P L D 2003 Supreme Court 536 (PLP)

"It is stated by the. Chairman, Zila Council and learned counsel for the parties that they have arrived at a compromise so far as C.M. Nos. 347 and 656 of 1993 are concerned, which is to the following effect:‑‑ (1) That during the pendency of the proceedings before this Court, the petitioner shall be allowed to receive the export tax in accordance with the terms and conditions contained in the previous agreement between the parties except that he shall be liable to pay the lease money alongwith 10% increase in the same manner as in the previous agreement; (2) that the petitioner shall pay salary to the staff regularly; (3) that security lying with the respondent shall not be released till further order of this Court; and (4) that during the pendency of the proceedings before this Court no further rebate shall be claimed by the petitioner on any ground whatsoever. "

5. In view of the objection relating to the validity of the reference and maintainability of the application under section 14 read with sections 16 and 17 of Arbitration Act, 1940 before the High Court, the learned Single Judge referred the matter to the honourable Chief Justice for decision of the following two questions by a larger Bench:‑‑ (i) Whether dispute in a Constitutional petition can at all be referred to arbitration? (ii) If the answer to the first question is in affirmative, whether an application under sections 14 and 17 and also under sections‑30 and 33 of the Arbitration Act, 1940 for filing of the award or setting aside the same as the case may be, would lie before this Court or, before a Civil Court having territorial jurisdiction over the matter?

6. The respondent through a miscellaneous application (C.M.A. No. 1386 of 1994) requested the Court for recall of the order dated 29‑6‑1993 on the ground that it was a collusive order through which the appellant got the lease period extended till 30‑6‑1994 and that the same was obtained without the approval of Government of Punjab. It was also prayed that the order dated 24‑4‑1994 whereby the case was referred to the larger Bench may be recalled as there was no, lis pending before the High Court and a miscellaneous application in a disposed of matter could not proceed. The appellant on the other hand, ‑moved a miscellaneous application (C.M.A. No. 1512 of 1994) wherein he claimed that in consequence to the payment of Rs.1,50,000 made by him to the Zila Council, Lahore through call deposit, the contract of collection of exit tax for the period commencing from 1‑7‑1994 to 30‑6‑1995 would be deemed to be given to him. The Zila Council in reply while denying the grant of any such contract pleaded that appellant could only collect export tax till 30‑6‑1994. The learned Single Judge disposed of the above said two applications vide order dated 12‑6‑1994 as under:‑‑ (a) The order dated 29‑6‑1993 was modified to the extent that the arrangement mentioned therein would remain effective till the stay matter was decided by this Court. It was directed that the petitioner would cease to collect export tax as from 1st July, 1994. (b) Order dated 24‑4‑1994 was re‑called in the interest of justice so as to decide afresh as to whether there was any live issue in which reference should be made to a larger Bench. (c) The petitioner was not entitled to recover export tax from 1‑7‑1994 to 30‑6‑1995. "

7. The above order was challenged before this Court in C.P. No.644‑L of 1994 which was converted into an appeal and was allowed vide judgment dated 29‑6‑1994 and in consequence thereto the consent order dated 29‑6‑1993 was restored and it was held that the payment of Rs.1,50,000 made by the appellant would not put the Zila Council under any obligation for grant of fresh contract or for extension/renewal of previous lease for any further period. The case was remanded to the High Court for disposal of the arbitration application bearing No.346 of 1993 and pending disposal of the said application, the order dated 29‑6‑1993 was allowed to continue. The appellant while seeking the implementation of the above order of this Court moved a miscellaneous application under Article 190 of the Constitution of Islamic Republic of Pakistan, 1973 in the High Court which was disposed of by the learned Single Judge of the Lahore High Court vide order dated 7‑7‑1994 and subsequently a Full Bench consisting upon five learned Judges of the Lahore High Court while dismissing the arbitration application (C.M. No.346 of 1993) with the connected C.M.As. vide impugned judgment held that the arbitration in the case was without the intervention of the Court and section 31 of the Arbitration Act, 1940 would not be attracted at all as the matter was not referable as an arbitration dispute under the Arbitration Act, 1940. The C.M. No. 263 of 1993 and C.M.A. No.352 of 1993 moved in Writ Petition No.6450 of 1992 and 6451 of 1992 respectively, were returned to the appellant for presentation before the proper forum for adjudication. Leave was granted in the present appeal vide order dated 2‑7‑1995 as under:‑‑ "The petitioner obtained from the Zila Council, Lahore a contract for the collection of Exit Tax for the period from 1‑7‑1990 to 30‑6‑1991 and then for the period from 1‑7‑1991 to 30‑6‑1992. During the subsistence of the contract, the Lahore High Court, Lahore held in another case that the Export Tax could not be levied item-wise/piecewise and the same was recoverable only on the basis of weight. That judgment was reversed by this Court's judgment in Zila Council Sheikhupura v. Mian Tyre and Rubber Co., (PLD 1994 SC 212). The petitioner then made representation to the Zila Council praying that the contract money be reduced by as much as Rs.2 crores 50 lacs. The representation was rejected by an order dated 30‑5‑1992. The petitioner then invoked the High Court's Constitutional jurisdiction under Article 199 of the Constitution and prayed that order dated 30‑5‑1992 of respondent No.2 may be declared to have been made illegally and without lawful authority and appropriate orders/directions may be issued to the respondents for refund of Rs.2,50,00,

000. During the pendency of the writ petition the parties agreed to the dispute being referred to the Secretary, Local Government and Rural Development, Government of the Punjab, Lahore for decision as Arbitrator. The matter was so referred, the parties participated in the Arbitration proceedings and the Arbitrator gave his award on 13‑8‑1992. In the view of the Arbitrator 'neither under the rules nor the terms and conditions of the contract the petitioner was entitled to claim any refund but since he had suffered a loss therefore, respondent No.1 i.e. Zila Council should pay him Rs.1,00,00,000."

2. The petitioner then moved the Civil Court under sections 14, 16 and 17 of the Arbitration Act praying that the award be directed to be filed and then remitted to the Arbitrator for considering his claim 'for the remaining amount and making it rule of the Court'. The proceedings under the Arbitration Act before the Civil Court were pending, when the petitioner thought it proper to make miscellaneous application before the High Court seeking the same relief as he had sought in his application under sections 14, 16 and 17 of the Arbitration Act in the Civil Court. Various other miscellaneous applications for interim relief were made. Before the learned Judge who was dealing with the matter, objection to the maintainability of the petitioner's application was raised. The learned Judge formulated the following two questions which in his opinion deserved to be referred for decision to a larger Bench namely (i) whether dispute in a Constitutional petition can at all be referred to arbitration? (ii) If the answer to the first question is in affirmative, whether an application under sections 14/17 as also under sections 30/33 of the Arbitration Act, 1940 for filing of the award or setting aside the same as the case may be would lie before this Court or before a Civil Court having territorial jurisdiction over the matter. " Accordingly these questions were referred to a Full Bench of five learned Judges. The answers/returned by the Full Bench were (i) according to law as examined above this Court while exercising its Constitutional jurisdiction is not a Court as defined in section 2(c) of the Arbitration Act, therefore, the dispute raised in Constitutional petition could not be referred to arbitration with the intervention of the Court'; and (ii) for all purposes it shall be deemed to be a private arbitration without the intervention of the Court by the parties"

3. Leave to appeal is granted to consider whether the above two questions, which seem to be a questions of first impression, were rightly decided by the learned Judges of the High Court. ,

4. Criminal Original No.23 of 1994 and other miscellaneous applications shall be dealt with alongwith the main appeal. "

8. Learned counsel for the appellant has contended that Burin, the proceedings in the writ petition, parties consented for decision of the dispute through arbitration and the learned Single Judge of Lahore High Court at their option while appointing the Secretary Local Government and Rural Development, Government of Punjab as sole arbitrator, disposed of the writ petition and thus it being an arbitration with intervention of the High Court the arbitration application would not lie before the Civil Court and that the High Court would be the proper forum for adjudication of dispute in terms of section 2(c) of the Arbitration Act, 1940. The learned counsel while placing reliance on Shukrullah v. Rahmat Bibi AIR 1947 All. 304; Messrs Guru Nanak Foundation v. Messrs Rattan Singh and Sots AIR 1981 SC 2075 and State of M.P. v. S.& S. Ltd. AIR 1972 SC 1507 has contended that no Court other than the Court which made the reference would be competent to adjudicate the matter and. pass the decree.

9. Learned Additional Advocate‑General, Punjab appearing on behalf. of respondents, on the other hand, has submitted that it was not an arbitration with the intervention of the Court, therefore, the proper forum for adjudication of the dispute was the Civil Court.

10. The essential condition for an arbitration with the intervention of the Court is that the dispute must be referable as an arbitration dispute under the Arbitration Act, 1940. The arbitration agreement should be in writing and capable of enforcement even if it does not bear the signatures of parties and parties must willingly want to refer their dispute to arbitrator. In the present case, the parties during the proceedings in the writ petition without such an agreement voluntarily opted for decision. of the dispute, subject-matter of the litigation, through an arbitration and in consequence thereto, the learned Single Judge with the consent of the parties, sent the matter to the Secretary, Local Government and Rural Development, Government of Punjab for decision and disposed of the writ petition. The object of this voluntary arbitration by a selected domestic tribunal was to settle the dispute involving controversial question of facts without the intervention of the High Court and the arbitration being entirely a mutual arrangement of the parties would not be considered part of the proceedings in the writ petition for bringing the subsequent disputes arising out of the arbitration to the High Court. The lis between the parties before the High Court would come to an end on disposal I of writ petition and neither the dispute was referred by the. High Court to the Secretary in terms of the lease contract nor the arbitrator was required to file the award in the High Court, therefore, the essential question for determination would be that in the given situation whether tile Civil Court or Court would be the proper forum to entertain an application under Arbitration Act, 1940 for adjudication of the dispute arising out of the award. The word 'Court' appearing in section 33 read with section 2(c) of the Arbitration Act, 1940 means the Civil Court which has the jurisdiction to resolve the controversy between the parties in the arbitration if, the dispute in absence of arbitration, could be made subject‑matter of a civil suit and thus the Civil Court having the jurisdiction to entertain arbitration disputes arising out of an arbitration made‑with or without intervention of Court is the proper forum for adjudication of the disputes. The parties with the intention to avoid litigation' in the writ petition desired for settlement of the dispute in the writ petition by a person of their choice without the interference of Court and the matter being not referable to an arbitrator as an arbitration dispute under Arbitration Act, 1940, the award given by the Secretary, Local Government and Rural Development, Government of Punjab, would have no nexus with the proceedings in the writ petition, therefore, the application under section 14 of the Arbitration Act, 1940 would not be maintainable before the High Court. It is settled law that the Court which has the jurisdiction to entertain the arbitration dispute under the Arbitration Act, 1940 would be the proper forum for adjudication of such disputes and under the law the Civil Court would be the proper forum to entertain and adjudicate the dispute arising out of the arbitration and not the High Court. The dispute in the writ petition was. not as such referable to the arbitration under the lease agreement between the parties rather the writ petition was disposed of in terms of compromise between the parties for decision of dispute through arbitration by the Secretary, Local Government and Rural Development, Government of Punjab and mere fact that High Court sent the matter to the Secretary would neither be, obligatory for the High Court to entertain the application under Arbitration Act, 1940 and perform the function of Civil Court nor it would be deemed that it was an arbitration with the intervention of High Court and thus in view of the provisions of section 33 read with section,2(c) of the Arbitration Act, 1940 the High Court would have no jurisdiction to entertain the arbitration application for adjudication of the dispute arising out of the award in its Constitutional jurisdiction. We find that the arbitration in the present case being entirely independent to the proceedings in the writ petition, the dispute would necessarily be adjudicated by the Court having the jurisdiction to adjudicate such disputes under the Arbitration Act, 1940.

11. The appellant before filing an. Application under section 14 read with sections 16 and 17 of Arbitration Act, 1940, for adjudication of the arbitration dispute in the High Court, filed such an application in the Civil Court at Lahore but subsequently by withdrawing the said application invoked the jurisdiction of the High Court in the matter and under the garb of the interim order passed by the High Court, got the contract renewed till 30th of June, 1994. The learned counsel has submitted that since the dispute was referred by the High Court for arbitration, therefore, the appellant being under the bona fide impression that the dispute would not be adjudicatable by the Civil Court, approached the High Court in good faith and that he with the permission of this Court, would be prepared to tile a fresh application before the Civil Court for redressal of his grievance.

12. The appellant having obtained the interim relief from the High Court in the civil revision prolonged the litigation and after expiry of his C contract, operated as contractor through process of litigation for a considerable period and subsequently, instead of pursuing his remedy before the Civil Court for adjudication of the dispute moved a petition under section 14 read with sections 16 and 17 of the Arbitration Act, 1940 in the High Court and on dismissal of the said arbitration application by the High Court instead of moving to the Civil Court, preferred to approach this Court. The leave was undoubtedly granted in this appeal to consider the question of law raised therein and the appellant without waiting for the result of this appeal; could conveniently avail his remedy before the Civil Court but he willingly having not done so, would not be entitled to get the benefit of section 14 of the Limitation Act, 1908 to start a fresh round of litigation.

13. For the foregoing reasons, this appeal being without any substance is accordingly dismissed. The Criminal Original No.23 of 1994 is also dismissed. The parties shall bear their own costs. M.B.A:/A‑401/S Appeal dismissed.