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Second Civil Appeal No. 12 of 1965, decided on 20th May 1968.

S. 12‑Jurisdic tion of civil Courts‑Not barred pending constitution of Arbitration Tribunal ‑ Interpretation of statutes ‑ Statute taking away jurisdiction of Courts has to be construed strictly‑Rights created by statute and those conferred by common law are to be distinguished Rights specially created by statute ousting jurisdiction of civil Court‑Cannot be enforced through civil Courts‑Rights conferred by common law cannot however be precluded to be enforced through civil Courts pending functioning of Tribunal envisaged, by statute.

When rights created by a statute are required by statute to be adjudicated only by a tribunal to be set up under that statute, then the Civil Courts have no jurisdiction to grant relief. But where, a statute confers exclusive jurisdiction on a tribunal for determining claims in respect of common law rights, then the jurisdiction of the Courts will not be excluded until the tribunal required by the statute is set up.

Sultan Ali Nanghiana v. Nur Hussain A I R 1949 Lah. 131; Dost Muhammad Malik v. The Returning Officer and others P L D 1965 Lab. 560; Satnarain v. Hanuman Pershad A I R 1946 Lab. 85; Satnarain Gurwala v. Hanuman Pershad 224 I C 322; Secretary of State v. Mask & Co. A I R 1940 P C 105; Nevile v. London Express News Paper Ltd. 1919 A C 368 ; Attorney‑General v. Garden Grant & Co. 1935 A C 532 and Wolver Hampton New Waterworks Co. v. Hawksford (1889) 6 C B (N S) 336 ref.

Riazul Hassan for Appellant.

Mansoor Ahmad for Respondent.

Dates of hearing: 1st, 8th and 29th April 1968.

This is an appeal against the judgment and decree of an Additional District Judge, Karachi, dated 9th November 1964, dismissing the appeal filed by the appellant against the dismissal of his suit by the judgment' and decree of the Civil Judge First Class Karachi, dated 11th August 1964.

2. The material facts are that the appellant is a registered firm carrying on Cotton business in Karachi, whilst the respondent‑Company is a public limited company incorporated under the Pakistan Companies Act, 1913. The respondent "supervises, controls and regulates the cotton trade, which is transacted by any of its members at Karachi under its various bye‑laws, which are framed under powers given to the said company by its Memorandum and Articles of Association". The appellant is a member of the respondent‑Company. The respon dent‑Company is also entitled under the said bye‑laws to take action against any member found guilty of breach of any of its bye‑laws. In the events that happened, the respondent- Company altered Bye‑law 39. The appellant was aggrieved by this amendment, which in its opinion was illegal and ultra vires of the powers of the respondent. Accordingly the appellant filed a suit being Suit No. 20 of 1964 in the Court of the Civil Judge first class in Karachi, in which the appellant sought a declaration that the amendment of Bye‑law 39 by the respondent was illegal and ultra vires of the respondent's powers and for a permanent injunction restraining the respondent and all persons claiming through or under the respondent from enforcing the said amended bye‑law.

3. The respondent is a trade organisation within the meaning of the Trade Organisation Ordinance, 1961. Accordingly on service of the plaint, the respondent contended that under the Trade Organisation Ordinance, 1961 (hereafter called the said Ordinance) the suit filed against it by the appellant was barred under the provisions of section 12 of the said Ordinance, and filed an application under Order VII, rule 11, C. P. C. that the suit should be summarily dismissed. This application was contested by the appellant on the ground that the arbitration tribunal envisaged by section 12 had not been set up: Briefly section 12 declares that no suit shall be filed against a trade Organisation by any member of such organisation to challenge the validity or propriety of the acts or proceedings of such organisation, unless such member has made an application referring the matter to the arbitration tribunal constituted for deciding such matters by the Federation of Chambers of Commerce and Industry registered under the Act. This application under Order VII, rule, 11, C. P. C. was contested by the appellant on the ground that no arbitration tribunal had been set up as required by section 12, and in support of this plea, the appellant filed a letter dated 6th August 1964 written by the Secretary of the said Federation of Pakistan Chambers of Commerce and Industry, by which the Secretary informed the appellant's Advocate that the arbitration tribunal "visualised under section 12 of the said Ordinance had not been set up". By his judgment dated 11th August 1964, the learned Civil Judge allowed the application of the respondent and dismissed the suit under Order VII, rule 11, C. P. C. Aggrieved by the said order, the appellant filed an appeal which wag hard and dismissed by the Additional District Judge, Karachi. The learned Additional District Judge held that the provisions of section 12 of the said Ordinance were a complete bar to the suit filed by the appellant and that if the tribunal under section 12 had not been set up, the aggrieved party must appeal for relief to "the law‑giver and not to the law Court". Accordingly the learned Additional District Judge dismissed the appeal and upheld the order of the trial Court. Aggrieved by this judgment, the appellant filed this second appeal which has come up for hearing before me.

4. In support of the appeal counsel for the appellant argued that the jurisdiction of the Courts could be ousted under section 12 of the said Ordinance only if the Tribunal envisaged under section 12 of the said Ordinance was set up, therefore, as this tribunal had not been set up by the said Federation, the Jurisdic tion of the Courts was not barred. In support of his argument he relied on a judgment of the Lahore High Court in Sultan Ali Nanghiana v. Nur Hussain (A I R 1949 Lah. 131) and the judgment of a Full Bench of this Court in Dost Muhammad Malik v. The Returning Officer and others (P L D 1965 Lah. 560). On the other hand, counsel for the respondent submitted that the provisions of section 12 of the said Ordinance were a complete bar to the jurisdiction of the Courts, whether or not an arbitration tribunal as envisaged by the said Ordinance had been set up. In support of his contention, counsel for the respondent also relied on the judgment of the Lahore High Court in A I R 1949 Lah. 131. Counsel for the respondent further contented that according to section 12 of the said Ordinance, the appellant had to make an application to the said Federation for the setting up of an arbitration tribunal and that the appellant had not made such an application for the setting up of a tribunal to hear its disputes with the respondent, therefore, the suit filed by it was barred.

5. The sole question involved in this appeal is the interpreta tion of section 12 of the said Ordinance, This section states as follows;

"Restriction on suits against trade organisation.‑(1)Notwith standing anything contained in any law for the time being in force or in the articles of memorandum of a registered trade organisation, no suit or other legal proceedings shall be instituted or commenced against such registered trade organisation questioning the validity or propriety of any act or proceeding of such trade organisation or of the Executive Committee or other body thereof, or the constitution of, or election or appointment to, such Committee or body by any member or such trade organisation or by any member or other trade organisation unless such member or other trade organisation has made an application, accompanied by such fee not less than one thousand rupees as may be prescribed by rules, referring the matter to the Arbitration Tribunal constituted for the purpose of deciding such references by the Federation of Chambers of Commerce and Industry registered under the Act in pursuance of a licence and such Arbitration tribunal has given its decision or award thereon.

(2) The Arbitration Tribunal constituted under subsection (1) shall consist of not less than three and not more than five members appointed by the said Federation of Chambers of Commerce and Industry and shall conduct its proceedings and give its decision or award in accordance with the rules made in this behalf.

(3) Nothing in this section shall effect any suit or other legal proceedings instituted or commenced before the commencement of this Ordinance."

As there is a dispute about the setting up of an Arbitration Tribunal, it will be convenient to set out here the letter written to the appellant's Advocate by the Federation of Chambers of Commerce and Industry on 6th August 1964. This letter states as follows:‑-

"Kindly refer to your letter No. Nil dated today on the above subject.

In response I am directed to say as follows:‑---

(i) The draft constitution prepared by the Federation, for Arbitration Tribunal visualised under section 12 of the Trade Organisations Ordinance is still under consideration by the Ministry of Commerce, Government of Pakistan, pending which no Arbitration Tribunal can be set up.

(ii) Regarding Rules visualised under section 23 of the Ordinance you are advised to approach the Director of Trade Organisations, Ministry of Commerce, Government of Pakistan, for any information.

With regards,

Yours faithfully,

(Sd.) (TUFAIL AHMED KHAN),

Secretary."

6. Counsel for the appellant further pointed out that although nearly four years had passed since their letter was written by the Federation of Chambers of Commerce and Industry, no tribunal had yet been set up. Counsel for the respondent disputed this contention, therefore as the case was adjourned, I asked counsel for the respondent to verify the position and inform the Court whether any tribunal had been set up so far by the said Federation of Chambers of Commerce and Industry. Although in consequence of the adjournments the respondents have had more than sufficient time to ascertain the facts, counsel for the respondent told me that he was not aware whether any tribunal had been set up under section 12 of the said Ordinance. Accordingly, I have to presume that no tribunal had been constituted, although seven years have passed since the enactment of the said ordinance. In these circumstances, the question for determination is whether the jurisdiction of the Courts is barred even though no tribunal has been set up If the contention of the respondent is correct, it would mean that a member who seek to enforce his rights under the Common law against a trade organisation is totally deprived of his rights as no tribunal has been set up. If the Legislature had intended to bar the jurisdiction of the Courts even when no tribunal was set up, as contended by the respondent, it could have made express provision in that respect. A statute which takes away the jurisdic tion of the Courts has to be construed strictly, therefore prima facie that construction of section 12 of the Ordinance has to be preferred which does not oust the jurisdiction of the Courts when no tribunal has been set up.

7. I shall now consider the judgment of the Lahore High Court, on which both counsel relied, counsel for the respondent argued that his case was supported by those observations of Mr. Justice Munir in Sultan Ali v. Nur Hussain (A I R 1949 Lah. 131) in which the Chief Justice criticised the earlier view taken by the Lahore High Court in Satnarain v. Hanuman Pershad (A I R 1946 Lah. 85). In order to under stand the observations of the Chief Justice, it is necessary to give a brief reference to the earlier Lahore case. The facts of that case were that a suit had been filed by a plaintiff in respect of the rejection of his nominations papers for election to a Municipal Committee, plea of the defendant was that the election rights in dispute were the creation of a statute, which could only be enforced though the tribunal that had been set up under that statute for hearing such disputes, therefore the jurisdiction of the civil Courts was barred. The Court of the first instance and the first appellate Court accepted this contention and dismissed the suit. The plaintiff filed an appeal, which was allowed by the High Court with the following observations:

"It is however contended that the jurisdiction of the Civil Courts is barred by the necessary implication that arises by the creation of a special jurisdiction under the rules framed under section 240, Punjab Municipal Act. In my view, if the special tribunal constituted by these rules come into existence and they function, in the event, there can be no manner of doubt that the civil Courts would have no jurisdiction. Their jurisdic tion to try any matter of a civil nature would be barred. On the other hand, if the tribunal, though contemplated by the rules and by the Legislature, do not come into existence or having come into existence they refuse to deal with the matter with which they are entrusted, in that event the jurisdiction of a civil Court which it has under section 9, Civil P. C. is not ousted."

In Sultan Ali v. Nur Hussain, Mr. Justice Munir, the Chief justice, criticised the observations made in 1946 Lah. 85.wbich I have quoted above. At 158 of the judgment in Sultan Alt's case, the Chief Justice observed as follows:‑----

"The ouster of civil Courts jurisdiction in such cases rests on the construction of the statute creating the right and a special tribunal for its enforcement, and if as a matter of construction of the relevant statute the Court arrives at the conclusion that rile Legislature intended that the right created by the statute should only be exercised or enforced in the manner provided by that statute, then it is somewhat difficult to accept the Madras and Patna view which found favour with the Division Beach in 1amarain Gurwala v. Hunuman Parshad A 1 R 1946 Lah. 85= 224 I C 322 that if the special tribunal is not constituted or having been constituted it does not function, the civil Court's jurisdiction to adjudicate on that right is not affected. The stew right depending for its creation on the will of the Legislature the Legislature could well have refused to create it or, having created it could have subjected it to qualifications and restric tions or defined the conditions under which it could be exercised. The argument for ouster is based in such cases can the presumed intention of the Legislature that the right was intended to be exercised only in the manner prescribed by the Act that created it."

These observations of the Chief Justice have to be understood to reference to the fact that both the Lahore cases namely, A I R 1946 Lah. 85 and A I R 1949 Lah. 131 related to election disputes. The right which the plaintiffs sought to enforce in both the Lahore cases was not a right existing under the Common Law, but a right created under the election laws, which had set up tribunals for the adjudication of election rights so conferred. In the appeal before me the rights of the plaintiff‑appellant, which are affected by section 12 of the said ordinance, are not rights conferred on him by this Ordinance, but are rights vested in him under the Common laws. Tee distinction between such Common Law rights and rights created by statute is fundamental to the construction of statute which take away the jurisdiction of the Courts. This is made very clear by the following observations of the Chief Justice in Sultan All's case. In reference to election laws, the Chief Justice observed at page 158:

"When a plea of ouster of the Civil Courts' jurisdiction is taken, the essential question to determine is whether such jurisdiction is barred expressly or by necessary implication. It is not contended here that there is any express ouster of the civil Court's jurisdiction, because neither in the Constitution Act nor in the Orders in Council of the Electoral Rules is there any provision that civil Courts will have no jurisdiction to entertain suits relating to an electoral right. The question falling for decision is whether on a true construction of the various provisions contained in the Orders in Council and the Electoral Rules, it can be held that the jurisdiction of civil Courts is impliedly barred. It is while determining this question that the distinction between a right which is purely the creation of a statute and a right at common law becomes important because where a civil right did not exist before a statute was passed and was entirely created by that statute, it is reasonable to infer that the Legislature intended that right to be enforced only in the manner that the statute prescribed. In the present case, the right was created by the Constitution Act and the Orders in Council issued thereunder, which, together with the Electoral Rules promulgated by the Governor in exercise of the authority conferred op him by the Act and the Orders, also contain a complete Code in regard to the manner in which a person may acquire and exercise that right and the remedies available to him in case of infringement of that right. The right, therefore, falls within that class or rights which being a creation of the statute can only be enforced in the manner prescribed by the statute creating them and are excluded from the cognizance of the Civil Courts."

After thus commenting on the construction of election laws the Chief Justice criticised the view taken in A I R 1946 Lah. 85 and observed that the theory of the conditional ouster of Courts was not applicable to election rights, thereafter Chief Justice went on to discuss the construction of statutes which ousted the jurisdic tion of the Courts in respect of Common Law rights. I shall quote the whole of this passage also at page 158 of the judgment because the rights in dispute in this appeal are also common law rights.

"The theory of conditional ouster is not at all applicable to such rights (rights created under a statute). It is, however, otherwise where a right is not created by a statute but existed before disputes relating to it or to some aspect of it were entrusted by statute to a special tribunal. Such pre‑existing rights having originally been within the cognizance of the civil Courts, the ouster is dependent on the functioning of the special tribunal."

Thereafter the Chief Justice approved of the observations of the Privy Council in Secretary of State v. Mask & Co., (A I R 1940 P C 105). where their Lordships of the Judicial Committee stated that it was well settled that even if the jurisdiction of the civil Courts is expressly barred "Civil Court have jurisdiction to examine into cases where the provisions of the act excluding the jurisdiction of the Courts have not been complied with or where the statutory tribunal has not acted in all conformity with the fundamental principles of judicial procedure." These observations are binding on me. If‑Courts have jurisdiction to examine whether a tribunal has exceeded the jurisdiction, then at least in respect of common law rights, the jurisdiction of Courts cannot be barred when no tribunal has been set up under an act which purports to exclude the jurisdiction of the Courts. In my opinion, the ratio decidendi of the judgment of Mr. Justice Munir is that when rights created by a statute are required by that statute to be adjudicated only by a tribunal to be set up under that statute, then the Civil Courts have no jurisdiction to grant relief. But where, as in the case under appeal, a statute confers exclusive jurisdiction on a tribunal for determining claims in respect of common law rights, then the jurisdiction of the Courts will not be excluded until the tribunal required by the statute is set up.

7. This question has been further considered by a Full Bench of this Court reported in Dost Mohd. Malik v. The Returning officer and others. That case related to a writ petition filed in respect of the alleged violation of Election rights. As I have pointed out, the jurisdiction of the Courts is excluded under the Election Laws. In discussing the extent of that exclusion, Yaqub Ali, J, who delivered the judgment of the Court, stated as follows:‑

"But there is another enunciation by Willes, J., frequently invoked in this field for the opposite view in Wolver‑Hampton New Water Works Co. v. Hawkesford, (1889) 6 C B (NS) 336 in discussing‑the establishment of liabilities founded on statute, the learned Judge observed as follows:‑---

'There are three classes of cases in which a liability may be established founded upon statute. One is, where there was a liability existing at common law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law, there, unless the statute contains words which expressly or by necessary implication exclude the common law remedy, the party suing has his election to pursue either that or the statutory remedy. The second class of cases is, where the statute gives the right to sue merely, but provides no particular form of remedy; there the party can only proceed by action at common law. But there is a third class, viz., where a liability not existing at common law is created by the statute, which at the same time gives a special and particular remedy for enforcing it. The present case falls within this latter class, if any liability at all exists. The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to.'

In Nevile v. London Express Newspaper Ltd. (1919) A C 368 the above enunciation was approved by the House of Lords and it was re‑affirmed by the Privy Council in Attorney‑General v. Garden Grant 8c Co. 1935 A C 532. This, however, is not the last word on the subject. On the basis of these pronouncements of high authority, it was urged that the jurisdiction of superior Courts to issue prerogative writs was completely ousted. An exception has been made that until remedy provided for in the statute for establishment of a right founded on it is made available a plaintiff would have a right of recourse to civil Courts with corresponding rights of appeal. The bar, thus, is not absolute and even in cases where the machinery for enforcement of such rights is provided, but it refuses or neglects to exercise jurisdiction, or acts in excess of its jurisdiction, an aggrieved person will have the right of recourse to civil Courts."

Counsel for the respondent sought to distinguish these observations on the ground that they were contained in a judgment on a petition filed under Article 98 of the Constitution. There is a distinction between the extraordinary powers of this Court under Article 98 of the Constitution and the jurisdiction of the civil Courts, but that distinction is not relevant to the argument of counsel, because the observations quoted have laid down the principles to be followed by the Courts in construing statutes which take away the jurisdiction of the Courts. I am in respectful agreement with these observations, which are binding on me. Accordingly I hold that, in the events that had happened, section 12 of the said Ordinance does not bar the suit filed by,' the appellant.

8. The only other argument advanced by counsel for the respondent was that section 12 envisaged an ad hoc tribunal for hearing disputes between a trade organisation and its members, and that such a tribunal could be set up only on the application of a member who had a claim against a trade organisation. In the instant case, as no application was filed by the appellant, counsel argued that the suit was barred under section 12. Accord ing to section 12, which I have quoted in para. 5, a member who has a dispute with a trade organisation has to make an application " referring the matter to the arbitration tribunal constituted for the purpose of deciding such references by the Federation of Chambers of Commerce and Industry. . ." The language of the statute does not support the interpretation of counsel for the respondent. Additionally sub‑rule (2) of section 12 states that the tribunal "shall conduct its proceedings and give its decision or award in accordance with the rules made in this behalf." Under section 23 of the said Ordinance, the Central Government is empowered to frame rules for this purpose. Here it is relevant to point that the letter of the Secretary of the Federation of Chambers of Commerce and industry, dated 6th August 1964, clearly states that the setting up of a tribunal under section 12 of the said Ordinance was still under consideration with the Government and that the rules under the said section 23 could only be obtained from the Government. In these circumstances it would have been futile for the appellant to make an application to the said Federation of Chambers of Commerce and Industry in respect of his claim against the respondent, so that the only remedy available to him was to file a suit as he did.

9. In the result I hold that the judgments of the Civil Judge and the learned Additional District Judge dismissing the suit of the appellant are erroneous and are set aside. The appeal is there fore allowed, but in the circumstances of the case I do not make any order as to costs. The case will go back to the trial Court and will be heard and decided on merits in due course.

A. E. Appeal allowed.

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