This appeal has been remanded by the Supreme Court for fresh disposal.
2. This is appellants' first appeal directed against the order dated 12-7-1977 passed by the learned Senior Civil Judge, Lahore, accepting the application filed by the respondent under Section 20 of the Arbitration Act, whereby the appellants were ordered to file the original agreement dated 1-10- 1967 as supplemented by agreement dated 11-12-1969 in Court.
3. The facts forming the background of this appeal relevant for its disposal briefly stated are as follows: The respondent filed an application under Section 20 of the Arbitration Act Alleging that a dispute had arisen between the parties in connection with arbitration agreement dated 1-10-1967 and 17- 11-1969 which may be ordered to be filed in Court and an arbitrator be appointed to decide the dispute between the parties. According to averments in this application agreement dated 1-10- 1967 was entered into between the respondent and appellant No.2/respondent No.2 for carrying out certain specialist activities in Pakistan. It was averred that appellant No.1/respondent No.1 was an affiliated/subsidiary of appellant No.2 and was carrying on certain works for Tarbela Joint Venture which was the consortium building the Tarbela Dam etc. In pursuance to a contract with the Pakistan Water and Power Development Authority (WAPDA). Apart from the said agreement dated 1-10-1967, it was pleaded that the appellants entered into another contract with the respondent on 17-11-1969 for certain works at Tarbela and there was running account between the parties. It was pleaded that pursuant to these agreements the appellants owed the following amounts to the respondent:-
(a) Payable in Rupees: : Rs.2,12,235.58
(b) Payable in US Dollars : 1,10,181.03 Since the appellants declined to pay these amounts in spite of repeated reminders, therefore, the respondent asked for appointment of an arbitrator and reference of dispute to the arbitrator, in accordance with the arbitration clause. It was, however, stated in the application that the appellants denied the very existence of the dispute and refused to concur in the appointment of arbitrator. It was stated in Para 8 of the petition that the Civil Court at Lahore had the jurisdiction because the agreements between the parties were made at Lahore and refusal to refer the matter to arbitration was received at Lahore.
4. This application was contested by the appellants who filed written reply. The learned trial Court on the pleadings of the parties framed the following issues:-
(1) Has the petitioner no locus standi to bring the suit ?
(2) Is there any sufficient reason for not filing the agreement in Court ?
(2-A) Has this Court no jurisdiction to try this application ?
(3) Relief.
The learned trial Court after considering the evidence produced by the parties decided these issues against the appellants and passed the impugned order dated 12-7-1974 for filing both the agreements in Court. The appellants challenged the same in the present appeal. This appeal was accepted through judgment dated 19-3-1975 by this Court wherein it was held that "the application under section 20 of the Arbitration Act would be competent only against Cementation Ground Engineering Limited. The impugned order could not have been passed in absence of that Company. It is not necessary to consider any other question." Against this judgment the respondent filed appeal before the Supreme Court which was accepted through judgment dated 18-5-1982. The judgment of this Court dated 19-3-1975 was set aside and that of the learned trial Court dated 12-7-1974 was restored. The appellants moved Civil Review Petition No.12/R of 1982 before the Supreme Court praying that the case be remanded to this court for deciding other grounds raised in the appeal. Through judgment dated 30-4-1985 this review petition was allowed to the extent that the appeal filed by the respondent against the judgment of this Court dated 19- 3-1975 was allowed with costs but the case was remanded to this Court for determination of the other questions raised before it in this appeal. It is in consequence of this older that the appeal has been taken up.
5. Learned counsel for the appellants in support of this appeal argued that the agreements in question were not duly stamped as required under the Stamp Act, therefore, they could not be acted upon, as such, the initiation of proceedings under Section 20 of the Arbitration Act and the impugned order made thereon amounts to acting upon the said agreements which is prohibited under Section 36 of the Stamp Act.
6. I have examined the reply of the appellants to the application under section 20 of the Arbitration Act, and find that no such objection was raised therein and obviously for this reason no issue was framed by the learned trial Court. Faced with this situation learned counsel for the appellants submitted that an application on 15-1-1974 was moved before the learned trial Court for framing of an issue on this point on which the learned trial Court passed an order on the same date that the objection being legal, therefore, could be argued and considered. I have gone through the said application. It is evident from the plain reading of this application that it was not pleaded that the agreements were not stamped. An issue was claimed in the general terms about the validity of arbitration agreement without specifying the grounds on which invalidity to the agreement was being attributed. It is manifest from the impugned order of the learned trial Court that even at the time of argument no such point was urged as there is no discussion in the order regarding this point. The copies of the agreements have been produced in evidence as Exs. P.10 and P.13. There is nothing on the record that the admissibility of these documents was questioned on the ground that they were not duly stamped. The law is fairly settled that the admissibility of a document on the ground that it was not dully stamped could not be allowed to be raised after the document was admitted without any such objection. Faced with this difficulty learned counsel for the appellants tried to overcome it by arguing that the admissibility of a document is distinguishable from acting upon it and if the admissibility of a document could not be objected to after a document was admitted in evidence, it could still be maintained that the document was not capable of being acted upon. The argument on face looks to be attractive but on proper analysis it is likely to fail inasmuch as the said documents are the copies of the agreement. If any stamp was required to be affixed on the agreements it was to be affixed on the original. Had this objection been raised at the proper time in the pleadings or subsequently respecting their admissibility due to absence of stamp, the respondents would have had opportunity to meet the same. The omission to raise objection against the admissibility of these documents on the ground that they were not stamped also establishes that the said agreement was never treated as invalid for the reason c f absence of stamp. Considering in this context the application dated 15-1-1974 made by the appellants in which it was merely alleged in general terms that the agreement was not valid cannot be construed to be a specific ground regarding absence of stamp. From these facts it is explainably clear that this point was not urged at the time of hearing of the petition. For the foregoing reasons I am not inclined to allow the appellants to urge this ground at this stage. The argument is, therefore repelled.
7. Learned counsel for the appellants then argued that the Civil Court at Lahore had no jurisdiction to entertain the application of the respondent. The precise argument was that the appellant's Company had neither principal nor subordinate office situated at Lahore and since the legal proceedings against the companies could only be instituted at either of these places and no where else therefore, Civil Court at Lahore lacked jurisdiction to entertain the petition moved by the respondent. In support of his argument reliance has been placed on judgment reported as Registered Firm Sheikhan Industries, Quetta v. West Pakistan Industrial Development Corporation Karachi through its Chairman PLD 1976 Quetta 94.
8. I have thoroughly scrutinised this judgment. No doubt the learned Judge while interpreting the provision of Section 20 of the C.P.C. Appears to have held that view as argued. On close scrutiny of Section 20 I do not find myself in agreement with the view taken in the said reported case and I say so with utmost respect. The operative part of this section has three clauses. According to clause
(a) suit can be instituted in a Court within local limits of whose jurisdiction the defendant or each of the defendants at the time of the commencement of the suit actually and voluntarily resides, or carries on business, or personally works for gain; whereas under clause (b) it can also be instituted in a Court within the local limits of whose jurisdiction any of the defendants, where there are more than one defendants, actually and voluntarily resides, or carries on business, or personally works for gain, provided either the leave of the Court is given or the defendants not residing or carrying on business or personally working for gain, acquiesed in such institution and under clause (c) it can also be instituted in a Court within the local limits of whose jurisdiction the cause of action wholly or in part arises. Explanation II attached to this Section is in the nature of definition clause which provides that a corporation shall be deemed to carry on business at its sole or principal Office in Pakistan or in respect of any cause of action at any place where it has also a subordinate office, at such place. From a plain reading of clauses (a) and (b) read with Explanation II it is demonstrably clear that Explanation II is relatable to clauses (a) and (b) it has no nexus with clause (c) which is an independent clause and operates independently. If interpreted in this manner it means that the places of carrying on business of a corporation for the purposes of clauses (a) and (b) would be where its sole or principal office is situated and in respect of a cause of action where its subordinate office is also situated, as such, a suit against a corporation could be instituted at both these places by virtue of the aforesaid clauses and in addition to these places at any other place where cause of g action wholly or in part arises. This view finds support from judgment reported as A.I Hussain v. Rafiq-ud-Din and 9 others PLD 1977 Lah. 418 which in my view has laid down the correct law based on interpretation of Section 20 of the C.P.C.
9. It is in the evidence of Dr. Col. Ata Ullah Director of he appellants Company who was examined as PW 1 that the agreement was executed by him on behalf of the appellant's Company with the respondent at Lahore. He also stated that he received information from the appellants at Lahore that they were not ready and prepared to refer the matter to arbitration. A photo copy of a letter dated 1-8-1973 was produced in evidence as Ex. P.2 which was addressed to the respondent Company at Lahore. Copy of another letter dated 7-2-1983 was also produced as Ex.P.3 from which it is evident that it was despatched from Rawalpindi to the respondent seeking confirmation of matters which were required to be referred to arbitration. A photo copy of letter dated 17-11-1969 Ex.
P.10 also shows that it was mailed from London and was addressed to the respondent Company at Lahore. Learned counsel for the appellants when questioned did not dispute the fact that the refusal to the demand of the respondent to refer the dispute to arbitration was intimated to respondent at Lahore. From all this evidence and the other material in the impugned order such as Ex. P.13 and letter dated 9-1-1968 it is manifest that not only that the execution of agreements took place at Lahore but also that the appellants Company had a subordinate office at Lahore. The refusal to refer the dispute to arbitration was also communicated to the respondent at Lahore, therefore, it can safely be concluded that part of cause of action arose at Lahore and the application moved by the respondent under Section 20 of the Arbitration Act, could be instituted in a Civil Court at Lahore which was rightly entertained and decided. Learned counsel for the appellants could not successfully assail the findings of the learned trial Court on issue No.2-A which findings are perfectly valid, based on evidence and correct application of provisions of Section 20 of the C.P.C.
10. Learned counsel for the appellants then argued that Col. Ata Ullah who instituted the application was not authorised to act on behalf of respondent---Company to file the said application, therefore, it was not Moved by a competent person. In support of this argument he placed reliance on Article 9 of President's Order No.2 of 1972, known as Companies (Managing Agency and Election of Directors) Order, 1972, which provided that all the directors of a company shall stand retired on the expiration of the period of one hundred and eighty days from the date of commencement of this Order which was 15-1-1972, or on the date of first annual general meeting of a company held after such commencement, whichever was earlier. Under Article 8 of this Order every private company was required to have not less than three directors and public company not less than seven directors. The respondent-company being private company, therefore, it was urged by the learned counsel for the appellants that since it had only two directors at the relevant time when the application was instituted on 27-8-1973, therefore, Col. Ata Ullah due to operation of these provisions of the order stood retired and could not act as director of the company and was not competent to institute the application in that capacity.
11. I am afraid the argument is wholly fallacious. According to proviso to Article 9 all the directors who were to retire were allowed to perform their functions until their successors were elected. There is no provision in this Statute prescribing any consequences or penalty for non-observance or non- compliance with the provision of the order. Since Col. Ata Ullah under the said proviso to Section 9 could continue performing his function as one of the directors as he then admittedly was, therefore, his authority to act on behalf of the company and institute the legal proceedings as director remained unaffected. This is apart from the fact that a resolution was passed by the respondent-company on 24-12-1973 a copy of which was produced in evidence as Ex. P.32 which shows that Farid Ahmad was elected as the third director of the respondent-company. Ex. P.9 is the copy of Articles of Association of respondent-company, from clause 120(i) of which it is manifest that the managing director was authorised to institute the legal proceedings on behalf of the company and Col. Ata Ullah was the Managing Director which fact was not denied by the learned counsel for the appellants. Learned counsel for the appellants when confronted with this situation maintained that according to judgment reported in Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd. PLD 1966 SC 684 only a person authorised by the resolution of a company could institute the legal proceedings.
12. The argument is devoid of any force inasmuch as it is in the Articles of Association of the respondent-company itself that the Managing Director of the company was fully authorised to institute legal proceedings. Apart from that Ex. I P.1 is a copy of resolution dated 25-8-1971 passed by the directors of the company authorising Col. Ata Ullah to institute legal proceedings on behalf of the company. This authority conferred on him was further ratified through resolution dated 24- 12-1973 Ex. P.32. In this view of the matter the law as declared by the Supreme Court in the reported judgment had even been complied with.
13. In light of what has been hereinbefore discussed Col. Ata Ullah was fully competent to institute application on behalf of the respondent-company as such the findings recorded by the learned trial Court on issue No.1 suffer from no illegality. The same are therefore, upheld.
14. Learned counsel for the appellants then argued that the agreement (Ex. P.13) dated 1-10-1967 was between appellant No.2 and the respondent whereas agreement dated 17-11-1969 (Ex. P.10) was between the respondent and appellant No.1 and both the agreements have no connection with each other as such one application seeking appointment of arbitrator for resolving the disputes arising therefrom was not competent as it was bad for multifariousness i.e. Misjoinder of causes of action and the parties.
15. This argument too has no substance and as a matter of fact does not deserve any serious consideration and I need not pause to consider it inasmuch as a similar objection though in different form was raised before the Supreme Court in appeal which was repelled. The case has been remanded to this Court for considering the other points raised in the FA.O. The said objection having been disposed of on merits by the Supreme Court, therefore, this Court has no jurisdiction to act beyond the terms of the remand order, as such this question cannot be allowed to be re- opened. It may be observed that no issue appears to have been claimed by the appellants that the application was bad for multifariousness.
16. Learned counsel for the appellants also feebly argued that it was the requirement of law that the dispute with necessary details which was required to be referred to arbitrator should have been given in the application which having not been done, therefore, the application was liable to be rejected on account of vagueness. In order to appreciate this argument I have scrutinized the application in which it was alleged that certain amounts were due from the appellants on account of the works done under the said two agreements which were not being paid to the applicant by the appellants, therefore it was alleged that the said dispute according to arbitration clause was to be referred to arbitrator. In the documents produced in evidence as Ex. P.4 the respondent in sufficient details mentioned the nature of disputes and ascertained some of amounts which according to it were recoverable in respect of different items. The application and this document if read together gives in sufficient details the disputes which were to be referred to the arbitrator for delivering award. The argument thus is found to be without any force.
17. Learned counsel for the appellants lastly argued that some of the claims raised by the respondent as mentioned in Ex. P.4 are not recoverable under either of the two agreements whereas some amounts were no longer recoverable as the liability regarding them had already been discharged. This argument has not impressed me for, it touches the merits of the respective stand of the parties. The dispute whether a particular sum is due under the agreement or not or that it was not recoverable on the ground that the liability regarding it had already been discharged are all matters which are to be decided by the arbitrator who has to deliver award. It will be for the appellants to establish before the arbitrator that the sums claimed by the respondent were not recoverable on any ground including the above grounds urged by the learned counsel for the appellants.
18. I have undertaken elaborate scrutiny of the oral as also documentary evidence produced by the parties in this case and find that the findings of the learned trial Court on the issues framed do not suffer from any illegality which are hereby upheld. The appeal for the foregoing reasons is hereby dismissed with no order as to costs.
H.B.T./G-52/L