MUJAHID MUST AQEEM AHMED, J.- This common judgment shall dispose of following revision petitions involving common questions of law and fact: i) Civil Revision No. 101 of 2018.
(Sheikh Muhammad Ahmed v . Province of Punjab and others) ii) Civil Revision No. 102 of 2018.
(Sheikh Muhammad Ahmed v . Province of Punjab and others) iii) Civil Revision No. 103 of 2018.
(Sheikh Muhammad Ahmed v . Province of Punjab and others) iv) Civil Revision No. 104 of 2018.
(Sheikh Muhammad Ahmed v . Province of Punjab and others) v) Civil Revision No. 105 of 2018.
(Sheikh Muhammad Ahmed v . Province of Punjab and others) vi) Civil Revision No. 106 of 2018.
(Sheikh Muhammad Ahmed v . Province of Punjab and others) vii) Civil Revision No. 107 of 2018.
(Rana Muhammad Younis Imran v . Province of Punjab and others) viii) Civil Revision No. 108 of 2018.
(Sheikh Muhammad Ahmed v . Province of Punjab and others) ix) Civil Revision No. 109 of 2018.
(Sheikh Muhammad Ahmed v . Province of Punjab and others) x) Civil Revision No. 110 of 2018.
(Rana Muhammad Younis Imran v . Province of Punjab and others) xi) Civil Revision No. 111 of 2018.
(Sheikh Muhammad Ahmed v . Province of Punjab and others) xii) Civil Revision No. 112 of 2018.
(Sheikh Muhammad Ahmed v . Province of Punjab and others) xiii) Civil Revision No. 113 of 2018.
(Sheikh Muhammad Ahmed v . Province of Punjab and others)
2. These petitions filed in terms of Section 115 C.P.C. have called in question judgments and decrees dated 27.9.2017 passed by learned Addl. Distt. Judge, Bahawalpur whereby appeals filed by the respondents were partly accepted to the extent that petitioners/plaintif fs are entitled to recover principal adjudged amount alongwith 10% interest from the date of decree till realization of claim. Whereas the petitioners had filed suits for recovery of money in the Court of learned Senior Civil Judge, Bahawalpur which were finally decreed by learned Civil Judge 1st Class, Bahawalpur vide judgments and decrees dated 18.1.2017 in favour of the petitioners/plaintif fs with direction to the respondents/defendants to make payment of decretal amounts alongwith compound interest at the rate of 10% per annum from the date of institution of suits till the date of payment. Special amount of damages was also awarded in petitioners ' favour .
3. Background for filing of money suits is that the petitioners were approved Contractors of Provincial Building Department and were awarded various contracts of petty nature for repair of government residences etc. The petitioners carried out the work and accomplished their task. The bills submitted for payment of this work, however , could not be encashed (allegedly) due to non-availability of funds constraining the petitioners to approach the learned civil court by way of filing of money suits.
4. The suits were contested by the respondents/defendants by filing separate written statements. Issues were framed on divergent pleadings of the parties who were directed to lead their eviden ce in support of their respective claim. However , during proceedings, on the application of the defendants under Section 21 of the Arbitration Act, 1940, Arbitrators were appointed by learned trial Court exercising powers under Section 22 of Act ibid. After conducting arbitration proceedings the sole Arbitrator submitted the consolidated award before learned trial Court.
The learned trial Court made the award rule of the Court and decreed the suits of the plaintif fs/petitioners. It so happened that for more than once the matter was remanded in appeal/revision and finally the learned trial Court vide judgments and decrees dated 18.1.2017 decreed the suits by directing the respondents to make payment of principal amount with interest at the rate of 10% per annum from the date of institution of suits till its payment.
However , these judgments and decrees were assailed by the respondents by filing appeals before learned Ist.
Appellate Court which were partly allowed by holding the petitioners entitled to get original amount alongwith 10% interest from the date of decrees till realization of claim, vide judgments and decrees dated 27.9.2017, subject matter of these petitions.
5. Learned counsel for the petitioners submit that the petitioners had completed the allocated work in the year 1996 and till date they are running from pillar to post for payment of the work done and in such eventuality the learned trial Court not only rightly decreed the suits on the basis of award of the Arbitrator but was justified under Section 34 of the Code of Civil Procedure, 1908 to order the respondents/defendants to pay compound interest on the principal amount from the date of filing of suits and as such the learned Ist. Appellate Court erred in law while ordering interest to be paid from the date of decree and that too simple. Learned counsel submits that the petitioners have beseeched for payment of work done by them for more than two decades and as such learned trial Court was fully justified to award compound interest on the principal amount due to the petitioners.
6. On the other hand, although learned counsel for the respondents did not dispute the discretionary power/authority of Court to award interest on the decreed amount from the date of decree but vigorously contended that according to arbitration clause in work agreement in case of dispute between the contractor and the Provincial Building Department, the matter was to be referred to the arbitrator , whereas it were the petitioners who in violation of arbitration clause have approached the civil court to settle their dispute and ultimately it was resolved in the light of award. Learned counsel argues that in absence of any clause in the contract between the Contractor and the department the learned trial court was not justified to grant compound interest and that under Section 29 of the Arbitration Act, 1940 learned trial Court was not competent to direct payment of compound interest from the date of institution of suit rather simple interest could have been ordered from the date of decree and as such learned trial Court had traversed its jurisdiction, therefore, learned lower appellate Court has rightly ordered simple interest on the principal amount from the date of decree.
7. Learned counsel for the parties have been heard at length. Sole point for determination in these petitions is as to whether the petitioners are entitled to interest on principal amount from the date when the suits were instituted as per mandate of Section 34 of the C.P.C. or whether they were entitled to get intere st on principal amount from the date of decree passed in their favour as stipulated in Section 29 of the Arbitration Act, 1940. It appears that this question has remained debatable and open to discussion in the courts of country for quite considerable time.
8. Before entering into conclusive discussion, it would be appropriate to reproduce both the provisions of law .
Section 34 C.P .C. reads as under: "Interest. --(1) Where and in so far as a decree is for the payment of money , the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principa l sum for any period prior to the institution of the suit, with further interest at such rate as the Court deems reasonable on the aggregate sum so adjudged, from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit. "
Section 29 of the Arbitration Act, 1940 is as under: "29. Interest on award. Where and in so far as an award is for the payment of money the Court may in the decree, order interest, from the date of the decree at such rate as the Court deems reason able to be paid on the principal sum as adjudged by the award and confirmed by the decree."
9. In order to better appreciate the above provisions of law I consider it appropria te to refer the judgments on the subject.
The Hon'ble Supreme Court in a case Ghulam Abbas v. Trustees of the Port of Karachi (PLD 1987 SC 393) dealt with the principle of interest on award as under: "16. As far as the other ground that prevailed with the learned Judges of the Division Bench it may be stated that in holding that the matter of interest should have been left for the Court the learned Judges overlooked and misconceived the real import of section 29 of the Arbitration Act which is a provision whereby power has been conferred on the court to order payment of interest, while making the award the rule of the Court, if the same is for payment of money and this interest covers the post-decree period on the principal sum in the award.
(emphasis supplied by me). By its own terms, therefore, this section does not contemplate or create any embargo on the power of the Arbitrator to award interest in adjudicating upon the reference before him. This was, therefore, not a sound basis for the court to disallow interest on the ground that the Arbitrator should not have decided this question.
17...
18. In order to further examine this question it is necessary to analyse the nature of right to interest on a money claim before a court of law and on the same analogy before the domestic forum of an Arbitrator. The right to interest, for the period prior to the date of suit or prior to the reference to arbitration is a matter of substantive law, as contrasted with the power given to a court of law under section 34 CPC or section 29 of the Arbitration Act, which is a statutory power within the domain of procedural law. (emphasis supplied by me). In the present controversy firstly we are concerned with the right claimed substantively by the contractor for a period before the matter reached the forum, for adjudication as a liquidated claim based on a legal right. The right to interest, for the period prior to the suit, arises in one of the four following ways: i) Agreement, express or implied between the parties, ii) Mercantile usage, iii) Statutory provisions, iv) Interest may be also allowed on equitable grounds in proper cases.
Thus in Bengal Nagpur Railway Co. Ruttanji Ramji and others AIR 1938 PC 67, it was observed: The question however, is whether the Court has authority to allow interest for the period prior to the institution of the suit; and the solution of this question depends, not upon the Civil Procedure Code, but upon substantive law.
Now, interest for the period prior to the date of the suit may be awarded, if there is an agreement for the payment of interest at a fix rate, or it is payable by the usage of trade having the force of law, or under the provision of any substantive law entitling the plaintiff to recover interest, as for instance, under section 80, Negotiable Instruments Act, 1881, the Court may award interest at the rate of 6 per cent per annum, when no rate of interest is specified in the promissory note or bill of exchange."
In the case titled The Federation of Pakistan, Chambers of Commerce and Industry , Karachi v. Messrs Al-Farooq Builders (2001 MLD 99 ) a learned Division Bench of Karachi High Court observed as under: ".....Arbitrator was in fact and law justified in equity in awarding interest on the amount found due and outstanding against the appellants at the rate of 6% per annum only from the date of award and not from the date of legal notice It was further held: ".....since the Arbitrator does not enjoy the powers of a Court, his authority can be operative only from the date of award till payment whereas the period subsequent to the passing of the decree would be governed by S.29 of the Arbitration Act, 1940, under which the Court was empowered to grant interest from the date of decree till payment...." (underlying is mine).
In case titled Pakistan Steel Mills Corporation Ltd. v. Syed Altaf Hussain (PLD 1991 Karachi 386) the Court held as under: "It may also be stated here that it is not a case where arbitration has taken place in a suit which gives implied power to the arbitrator to award interest, as a Court will do under section 34, C.P.C. nor it is the case of the respondent that the parties had specifica lly agreed to refer this question to the arbitrator . Learned counsel for the respondent has failed to pinpoint any express provision of law under which an arbitrator is empowered to award interest from the date of award such as is available to a Court under section 29 of the Arbitration Act......
We accordingly , hold that the arbitrator had no jurisdiction to grant interest from the date of award till the date of decree but in view of the facts and circumstances of the case, we maintain grant of interest by the learned Single Judge from the date of the decree till the date of payment. "
In case titled Messrs Gerry' s International (PVT .) Ltd. v. Messrs Aero Flot A Russian International Airlines [(2017 CLC 291 (Sindh)] it was observed as under: "The Arbitrator does not enjoy the power of the Court and as such cannot award future interest because it is only a Court, which can award such interest vide Section 29 of the Act read with Section 34 of the C.P .C."
The Hon'ble Supreme Court in the case titled WAPDA and another v. Messrs Khanzada Muhammad Abdul Haque Khan Khattak and company (PLD 1990 SC 359 ) proceeded to hold even to the following extent: "...if the trial Court had not awarded interest as provided in S. 29 of the Arbitration Act, the Appellate Court has had ample powers under O.XLI, R.33 C.P.C. to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require, and this power could be exercised by the Court in favour of all or any of the respondents or parties although such respondents or parties may not have filed any appeal or objection."
In the case titled Ascon Engineers (Pvt.) Ltd. v. Province of Punjab through Secretary , Housing and Physical Planing Department (2002 SCMR 1662 ) it has been held as under: "As far as the judgment relied upon by the learned counsel in the case of Ghulam Abbas (ibid) is concerned the same is not applicable to the facts of the instant case because it was observed therein that under section 29 of the Act interest for the period prior to the date of the suit may be awarded if there is an agreement or it is payable by the usage of trade having the force of law or entitle the plaintiff to recover interest etc. whereas in the instant case there is no such clause in the agreemen t, therefore, the High Court ratified these errors by awarding the interest from the date of decree onwards with effect from 22 October , 1998. The findings so recorded by the High Court in this context are in consonance with the provisions of section 29 of the Act. Thus, no interference is called for in this behalf as well."nd
10. What I have gathered from a visit of the above provisions of law in the light of authoritative pronouncements of superior courts of the country is that there are three stages of awarding interest on the principal amount adjudged: i) From the date when the principal amount became due but not paid.
(Stage prior to filing of suit)
(As laid down by the Apex Court in Ghulam Abbas' case PLD 1987 SC 393 supra . ii) From the date when the suit was filed. (Section 34 of the C.P.C. Though from language of this provision it is not clear that such interest would be simple or compound but as per its liberal interpretation it covers both simple and compound interest) iii) From the date when the decree was passed.
(As capsulated in S. 29 of the Arbitration Act).
It may also be clarified that Section 34 of the C.P.C. and Section 29 of the Arbitration Act are not in contrast or derogatory to each other, rather the same are complementary/supplementary to each other and are not to be read in isolation. These enabling provisions empower the Court of law to exercise the discretion of awarding interest i.e. simple, compound from the date of suit or from the date of decree to compensate an aggrieved party but such discretion is to be exercised judicially and not in mechanical or arbitrary manner.
11. In the present case, none of the parties has brought on record any written agreement/contract between them to carry out work, as such I find that there was no condition in the agreement/contract that in case of non-payment of work amount in time, the party in default shall pay interest with the principal sum from the date of default or any period prior to filing of suit. During pendency of suits the parties agreed to make reference to the Arbitrator, who in due course submitted Award. However, the Arbitrator did not award any interest on the principal amount meaning thereby that the petitioners were found not entitled by the Arbitrator to be awarded interest. Now remains the fourth pre requisite (as discussed in Ghulam Abbas' case supra) that if the court decrees the suit it may also award interest on the principal sum from the date of decreeing the suit till realization of the payment.
12. It is matter of the record that the petitioners completed their work (petty in nature) but they submitted their bills after more than one year. The claims of the petitioners were undetermined and from the award it is fully established that in some cases of repair work, the amount claimed by the Sh. Muhammad Ahmad, petitioner has been reduced by the Arbitrator while in others totally denied, meaning thereby that till date of filing of award the claim of the petitioner was not settled. Even the Arbitrator in his award did not award interest to the petitioners. Moreover the petitioner himself in violation of work agreement, instead of invoking arbitration clause, filed suit before Court and ultimately the dispute was settled by arbitrator and thus the petitioner himse lf contributed towards delay in settlement of his claim, disentitling him to claim any damages or interest from the date of suit. Therefore, the learned trial Court was unjustified to award compound interest on the principal amount and the learned Ist.
Appellate Court had rightly modified the judgment to that extent only .
13. The resume of above discussions is the learned Addl. Distt. Judge has properly exercised the jurisdiction vested with him and the orders passed by him are in conformity with the law to which no exception can be taken.
Learned counsel for the petitioners could not point out any illegality , material irregularity or jurisdictional defect in the judgment impugned herein.
The superior Courts of the country have handed down in Farid Bakhsh v. Jind Wadda and others (2015 SCMR 1044), Muhammad Nawaz through L.Rs. v. Haji Muhammad Baran Khan through L.Rs. and others (2013 SCMR 1300), Ghulam Muhammad and another v. Muhammad Waris (2017 CLC Note 56 Lahore), Kaniz Bibi v. Muhammad Ashraf and another (2008 YLR 159 Lahore), Muhammad Din through Legal Representatives v.
Mst. Fatima Bibi and another (2008 YLR 881 Lahore) Mir Muhammad alias Miral v. Ghulam Muhammad (PLD 1996 Karachi 202) and Ilamuddin through legal heirs v. Syed Sarfraz Hussain through legal heirs and 5 others (1999 C.L.C. 312 Karachi) that where there is conflict of judgments of trial Court and First appellate Court, view expressed by First Appellate Court should ordinarily be preferred which was the final court of fact unless same was contrary to evidence on record or in violation of principles of administration of justice. Of course High Court in exercise of its revisional jurisdiction under Section 115 C.P.C. could interfere with findings of Lower Appellate Court only when the court had handed down the findings without considering material available on the record and relevant law on such subject.
14. For the foregoing reasons, finding no force in these petitions, the same are accordingly dismissed.