'MUHAMMAD MUNIR PERACHA, J.---In the year 1991, the National Highway Authority (NHA) employed the National Logistic Cell (NLC) as contractor for building the additional carriage way between Kharian and Rawalpindi. NLC awarded the contract of construction of different parts to Messrs Hakas (Pvt.) Ltd, the respondent herein, through different contracts entered on different dates.
Contract No,9/93 was signed in the year 1993 whereas contracts Nos.48/94, 51/94 and 62/94 were signed in the year 1994. The work was completed but certain disputes arose between the NLC and M/S Hakas (Pvt.) Ltd. Messrs Hakas (Pvt.) Ltd. Submitted their final bills in the years 1998 and 1999 which were not paid and were rejected. The respondent M/S Hakas (Pvt.) Ltd, filed a writ petition in Rawalpindi Bench of the Lahore High Court, which was registered as Writ Petition No,1945 of 1999.
The Lahore High Court, disposed of the writ petition with the following observations:- "The learned counsel representing NLC states that the said respondent is prepared to settle the account with the petitioner finally and therefore the petitioner should submit final bill if it is already submitted. He undertakes to make final settlement of account within one month from the date of submission of final bill and that the balance, if any, shall be paid to the petitioner and in case the dispute is not settled by the parties, the matter shall be referred to National Highway Authority. The learned counsel for the parties have agreed to the manner of settlement of dispute stated that this petition may be disposed of accordingly.
'In view of the agreement of the learned counsel of the parties for amicable settlement of the dispute and in case of failure to refer the matter to National Highway Authority, without commenting on the merits of this petition, I dispose of the same on the above terms with ' direction that the matter should be finally (sic) within one month."
'The matter could not be resolved and Messrs Hakas (Pvt.) Ltd. Filed another Writ Petition bearing No,2884/2001. The writ petition was disposed of on 21-11-2002. National Logistic Cell (NLC), the appellant, filed an Intra-Court Appeal, I.C.A. No,13/2003 which resulted into a compromise. The compromise was to the effect that the matter be referred to Mr.K.M. Samdani, retired Judge of the Lahore High Court, as sole arbitrator. The sole arbitrator gave the award on 6-5-2004 On 16-7-2004, respondent Messrs Hakas (Pvt.) Ltd. Gave an application in the Court of Senior Civil Judge, Islamabad under sections 14 and 17 of the Arbitration Act, 1940 with the prayer that the judgment be announced in terms of the award dated 6-5-2004 and same be made rule of the Court. The application was placed before a learned Civil Judge on 17-7-2004. The learned Judge ordered that a notice be issued to the respondents in the said application. Respondent No,1 was served. He filed reply to the application on 17-12-2004. It appears that NLC absented itself on 11-4-2005. It was proceeded against ex parte and the case was adjourned to 14-4-2005. On 14-4-2005 arguments on behalf of the respondent Messrs Hakas (Pvt.) Ltd. Were addressed and on 16-4-2005, the award was made rule of the Court. An application was filed on behalf of the appellant for setting aside the ex parte order dated 16-4-2005. Vide order dated 28-9-2007, this application was dismissed by the learned Civil Judge, Islamabad. The order dated 28-9-2007, was assailed by the appellant through an appeal filed before a learned Additional District Judge. The learned Additional District Judge vide order dated 30-1-2008 came to the conclusion that the value of the subject-matter of the appeal is in excess of the pecuniary jurisdiction of the District Judge. The appeal was, therefore, dismissed. Thereafter on 4-2-2008, the present appeal was filed before Lahore High Court, Rawalpindi Bench, Rawalpindi. On the establishment of Islamabad High Court, Islamabad, the appeal stood transferred to this Court.
2. We have heard the learned counsel for the appellant as well as the respondent and have perused the record with the able assistance of the learned counsel for the parties.
3. The learned counsel for the appellant submits that the learned Civil Judge erred in law in making the award rule of the Court vide order dated 16-5-2008 and also committed a legal mistake in passing order dated 28-9-2007 whereby, the application for setting aside the ex parte decree filed by the appellant was rejected.
4. On the other hand, the learned counsel for the respondent submits that this appeal is barred by time. He also submits that the appellant did not file any application under section 33 of the Arbitration Act for setting aside the award. According to the learned counsel, the learned Civil Judge had no option except to make the award, rule of the Court in terms of section 17 of the Arbitration Act because no application for setting aside the award was filed within the time, prescribed by Article 158 of the Limitation Act.
5. The learned counsel for the appellant submits that no notice of the filing of the award was given to the appellant by the Court, therefore, it cannot be said that the appellant did not file an application to set aside the award within the period prescribed under Article 158 of the Limitation Act. Article 158 was examined by the Honourable Supreme Court with reference to section 14(1) and
(2) of the Arbitration Act in case reported as Muhammad Mushtaq Saigal and others v.
Muhammad Wasi Saigal 2001 SCJ 96 and it was observed:-- "9. From the above-cited cases it is evident that there is a distinction between the provisions of subsection (1) and subsection (2) of section 14 of the Act, inasmuch as the former provides that when the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award. Whereas, the later provision lays down that the arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration award and of the costs and charges of filing the award, cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award.
10. It may be noted that under subsection (1) of section 14 of the Act, it is mandatory that notice of making and signing of the award is to be given in writing to the parties, whereas under subsection
(2) of section 14 of the Act there is no such requirement as it inter alia provides that the Court shall thereupon give notice to the parties of the filing of the award without stating that it would be in writing. From the above reports it is evident that it has been held by the Courts that a notice by a Court under subsection (2) of section 14 of the Act need not be in writing and it may be given even orally for the purpose of limitation. Whereas, as regards subsection (1) of section 14 of the Act, it has been held that notice of making and signing of the award to the parties should be in writing for the purpose of computing the period of limitation. However, in none of the cases it has been held that there is any format of notice under subsection (1) of section 14 of the Act.
'The requirement is of a notice in writing."
'In case reported as Ashfaq Ali Qureshi v. Municipal Corporation Multan, 1984 SCM R 597, the Supreme Court of Pakistan after survey of the case law observed in para-9 at page 601 of the report, as under:- "Apparently, the prevalent view is that as the provision of the law is meant to enable the parties to know that the award has been filed in Court so that they may file their objections, if any, within the time prescribed, a formal compliance in strict conformity with the relevant provision of law is not to be insisted upon when substantial compliance has been made of it. In keeping with this view where the fact of filing of the award by the Arbitrator had already been in the knowledge of the parties and their counsel had in response to notice issued by the Court appeared and taken time to file their objections, as is in the present case, an insistence on a formal service of notice under Order XXIX would be a mere technicality. Even otherwise, an objection on this score had neither been taken before the trial Court nor in the memorandum of appeal before the High Court and was, therefore, only an afterthought not entitled to serious consideration."
'In this respect case reported as Nilkantha Sidramappa Nigashetti v. Kashinath Somanna Ningashetti and others AIR 1962 Supreme Court 666 can also be referred. The appellant appeared before the learned Civil Judge on 12-10-2004 and requested for an adjournment for filing reply to the application, filed by the respondent under section 14 read with section 17 of the Arbitration Act, 1940. Thus the appellant got the knowledge of the filing of the award. We are, therefore, unable to agree with the learned counsel for the appellant that notice of the filing of the award ought to have been given to the appellant.
6. Paragraph 2 of the application filed by the respondent under sections 14 and 17 of the Arbitration Act, 1940 reads as under:-- "That the award made by the Sole Arbitrator dated 6-5-2004 is accordingly submitted in this Honourable Court."
From this it can be gathered that award was not filed in the Court by the arbitrator but it was filed by respondent along with application under sections 14 and 17 of Arbitration Act, 1940. Section 14(2) of the Arbitration Act provides:-- "The arbitrators or umpires shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the award cause the award or signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in Court, and the Court shall thereupon given notice to the parties of the filing of the award."
The award is to be filed or caused to be filed in the Court by the arbitrator either on the request of the parties or any one of them or on the direction of the Court. Section-14 of the Arbitration Act was examined by the Indian Supreme Court in the case reported as Binod Bihari Singh versus Union of Indian 1994 SCM R 603 and it was held by the Indian Supreme Court that mere handing over a signed copy of the award to a party does not mean that there was an implied authority from the arbitrator to file the award in Court on his behalf. The Indian Supreme Court approved the earlier judgment reported as Kumbha Mawji v. Dominion of India AIR 1953 Supreme Court 313. In case reported as 1994 SCM R 603, the facts were that one of the parties to the arbitration filed an application under section 14 read with section 17 of the Arbitration Act and annexed therewith a signed copy of the award. The Indian Supreme Court came to the conclusion that in the absence of any authority from the arbitrator to file the award in the Court, the application filed shall be deemed to be under section 14(2) of the Arbitration Act and not under section 17 of the Act. In the present case the respondent has not shown that it has any authority express or implied from the arbitrator to file the award in the Court on his behalf. The award, therefore, cannot be said to have been filed in the Court in terms of section 14(2) of the Arbitration Act. In case reported as Ganga Ram v Radha Kishan AIR 1952 Punjab 350, the High Court of Punjab observed as under:-- "(3) The question is whether the application upon which the decision of the learned trial Judge was given was an application under section 14 or some other section of the Arbitration Act. Section 14 deals with the filing of the award by the arbitrators. It provides that "the arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court cause the award or a signed copy of it to, to be filed in Court " In the present case, no application was made to the arbitrator and it was not the arbitrator himself who made an application to the Court to file the award. It was one of the parties to the agreement that applied to the Court directly. It is quite clear, however, that the first step is to call upon the arbitrator to file his award and until this is one, the provisions of section 17 do not come into play. An award can only be made a rule of the Court after it has been filed and the only section which deals with the filing of the award is section 14 and according to this section the award may be filed by the arbitrator 'suo motu' or upon a direction given by the Court. The Court may give a direction when moved by a party to the arbitration or by a person claiming under such party. Therefore, it is clear that the present application was an application under section 14. Section 17 merely deals with but the Court has to do after the award has been raised against it have been disposed of. That stage has not yet arrived and therefore, it is clear that the application of Radha Kishan was made under section 14 although for obvious reasons it mentioned only section 17.
(4) Now, an application under section 14 is covered by Article 178 of the Indian Limitation Act and such application must be made within the 90 days of "the date of service of the notice of the making of the award." This means that an application under section 14 must be made within 90 days of the day when the applicant comes to know of the existence of the award. The award in the present case was signed by both parties on 21-1-1943 and Radha Kishan, therefore, knew that the award had been made. In other words, he had notice of it. His application should therefore, have been filed within 90 days of 21-1-43 and, not having b$en made until 2-2-48, it is clearly barred by time."
6. Vide order dated 16-4-2005, the leamed Civil Judge without examining the award made the award, rule of the Court on the short ground that no objections were files to the award. Section-17 of the Arbitration Act reads as under:-- "Judgment in terms of Award. - Where the Court sees no cause to remit the award of any of the matters referred to arbitration for consideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it is in excess, or not otherwise in accordance with the award."
'The Honourable Supreme Court of Pakistan in case reported as Messrs Awan Industries Ltd. v. The Executive Engineer, Lined Channel Division and another 1992 SCM R 65 examined the provisions of section 17 of the Arbitration Act and in paragraph-17 at page 74 of the report observed:- "17. But, in his submission, he ignored the provisions of section 17 of the Arbitration Act, which imposes a duty on Courts to see that there is no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award. This can be done by the Court suo motu, apart from the application which a party may make for either remission of the award or its reversal. Where, therefore, an award is found to be nullity because of the invalidity of the arbitration agreement or, for any other reason, the award is prima facie illegal and not fit to be maintained, the Court has power under section 17 of the Act to set it aside without waiting for an objection to award being filed or without considering any application for setting it aside, if there be any, and irrespective of the question whether or not any objection to the award was filed or whether the objection, if filed, was not within time. In such cases section 30, clause (c) of the Act is also attracted. Another example can be where a party appoints a sole arbitrator without prior notice to the other party, the award would be prima facie illegal and may be set aside. See Abdul Khaleq v. Province of East Pakistan and another PLD 1964 Dacca 166 and Messrs S.M. Fazail and Company v. Messrs Overseas Cotton PLD 1959 Kar.
739."
'In case reported as Pakistan Through General Manager, Pakistan Railway v. Messrs Q.M.R. Expert Consultants PLD 1990 Supreme Court 800, the Supreme Court of Pakistan ruled out as under:- "However, we may observe that under section 17 of the Act, it is the duty of the Court to examine, whether there was any reason for modifying of the award or for setting aside the award notwithstanding that an affected party may have failed to file the objections to the award on account of the expiry of the limitation period or the parties to the arbitration proceedings may be in collusion and because of that, they may not file any objection to a collusive award. If any authority is needed, reference may be made to the case of Union of India v. Pratap Chandra Biswas AIR 1964 Assam and Nagaland 141, in which a Division Bench of the above High Court held that there is nothing in section 39 or any other provision of the Act to show that the Court can refuse to set aside an award only on an application made by a party but from a bare reading of section 17, it is clear that even the ' Court, can suo motu set aside an award. Reliance was placed on the case of Chhabba Lal v. Kallu Lal and others AIR (33) 1946 PC 72. We are inclined to hold that in a fit case, the Court may on its own under section 17 of the Act modify or set aside the award if the facts and dictates of justice so demand."
8. The learned Civil Judge before making the award rule of the Court, was to apply his mind whether there is no cause to remit the award or any of the matters referred to arbitration for consideration or whether the award is liable to be set aside. Without doing that exercise, the learned Civil Judge made the award rule of the Court on the only ground that no application for setting aside the award has B been filed.
9. Since we have come to the conclusion that the respondent had no express or implied authority on behalf of the arbitrator to file the award, therefore, the order dated 16-4-2005 is patently illegal.
In view of this situation, we are inclined to condone the delay in filing the appeal.
10. For all these reasons, we set aside order dated 16-4-2005 as well as subsequent order dated 28- 9-2007.
11. In view of what has been stated above, the appeal is allowed and the case is remanded to the learned trial Court for disposal in accordance with law.