NASIM HASAN SHAH, J.-This is a direct appeal under Article 185(2)(d) of the Constitution of 1973, directed against the judgment dated 19-3-1975 passed by a learned Single Judge of the Lahore High Court in F. A. O. No. 150 of 1974, whereby the appeal of the respondent against the order of the learned Senior Civil Judge, dated 12-7-1974 was accepted and his order directing, under section 20 of the Arbitration Act, 1940, the filing in Court of the original agreements dated 1-10-1967 and 17-11- 1969, was set aside.
2. The facts briefly are that respondent No. 2, the Comentation Company Ltd. Is a huge company, which is incorporated in the United Kingdom and respondent No. 1, the Comentation Intrafor Limited, is according to the appellant, an affiliating and subsidiary company of respondent No. 2.
The Comentation Company (respondent No. 2) obtained a contract for drilling and grouting work at the Tarbela Dam Project and in order to complete the contract, the said company entered into a sub-contract with the appellant on 15-10-1967 for carrying out various types of works in Pakistan (Exh. P. 13). Clause 22 of the contract provided for arbitration, in case of dispute between the contracting parties and is in the following terms: "This agreement shall be subject to Pakistan Law but in the event of any dispute between the parties the matter shall be referred to a single arbitrator resident in Pakistan appointed by the President for the time being of the Institution of Civil Engineers in England. The arbitration procedure shall be in accordance with the Arbitration Act, 1940 or any statutory modification thereof."
3. The case of the appellant is that the Comentation Company (respondent No. 2) being a huge organization having several departments and subsidiaries flouted and got incorporated another company called Comentation Intrafor Limited-shortly called CIL (respondent No. 1) carrying out the contracted work at Tarbela in order to show that the said Company is only a subsidiary of respondent No. 2 it is pointed out three officers of the Comentation Company (respondent No. 2 namely Mr. R. J. Neelanis, Mr. R. E. Parrot and Mr. J. N. Macdonald are the Directors of the Comentation Intrafor Ltd.
4. On 4-10-1968, a meeting was held in the office of the Comentation Company Ltd., London between Col. Ataullah, Director of the appellant and the aforementioned three officers/Directors of the respondent No. 2 wherein the problem arising in the execution of the work in connection with the Relief Wells were discussed and the new terms on which this work was to be continued were settled and the minutes of this meeting were duly drawn up on 8-10-1968 (Exh. P. 17). Para. 4 (b) of these minutes dealt with the matter of Relief Wells; the relevant part of the agreement on this point was as under : 4(b) Relief' Wells.-(a) Colonel Ataullah pointed out that' indus' offer to CIL was very brief and left much to be spelt out. It was agreed, that CIL would draft appropriate sub-contract terms as between CIL and Indus and post this draft to Colonel Ata Ullah by early November. This would reflect, inter alga, this morning's discussion on the subject."
The formal proposal embodying the term, on which the appellant had to work, however, was set out in a letter dated 17-11-1969 sent by the Comentation Ground Engineering Limited and addressed to the appellant whereby the agreement recorded in the minutes dated 8-10-1968 (Exh.
P. 17) was discharged and an offer was made to the appellant to engage them on sub-contract for drilling and installation of relief wells on the terms set out in the said letter. In the aforesaid letter para. 14,related to the matter of arbitration and laid down:- "in case of any dispute regarding this agreement, the Arbitration pro--vision of the existing agreement dated First of October, 1967 bet--ween the Comentation Co. Ltd. And ourselves will apply.,.,(This letter is Exh. P. 10).
The appellant accepted the proposal vide its letter dated 24-11-1969 which was addressed to the Comentation Intrafor Limited (respondent No. 1) (Exh. P. 8) and a copy thereof was forwarded to Mr. R. E. Parrot, Comentation Ground Engineering Ltd. A. Forwarding letter of acceptance of the same date is Exh. P.
25. According to the appellant, Exh. P. 10 dated 17-11-1969 and Exh. P. 8 dated 24-11- 1969 constitute the complete contract between the appellant and respondent No. 1. According to para, 14 of Exh. P. 10, as noted above, all disputes between the parties were to be settled, as provided in Clause 22 of the agreement dated 1-10-1967 (Exh. P. 13).
5. According to the appellant, he carried out his part of the work at Tarbela as per terms of the contract embodied in Exh. P. 13, dated 1-10-1967 and Exh. P. 10, dated 17-11-1969. However, some dispute arose between the parties with regard to the amount payable by the respondents to the appellant. The appellant claimed that the respondents were liable to pay to him the following amounts-
(a) Payable in Rupees Rs. 3,19,181.03-
(b) Payable in U. S. Dollars$ 1,10,181.03
(c) Interest on the above two amount As the respondents refused to accept the claim` the appellant moved the Senior Civil Judge, Lahore, under section 20 of the Arbitration Act, 1940, praying that the respondents be directed to file the original agreement dated 1st October, 1967, as supplemented by the agreement dated 17-11- 1969 in Court.
6. The reply to this petition was filed only by respondent No. 1. Herein the said respondent admitted the execution of the agreement dated 1-10-1967 (Exh. P. 13). As regards the agreement dated 17-11- 1969, which, according to the appellant, was entered into with him by both the respondents, it was submitted that the said agreement was entered into with respondent No. 1 alone and the plea taken why it was not necessary to file in Court, apart from technical objections about the jurisdiction etc. Was that there was no dispute between the parties and no amount was, due to the appellant. Hence there was no need of arbitration.
7. The pleadings of the parties gave rise to the following issues: -
(1) Has the petitioner no locus standi to bring this suit?
(2) Is there arty sufficient reason for filing the agreement in Court?
(2-A) Has this Court no jurisdiction to try this application? (3) Relief.
8. The learned Senior Civil Judge, by his judgment, dated 12-7-1974, decided all the issues against the respondents and directed the filing of the original agreement in Court dated 1-10-1967 as supplemented by the agreement dated 17-11-1969. Both the respondents filed a joint appeal in the Lahore High Court, where, apart from certain technical objections, namely, that the agreement on which reliance has been placed was unstamped and, therefore, it could not be acted upon, in view of section 35 of the Stamp Act, that Col. Ata Ullah was not proved to have been authorised to institute the application under section 20; that the matter was beyond the territorial jurisdiction of the Civil Court at Lahore and that in any case the discretion under section 20 should not have been exercised in favour of the appellant, it was contended that the agree--ment dated 17-11-1969 (Exh.
P. 10) was not between the respondents and the appellant but was between the appellant and an altogether different company, namely, Comentation Ground Engineering Ltd., which had not been impleaded as a party. This objection found favour with the learned Single Judge, who observed that from the history of the case it appeared that originally the Comentation Ground Engineering Ltd. Was a Department of the main Company (respondent No. 2) but, by the time, that the letter (Ekh. P. 10) was written, it was incorporated into a separate Company through the directors and the management of the three Companies i.e. The two respondents Companies and the Comentation Ground Engineer--ing Limited were common. However, in so far as the offer Exh. P. 10 was made by the said 3rd Company to the appellant and as under the law as incorporated company enjoys a separate entity and is an inde--pendent person, that the fact that the management of several companies was the same did not detract from the position in law that the Comentation Ground Engineering Ltd. Was an independent entity and this principle was firmly entrenched in law.
Solomon v. Solomon & Company Ltd. ((1897) A C 22 ) was referred to in this connection. In this view of the matter, the learned Single Judge held that the application filed by the appellant under section 20 of the Arbitration Act, 1940, would be competent only against Comentation Ground Engineering Ltd. And the impugned order passed by the learned Senior Civil Judge could not have been passed in absence of that company. In this view of the matter, the appeal was allowed and the order of the learned Senior Civil Judge was set aside and the application under section 20, filed by the appellant herein, was dismissed by the order dated 19-3-1975. Hence this appeal.
9. We have heard Ch. Aziz Ahmad, on behalf of the appellant and Mr. Aftab Ahmad Khan, in reply, on behalf of the respondents.
10. There is no dispute that the agreement-dated 1-10-1967 was executed between the appellant and respondent No. 2. According to Clause 22 of the said agreement, in case of any dispute arising between the appellant and the respondents, the same was to be decided by resorting to arbitration. The learned Judge in the High Court has failed to consider that even there was some dispute with regard to the question whether the agreement dated 17-I 1-1969 (Exh. P. 10) was entered into between the parties, there was no such dispute so far as the agreement dated 1-10- 1967 (Exh. P. 10) was concerned and, therefore, there was no reason why the same should not have been' ordered to have been filed in Court. The order of the learned Judge in the High Court, therefore, rejecting the application of the appellant under section 20 in toto is clearly untenable, on this short ground.
11. So far as the agreement dated 17-11-1969 (Exh. P. 10) is concerned, the petition of respondent No. 1, in its reply, was that it alone had entered into the agreement dated 17-11-1969 with the appellant for the purpose of carrying out certain work in Tarbela. Thus, the only objection raised with respect to the said agreement was that it was entered into only with it and not with respondent No. 2. A reference to the pleadings of the parties fully clarifies the matter. Para. 4 of the petition filed by the appellant under sec--tion 20 is in the following words: - "Apart from other dealings, the respondents also entered into another contract with the petitioner dated 17-11-1969 for certain works at Tarbela."
The reply of respondent No. 1 to this para. Was: - "In reply to para. 4 of the petition, it is submitted that answering res--pondent also entered into an agreement for purposes of carrying out certain works at Tarbela by the petitioner. Contents of para. 4 of the petition are denied."
12. Thus, the contents of para. 4 of the petition that the agreement dated 17-I1-1969 was entered into with both the respondents was denied and it was submitted that it was the answering respondent alone (respon--dent No. 1), who had entered into the said agreement. Para. 5 of the reply further clarifies that there was no dispute between the parties arising out of agreement dated 17-11-1969 because the appellant was not entitled to receive any amount as alleged. In fact, the only objection taken to the appellant's prayer requiring the filing of the agreement dated 17-11-1969 was that the said agreement was only in the form of a letter addressed to the appellant itself and its original was in its possession. The perusal of the pleadings indicates that the main objection was with regard to the fling of the agreement dated 1-10-1967, namely, that as it was entered into by the appellant with respondent No. 2, respondent No. 1 could not be asked to file it on the ground that the respondent No. 2 was an independent Com--pany incorporated under the Companies Act in U. K.
13. The above discussion shows that respondent No. 1 had never taken up the plea that it had nothing to do with the letter dated 17-11-1969 addressed to the appellant by the Comentation Ground Engineering Ltd. On the other hand, the same was accepted as that of respondent No. 1 herein. In these circumstances, the reliance on Solomon v. Solomon and Company Ltd. Is of no avail. In fact, the force of the said authority has considerably been weakened by the enunciation of the law in subsequent cases, wherein the Courts below have not hesitated to look behind the veil of incorporation. This Court has itself observed in The President v. Mr. Justice Shaukat Ali (PLD 1971SC585), while refusing to follow the principle laid down in Solomons' case, that "there are also other circumstances in which the veil has been pierced and the separate legal entity theory given the go-by". Thus, if the Comentation Ground Engineering Ltd, is, for all practical purposes, a part of the respondents, the Courts can go behind the veil of incorporation. However, it is not necessary for us to go into this aspect of the matter because it is clear that in the application under section 20, filed by the appellant, wherein Comentation Intrafor Ltd. Was duly impleaded as respondent No. 1, it was alleged that the agreement dated 17-11-1969 was entered into between the appellant and the respondent but, in reply, respondent No. 1 submitted that the said agreement was entered into only with itself; thus, it accepted that it was a party to the said agreement. The said respondent was, therefore, estopped from asserting later on/ that the said agreement was between the appellant and a third party.
14. We do not, therefore, think that the view of the learned Judge in the High Court that it was necessary to implead the Comentation Ground Engineering Company also a party was right. The respondent No. 1 had accepted that it was bound by the terms incorporated in the letter dated 17- 11-1969 including the arbitration clause contained therein. An order passed in the proceedings between the appellant and the respondent cannot prejudice the rights of the Comentation Engineering Company Ltd., because not being a party to the proceeding any judgment rendered therein cannot be executed against it. Similarly, the apprehension that any interpretation given of the agreement dated 17-11-1969 in these proceedings enough prejudice the interest of the Ground Engineering Company Ltd., is also unfounded, because it, not being a party to the proceedings anything said in the present judgment, wherein it is not a party, will not be binding on it. In fact, the terms of the letter dated 17-11-1969 sent on the letter-pad of the Comentation Ground Engineering Company Ltd., will be available as the terms of agreement between the appellant and respondent No. 1 merely b reference for the limited purpose of the present dispute. Thus, the view, of the learned Judge in the High Court that no order could be passed directing respondent No. 1 to file agreement dated 17-11-1969 cannot be sustained and is thereby set aside.
15. Mr. Aftab Ahmad Khan, however, submitted that there were other objections which were raised before the learned Single: Judge which have not been attended to and, in this connection, pressed the objec--tion with regard to the agreement being unstamped and could not be acted upon in view section 35, 25 of the Stamp Act. This objection, however, was not taken in the reply to the petition under section 20 nor was any issue framed on this point. Hence we are not inclined to consider this objection in the present appeal proceedings.
16. The result is that this appeal succeeds. The judgment of the High Court dated 19-3-1975 is hereby set aside and that of the trial Judge dated 12-7-1974 is restored and the appeal is allowed with costs.