme Court cited by the learned counsel for the respondent it can be safely concluded that a Court while examining the validity of an award does not act as a Court of appeal, therefore, a Court hearing the objection to the award cannot make reappraisal of evidence by the arbitrator in order to dis-cover the error or infirmity in the award, unless such error or infirmity appears on the face of the award. Similarly, an arbitration agreement is not bound by set rules of evidence, hence the arbitrator can even award damages without recording of evidence particularly when an award is based upon documentary evidence, which remained undisputed or could not be refused. Reference in this regard can be made to the judgment of a Full Bench of the Hon’ble Supreme Court in the case of Abdul Ghani v. Saida Naim Hussain reported as 1984 SCMR, M/s Joint Venture KG/Rist and others v. Federation of Pakistan PLD 1996 SC 108 and Tribal Friends Co. v. Province of Balochistan 2002 SCMR 1903.
23. In terms of section 2(a) of the Arbitration Act, 1940, it has been defined that an arbitration agreement means a written agreement to submit present or future difference to arbitration whether an arbitrator is named therein or not. In the instant case admittedly there is a written agreement requiring the authorities to refer any dispute arising out of such agreement to arbitration under Arbitration Act. It has also come on record that all the parties including the appellant and the respondents by consent before the Federal Ombudsman of Pakistan on 9th March 1995 agreed to appoint Mr. Justice (Retd.)Raja Muhammad Khursheed, Ex-Chief Justice of the Supreme Court of Azad Jammu and Kashmir, as Sole Arbitrator and to make an award with regard to controversial issue involved in terms of clause 24 of the agreement, whereafter the above named arbitrator was appointed on 15th March 1995 as Sole Arbitrator. No objection as to limitation or as to appointment of Mr. Justice (Retd.)Raja Muhammad Khursheed, Ex-Chief Justice of the Supreme Court of Azad Jammu and Kashmir as Sole Arbitrator was ever raised before the learned Arbitrator by any of the parties. On the contrary, from perusal of the record, it appears that the resolution of the dispute between the parties and the delay in the arbitration proceedings was caused due to continuous default on the part of the appellant.
24. In the instant case all the parties including the appellant consented to the resolution of the dispute through arbitration by the above named learned Arbitrator, which fact is otherwise sufficient to justify the arbitration proceedings by the learned arbitrator in the instant case. The Hon’ble Supreme Court in the case of Tribal Friends Co. v. Province of Balochistan 2002 SCMR 1903 has already held that “there is no bar in law for the parties to agreement for the settlement of their dispute by arbitration even though the claim involved may be barred by time.” Further reliance in this regard can also be placed to the case of Haji Muhammad Sharif-Atta Muhammad v. Khoja Mithabhai Nathoo and others PLD 1960 Karachi 10 and M/s Awan Industries Limited v. The Executive Engineer, Lined Channel Division and another 1992 SCMR 65.
25. It is pertinent to note that no allegation whatsoever has been raised by the learned counsel for the appellant as to the conduct of the learned arbitrator nor any bias has been alleged against him. Nothing on record has been pointed out by the learned counsel for the appellant, which could justify the ground of mis-reading or non-reading of evidence. On the contrary, it appears that the respective claims of the respondents, which were otherwise duly supported by the documents and the evidence, were not specifically disputed or controverted by the appellant, whereas an attempt was made to dislodge the finding of the learned arbitrator and the impugned judgment passed by the learned Single Judge on technical ground of limitation and the binding effect of the award on the parties who were not the signatory to the agreement. Learned Single Judge through his judgment after having minutely examined the material produced by the parties has been able to establish that the default and non-compliance of the terms of the agreement by the appellant i.e. Export Promotion Bureau, Ministry of Commerce, Government of Pakistan, resulted in huge financial loss to the respondent. Nothing contrary to the assertion of the respondent has been pointed out by the learned counsel for the appellant.
26. Apart from the merits of the case, this appeal is also liable to be dismissed on the ground of limitation as the impugned judgment by the learned Single Judge was passed on 23.10.1999 and an application for a certified copy was made on 23.11.1999 after the limitation period had passed. Subsequently, an application under section 152 for review was filed and an order was passed by the learned Single Judge in the presence of counsel for the appellant and others. Another application for a certified copy was filed after the period of limitation had expired on 13.01.2000 and though the copy was delivered on time, the memo of appeal was presented on 27.03.2000 without any plausible reason for this gross delay even though law demands that an appeal in such a case be filed within 20 days. In fact the appellant has consistently been negligent causing delays since the breach of contractual obligations to date. In the affidavit filed in support by the appellant alongwith application seeking condonation of delay, no plausible explanation has been given in the affidavit, which could require this court to condone the delay. It is pertinent to note that each day of the delay has to be explained, whereas no special treatment in this regard can be given to the government. On the contrary, the government functionaries are required to act promptly with due diligence which in the instant case is lacking.
27. For the foregoing reasons, we do not find any substance in the instant High Court Appeal, which is accordingly dismissed alongwith listed application with no order as to costs.
JUDGE
CHIEF JUSTICE
Karachi
Dated: -08-2012