MUHAMMAD YASIN Versus HANIF AHMED

1. SALEEM AKHTAR, J. ‑‑‑The dispute relates to a building site ‑bearing No.15/296/B situated in Satellite Town, Sargodha which was allotted to the appellant in 1979 by the Government. On 23rd June, 1985 respondent No.1 filed an application under section 14 of the Arbitration Act against the appellant praying that the Arbitrator Javaid Iqbal be summoned to file the award dated 2‑6‑1985 in the Court which may be made rule of the Court and decree may be passed accordingly. This application was sought to be served on the appellant through Parveen Akhtar wife of Muhammad Yousaf describing her as the attorney of the appellant. It seems that in pursuance of this proceeding the award was filed and with the consent of Parveen Akhtar it was made rule of the Court.

2. The appellant filed a petition under section 12(2) read with section 151, C.P.C. and section 33 of the Arbitration Act for setting aside the decree passed on the basis of the award on the ground that it was obtained by fraud and misrepresentation as he had never executed a power of attorney in favour of Parveen Akhtar nor entered into an arbitration agreement nor consented or authorised anybody to consent for a decree. The arbitrator and respondent No.1 filed written statement jointly. The learned Civil Judge framed several issues and on consideration of evidence dismissed the appellant's application. In an appeal preferred by the appellant the learned District Judge came to the conclusion that the decree was procured by fraud and forgery and consequently the decree passed by the learned Civil Judge was set aside. Respondent No.1 challenged the judgment of the learned Additional District Judge in a writ petition. The learned Judge in Chamber without entering into the merits of the case or upsetting the order of the learned Additional District Judge held that application under section 12(2), C.P.C. was not maintainable in arbitration case and accepted the petition. Leave was granted to the appellant to consider whether the learned Judge of the Lahore High Court has correctly interpreted the judgment in the case of M/s. Combined Enterprises v. Water and Power Development Authority (WAPDA) PLD 1988 SC 39. It was also to be considered whether the wrong nomenclature of proceedings before any Court which otherwise had jurisdiction to entertain the same and give verdict on merit thereof could at all be treated as real bar to grant of relief in accordance with law and jurisdiction and further that if there was any bar in the description of provision relied upon by the appellant in application before the District Court could it not be corrected by the District Court or by the High Court and could it not be even converted into a proceeding as required by law.

3. The impugned judgment proceeded on the assumption that in the facts and circumstances of the case section 12(2), C.P.C. and section 30 or 33 of Arbitration Act were. not applicable. Section 12(2) was held not to be applicable as C.P.C. did not apply to arbitration proceedings while sections 30 and 33 were held inapplicable as no such remedy was sought from the Court in the first instance which has become out of time and decree has already been passed. Section 39 would also not apply as there exists no order appealable as defined in it.

4. The appellant's case throughout had been that he had neither executed a power of attorney nor signed any agreement and nobody was authorised on his behalf to refer to arbitration or consent to the award. The allegation was that the award was obtained by fraud and misrepresentation which was not within his knowledge and no sooner he came to know about it he filed application under section 33 of Arbitration Act read with section 12(2), C.P.C.

5. The question for consideration is whether section 12(2), C.P.C. will apply where a decree has been passed under section 17 of the Arbitration Act hereinafter referred as the Act. Where an award is filed in Court in pursuance of notice under section 14 of the Act and after hearing of objections, if any, filed by any party, or where no objection is filed, on expiry of the time fixed for making an application to set aside the award and there is no cause to remit the award, the decree is passed in terms of the award. Section 17 of the Act further provides that no appeal shall lie from such decree except on the ground that it is in excess of or not in accordance with the award. Therefore, the decree passed under section 17 cannot be challenged under section 39 of the Act. The appeal can be filed only on grounds specified under section 17 itself. Where a decree has been passed the award merges in the decree and such decree can be challenged in a limited manner specified above. In order to set aside such a decree which is passed on award, sections 30 and 33 of the Act cannot be invoked. Section 30 provides the grounds for setting aside the award while section 33 permits any party to an arbitration agreement to challenge the existence and validity of an arbitration agreement or an award or the effect of either determination by the Court. Under section 12(2) a person can challenge the validity of a judgment, decree or an order on the plea of fraud, misrepresentation and want of jurisdiction. As provided by section 41 of the Act the applicability of the provisions of C.P.C. to proceedings under the Act are subject to the provisions of the Act. The provisions of C.P.C. are applicable except in cases where its applicability is excluded by the Act.

6. In Combined Enterprises v. WAPDA PLD 1988 SC 39 this Court considered the question of applicability of C.P.C. in arbitration proceedings particularly relating to setting aside the award. After analysing sections 31, 32, 33 and 41 of the Act it was observed as follows:

7. "The reference and the award could only be interfered with in the manner laid down by sections 31, 32 and 33 and to that extent the provisions of the Code of Civil Procedure are expressly excluded and no Court other than that mentioned therein could deal with the matter."

8. It was further observed that the Code of Civil Procedure is applicable only subject to the provision of section 23(2) and section 32 of the Arbitration Act.

9. In Government of Sindh v. Fazal Mahmood PLD 1991 SC 197 the appellants had the opportunity to take all objections to the award which they had filed earlier and were rejected. Thereafter, they were not allowed to press the same objections under section 12(2), C.P.C. to challenge the validity of judgment and decree passed on the basis of the award.

10. In both these judgments the question whether a decree passed on the basis of the award can be challenged by an application under section 12(2), C.P.C. was not considered. Sections 30 and 33 refer to only awards and not decree passed on the basis of the award. Under the Arbitration Act there is no provision for challenging such decree on the ground that it has been obtained by misrepresentation and fraud. Therefore applicability of section 12(2), C.P.C. has not been excluded. In the present case the appellant had filed application under section 33 of the Act and section 12(2), C.P.C. It seems to be composite application for determination of the effect of the agreement as provided by section 33 and challenging the decree on ground of fraud and misrepresentation. The application, therefore should have been considered on merits instead of dismissing it on technical ground that no application under section 12(2) was maintainable. From the above discussion it is clear that in the facts and circumstances of the case application under both the provisions was maintainable. We, therefore, allow the appeal and remand the case for hearing on merits.

11. AA./M‑1705/S Case remanded.