JUDGMENT SHEET
IN THE LAHORE HIGH COURT,
MULTAN BENCH, MULTAN
JUDICIAL DEPARTMENT
R.S.A No.93 of 2005
Zaheer Brothers through Zaheer Ahmad
Versus
Multan Development Authority & others
JUDGMENT
Date of Hearing. 18.05.2015
APPELLANTE BY: Mr. Abdul Quddus Khan Tareen, Advocate
RESPONDENTS BY: Mr. Muhammad Amin Malik, Advocate for
MDA-respondent.
Rana Muhammad Hussain, A.A.G.
Shahid Karim, J:- This is a second appeal under section 100
of Code of Civil Procedure (CPC) and lays a challenge to the
judgment and decree dated 20.6.2005 passed by the Addl.
District Judge, Multan. By the said judgment and decree
appeal filed by the respondents No.2 to 5 was accepted and the
judgment and decree dated 12.12.2000 passed by the Civil
Judge, Multan was set aside.
2. The relevant facts are that a contract was executed
between the appellant and the respondent No.2 on 15.3.1989.
On the allegation of breach of contract and the non-fulfillment
of the necessary terms of the contract, the respondent No.2
stopped making payments against the bills of the appellant.
An application under section 8 of the Arbitration Act, 1940
(Act, 1940) was filed by the appellant. On 11.3.94 arbitrators
were appointed by the civil court who conducted the
arbitration proceedings and issued the award dated 11.3.94 in
favour of respondent No.2-authority. Vide order dated
R.S.A No.93 of 2005 2
5.11.1995, the objections were accepted and the award in
favour of Multan Development Authority (MDA) was set
aside. On 27.11.1995 on the application of the appellant, the
civil court ordered for the withdrawal of the application under
section 8 of the Act, 1940. This order is at page 511 of the file
and is Ex.P.93. On 17.12.1995 a suit for declaration was filed
by the appellant herein. This suit was decreed by Civil Judge,
Multan on 12.12.2000. An appeal filed by the respondent
No.2 was accepted vide judgment and decree dated
20.06.2005.
3. The trial court struck the following issues from the
respective pleadings of the parties:
1. Whether the suit is incompetent in view of
preliminary objection No.1? OPD.
2. Whether the plaintiff is estopped to file the suit
by his words and conduct? OPD.
3. Whether the suit is time barred? OPD.
4. Whether the suit is bad for misjoinder of the
parties i.e. defendants No.3 to 5, if so, its effect?
OPD.
5. Whether the plaintiff failed to complete the work
in accordance with the terms and conditions of
the agreement and therefore he is liable to bear
the consequences occurred later on? OPD.
6. Whether the plaintiff is entitled to recover
Rs.688052/- from the defendants the detail of
which is given in para No.17 of the plaint? OPD.
7. Relief.
4. The learned counsel for the appellant submits that the
findings of the lower appellate court have been rendered
primarily on issue No.1 and is a decision which is contrary to
law and has also failed to determine material issues of law.
5. Learned counsel for the respondents No.2 to 5, on the
other hand, has supported the impugned judgment of the
lower appellate court and submits that the lower appellate
R.S.A No.93 of 2005 3
court has rightly held the suit to be incompetent in view of the
section 32 of the Act, 1940 which bars a challenge to the
existence or validity to the arbitration agreement or award.
6. The judgment and decree of the lower appellate court is
merely confined to issue No.1 which relates to the competence
or otherwise of the suit filed by the appellant. The lower
appellate court has held that the crucial issue No.1 has been
decided “in a slipshod manner while ignoring the basic law as
the plaintiff was required to file fresh list of proposed
arbitrators after setting aside the award”.
7. The entire reliance of the lower appellate court was on
section 32 of the Act, 1940 on the basis of which it was held
that a challenge in the nature of suit for declaration was
barred and it was well settled that once the dispute between
the parties had been referred to arbitration, the only remedy
was under the Act, 1940 and not through any suit. While
doing so, the lower appellate court fell into a palpable error. It
was assumed by the lower appellate court that once remedy
under Act, 1940 had been invoked or availed, the normal
remedy under the plenary jurisdiction of the civil court was
barred. This is a fallacy and does not have a basis in law.
Further, the lower appellate court has proceeded on the
presumption that an award was made and the subject matter
and reference had merged in the award and, therefore, no suit
would lie. This again is negated as the award had been set
aside by the order of the civil court and subsequently the
application under section 8 of the Act, 1940 had been
withdrawn by the appellant. This was a right which was
R.S.A No.93 of 2005 4
validly exercised by the appellant and no cavil could be taken
to it. Further, it could not be held against the appellant so as
to bar his right to file a suit for declaration subsequently.
There is no precedent cited by the lower appellate court nor
has any provision of law referred to in this regard while
holding that “a court proceeding to hear such a suit will be
acting without jurisdiction, since as a court of general
jurisdiction, its jurisdiction to hear a cause of this nature is
curtailed”.
8. While so holding, the lower appellate court was swayed
by the provisions of section 32 of the Act, 1940. Suffice to say
that the provisions of section 32 and it tenor is not attracted to
the facts of the present case. Section 32 merely bars a suit to
challenge a decision upon the existence, effect or validity of an
arbitration agreement or award and it further prohibits the
setting aside or amendment of an arbitration agreement or an
award otherwise than as provided in the Act, 1940. As is
evident from the summary of facts brought forth, the suit for
declaration was not brought to decide upon the existence,
affect or validity of an arbitration agreement or award. The
suit merely sought a declaration that the order dated
16.10.1996 whereby the security of the appellant was
confiscated after terminating the contract as well as the order
dated 17.10.1991 whereby the contract was awarded to another
contractor at the risk and cost of the appellant was void,
without jurisdiction and ineffective. Simultaneously, a
recovery for Rs.6,88,052/- under different heads was also
sought. This cannot, by any stretch of imagination, be
R.S.A No.93 of 2005 5
considered as being barred by section 32 of the Act, 1940.
Clearly, the lower appellate court has misinterpreted the
provisions of section 32 and while doing so has fallen in
palpable error of law. In fact, there were other substantial
questions which were involved in the suit from which the
present appeal arises and it seems that the respondents have
neither taken those objections nor have the courts below
adverted to them. I would not like to comment on the
objection which could validly be taken and adjudicated upon
by the courts below. Since the lower appellate court has
rendered its decision merely on issue No.1, there is no escape
but to remand this case for the decision on other issues which
have gone abegging in the impugned judgment.
9. In view of the above, the judgment and decree of the
lower appellate court dated 20.06.2005 is set aside and the
case is remanded to the Addl. District Judge, Multan for
decision afresh on all the issues in accordance with law.
Petition accepted.
(SHAHID KARIM)
JUDGE
Approved for reporting.
JUDGE
*
Rafaqat Ali
