2006 PLP 1555 (SCMR)

SAIYED SAEED ASHHAD, J.

Appellant feeling aggrieved and dissatisfied with the order of learned Division Bench of Sindh High Court dated 12-3-2003 in High Court Appeal No.230 of 2001 sought leave to appeal by filing C.P.L.A. No.229-K of 2003. Vide order, dated 9-2-2004 leave was granted to consider whether the High Court was justified in warding mark-up on decretal amount from a date of decree and whether the appellant not having challenged the said decree by way of appeal could raise such objection before the Executing Court.

2. The facts of the case in brief are that the parties entered into a contract/agreement whereby the appellant awarded work of construction of Unit No.3 of its Cotton Mills at Landhi to the respondent on 10-9-1981. According to the stipulations contained in the contract/agreement the work was to be executed and the building was to be handed over within six months i.e. on or before 23-3-1982. The work of construction of Unit No.3 was delayed and was completed in December, 1983. On 20th May, 1984 the respondent submitted its tenth and final bill amounting to Rs.1,796,139.00. The appellant failed to make payment of the bill and instead setup a belated claim on 20-10-1984 in the sum of Rs. 11,200,

220. The tenth and final bill submitted by the respondent was scrutinized by Messrs Akbar Associates Ltd., the consultants as per terms settled between the parties, who recommended payment of Rs.553,840 by the appellant to the respondent of which the appellant failed to make payment. As the parties could not settle their dispute, the respondent thereafter requested for reference of the dispute to arbitration under section 20 of Arbitration Act (hereafter referred to as the "Act") for appointment of sole arbitrator. In pursuance of application under section 20 of the Act, Mr. Justice (R) Agha Ali Haider, former Chief Justice of Sindh High Court was appointed as Sole Arbitrator. Respondent on 11-5-1988 filed its claim for recovery of Rs.40,63,321 with prayer for interest at the rate of 20% per month on it from 21-4-1988.

3. Appellant in its reply denied the claim of the respondent and made counter-claim of Rs.11,200,236 on the ground that the delay in completion of the work was solely due to the negligence and lethargy of the respondent in spite of the fact that the appellant always performed its part of the contract/agreement in time with diligence and made payments regularly.

4. The learned Arbitrator after recording evidence of the parties and taking into consideration the arguments advanced on behalf of the parties as well as going through the evidence made an award in favour of the respondents in the sum of Rs.5,53,840 towards the unpaid amount of tenth and final bill and a sum of Rs.68,485 as overhead expenses. The award was filed in Sindh High Court and was registered as Suit No. 13 of 1995. Respondents filed objections to the award under sections 30 and 33 of the Act seeking its modification while the appellant did not file any objection.

5. Learned Single Judge of Sindh High Court vide judgment, dated 3-3-1999 while making the award rule .of the Court, modified the same and allowed mark-up at the rate of 15 % per annum on the unpaid amount of Rs.5,53,840 of the tenth and final bill effect from 3-1-1985 till its payment. It also allowed mark-up on sum of Rs. 1,68,485 from the date of decree till the payment. The judgment was not assailed by any of the above parties.

6. As the appellant failed to make payment to the respondent in terms of the judgment and decree of learned Single Judge, the respondent filed execution application on 20-5-2000 which was registered as Execution Application No. 150 of 2000. The appellant raised objection with regard to the judgment allowing mark-up for the period prior the date of judgment and decree. This objection was rejected by the executing Court vide order, dated 3-9-2001 on the ground that it could not go beyond the decree in view of the provisions of section 47 of the Civil Procedure Code.

7. Feeling aggrieved and dissatisfied with the order, dated 3-9-2001 the appellant filed High Court Appeal No.230 of 2001 wherein they reiterated their objection with regard to the order of learned Single Judge allowing mark-up prior to the date of decree. Before the learned Division Bench it was vehemently argued that allowing of mark-up on the amount awarded by the learned Arbitrator before the period of judgment and decree was an illegality as it was in clear violation of the provisions of section 29 of the Act according to which the Court making the award as rule of the Court was empowered only to allow mark-up from the date of judgment/decree making the award rule of the Court till the payment of decretal amount. However, the objection raised and the arguments advanced on behalf of the appellant did not find favour with the .learned Division Bench hearing the High Court Appeal on the grounds; firstly, that it amounted to correction of an omission/irregularity committed by the learned Arbitrator in not allowing the mark-up/interest from the date of reference made to the Arbitrator, and secondly, that the appellant did not assail the above findings of learned Single Judge by way of appeal and after lapse of the period for filing the appeal against the judgment and decree, dated 3-3-1999, it had attained finality and could not be assailed or challenged by filing objections in execution proceedings, hence the above appeal.

8. We have heard the arguments of Mr. Ibrar Hasan, Advocate Supreme Court on behalf of the appellant and Mr. M.G. Dastagir, Advocate Supreme Court on behalf of the respondent. We have also perused the material on record, the relevant provisions of Act and the case-law relied upon by Mr. M.G. Dastagir in support of his contentions.

9. The grievance of the appellant against the judgment of learned Single Judge of the Sindh High Court, dated 3-3-1999 in Suit No.13 of 1995 making the award as Rule of the Court is with regard to the modification/grant of mark-up at the rate of 15% per annum on the amount of decree with effect from 3-1-1985 till the date of payment. It was submitted by Mr. Ibrar Hassan that the modification in the award by the learned Single Judge, as stated above, was absolutely illegal as it was in contravention of the provisions of section 29 of the Act which permits the Court to allow interest from the date of 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: He submitted that allowing interest from 3-1-1985 till the payment of the decretal amount was in exercise of jurisdiction not vested in the Court. He further submitted that the power to grant interest prior to the date of decree vested in the Arbitrator. He concluded that the order of the learned Single Judge, dated 3-3-1999 was an illegal order and notwithstanding the fact that the appellant did not assail the same by way of appeal, there would be no bar for the appellant to assail the legality thereof in the collateral proceedings initiated by way of execution proceedings and the learned Single Judge who was proceeding with the execution application as well as the learned Division Bench who was hearing the High Court appeal against the order of the executing Judge ought to have set right the illegality having crept in the order, dated 3-3-1999.

10. Mr. M.G. Dastagir on the other hand controverted the arguments of Mr. Abrar Hassan and submitted that the learned Arbitrator committed illegality in not allowing interest from the date when the Arbitrator directed the parties to file their respective statements of claim. He further submitted that the appellant had wrongfully, with mala fide intention and ulterior, motive withheld the amount due to the respondent for the construction work performed by it on behalf of the appellant, thus, causing loss and prejudice. Further contention of Mr. Dastagir was that' learned Arbitrator denied to allow interest to the respondent as envisaged by section 29 of the Act, to which in the facts and circumstances of the case it was legally entitled to, the learned Single Judge being mindful of the omission was justified in offering grant of interest as claimed by the respondent. In support of his contention he placed reliance on the case of Ghulam Abbas v. Trustees, of Port of Karachi PLD 1987 SC

393. He fully supported the order of the learned Single Judge dated 3-3-1999 and the impugned order of the learned Division Bench in High Court Appeal. 1.1. After taking into consideration the respective arguments of the learned counsel for the parties and perusing the relevant provisions of the Act as well as the case-law cited by Mr. Dastagir we are of the opinion that the learned Single Judge had committed serious illegality in allowing interest to the respondent from the date prior to the decree as the Court did not have the power and authority to allow such interest in view of the provisions of section 29 of the Act, it will be appropriate to reproduce section 29 of the Act as under:-- "

29. Interest on awards.

Where and insofar as an award is for the payment of money the Court may in the decree order interest, from the date of the decree at the rate as the Court deems reasonable, to be paid on the principal sum as adjudged by the award and confirmed by the decree."

12. From a bare perusal of section 29 of the Act it is crystal clear that it confers power/authority on the Court making the award rule of the Court in allowing or granting interest on the principal sum adjudged by the award and confirmed by the decree on such rate as deemed reasonable from the date of decree. This section does not confer power on the Court to grant interest prior to the date of award. It is the grant of interest from the date of decree which falls within the exclusive domain of the Court proceedings with the matter for making award rule of the Court in terms of section 14 of the Act. In the circumstances order, dated 3-3-1999 was illegal to the extent of granting interest before the period of award as it had usurped the jurisdiction/power, which vested in the Arbitrator. The judgment in the case of Ghulam Abbas (supra) is of no help to the case of the respondent as this Court categorically held that grant of interest prior to the date of award was within the domain of the Arbitrator and grant thereof from the date of decree was within the authority and power of the Court and the two forums could not act otherwise and if anyone of them acted contrary to the provisions of section 29 of the Act, the order would be an illegal order.

13. As the order, dated 3-3-1999 suffered from a patent illegality, the same could be assailed at any time as it being an order in illegal exercise of jurisdiction was an order coram non judice.

14. For the foregoing facts, reasons and discussion this appeal is found to have force. Accordingly it is allowed. Impugned judgment dated 12-3-2002 of learned Division Bench of the High Court in H.C.A. No.230 of 2001 and the order of the learned Single Judge, dated 3-9-2001 in Execution Application No. 150 of 2000 are set aside and the order dated 3-3-1999 of the learned Single Judge making the award rule of the Court is modified to the extent that the respondent would be entitled to the mark-up the rate mentioned in the decree from the date of decree till the payment of the decree. Parties are left to bear their own costs. H.B.T./D-8/SC Appeal allowed.