KASHMIR CORPN. LTD. Versus P.I.A

??????????????????????????????????????????????????????????????????????????????????? JUDGMENT

Dispute between the Kashmir Corporation Limited (hereinafter referred to as the Plaintiff or the Claimant) and the Pakistan International Airlines Corporation (hereinafter referred to as "the P.I.A.") was initially sought to be resolved by the Sole Arbitrator Mr. Justice (Retd). Ahmed Ali U. Qureshi as consented by both the parties but on 17‑12‑1990, permission was sought from the Sole Arbitrator, on behalf of the P.I.A. to appoint Mr. Justice (Retd, as he then was) Abdul Hafeez Memon (now the Acting Chief Justice of Sindh High Court) as second Arbitrator. As the Sole Arbitrator did not dissent and the claimant showed no disagreement, hence Mr. Justice Abdul Hafeez Memon was coupled with the Sole Arbitrator. Both the parties also consented that Mr. Justice (Recd.) Fakhruddin G. Ebrahim would act as Umpire in case of incongruity between the two arbitrators. However the Arbitrators did not provide any such opportunity to the agreed Umpire by showing congruency between them at the time of giving Award on 6‑6‑1992 under the Arbitration Act, 1940 (hereinafter referred to as the Act) filed before the High Court on 17‑6‑1992.

2. Mr. S,Ahmed Sarwana, the learned Advocate, filed objections consisting of 34 par. on behalf of the P.I.A. on 15th September, 1992 by labelling routine terms and phrases on the face of the award such perverse, Contrary to law, contrary to evidence, result of misconduct, without jurisdiction, time‑barred, contrary to agreement, bad in law, cannot be termed as speaking award, not properly reasoned, based on surmises and conjectures, grossly misinterpreted etc. etc. Hence most of these objections were general in nature and limited or related to the facts of the disputes except the question of limitation which, undoubtedly, was a mixed question of law and fact.

3. It may be painful to pin‑point that the dispute between the parties is as unpleasant gift of General Zia's Martial Law Regime (not the Government) when will of Regime's "god‑fathers" was the only law to be followed, may or may not be acceptable to anyone. The P.IA. at that time, was a bond‑maid under the Managing Directorship of Air Marshal Waqar Azim.

4. It may be advantageous to bring into light the summary of undisputed facts between the parties.

The claimant had been working as "General Sales" and "Ground Service Handling' Agent of the P.I.A. since 1970 and 1971 respectively for Hyderabad, Nawabshah, Sukkur (One‑line Stations‑‑means where regular flights are operating) and Hazro (off‑line station) on the basis of several agreements executed between them. All of a sudden, the agencies were terminated and taken over on 7‑3‑1985 without giving 30 days' notice in writing which was admittedly imperative for either of the parties to terminate agencies. Stand of the P.I.A., as urged by Mr. Sarwana, before the Arbitrators, was that notice was issued on 6‑3‑1985 and it had to come into effect after 30 days. But this doldrum stand of the P.IA. was found by the arbitrators to be dogmatic in its nature on the face of evidence as the P.IA. ‑had nothing in its hands to prove the same. This stand was further exposed in paras. 17, 23 and 24 of the Awards which reveal that:‑‑

"The management took the above decision because Martial Law was in force in the country at that time and it was hoped that P.I.A. would be able to get the matter resolved in their favour without much difficulty ... ... ... (minutes para. 17 of the Award).

From the letter Annexure E‑1, it would be seen that officers designated therein to take charge were serving or retired Colonels of the Army (para. 23).

From para. 24 of the award, it appears that the officers who carried this operation were supervised by Colonel (Retd.) Qudratullah Khan `Even catering, utensils, punching machines, match‑box, plastic basket, diaries, table calender, stamp‑pad, pin‑cushion, telephone, electric calls bells etc. were taken over by the P.I.A. (para. 24)':'

If these factual realities could not be denied by the P.IA., then nothing was left for the arbitrators to believe that the notice issued on 6‑3‑1985 had, immediately, come into effect within 24 years. The claimant was, however, fortunate enough that he himself was not taken away physically by the wiseacres and eulogists of the Regime, perhaps, due to the reason that there were no complaints against the Claimant (para. 18 of the Award). But this mistake of the retired Colonels encouraged the claimant to file a suit before the High Court against the P.I.A. which was ultimately withdrawn on 6 3‑1986 after reaching a fresh agreement on 3‑3‑1988 (to be referred as Annex H). This fresh agreement protected the rights of the claimant in its para. 3 which runs with the following words:‑‑

. ???? "3. A fair assessment of the assets, equipment and any other claim of M/s. Kashmir Corporation Ltd., on account of their handling agency at Hyderabad, Sukkur and Nawab Shah, will be made by PIAC ???????? Management and the amount will be paid to M/s. Kashmir Corporation Ltd., latest by 15th July, 1986.

In spite of this fresh agreement further negotiations, meetings and correspondence between the parties failed to resolve the dispute. So, the claimant was deprived to get anything till the expiry of promised date i.e.15‑7‑1986, as has been agreed at the time of executing Annexure `H` dated 3‑3‑1986. When no alternation was left, the dispute was referred to the arbitrators as mentioned in para. 1 above. The claim of the plaintiff before the Arbitrators against the P.IA. was totalling Rs.3,14,45,100 (para. 30 of the Award) but the Arbitrators awarded a total amount of Rs.17,34,000 (para. 49 of the Award) which was approximately 5‑1/2% of the total claim submitted by the claimant. This award was given after discussing the following issue in detail:‑‑

(i) ????????? Whether claim of the claimant is barred by limitation and therefore ?????? these proceedings are not maintainable?

(ii) ???????? Whether action of cancellation of the Agencies of the claimant by the respondent was illegal and mala fide?

(iii) ??????? Whether equipment at the Airports was property of the claimant or ????? the respondents?

(iv) ??????? What amount if any is payable by the respondents to the claimant ?

6. The next round of the litigation started before the Court when the P.I.A. avoided to accept the Award gracefully and Mr. S. Ahmed Sarwana filed objections on 15‑9‑1992, as stated in para. 2 above, but hearing of these objections was adjourned from time to time for about two years. However, the learned Advocates of both the parties were found agreed to argue the matter on 26‑1‑1995.

7. Averments advanced by both the learned Advocates pin‑pointed certain principles of Arbitration from the wombs of several judgments delivered by the superior Courts of the sub‑continents. These judgments were authored by the over-shining and respectable stars of the Judiciary and are proudly referred, relied and followed by the successors till date. Some of the relevant principles are as under:‑‑

(a) ???????? At the time of hearing objections, the Court has not to act as "a Court of appeal";

(b) ???????? the proceedings before the Arbitrators or the Umpire are in the nature of proceedings or before a domestic tribunal and strict compliances of procedural law or the Law of Evidence cannot be insisted upon in such proceedings;

(c) ???????? it is the duty of the Court to give every reasonable intendment in favour of the award and lean towards upholding it rather than vitiating it;

(d) ??????? an award not found to be suffering from any patent infirmity should not be remitted or set aside;

(e) ??????? the Court is not powerless but is duty bound to set aside an award if it falls within the clutches of section 30 of the Arbitration Act, 1940.

Section 30 of the Act runs as under:‑‑

"30. Grounds for setting aside award. ‑‑An award shall not be set aside except on one or more of the following grounds, namely:‑‑

(a) ??????? That an arbitrator or umpire has misconducted himself or the proceeding;

(b) ???????? that an award has been made after the issue of an order by the Court superseding the arbitration or after, arbitration proceedings had been invalid under section 35;

(c) ??????? that an award has been improperly procured or is otherwise invalid."

7‑A. It can be gathered from all these principles that an award should not be given the sanctity of the sacrosanct Qur'anic commandment. According to the Latin Maxim: Compromissarii sunt judices meaning "Arbitrators are Judges and arbitrium est judicium meaning" an award is a judgment. It is thus obvious that arbitrators are not angels and on account of their being the human‑beings, an award given by them may or may not be free from defects. This point can be further elaborated with the help of one Hadith of the Holy Prophet (peace be upon him) as narrated by Umul‑Momineen Hazrat Ume?Salma (RA.) in the following words:‑‑

No doubt I am human‑being like you. You bring your disputes before me. It is possible that one of you may be better debater than the other. So, (if in such situation) I reach a decision (contrary to the reality),

"Do not take anything, even the least, out of (Your) brother's right, (on the basis of decision) because the same would be a piece of fire."

(The Bukhari‑Kitab‑ul‑Shahadat and The Muslim Kitab‑ul‑Aqziah)

It can, thus, be safely said that neither the Arbitrators nor the Judges of Courts, if they claim to be believer, can presume that each and every award given by them would be free from all kinds of defects. But at the same time, they are not expected to work as slaves of technicalities when they are giving an ''ll A award or judging the validity and legality of the award by putting the same in j, the clutches of sections of the C.P.C. or the articles of the Oanun‑e‑Shahadat. (Reference can be made to section 32 of the Act as interpreted in AIR 1958 All. 692, AIR 1946 Cal. 427).

8. As this Court, while dealing in or hearing of objections of the concerned parties in respect of any award, is not supposed to constitute itself as a regular Court of appeal on the award of arbitrators, therefore, it cannot impose its own opinion, contrary to the opinion drawn by the arbitrators because jurisdiction of the Court, in this respect, is restricted to cases falling in the ambit of section 30 of the Act. Even this Court, at the time of hearing objections of the parties, has not to see whether the arbitrators were laymen or 8 expert in their profession and whether they were or were not fully conversant with the niceties of relevant law and concerned rules. The important function, which the Court has to perform at the stage of hearing objections is to see whether or not the arbitrators have properly answered the precised questions referred to them and whether substantial justice, which could appeal to the conscience, has been done or not. If the Court finds that the award is based on evidence on record and is a result of proper appreciation of the evidence adduced by the parties, then interference by Court would not be proper.

9. After keeping this Court fully equipped and guarded with all these undisputed principles of arbitration, as discussed in the foregoing paragraph, attention was paid to the worthy submissions advanced by Mr. Qazi and Mr. Namazie on behalf of their parties. Mr. Qazi, the learned counsel for the claimant warmly supported the award awarded by the arbitrators on the strength of all those principles. He also put forward an additional averment attached to section 33 of the Act, but lukewarmly. It was contended by Mr.Qazi that the award had become final because no application under section 33 of the Act was moved on behalf of the P.IA. to challenge the validity of the Award. This plea of the learned counsel could not convince me. If an award cannot be set aside under section 30 of the Act unless there is an application before the Court under section 33 of the Act, then both these sections have to be treated as co‑extensive, which cannot be the intention of law because legislating co?extensive sections in an Act means nothing but the absurdity. No doubt, the validity of an award under section 33 as well as on grounds (b) and (c) of section 30 of the Act can be assailed by the concerned parties but the scope and objects of both these sections are different and they are independent in their nature. So far as ground (b) of section 30 of the Act is concerned it encircles specific conditions to set aside an award. But from section 30(c) of the Act, a semi‑transparent impression erupts on account of certain judgments that section 33 ground (c) of section 30 of the Act are co‑extensive (PLD 1976 Lahore 1273) and such an impression got further stength when a parallel view was also expressed by the Courts that an application under section 30 may be treated as an application under section 33 of the Act.

With due regard for all such opinions, I am of the view that section 33 and section 30 (c) of the Act, are independent in their scope and objects on account of the following reasons.

Section 33 of the Act contains the word `shall' used twice in it. The first `shall' is related to moving of an application by any of the parties in dispute to an arbitration and the second `shall' is related to the duty of the Court to decide the issue raised in the application. Both these acts, attached with the word `shall', can be performed on the strength of affidavits.

It is, thus, obvious that if validity of an arbitration agreement or an award with reference to the questioning of their existence can be decided on the basis of affidavits then such remedy can be sought by moving an application under section 33 of the Act accompanied with affidavits. Similarly, the contesting party can also submit counter‑affidavit to rebut the contention raised in application under section 33 of the Act. The Court, then shall decide the issue on the basis of those affidavits. However, the proviso to section 33 of the Act also empowers the Court to examine witnesses where the issue raised in the application cannot be conveniently decided' on the strength of these affidavits. The view gets strength from the cases reported in AIR 1941 Cal. 527, oTR 1446, Nao 5AIR 1948 Pat. 207 and AIR 1922 PC 374.

? I think that main stress in section 33 of the Act is on the validity of an "arbitration agreement with reference to its existence". Therefore an award based on such agreement or the effects arising out of that agreement or the award would also be challengeable under section 33 of the Act. So far as section 30 of the Act is concerned, it has nothing to do with the disputed questionable existence of an arbitration agreement or an award based on such disputed agreements but it deals with such awards which are mostly related to undisputed agreement, and the existence of which is not denied by any of the contesting parties. '

Admittedly the dispute between the P.I.A. and the claimant in this case is on the findings of arbitration related to Annex 'H' dated 3‑3‑1986, which is not disputed with reference to its existence or validity. Therefore, section 33 of the Act is not applicable to the present case and the P.IA. 'can challenge the award only on one or more of the grounds mentioned in section 30 of the Act. Hence I see no force in the contention of the learned advocate for the claimant on the. point of moving application under section 33 rf the Act which, accordingly, stands repelled.

10. It may be conceded by Mr. Namazie that Mr. Qazi was intelligent enough on account of his being pre‑conscious about the line of assailant which had to be adopted by the learned Advocate for the P.IA. It was urged by Mr. Qazi that the P.IA. had never taken the plea ,that claim of the plaintiff was time‑barred till the matter remained pending in the Court. The P.IA. raised such plea when the matter was referred to the arbitrators. It was, thus, contended by the learned Advocate that the P.IA. was not justified to raise such issue at that stage.

I do not agree with the contention of the learned Advocate on this point too. When any matter is referred to the arbitrators, they are supposed to consider all such points which are raised by the concerned parties like Judges without observing the technicalities strictly which are observed by the Courts. The arbitrators are thus, fully empowered not only to frame any issue on any I point including the point of limitation but are also bound to give their findings on these points even if the same were not raised before the matter was referred to the arbitrators. It would be interesting to point out that if the contention of Mr. Qazi is treated to be correct, the same can be used against him too. It does not appear from the record that he might have objected when the issue on the point of limitation was framed by the arbitrators. Therefore, he is also not justified to raise this point after the announcement of award provided he considers his contention to be forceful. I am of the view that if no objection was raised on any issue framed by the arbitrators and the concerned parties remained sleeping at the time of framing that issue, then no objections be entertained by', the Court regarding that issue at the time of hearing objections on any of the grounds mentioned in section 30 of the Act. Even otherwise section 37 of the Act clearly shows that all the provisions of the Limitation Act, 1908 shall apply to arbitration. Due to these reasons the contention raised by the learned Advocate for the claimant has no force and the same is accordingly rejected.

11. Instead of touching the award on any other point Mr. Qazi adroitly cornered himself from reading the award and in friendlier terms forced this burden to glide from his shoulders to enter into the cradle of this Court after referring few, lines from the award as the same were serving his purpose. These lines run as under:‑‑

"The claim has been filed on 27‑8‑1990 viz. within three years of he letter Exh. `N' dated 24‑12‑1988 and therefore, the claim was within time." (Para. 45 of the Award).

As the point of limitation has also been raised by Mr. Namazi, therefore, I would like to discuss this point in the forthcoming paragraphs in the light of submissions made by both the learned Advocates.

12. Mr. Qazi supported the award on the point of limitation on the grounds discussed by the arbitrators while Mr. Namazi assailed the whole award by saying that:

"The P.IA. was bound to give one month notice to the claimant to terminate the agencies. If it was found by the arbitrators that the ??????? P.IA. had violated this condition, they could grant compensation to the claimant only for that period of 30 days which could not be more than Rs.4 lacs and the P.IA. has never refused to pay that amount to the claimant."

Regarding the point of limitation Mr. Namazi submitted that‑‑ "the claim of the plaintiff was time‑barred as the cause of action accrued to the claimant on 7‑3‑1985 when the agencies were taken over by the P.IA. or on 20‑1‑1987 when the talks between the parties failed. Thus, the period of limitation, which is admitted three years, would expire on 6‑3‑1988 or on 19‑1‑1990 respectively. Admittedly the 'claim was filed before the Arbitrators on 27‑8‑1993, hence it was time? barred."

It was thus alleged by the learned Advocate that‑‑

"The arbitrators have neglected these points therefore they had misconducted. On account of these reasons the award was liable to be set aside."

13. ,As the word "misconduct" has not been defined in the Act, therefore, it has several ambiguities hidden in it. This fact is not disputed by any one that this word cannot be limited to moral turpitude but it includes legal misconduct', also, which in its judicial sense, means failure to perform duty judiciously by some breach and neglect to do justice resulting in substantial miscarriage oz' justice, though erroneously. The Superior Courts, while interpreting the word misconduct, have included several acts of arbitrators to be termed as mis?conduct. For example, the acts of neglecting of duties and responsibilities, refusing to provide chance to the parties for engaging Advocates, not providing reasonable opportunities for evidence, recording evidence behind the back of the parties, indicating gross negligence or recklessness apparent from the face of the evidence on record, etc. have been treated as misconduct. Similarly awarding an. award beyond the scope of reference or on no evidence or opposed to ? evidence on record amounts to legal misconduct.

14. ? In the light of above discussion, the objections raised by Mr. Namazi are being dealt as under. ????????

???????????????? It is an admitted position that the question of limitation, is a mixed question of facts and law which means that this question of law should be by taking into consideration all the facts of the case. If the facts of any case with reference to different dates clearly show that the claim was time? barred but the arbitrators gave the award without deciding the issue of limitation or ignored the said issue then the Court is not barred to consider objections on this point and to set aside the award, if the claim is found time barred because referring any matter to the arbitrators does not mean that the effects (sic).

The contentions raised by Mr. Namazi on the point of limitation before this Court had also been raised by Mr. Sarwana before the learned arbitrators and Mr. A.Z. Rizvi, appearing on behalf of the claimant had controverted the same by saying that Article 115 would not be applicable to arbitrator proceedings and in support of his contention he relied upon AIR 1927 Sindh 117. After hearing the learned Advocates, both the learned arbitrators opined unanimously that the claim was not time‑barred. The evidence on record was properly discussed on this point by the learned arbitrators. It may be advantageous to reproduce relevant sentences from different paragraphs which run as under:‑‑

"Admittedly negotiations, meetings and correspondence between the parties continued to arrive at a fair settlement of the amount payable to the claimant. Mr. Sarwana has relied upon Annexure `J' dated 20‑1‑1987 to show that the negotiations had finally failed on that date."

(Para. 9 of the award).

"... ....this meeting on 20‑1‑1987 was not conclusive and no final decision was taken so as to give cause of action to the claimant for breach of Agreement dated 3‑3‑1986. (Para. 10 of the Award) .

.... It will be seen that this figure of Rs.4,00,000 has no mention in Annexure‑J, Exh. `N' and Exh. S‑13 produced by Mr. Kashmirwala are copies of letters of the P.IA. dated 24‑12‑1988 whereby the P.IA. offered the claimant payment of Rs.4,00,000 in full and final settlement of his claim. As pointed above, the claim was filed for arbitration on 27‑8‑1990. All these facts clearly show that negotiations between the parties continued even after 20‑1‑1987. In view of the above discussion we are of the opinion that arbitration proceedings were neither factually nor legally barred by limitation and present proceedings are maintainable. (Para. 11 of the Award).

"As pointed above the claim has been filed on 27‑8‑1990 viz. within 3 years of the letter Exh. `N' dated 24‑12‑1988, and therefore, the claim was within time:' (Para. 45 of the Award).

The facts narrated in the abovequoted lines leave no doubt that the ? ' claim of the plaintiff was not time‑barred and the arbitrators had rightly rejected the said contention on the strength of evidence. The unanimous decision of the arbitrators got more importance especially when the second arbitrator was coupled with the sole arbitrator on account of the P.I.A.

15. ? The award in hand has also been assailed by the learned counsel for the P.I.A. on the issue of awarding an amount of Rs.17,34,000 instead offered amount of Rs.4,00,000 by the P.IA. Perhaps the learned counsel die not consider the consequences of such offer. This stand has shattered the plea of limitation taken on behalf of the P.IA. in the first instance. If the claim of the claimant was time‑barred then he was not entitled to receive anything. But the offer of Rs.4 lacs by the P.IA. to the claimant, even at this stage of hearing the objections, clearly shows that the P.IA. is not confident about its own stand regarding limitation.

So far as the amount of award is concerned, the arbitrators have acted within the boundaries of issues before them. In .all, there were four issues before the arbitrators as mentioned in para. 5 above. The amount, if any, to be awarded to the claimant, had to be decided in accordance to issues Nos.(ii) to (iv). The objections raised on behalf of the P.IA. could be of worth consideration if there had been any issue with the following word:

Whether the claimant was entitled to receive compensation only for 30 days in lieu of the notice necessary for terminating agencies?

In absence of such an issue, jurisdiction of the arbitrators was not limited to a specific period as presumed by the learned Advocate for the P.IA:

16. Admittedly, the P.IA. had adopted unusual procedure under the umbrella of Martial Law Regime at the time of terminating the agencies of the claimant without any apparent reason and without expiry of notice for 30 days, if believed to have been served upon the claimant. It is also not denied by the P.IA. that termination of Agencies is handled by Agency Affairs Department but in the present case, action was taken by Administration and not by Agency Affairs Department (Para. 22 of the Award). The notice of termination was published in Daily Dawn, Karachi which was also unusual because no such notice is advertised in the newspapers.

Such kind of unusual steps seem to have been taken by the disciples of Martial Law Authorities only to damage the business reputation of the claimant. I am of the view that, in these circumstances, the claimant was also entitled for compensation in' respect of damages caused to his business reputation, provided ther6'`had been an issue on t his point too. In the light of all these factual realities, there remains no doubt that action of the P.LA: was clearly in violation of the written agreement but was also mala fide (paras. 20 and 25 of the Award). I am of the view that the claimant could be granted damages from 7‑3‑1985 when the agencies were terminated by the P.IA. and everything was taken over from him by force under the supervision of one Retd. Colonel. It can be, therefore, safely said that the contention of the learned Advocate for the claimant before the arbitrators for claim of damages from the date of terminating the agencies had sufficient force in it. But the said contention was not accepted by the learned arbitrators on account of the fresh agreement (Annex. H) which was arrived at by the parties on 3‑3‑1986.

With due regard for the learned arbitrators, I am of the considered opinion that the P.IA. could get benefit out of that fresh agreement provided they had been sincere to act according to its letters and spirit. The P.IA. was bound to pay the assessed amount regarding their claim of the plaintiff latest by 15th July, 1986. As the P.IA. had breached this important condition of fresh agreement and deprived the claimant from getting, even the offered amount of Rs.4 lacs, therefore, according to my point, the P.IA. could not be given any benefit on the basis of that agreement. In spite of this difference of opinion with the learned arbitrators, this Court cannot impose its own view‑point by replacing the view taken by the learned arbitrators at this stage of considering objections raised by the parties as this Court is not a Court of Appeal. Moreover, the learned arbitrators have discussed all the points so beautifully in paras. 30, 31, 32, 34, 36, 39, 40, 41 and 97 of the Award that it warrants no interference at all.

17. Keeping in view all the legal and factual aspects of the award, as discussed in the foregoing paragraphs I find myself totally helpless to sustain any of the objections raised by the learned Advocates to set aside, trim, alter or modify the award from any angle whatsoever because it would amount to reduce its beauty and legal sanctity. However, to protect its existing sanctity and validity, this Court does not consider itself powerless in announcing that:

(i) ????????? Objections raised to stab or dent the award are rejected.

(ii) ???????? Award is made the rule of the Court, and

(iii) ???????? The plaintiff would be entitled to get interest at an average rate of interest announced by any of the bank on PI.S accounts form 15‑9‑1992, when objections were filed on behalf of the P.IA., provided the claimant does not forego the interest. on account of his religious faith due to the controversy on the issue of interest in Pakistan.

AA./K‑377/K ?????????????????????????????????????????????????????????????? Order accordingly