QASIM INTERNATIONAL CONTAINERS Versus QASIM FREIGHT STATION (PVT.)

ORDER

1. S. AHMED SARWANA, J.‑ ‑‑Qasim International Container (Pvt.) Limited (Appellant herein), entered into an Implementation Agreement dated 25‑7‑1995 with Port Qasim Authority ("PQA~) as operators of a Container Terminal at Port Qasim. It is alleged that the appellants also set up a Container Freight Station ("CFS") within the port area and that there are several other CFS operated by other persons outside the port area. PQA contends that under the above referred Agreement the appellants were not entitled to operate within the Container Terminal as CFS which is popularly known as "On Dock CFS", however, PQA reluctantly and purely as a temporary measure allowed the appellant to operate the same about three years ago which permission apparently continued and by letter dated 23‑12‑2000, PQA directed the appellant to close down the temporary CFS facilities at their terminal by 31‑1‑2001 as agreed by the appellant in their letter dated 22‑12‑2000. The appellants have alleged that to resolve the problem of the On Dock CFS facilities operated by them, on 25‑1‑2001 they issued a notice to PQA under the provisions of the Agreement to appoint an arbitrator which notice was disputed by the latter. However, appellant allegedly proceeded with the arbitration before the sole arbitrator appointed by them. Simultaneously with the commencement of the arbitration proceedings before the arbitrator, appellant filed an application under section 41(b) of the Arbitration Act, 1940 (JM No.3 of 2001) before the High Court seeking an order to restrain PQA from closing down Appellant's On Dock CFS till the award in the arbitration proceedings is made Rule of the Court. The learned Single Judge while issuing notice of the application also granted them ad interim relief.

2. On or about 22‑2‑2001, Qasim Freight Station (Pvt.) Limited (respondent No. l) who are operating Off Dock CFS outside the port area filed an application under Order I, rule 19, C.P.C. to be joined as a party in J.M. No.3 of 2001 on the ground that continuance of the On Dock CFS operation by the appellant was prejudicial to their interest, they had an interest in the proceedings and in case the injunction was confirmed they would suffer irreparable loss as their right to bid for and, if successful, to operate the profitable On Dock CFS facilities would be effected. The parties filed counter‑affidavit and affidavit‑in‑rejoinder to the application filed by respondent No.l. After hearing the arguments of all counsel, the learned Single Judge by order, dated 25‑4‑2001 granted the application of Respondent No.l/Intervenor holding that they were a proper party and their presence was necessary to enable the Court to factually and completely adjudicate the matter and to eliminate multiplicity of proceedings and directed the appellant to file an amended title of the petition within a week. Hence this appeal.

3. The main contention of Mr. Shaiq Usmani, learned counsel for the appellant is that the arbitration is between the appellant and PQA where the dispute between the parties is whether or not they have a right to operate On Dock CFS under the implementation agreement with PQA in which respondent No.l is neither a party nor has any interest therein and consequently they cannot be made a party to the proceedings under section 41(b) of the Arbitration Act which are ancillary/subsidiary to the arbitration proceedings between the appellant and PQA.

4. On the other hand, Mr. Rasheed A. Razvi, learned counsel for respondent No. l vehemently argued that respondent No. 1 is a proper and necessary party to the proceedings as they are interested in setting up and operating an "On Dock CFS" facility within the port for which PQA would float a Tender in which they would participate and, if successful, would operate the same and if the interim injunction is confirmed it would continue for a long time and consequently they would be deprived of the expected business and consequently‑of the profits therefrom and thereby suffer irreparable financial loss. He added that if other Off Dock CFS operators have not shown any interest in the litigation, it does not mean that respondent No. I has no right to join the proceedings because they are competitors of the appellant and have a right to compete with them in the tender for operation of On Dock CFS facilities in the port area. As the appellant had temporary permission only to operate On Dock CFS facilities which expired on 31‑1‑2001, their interest in the business and to take part in the expected tender has crystallized and become stronger.

5. We have heard Mr. Shaiq Usmani, learned counsel for the appellant, Mr. Rashid A. Razvi, learned counsel for the respondent No. 1 and Mr. Arif Khan, learned counsel for respondent No.2.

6. Section 41(b) of Arbitration Act, 1940 reads as follows:‑‑

7. "41. Procedure and powers of Court..‑‑Subjected to the provisions of this Act and of rules made thereunder‑

(a) ........

(b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to, any proceedings before the Court:

8. Provided that nothing in clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or, umpire for making order with respect to any of such matters. "

9. The second Schedule of the Arbitration Act provides:.

10. "Powers of Courts.‑‑(I) The preservation, interim custody or sale of any goods which are subject‑matter of the reference.

(2) Securing the amount in difference in the reference.

(3) The detention, preservation or inspection of any property or thing which is the subject of the reference or as to which any question may arise therein and authorizing for any of the aforesaid purposes any person to enter upon or into any land or building in the possession of any party to the reference, or authorizing any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence.

(4) Interim injunctions or the appointments of a receiver.

(5) ..........

11. The learned trial Court exercising its powers under the aforesaid section granted ad interim to the appellants whereafter respondent No.l filed their application under Order I, rule 10, C.P.C., to join the proceedings as a defendant which was granted.

12. On perusal of the impugned order it transpires that the learned Single Judge allowed the application of respondent No. l for the reason that if a party can be allowed to file an application under section 12(2) for setting aside the order making an award the rule of the Court and if the party's right is affected by an injunction in the proceedings, he can be joined as a party to contest the proceedings to protect his right and would be a proper party in the proceedings as "its presence before the Court would facilitate the Court for complete adjudication of the question involved in the present proceedings, whether the petitioner is entitled for the relief claimed or not".

13. To test the validity of the impugned order, we must refer to the provisions of section 12(2), C.P.C., which read as follows:‑‑

14. "12(2).‑‑----Where a person challenges the validity of a judgment decree or order on the plea of fraud, misrepresentation or want of jurisdiction, he shall seek his remedy by making an application to the Court which passed the final judgment, decree or order and not by a separate suit."

15. A bare reading of the above section clearly indicates that if any party is aggrieved by a judgment, decree or order on the ground of fraud, misrepresentation and want of jurisdiction, he can file an application under section 12(2), C.P.C., to challenge its validity. In the present case, respondent No.l filed an application under Order I, rule 10, C.P.C., and not under section 12(2), C.P.C. Further respondent No.2 did not allege any fraud or misrepresentation on the part of either the appellant or PQA or want of jurisdiction of the Court to grant the relief. On the record there is only an order of interim injunction which may not even be confirmed. At this stage the only person who can have any grievance is PQA ‑against whom the order has been passed. No other person can claim to be adversely affected by the interim order. In our opinion, in the present circumstances, the learned Single Judge could not press the provisions or the spirit of section 12(2), C.P.C., while considering the application under Order I, rule 10, C.P.C., filed by respondent No.l. Even if the ad interim injunction is confirmed in favour of the appellant, respondent No.l cannot be regarded as an aggrieved party for reason discussed below.

16. Now Order I, rule 10(2), C.P.C., reads as follows:‑‑

17. "Court may strike out or add parties.‑‑‑(2) The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely, to adjudicate upon and settle all the questions involved in the suit, be added."

18. The Courts have divided the persons who may be added or deleted as parties to the proceedings in two categories, namely "proper parties" and "necessary parties". The term "proper party" has been explained in the case of Pakistan v. Abdul Wali Khan PLD 1975 SC 463, by the Honorable Supreme Court of Pakistan in the following words:‑ .

19. "Now a proper party is a party whose presence before the Court is necessary to enable the Court to effectually and completely adjudicate upon and settle all questions involved in the proceedings. The terms `questions involved' include all matters material to a proper decision of the case but the object of making such persons parties is to prevent multiplicity of proceedings. The person must, therefore, be a person whose interest is likely to be affected even though no relief is claimed against him. This does not, therefore, extend to persons who have no interest which is likely to be affected by the proceedings nor does it embrace persons only generally interested in common with other nor can persons be added as parties so as to set up a new cause of action which does not concern the original parties.

20. In a generic sense, every decision of this Court on a point of law is likely to affect every one in this country in whose case a similar point of law arises, but this does not give every person in this country a right to intervene in every proceedings before this Court, merely because is likely to affect him in some future proceedings."

21. Similarly, the term "necessary party" has been explained in the case of Muhammad Kalim Khan v. Muhammad Farouk Khan (PLD 1987 Karachi 38 at 47 as follows:‑‑

22. "Clause (2) of the said rule further provides that the Court may at any stage of the proceedings, either upon or without the application of either party, order that the name of any person, who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added. Clause (2) of rule 10, therefore, is not to be read as requiring that all persons who claim to have a right, title or interest of any nature whatsoever in respect of the subject‑matter of a suit, should all be made parties. The expression used `all the questions involved in the suit', to my mind, refers to the questions involved in the suit instituted in the Court as are common between the parties to the suit and the applicants."

23. And the Honorable Supreme Court of Pakistan in the case of Muhammad Sadiq v. Muhammad Rafiq 1985 SCMR 376, has elaborated that necessary parties under the Civil Procedure are persons who ought to have been joined as parties and in whose absence no effective decree or order can be passed.

24. The arbitration proceeding in the present case is between the appellant and PQA. The primary dispute in the arbitration proceedings apparently is the interpretation of the Implementation Agreement dated 25‑7‑1995 executed between the appellant and PQA which has allegedly expired and the issue before this Court in J. Miscellaneous No.3 of 2001 is whether or not PQA be restrained from closing down the appellant On Dock CFS facilities operated by them within their container terminal till the arbitration award is made rule of the Court. Respondent No.l is admittedly neither a party to the Implementation Agreement nor in the arbitration proceedings Mr. Rashid A. Razvi, learned counsel for respondent No.1, has not been able to satisfy us by production of any document or advancing any argument as to how respondent No.l is either a proper party in the arbitration proceeding or the proceeding before the High Court or that their presence in the Court proceeding is necessary in order to enable the High Court effectually and completely, to adjudicate upon and settle the questions involved in the proceedings of J: Miscellaneous‑ No.3 of 2001 before the Court which are ancillary to the arbitration proceeding pending between the appellant and PQA. He has also not been able to show how this Court would not be able to pass an effective order in J. Miscellaneous No.3 of 2001 in the absence of respondent No. 1. Respondent No. 1 is an outsider who has no connection with the present proceedings before the trial Court. The argument of the learned counsel that respondent No. l is a competitor and would be deprived of an opportunity to take part in the invitation to bid that may be advertised by PQA at some time in future is hypothetical, highly imaginative and too remote. We are remainder of an Urdu couplet which aptly applies to the arguments advanced by the learned counsel which is as follows:---

25. Further, there is no guarantee that the bid, if submitted by them in respect of the On‑Dock CFS facilities, would be accepted by PQA. If the argument of respondent No.l is accepted then every person who is operating a CFS in Pakistan or any where in the world would have an interest in the invitation to bid that may be advertised by PQA and consequently would have the right to join the proceedings filed by the appellant under section 41, Arbitration Act, if he expresses an interest in doing business at Port Qasim. Respondent No. l is neither a proper party nor a necessary party to effectually and completely adjudicate the issue of temporary injunction until the award is made rule of the Court. The argument is most unreasonable and rejected.

26. It is an admitted position that the dispute between the appellant and respondent No. l has been referred to arbitration and the appellant filed an application under section 41(2) of the Arbitration Act, 1940, to preserve the status quo between the parties during the arbitration proceeding. There cannot be any doubt that an application under section 41(2) of the Arbitration Act, 1940, cannot be filed by a party unless some arbitration proceedings are pending between him and another party or unless the person has sought assistance of the Court for enforcement of an arbitration clause. Additionally, if a third party cannot join the arbitration proceedings on account of the absence of an arbitration clause between the third party and the parties who are involved in the arbitration proceedings, we fail to understand how a third party can intervene and contend that it should be made a party to the E ancillary proceedings and he be heard before any order in the ancillary proceedings is passed.

27. There can be no cavil about the proposition of law stated in the case of Mst. Afroze Jehan v. Mst. Noor Jehan and others 1988 CLC 1318, cited by Mr. Razvi that the provisions of section 12(2), C.P.C. are applicable to arbitration proceedings because section 41 of the Arbitration Act itself clearly provides that "subject to the provisions of the Arbitration Act and Rules made thereunder the provisions of C.P.C. shall apply to all the proceedings before the Court and to all appeals under this Act". There is no dispute about the application of the provision of C.P.C. to the proceedings under section 41 Arbitration Act as Mr. Usmani had conceded the proposition before the trial Court. The situation in the present case is, however, different No order or judgment has been passed or is being attacked by any party under section 12(2), C.P.C. The reference to the said judgment is, therefore, not relevant.

28. In view of the above discussion, it is clear that in light of the judgments of the Honourable Supreme Court referred to above, respondent No.1 is neither a proper nor a necessary party to the proceedings in J. Miscellaneous No.3 of 2001. Accordingly, the impugned order, dated 25‑4‑2001 passed by the learned Single Judge allowing the application of respondent No.l under Order I,, rule 10, C.P.C. and directing the appellant to file an amended title of the petition is hereby set aside.

29. The above are the reasons for the short order dated 31‑5‑2001 whereby the appeal was allowed and the impugned order was set aside.

30. Q.M.H./M.A.K./Q‑14/K Appeal allowed.