Present: RASHEED A. RAZVI, J.
M/s. MUHAMMAD YASIN and Co
versus
K.D.A.

Suit No. 630 of 1992, decided on 3.2.1998.

(i) Civil Procedure Code, 1908 (V of 1908)–
—S. 96(3)-Arbitration Act, 1940, S. 20-Arbitration agreement-Reference to Arbitration made by consent of parties-Award-Pronouncement of- Whether an appeal of a party, who consented to an agreed order, can be entertained-Question of-One of principles, as envisaged in S. 96(3) CPC, is that a party after having consented to an agreed decision cannot .appeal against same-Once a mode/”procedure” is adopted by High Court on request of parties, decision given in pursuance of that mode should be given effect-A ‘necessary corollary of this rule will be that same parties are estopped from subsequently challenging that mode of decision in an
appeal-Award is made rule of court. [Pp. 410 & 417] A, B & D

(ii) Karachi Development Authority (Abatement of Arbitration Proceedings) Ordinance, 1965 (XXV’of 1965)-
—-S. 3-Abatement of proeedings before arbitrators-Effect of-There is no provision in entire ordinance, through which defendant (KDA), was restrained or prohibited from entering into any agreement in future for referring a dispute in arbitration-Preamble to ordinance is very clear, which states that KDA has entered into agreement with certain contractors/companies in furtherance of KDA Order, 1957; therefore, reference made to arbitration was pursuant to such agreement which have failed to achieve objects-Thecefore, it was deemed necessaiy that proceedings pending before arbitrator be annulled-Provisions of Ordinance 1965 are very clear that KDA was not barred or prohibited for all times to come to execute any agreement or arrangement for referring any dispute to arbitration. [P. 411] C

Mr. Muhammad All Jan, Advocate for Plaintiff.
Mr. Dasti Muhammad Ibrahim, Advocate for Defendant.

Date of hearing: 3.2.1998.

JUDGMENT

This is an Award dated 2.9.1992, given by Mr. Justice (Rtd.) Muhammad Jaffer Nairn, which has come before this Court in a proceeding under Section 14(2) of the Arbitration Act, 1940 read with Rule 282 of the Sindh Chief Court Rules (OS) (“Act 1940”). Following is the operative portion of the award :-

“On the basis of grounds stated above, I make an award that the respondent K.D.A. shall return the cable of the quality and condition specified above and in the alternative pay Rs. 79,800/- to the petitioner with costs of the proceedings before me which includes arbitration fee as well.

I had fixed Rs. 20,000/- as arbitration fee to be borne equally by the parties. The K.D.A. had paid its share. The petitioner has to pay Rs. 10,000/-. Since cost has to be borne by the respondent, the petitioner’s part of the fee should also be paid by the respondent. The K.D.A. will make arrangement to pay the balance fee.”

2. The dispute between the parties pertains to a contract dated 12.1.1962, which was in relation to the works to be carried out by the plaintiff. In the said agreement there was an arbitration clause through which parties were entitled to refer any dispute to a sole arbitrator. Since the defendants failed to pay the outstanding bills of the plaintiffs and to return the materials laying on the site, the plaintiff invoked Section 20 of the Arbitration Act, 1940, and filed a petition, which was numbered as Suit 188/1987, which was granted by this Court and the matter was referred by consent of the parties to the sole arbitration of Mr. Justice (Rtd.i Muhammad Jaffer Nairn. Thereafter, proceedings were conducted and finalized before the Arbitrator, who pronounced the Award and referred the same to this Court for making it rule of the Court. Notices were served on the parties. In response to the said notices only defendant filed its objections. Mr. Muhammad Ali Jan has supported this Award. During the period of all these proceedings i.e. from 1987 till 1997, for the first time on 9.9.1997 Mr. Dasti Muhammad Ibrahim raised an objection that by virtue of Ordinance XXV of 1965 namely, Karachi. Development Authority (Abatement of Arbitration Proceedings) Ordinance, 1965 all the provisions of arbitration in the agreements between KDA and other contractors were abrogated and annulled. Reliance was placed on Section 3 of the said Ordinance, which reads as follows :–

“3. Abatement of proceedings before arbitrators, etc.-(l) Notwithstanding anything to the contrary contained in any law for the time being inforce, or any order of a Court or any agreement-fa) any provision in an agreement between the Authority (or deemed to be between the Authority) and a contractor relating to the execution of any works or projects or the supply of any goods or labour or for the hiring or renting of accommodation providing for reference to arbitration of any dispute arising out of the agreement or any term or condition thereof, shall stand abrogated and annulled and be of no effect;

(b) all arbitration proceedings in pursuance of any such agreement as is referred to in clause (a), whether the reference to arbitration was made by consent of parties, by order of Court or otherwise, pending before an arbitrator or arbitrators or an umpire prior to the coming into force of this Ordinance, shall forthwith abate, and save as provided in this section shall be of no effect;
(c) any award made by an arbitrator, arbitrators or umpire in ‘pursuance of any such agreement as is referred to in clause

(a), if such award has not been made the rule of the Court, or partly or wholly implemented or acted upon, shall stand annulled and be of no effect, arid any proceedings in respect of such award, if pending immediately before the coming into force of this Ordinance, shall abate;

(d) all proceedings in relation to an application made to a Court for referring a dispute to arbitration pursuant to an
agreement referred to in clause (a) shall abate, and any order made by a Court on such application referring the dispute to arbitration shall be deemed to be of no effect;
(e) any dispute referred to arbitration, the proceedings whereof have abated by reason of the provisions of this
section, shall be decided in accordance with the provisions of the law for the time being in force.

(2) (3)

3. It was argued by Mr. Muhammad Ali Jan that by conduct of the defendants they are estopped from raising this plea. It was further argued that in the previous proceedings (Suit 188/1987) the matter was referred to the arbitration by consent of the parties and during the period of nearly ten years no such objection was raised. It was further argued that by conduct of the defendants a fresh agreement for arbitration was created and accordingly the matter was referred to the arbitration and that they are now estopped in law from raising the plea that the agreement was annulled by virtue of Ordinance XXV of 1965. On the other hand, it is vehemently argued by Mr. Dasti Muhammad Ibrahim that the provision of arbitration agreement was annulled by virtue of Law; therefore, even if the some officers of the KDA has acted in the manner as referred by Mr. Muhammad Ali Jan, it does not constitute a fresh arbitration agreement and that there is no estoppel against law. Mr. Muhammad Ali Jan has referred to the cases GhuUnn Mutu ud-Din v. Chief Settlement Commissioner (Pakistan) Lahore and others (PLD 1964 SC 829), Abdul Wahab and others v. Habib Ali and others (PLD 1969 Lahore 365) and the case of Nasrullah Jan and 3 others v. Muhammad Karim and 14 others (1986 CLC 1). The case of Ghulam Mohi-ud-Din arises out of a Constitutional petition, which was filed against the order of Chief Settlement Commissioner. It was pleaded before the Hon’ble Supreme Court that the Chief Settlement Commissioner has no authority to pass the impugned order. In that case it was within the knowledge of petitioner that a second revision petition was filed before the Chief Settlement Commissioner and that the said Commissioner, in law, had no power of review. Notwithstanding this, the petitioner did not raise any objection to the hearing of the review but actually participated in its hearing on merits. Because of such conduct of appellant the Settlement Commissioner proceeded with the hearing and passed the impugned order. It was held by a Full Bench of Hon’ble Supreme Court that the principle, upon which the writ is refused in such cases is not that jurisdiction has been conferred on the Tribunal concerned by waiver and acquiescence but that even though the impugned order is without jurisdiction, the persons seeking to have it quashed should not be granted discretionary relief as he has stood by and allowed the Tribunal to usurp a jurisdiction which it did not possess knowing that the Tribunal concerned was committing such an illegality. In addition to the cases cited by Mr. Muhammad Ali Jan, there are two other authorities on this point namely, Yasin Khan and another v. Settlement and Rehabilition Commissioner and others (PLD 1967 Karachi 295) and the case of Muhammad Rafiq Gazdar v. Additional Commissioner, Karachi and 3 others (PLD 1972 Karachi 119). It was held in both these cases that where a party has acquiesced in passing of an order the same could not be challenged through writ petition.

1. In the case of Abdul Wahab and others the parties consented for passing of order by the Court. It was held that if a party by its conduct obliges the Court to adopt a course which is contrary to its practice, that party will be debarred from raising the objection as to the procedure on the very salutary principle that after having led the Court to do a certain thing for the benefit of the parties, none of them can be allowed to challenge the same. Reference was made to the case of S.E. Makhdam Muhammad v. T.V. Muhammad Sheikh Abdul Kadir and another (AIR 1936 Madras 856). In the case of Abdul Wahab and others one of the question before a Division Bench of Lahore High Court was whether an appeal of a party, who consented to an agreed order, can be .entertained. Reference was made to sub-section (3) of Section 96 of the CPC, 1908. It was held, inter alia, that one of principles, as envisaged in Section 96(3) CPC, is that a party after having consented to an agreed decision cannot appeal against the same. Reliance was also made on the case Sh. Maqbool Elahi and others v. Khan Abdul Rehman and others (PLD 1958 SC (Pak.) 96) and it was further held that once a mode/”procedure” is adopted by the High Court on the request of the parties, the decision given in pursuance of that mode should be given effect. A necessary corollary of this rule will be that the same parties are estopped from subsequently challenging that mode of decision in an appeal. One of the question before the Division Bench of Balochistan High Court in the case of Nasrullah Jan (Supra) was whether the proceedings before the Tribunal and Assistant Commissioner, Pishin were conducted in flagrant violation of the provisions of the Ordinance I of 1968. Such contention was held to be devoid offeree and the proceedings before that Tribunal upheld by a Division Bench comprising of Ajmal Mian, J., (now Chief Justice of Pakistan) and Mir Hazar Khan Khoso, J., (as his lordship then was). It was observed that the said Tribunal referred the matter to the arbitrator at the joint request of parties and that the course contrary to the provisions of Ordinance I of 1968 was conducted by the Tribunal at the request of the petitioners, who cannot raise such objection subsequently when such objection resulted due to their own conduct and acquiescence, such objections were held not sustainable in law. Mr. Muhammad Ali Jan has placed reliance on the following observations made in the case of Nasrullah Jan and 3 others :-

“10. On going through the above said authorities the High Court held “that once a mode (procedure) is adopted by the High Court on the request of the parties, the decision given in pursuance of that mode should be given effect to; a necessary corollary of this rule will be that the same parties are estopped from subsequently challenging that mode of decision in appeal. We also adhere to the same view taken by the Lahore High Court. In the instant case that the petitioners themselves had asked the Tribunal to refer the . matter to shariah hence subsequently it cannot lie in their mouth to say that the Tribunal followed a procedure contrary to the provisions of the law.”

5. It was next contended by Mr. Dasti Muhammad Ibrahim, that the KDA was not competent even to enter into any agreement for referring a dispute to arbitration in view of the provisions of Ordinance XXV of 1965. He has placed strong reliance upon sub-clause (e) to subsection (1) of Section 3, which provides that any dispute “referred” to arbitration the proceedings whereof have been abated by virtue of Section 3(1) (a) and (b) shall be decided in accordance with the provisions of law for the time being in force. This Ordinance was promulgated on 16.8.1965 and all such agreements, which were entered by that time, stand abrogated and annulled. There is no provision in this entire Ordinance, through which the defendant namely, | KDA, was restrained or prohibited from entering into any agreement in j future for referring a dispute in arbitration. In this connection preamble to Ordinance XXV is very clear, which states that the KDA has entered into agreement with certain contractors/companies in furtherance of KDA I Order, 1957; therefore, reference made to arbitration was pursuant to such j agreement, which have failed to achieve the objects. Therefore, it was deemed necessary that the proceedings pending before the arbitrator be j annulled. Provisions of this Ordinance, 1965 is, therefore, veiy clear that the j KDA was not barred or prohibited for all times to come to execute any agreement or arrangement for referring any dispute to arbitration. There are several matters pending before this Court wherein KDA has entered into arbitration agreements and the matter was referred to the arbitration. One of such case has rightly been pointed out by Mr. Muhammad Ali Jan namely Q.M.R. Export Consultants v. KDA and another (1997 CLC 503) where this Court revoked the authority of named arbitrator and directed that the parties to suggest new name for the appointment of two arbitrators vide order dated 29.8.1996, against which an appeal was filed (HCA 164/1996), which was dismissed in limine. vide order dated 4.11.1996 by a Division Bench of this Court and by consent of the parties, including KDA Mr. Justice (Rtd.) Imam Ali G. Kazi, was appointed sole arbitrator. This agreement was executed after promulgation of Ordinance XXV of 1965. In these circumstances, the contention that the KDA was not competent to enter into any agreement after 1965 is untenable.

6. On merits, Mr. Dasti Muhammad Ibrahim, has raised objection that Karachi Water & Sewerage Board (“KW&SB”) was necessary party as after promulgation of the Sindh Local Government (Amendment) Ordinance, 1983, the defendant-KDA has transferred all the assets and liabilities of bulk water supply system to KW&SB and that it was that department who was responsible for return of cables or for payment of its compensation. Secondly, he contended that the claim of the plaintiff was
time barred and lastly that the arbitrator has exceeded his jurisdiction. All these questions were elaborately discussed and were answered by the learned arbitrator. No irregularity was pointed out in the reasons given in favour of Award.

7. The plaintiff has filed two claims before the arbitrator: one was for payment of Rs. 18,958.80, for the work done by the plaintiff, which was rightly held to be time barred by virtue of Article 56 of the Schedule to the Limitation Act, 1908. However, the first claim was not pressed by Mr. Muhammad Ali Jan, advocate. The second claim filed was for the return of cables or in alternative a payment of Rs. 79,800/-. Mr. Dasti Muhammad Ibrahim, was not able to show any perversity, illegality or even a minor irregularity in the Award. The reasoning for granting second claim reads as under:–

“As stated above the Governing Body of the Karachi Development Authority had recommended for payment as well as for return of cable lying in the Filter Plant. No action was taken by the respondent towards return of the cable. The petitioner sent a notice to the respondent on 1.10.1985 which was ignored. He then sent a notice to the Karachi Water & Sewerage Board for which the Chief Engineer of the Board sent a repl-, copy of which is Ex. A/64. The Karachi Development Authority should have taken steps to return the cable or refuted the petitioner’s claim for return of the cable. They did nothing in this behalf. This conduct of the K.D.A. would constitute a refusal on their part to deliver the cable. For recovery of movable property, time for filing suit would start running from the date of refusal and applying Article 49 of the Schedule I of the Act, I hold that the petitioner’s case for return of the cable is well within time. Before adverting to the respondent’s second objection, viz. the transfer of liability to the K.M.C. on the promulgation of Sind Local Government (Amendment) Ordinance, 1983, it will be appropriate to examine the factual position as to the cable lying at the Filter Plant and admission of the liability to return it.

In the statement of claim, the petitioner has claimed Rs. 79,800/- for 266 yards of cables of the specification given in the statement of claim. The respondent admitted its liability to return the cable in its General Body meeting on 8.7.1982. The copy of the resolution is Ex. A/61 and it reads as under :—

“RESOLUTION NO. 582.

20th. Meeting of the G.B. held Aug. 7. 1982. Item note was presented by CHIEF ENGINEER (W), Resolved that approval be accorded to the acceptance of the recommendations of claims Committees for payment of Rs. 18,958.80 and for the return of the Electrical Cable said to be lying at Filter Plant which belonging to M/s. Yasin & Co.

(Action : CHIEF ENGINEER, (W))”

As will be seen, the General Body recommended payment of Rs. 18,958/80 and return of the cable. The Superintending Engineer Filter Plant was asked to take necessary action in this behalf by a latter, copy of which is Ex. A/62. These documents have not been specifically denied by the respondent. A copy of the resolution was also forwarded to the petitioner with copy of the letter Ex. A/62. As late as 7.8.82 the respondent had admitted the petitioner’s claim of cable.The respondents, in their written statement denied the claim of the petitioner about payment of money for work done. They refrained from denying the petitioner’s claim for return of the cable. After 7.8.82 nothing seems to have been done by the Karachi Development Authority in the matter of return of the cable. Admitted position is that the cable had been lying with the respondent when the meeting was held of the General Body (7.8.82). The letter, copy of which is Ex. A/60, shows that the petitioner was informed about release of the fund for payment of Rs. 18,958/80 to the petitioner. The letter was issued on 22.9.82. It is silent about the return of cable. There is no document after 22.9.1982 mentioning “The Cable” or any reference to it. Notice was given to the respondent on 1.10.85, copy of which is Ex. A/63. The lawyers notice is Ex.A/64. The notices were not replied. The petitioner also gave notice to the Karachi Water & Sewerage Board which was replied by letter, copy of which is Ex. A/65. The Board refused to accept any claim of the petitioner without specifically referring to the cable. The silence of the K.D.A. in respect of the petitioner’s claim for return of the cable amounts to refusal to it. This refusal to return or silence in the matter after service of notice of 1.10.85 would give rise to a cause of action to the petitioner.

The K.D.A. at no stage from 8.7.82 to the date of filing of the application in the Court ever pointed-out to the petitioner that the cable had been given in the charge of the K.M.C. or the K.W.& S.B. In the first instance, the K.D.A. never denied the existence of the cable with them; when once they had admitted the entitlement of the petitioner in their Resolution No. 582, and secondly they never pleaded even after service of notice on 1.10.85 that they were not liable for return of the cable on account of promulgation of the Sind Local Government (Amendment) Ordinance, 1983. The respondent K.D.A. has not made any plea in their written statement about the quantity, quality or the price of the cable.

The respondent K.D.A. pleaded that on the promulgation of the Amendment Ordinance 1983, the KD.A. had transferred the Bulk Water Supply System to the K.M.C., all liability was transferred to the K.M.C. and later to the Karachi Water & Sewerage Board. The respondent also pleaded that the petitioner had given an undertaking on 18.8.82 relinquishing all claims against the KD.A. The undertaking, for whatever it is worth, relates to claim of money and not in respect of the petitioner’s claim for return of the cable.The K.D.A. never informed the petitioner that the cable had been transferred to the K.M.C. on or after 1.2.83 when the Ordinance amending . the Sind Local Government Ordinance, 1979 came into force. They maintained a sullen and callous attitude. It is correct that the petitioner should have knowledge about -the change of law, but. such presumption cannot lighten the burden of the K.D.A. especially in Arbitration Proceedings. Mr. S.H. Kizilbash appearing before the Court had communicated that he had no objection if reference was made. This means that he had admitted the existence of the dispute. The petitioner’s undertaking given by him on 18.8.82 nor by bar of limitation as suggested by Mr. N. A. Kazi.

The next objection of the counsel of the respondent is that the K.D.A. was absolved of all responsibility for return of the cable or payment of money on account of the enforcement of Sind Local Government (Amendment) Ordinance, 1983, which according to Ex. R/l came into force on 1.2.83 The counsel of the respondent relied upon Section 147(2) (i) of the amended Ordinance as it stood on 1.2.83. The provision is reproduced below for ready reference :–

“Section 147(2)(i): all property, movable and immovable, including all water works and installations held by the Karachi Development Authority in relation to bulk water supply, inventory whereof shall be prepared by the • Chartered Accountants, appointed by Government, with the help of a representative each of the Karachi Metropolitan Corporation and the Karachi Development Authority, shall vest in the Karachi Metropolitan Corporation;”

This provision has got one very material limitation atleast which is that such property would vest in the K.M.C. after 1.2.83 which was listed in the inventoiy to be prepared jointly by the representative of the K.D.A. and K.M.C. It has not been shown that such inventoiy was prepared and the cable was included in the inventoiy. The K.D.A. also did not mention the existence of such inventoiy at any stage and as such this provision would not help the respondent in releasing them of their liability.

The counsel of the respondent also referred to the provisions as contained in Section 147(x) of the Sindh Local Government Ordinance as it came to be, on amendment, by the Amending Ordinance, 1983. It reads as under :–

“147(2)(x): all suits and other legal proceedings instituted by or against the Karachi Development Authority in relation to bulk water supply, and the Karachi Water Management Board, before the coming into force of this Chapter may be continued by or against the Karachi Metropolitan Corporation;”

This provision has application only to proceedings commenced before coming into force of the Amending Ordinance of 1983 of which the relevant date is 1.2.83. The present proceedings are not effected by this provision and this is of no avail to the respondent.

There is another aspect of this saving provision and that it is of permissible nature and not mandatory. After Mr. Kizilbash pleaded no objection in the Court, there will be no impact of this provision on these proceedings. The bare facts are that the cable is still with the Karachi Development Authority and the petitioner is entitled to its return. The respondent is also responsible to return the cable of the quantity and quality it was when it was left there and in the alternative to pay such compensation to the petitioner as is equal to present market value.”

8. It is evident from the above reproduction of the reasonings of the Award that the question of limitation was considered by the learned Arbitrator who rightly held that the claim of the plaintiff was within time. Neither before the learned Arbitrator nor before this Court, any reference was made by the K.D.A. to any Article of the Limitation Act, 1908, to support their contention that the plaintiffs claim was barred by limitation. It was observed by the Arbitrator that the K.D.A. never denied possession of the cables with them. This fact stands proved from the Resolution No. 582 adopted by the Government Body of the K.D.A. on 7.8.1982; from the conduct of the defendant/KD.A. during the proceedings of Suit. No. 188/1987 and even during the arbitration proceedings. It is regrettable to note that a very lame and frivolous objection was raised by the respondent/K.D.A. that as a result of promulgation of the Sindh Local Government (Amendment) Ordinance, 1986, they are not liable for the return of cables. This does not suit an organisation established by the Presidential Order and being controlled by the Provincial Government to raise such pleas and to deprive a citizen of his valuable properties. Once K.D.A. admitted having these cables in their possession, it was their moral and legal duty to see that it be returned to its real claimant. It was more incumbent upon them when a resolution in this connection was also adopted by its Government Body. Before this Court also, the objections raised on behalf of the K.D.A. are hypertechnical in nature, perhaps with the aim not ro perform their statutory duties and other obligations.

9. It was argued by Mr. Dasti Muhammad Ebrahim, that as a consequence of introduction of clause (x.) to subsection (2) of Section 147 of the Sindh Local Government Ordinance, 1979 the liabilities of K.D.A. stand transferred to K.M.C. This is not the right interpretation. This provision was enacted strictly for the purpose of protecting litigations filed by and against the K.D.A. or Water Management Board in relation to bulk water supply which were to be continued by or against the Karachi Metropolitan
Corporation. In no manner it absolves K.D.A. from its admitted liabilities. It is pertinent to note that the plaintiff filed proceedings under Section 20 of the Arbitration Act, 1940, in the year 1987 when by consent, the matter was referred to the arbitration. This was done al’tar the amendment was made in the Sindl> Local Government Ordinance, 1979. In the year 1986, when the said amendment was made no litigation in respect of bulk water was pending between the present parties. In the aforesaid circumstances, the provisions of Section 147(2)(x) are not attracted. The other objections are not relevant.
10. As a result of the above discussion, the Award dated 2.9.1992 is made rule of the Court. Decree to follow.

(A.S) Orders accordingly.

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