1997 PLP 2387 (MLD)

‑‑‑‑R. 5‑‑‑Contract Act (IX of 1872), S.2(b)‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑ Constitutional petition‑‑‑Constitutional jurisdiction not available to enforce contractual obligations‑‑‑Relationship of parties were governed by written agreement executed by them‑‑‑Contractual rights and obligations could not be adjudicated under Art. 199 of the Constitution‑‑‑High Court, thus, had no jurisdiction in matters of rights/obligations arising out of contract. Chaudhary Hamid‑ud‑Din and Dr. M. Mohy‑ud‑Din Qazi for Petitioners. Hassan Irfan Khan and Moin Qamar for Respondent No.2. Chaudhary Saeed Shafqat, Legal Advisor Zila Council, Jhang and Muhammad Amin Lone, Asstt.A.‑G., Punjab. Date of hearing: 20th February, 1997. The facts which can be said to be reasonably established are that the petitioner is a contractor/lessee of Zila council, Jhang for the recovery of Goods Exit Tax for the period of 11 months with effect from 1‑8‑1995 to 30‑6‑1996 for a total sum of Rs.9,80,00.000 (Rupees nine crores and eighty lacs only). The relationship of the parties is governed by a written agreement, copy Annexure‑B. Clause 34 of the agreement provides that if a dispute arises between the parties regarding the implementation/interpretation of any clause of the agreement then the same shall be resolved under Arbitration Act, 1940 by the Commissioner, Faisalabad Division, who would be the sole arbitrator and whose decision shall be accepted by the parties. The clause further provides that the parties will have no right to challenge his decision. Vide application dated 3‑9‑1995 (Annexure‑C), the petitioner invoked this arbitration clause by filing an application before respondent No.1, the arbitrator. It was averred in the application that under the schedule announced and indicated at the time of the auction, the petitioner was entitled to charge Rs.2 per quintal on stone/crush being taken out of the District by Daewoo Corporation but in view of some dispute between the Zila Council and the said Corporation pending in the Supreme Court of Pakistan, the Zila Council is not permitting the petitioner to recover the Exit Tax on the announced rate but is compelling the petitioner to act in accordance with clause 18 of the agreement whereby in terms of the order of the Supreme Court of Pakistan dated 21‑2‑1995, the Daewoo Corporation will be paying Exit Tax at the rate of Rs.0.50 and for the balance would furnish insurance guarantee. In nutshell, the grievance in the application was that Zila Council be restrained from compelling the petitioner to desist from recovering the tax at the rate of Rs.2 per quintal on the pain of cancelling the contract. It was claimed that the petitioner being not a party to the litigation in the Supreme Court of Pakistan was not bound by the clause. It was further pleaded that in any case clause 18 was inserted later on and the petitioner signed the conditions of the auction in routine without examining the same in detail as did the other bidders. On this arbitration application, respondent No.1 called for comments from the Administrator which were duly submitted by respondent No.2 and after hearing the parties, vide order dated 6‑2‑1996 sent the entire case to the Administrator Zila Council, Jhang "with the direction that in case what has been contended and argued by the petitioner and his counsel is correct, the issue may be decided accordingly" and the parties were directed to appear before the Administrator Zila Council on 6‑3‑1996. Thereafter, the parties participated in the proceedings before the Administrator Zila Council who heard the parties on 21‑4‑1996, 6‑5‑1996 & 9‑5‑1996 and ultimately prepared a report and resubmitted the case to the Administrator/Commissioner, Faisalabad Division. The matter was freshly taken up by respondent No. l who again heard the parties and vide order dated 14‑7‑1996, Annexure G, rejected the application/claim of the petitioner. In this Constitutional petition, it is prayed that the order dated 14‑7‑1996, Annexure‑G, be graciously set aside as illegal, void and without lawful authority. A further request is made that respondent No.2 be directed to adjust the bank guarantee amount furnished by Daewoo Corporation at the rate of Rs.1.50 per quintal towards the lease amount of the petitioner.

2. In support of the petition, learned counsel has contended that in terms of the agreed arbitration clause it is the Commissioner who has to decide the controversy and vide order dated 6‑2‑1996, could not have sent the entire case to the Administrator, Zila Council with the direction 'that if what has been contended and argued by the petitioner before him was correct "the issue may be decided accordingly. " It is contended that in view of this illegality, the consequential proceedings held by the Administrator and the second order of respondent No. l dated 14‑7‑1996 has no sanction of law. On behalf of respondent No. 1, serious objection to the maintainability of this Constitutional petition has been taken on the ground that the relationship between the parties is governed by a contract and if the petitioner or any other party is aggrieved of the award/decision of the arbitrator, the remedy lies by taking action under the Arbitration Act 1940 and not by filing petition under Article 199 of the Constitution.

3. In support of the objection (PLD 1955 Sindh 282) Afaq Ahmad Ansari v. Zamir Hasan Ansari and another (1994 CLC 1733), Abdur Razaq v. District Council, Peshawar through Chairman, District Council, Peshawar and another have been relied upon. It is also contended that the petitioner having voluntarily accepted the first order dated 6‑2‑1996, participated in proceedings before the Administrator and before the Commissioner for the second time, cannot turn around and question the validity of proceedings before the Administrator and the consequential order of the Commissioner dated 14‑7‑1996. It is contended that having failed to object to the jurisdiction of respondent No.1, the petitioner is estopped from challenging the validity of the order dated 14‑7‑1996. In reply, learned counsel for the petitioners has contended that the Commissioner acted as arbitrator only up to 6‑2‑1996 when he passed that first order and thereafter, he had no authority to act in the matter and, therefore, the impugned order is without legal sanction. PLD 1966 Supreme Court 639 titled Anjuman‑e -Ahmadiya, Sargodha v. (1) The Deputy Commissioner, Sargodha and W.P. No.18161/96. (2) The Government of West Pakistan through the Secretary Colonies, Board of Revenue, West Pakistan, Lahore was relied upon to contend that the existence of arbitration clause in the agreement is no bar to the invocation of the Constitutional jurisdiction.

4. The objection as to the maintainability of this Constitutional petition is well based. It is the petitioner who approached respondent No.1 not as the Commissioner but as arbitrator in terms of Clause 34 of the Agreement. It is clear that in the absence of Clause 34 of the agreement, the Commissioner is a complete stranger in the relationship existing between the petitioner and the Zila Council. In fact, the Clause 34 itself talks of and refers Arbitration Act, 1940 under which the Commissioner was constituted as sole arbitrator by the parties. If anything done by the arbitrator is not to the liking of a party or if the decision or award given by the arbitrator is against the interest of a party, the remedy clearly lies under the provision of Arbitration Act, 1940. Merely because the arbitrator also enjoys an official position, could not suffice to contend that the arbitrator is amenable to writ jurisdiction of this Court. In fact, the perusal of Annexure‑E and Annexure‑G shows that in the title what is referred is "Application for arbitration, according to the terms and conditions settled in the agreement deed". This confirms the conclusion that the Commissioner was acting as arbitrator and in no other capacity as the Commissioner was deriving his authority under the agreement between the parties and not under the law by which he exercises the powers of Commissioner in a revenue division. The petitioner is aggrieved by the order ultimately dismissing his claim. Even though it is described as an order but it is and it, remains an award within the meaning of Arbitration Act. Perforce, the petitioner will have to fall back and resort to the provision of Arbitration Act, 1940 to get rid of this award/order by which the claim of the petitioner has been dismissed.

5. Otherwise also the relationship between the parties is being governed by the terms of the agreement and it is well-settled that the contractual rights and obligations cannot be adjudicated under Article 199 of the Constitution. In particular, the averments that Clause 18 of the agreement (Clause 22 of the terms and conditions of the auction) were inserted stealthily being a question of fact cannot further be determined in Constitutional jurisdiction.

6. In view of the finding on the non‑maintainability of the petition, the other points of estoppel and/or waiver are left to be determined in proper proceedings.

7. For the reasons noted above, this petition is dismissed, leaving the parties to bear their own costs. A.A./M‑264/L Petition dismissed.