Find a Lawyer

PROVINCE OF PUNJAB THROUGH SECRETARY TO GOVERNMENT OF PUNJAB versus MESSRS MUHAMMAD TUFAIL AND COMPANY

, S, 31 (1) bit arbitration award, section 31 (l) of the arbitration act of 1940 and jurisdiction bit arbitration award, court jurisdiction - section 31 (1) of the act was not a viable one, but one which the court Identified and appreciated the jurisdiction over which the award should be entered. The purpose of section 31 (l) was to link a court with jurisdiction in this case to avoid a jurisdictional dispute arising between different courts. Arbitration matters, once initiated and dealt with by a court, must be determined later by the same court, [p 60] A

P L D 2017 Supreme Court 53

Present: Mian Saqib Nisar and Manzoor Ahmad Malik, JJ

PROVINCE OF PUNJAB through Secretary to Government of Punjab, Communication and Works Department, Lahore and another—Appellants

versus

Messrs MUHAMMAD TUFAIL AND COMPANY through Muhammad Tufail (deceased) through Legal Heirs—Respondents

Civil Appeal No.417-L of 2009, decided on 6th September, 2016.

(Against the judgment dated 16-3-2004 of the Lahore High Court, Lahore passed in C.R.No.368-D of 1998).

(a) Arbitration Act (X of 1940)—

—S, 31(1)—Nature and object of S.31(l) of the Arbitration Act, 1940—Arbitration award, filing of—Jurisdiction of court—Scope-Section 31(1) of the Act was not an enabling provision, rather one which identified and defined the jurisdiction of the Court in which an award should be filed—Object of S.31(l) was to clothe a single court with jurisdiction in the matter so as to avoid conflict of jurisdiction which may arise between different courts so that all the matters pertaining to arbitration, once having been initiated and dealt with by one court, should subsequently continue to be determined by the same court, [p. 60] A

(b) Jurisdiction—

—Meaning and concept of 'jurisdiction'—Scope—uJurisdiction" meant the authority to decide—Concept of jurisdiction of a court encompassed, territorial jurisdiction; pecuniary jurisdiction, and subject matter jurisdiction—Jurisdiction had its genesis in the physical power of a court to issue process to persons within the reach of the court—Court was to decide matters when persons relating thereto were within its reach—Such basic jurisdiction was then regulated by defining the limits of that 'reach' by setting pecuniary limits, or by assigning different 'subjects' within one territory to different courts, for example, by assigning banking and environmental matters to different courts within one territory. [p. 63] B

R. Viswanathan and others v. Rukn-ul-Mulk Syed Abdul Wajid since deceased and others AIR 1963 SC 1 and Dennis Burnham v.

Superior Court of California, County of Marin 110 S.Ct. 2105 (1990) ref.

(c) Arbitration Act (X of 1940) —

—Ss. 2(c), 14, 17 & 31(1)—Civil Procedure Code (V of 1908), S. 20— Arbitration award, filing of—Application filed before civil court for making an arbitration award the Rule of the Court—Territorial jurisdiction of Court-Scope—Agreement between private company and Provincial Government for perfÓrm;ance of civil work at place "T"— Dispute arose over payment and arbitration clause was invoked by company—Arbitration proceedings were held at place ”L " and award was also announced at place "L" in favour of company—Application was filed by company before the civil court at place "L" for making the award the Rule of the Court—Whether court at place "L" had territorial jurisdiction—Section 2(c) read with S.31(l) of the Arbitration Act, 1940 required that the court suspend the existence of the arbitration agreement to consider which court(s) may have jurisdiction with respect to the "subject matter of the reference" if a civil suit were to be filed in respect thereof—In the absence of an arbitration agreement, the company could have filed a civil suit at place "T" on the basis that the cause of action accrued there—Civil courts at place "L" would also have concurrent jurisdiction with respect to the putative civil suit as S 20, C.P.C, was applicable in a case where the Government was carrying on some commercial activity through a contract with a private contractor, as was the situation in the present case—Conjunctive reading of Ss. 2(c) & 31(1) of the Arbitration Act, 1940 would therefore confer jurisdiction, for purposes of filing an application under Ss. 14 & 17 of the said Act for making an award a Rule of the Court on both the civil courts at place "T" and "L"—Appeal was dismissed accordingly,

Provincial Government (appellant) awarded civil work of widening and strengthening a road in place "T" to the respondent-company. After the work was completed a dispute arose on account of an amount deducted by the Provincial Government from company's final bill. Company invoked the arbitration clause of the agreement inter se the parties. Sole arbitrator entered upon the reference and arbitral proceedings were held at place "L". Arbitrator passed an award at place "L" in favour of the company and directed Provincial Government to pay the sum due to the company. The company filed an application under sections 14 and 17 of the Arbitration Act, 1940 before the civil court at place "L" for the purposes of making the award the Rule of the Court which was resisted by the Provincial Government on the ground that the courts at place "L" did not have the territorial jurisdiction.

Section 2(c) read with section 31(1) of the Arbitration Act, 1940 required that the court suspend the existence of the arbitration agreement to consider which court(s) may have jurisdiction with respect to the "subject matter of the reference" if a civil suit were to be filed in respect thereof. The subject matter of a reference could not be limited to the physical construction of the road at place "T". The subject matter of the reference was an inclusive term which would cover the physical road constructed at place "T", the contract executed at place "T", the arising of all the disputes regarding the violation and enforcement of the terms and conditions of the contract, and the rights emerging and based thereupon, including payment of/deduction from the final bill of the company. In such circumstances, in the absence of aif arbitration agreement, the company could have filed a civil suit at place "T" on the basis that the cause of action accrued therein. Question then was could the company have filed a civil suit at the civil courts at place "L" on the basis that the head office of the Provincial Highways Department was situated at place "L". [p. 65] C

When the State/Government carried on commercial activities such as road building through construction contracts with a private contactor, then it was subject to section 20, C.P.C, in its entirety. Therefore, the civil courts at place "T" and "L" would have concurrent jurisdiction with respect to the putative civil suit. [pp. 68, 69] E & G

Arbitration agreement was a part of the contract between the parties in the present case.

Conjunctive reading of sections 2(c) and 3.1(1) of the Arbitration Act, 1940 would therefore confer jurisdiction, for purposes of filing an application under sections 14 and 17 of the said Act for making an award a Rule of the Court on both the civil courts at place "T" and "L". Award therefore was competently filed by the company before the civil court at place "L" to be made a Rule of Court, [p. 69] H

Supreme Court observed that Governments should litigate only where necessary and the might of the State should not be employed to make an ordinary litigant run from pillar to post. Supreme Court directed the Provincial Government to make immediate payment of the sum due under the award to the company. Appeal was dismissed accordingly, [p. 69] I

(d) Constitution of Pakistan—

—Arts. 90 & 129—Core functions—Scope—Commercial activities undertaken by a government, regulation of—Scope—Such activities were not included in the "ordinary connotation" of the word "Government”—Commercial activities did not fÓrm; a part of the core

functions of a government—Government in the exercise of its core functions viz, its executive, legislative, judicial and quasi-judicial, and administrative roles exercised sovereign powers, but when it engaged in commercial activities it was not exercising sovereign power, rather it was engaging in business/commercial activities and merited no undue advantage over ordinary litigants—When a government entered into the domain ofjbusiness and commerce it could not be given a premium of its position and must be treated at par with its competitors or near competitors in the private sector—Commercial activities of government must be regulated in the same manner as those of the private sector; it could not be exempted therefrom simply by the dint of being a "government" [Mian Fazal Muhammad Nizam-ud-Din Baig & Co. v.

The Province of West Pakistan and others PLD 1969 Lah. 453 not approved], [pp, 68, 69] D & F

Mian Fazal Muhammad Nizam-ud-Din Baig & Co. v. The Province of West Pakistan and others PLD 1969 Lah. 453 not approved.

Subah Sadiq Wattoo, A.A.G., Punjab for Appellants.

Respondent No.l(ii) (In person).

Rassal Hassan Syed, Advocate Supreme Court and Mrs.Ayesha Hamid, Advocate Supreme Court: Amici Curiae:

Date of hearing: 6th September, 2016.

patent advocate from Hujra Shah Muqeem lawyer