' In 1966 the appellant was awarded a contract for construction of a bridge on Karachi-Quetta- Kalat Road at Uthal, District Lasbella which now forms part of the Province of Balochistan. Certain disputes arose between the parties with regard to the rates of works executed by the appellant and the appellant approached the respondent No,1 to appoint an Arbitrator in terms of the agreement between the parties. Upon the failure of the respondent to appoint an Arbitrator appellant moved an application under section 20 of the Arbitration Act on the original side of this Court praying that the respondent be directed to file the original agreement and an Arbitrator be appointed to settle such dispute in terms of the Arbitration Act. This application registered as Suit No,404 of 1973 and was allowed by consent whereby, one Mr. Sultan Hamid Razvi, Deputy Secretary, Communication and Works Department, Government of Balochistan was appointed Arbitrator.
2. Apparently the Arbitrator appointed failed to enter upon in the reference whereupon the appellant sought his removal and appointment of another Arbitrator in his place. In response to such application the respondent submitted in writing that they had no objection to the appointment of a second Arbitrator and suggested the names of two Superintending Engineers in the Irrigation Department. However, when the application came up for hearing on 23-9-1974 a number of names were suggested and the. Learned Single Judge appointed Justice (Retd.) Feroz Nana Ghulam Ali to act as the Sole Arbitrator. The parties appeared before the Arbitrator and the time available to him to make the Award was extended by 'mutual consent on 24-6-1975. The learned Arbitrator made his Award on 23-7-1975 which was filed on the original side of this Court on 11-8-1975 and registered as Suit No,336 of 1975. The respondent filed objections to the award wherein it was inter alia urged that the reference on the basis of which the Arbitrator made the award was invalid and without jurisdiction.
3. While objections to the award were yet to be heard and decided the appellant apprehended that the matter may be transferred to the High Court of Balochistan upon the establishment of such High Court under Presidential Order VI of 1976 made an application praying that the same may be retained and heard by this Court. This application came to be heard by learned Single Judge on the original side who held that in view of Article 4(3) of the Balochistan and Sindh High Courts Order, 1976 (P.O. VI of 1976) the case stood transferred to the High Court of Balochistan and dismissed the application. The appellant preferred H.C.A. No,12 of 1977 against such order which was allowed by Division Bench of this Court vide judgment, dated 25-1-1978 wherein it was held that the suit did, not automatically stand transferred to the Balochistan High Court though it was open to the respondent to contend that it did not lie in the original civil jurisdiction of this Court.
4. The question of jurisdiction of this Court to hear objections, and make a decree in terms of the Award came up for hearing in detail before a learned Single Judge who by his elaborate order, dated 11-10-1999 upheld the objections raised by the respondent and return the Award for presentation before a proper Court in Balochistan. The learned Single Judge held that the cause of action had only accrued in Bella and Uthal Sub-Division which, though a part of Karachi Civil Division in the erstwhile Province of West Pakistan (prior to 1-7-1970) were never amenable to the original civil jurisdiction of the High Court which only extended to the territorial limit of Karachi District and not to Lasbella District in the Karachi Division. It was further held that the Government of Balochistan could not be deemed to be residing or carrying on business within the limit of Karachi District. It was accordingly held that a suit for the purpose of obtaining a decree in terms of the Award could only be filed before a Civil Court in Balochistan. Aggrieved by the aforesaid order the appellant has come in appeal.
5. Mr. Abdul Hafeez Lakho learned counsel for the appellant in the first instance stressed that the respondent never objected to the territorial jurisdiction of this Court when the appellant had preferred an application under section 20 of the Arbitration Act and they had in fact acquiesced in the assumption of jurisdiction by consenting to the grant of the application. The suit was disposed of by the order, dated 23-9-1974 which became final as the respondent never appealed against it.
They also participated in the proceedings before the learned Arbitrator pursuant to a reference made by this Court. In the circumstances they were clearly estopped from challenging the award made by the learned Arbitrator on the ground that the initial reference was made by a Court which lacked territorial jurisdiction. Assailing the observations of the learned Single Judge to the effect that jurisdiction cannot be conferred by consent, learned counsel argued that it was not a matter of inherent lack of jurisdiction on the part of this Court and referred to section 21, C.P.C. Which reads as under:-- "21. Objections to jurisdiction.---No objection as to the place of suing shall be allowed by any appellate or revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues are settled at or before such settlement and unless there has been a consequent failure of justice."
6. Mr. A.H. Lakho argued that if a Court which does not have territorial jurisdiction to entertain a matter but is otherwise fully competent to pass orders it could not be deemed to have acted without jurisdiction but the matter would be one merely of irregular assumption of jurisdiction. In such cases the irregularity would stand cured by failure of the parties to raise objections at the earliest stage of the proceedings as otherwise it would be deemed to have been waived. He relied upon, inter alia, the cases of Combine Enterprises v. Water and Power Development Authority PLD 1988 SC 39, Chief Engineer, Building Department v. Pakistan National Construction 1988 SCMR 723; Mst. Chaghi and others v. Bachoo PLD 1984 Quetta 92; Prasun Roy v. Calcutta Metropolitan Development Authority 1989 MLD 3235 and Project Director and another v. Nawab Brothers Limited 1982 CLC 1147.
7. In addition to the above, Mr. A.H. Lakho further contended that once the arbitration proceedings had taken place pursuant to a reference made by this Court a decree in terms of the Award could only be 'made' by this Court and no other Court in terms of section 31 of the Arbitration Act. While learned counsel stressed on the provision of subsection (4) of the aforesaid section 31 which contained non obstante clause it might be worthwhile to reproduce the entire section 31 to appreciate its connotation:-- "Section 31. Jurisdiction.--- (1) Subject to the provisions of this Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates.
(2) Notwithstanding anything contained in any other law for the time being in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be filed, and by no other Court.
(3) All applications regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings shall be made to the Court where the award has been, or may be, filed and to no other Court.
(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and in no other Court."
8. Mr. Muhammad Ashraf Tanoli learned Advocate-General of Balochistan appearing for the respondent relied upon the findings of the learned Single Judge to the effect that neither the cause of action arose within the territorial limit of the District of Karachi nor could the respondent be deemed to be carrying on business or residing within such limit as such this Court in the exercise of its ordinary original jurisdiction was not competent to entertain the appellant application under section 20, read with section 2(c) of the Arbitration Act. He argued that the jurisdiction had been invoked through misleading the Court both as to facts and law. He took strong exceptions to the contents of para.7 of the application under section 20 of the Arbitration Act wherein it was alleged that "work was executed and complete in Bella forming part of Karachi District and payment was made in Karachi District". He also disputed the authority of Mr. Abdul Ghafoor, Advocate in consenting to the grant of the application and appointment of Arbitrator. However, confronted with the proposition that objection to territorial jurisdiction ought to have been taken at the first available opportunity learned Advocate-General argued that the occasion to do so only arose upon the establishment of a separate High Court of Balochistan through President Order No,VI of 1976 which came into effect on 1-12-1976 and by virtue of Article 4(3) whereof stipulated that cases relating to original jurisdiction pending in the High Court of Sindh and Balochistan where the cause of action or a part thereof had -arisen, where property of subject-matter involved was situated or where the respondent residing or work for gain in the Province of Balochistan shall stand transferred to the High Court of Balochistan. Moreover, he argued that objections to the territorial jurisdiction of this Court had been taken alongwith other objections to the award.
9. Since the question involved appears to be of first impression and of substantial public importance, we had requested Mr. Makhdoom Ali Khan, Advocate to assist us as amicus curiae. Mr. Makhdoom Ali Khan appears to be in agreement with Mr. Lakho as regards the scope and effect of section 21, C.P.C. And section 31 of the Arbitration Act and frankly conceded that he was not in a position to support the impugned judgment. Moreover, he argued that though it may be correct to say that Bella did not fall within the Civil District of Karachi to which the ordinary original civil jurisdiction of the High Court extended, but the finding of the learned Single Judge to the effect that the factum of payment in the context of the present case was inconsequential could not be sustained. Learned counsel relied upon Sundardas Prem Singh v. Porum Chand AIR 1933 Lah. 599 and General Papers Limited v. A.P.A. Pakkir Mohidden and Brothers AIR 1958 Mad. 483 to contend that in a suit for recovery of money the cause of action could also deem to have accrued at the place where money was required to be paid. Moreover, learned counsel argued that apart from the requirements of section 31, the fact that the respondent did not raise the question of territorial jurisdiction in Suit No,404 of 1973 he was debarred from doing so in Suit No,336 of 1975 even on general principle of estoppel and res judicata. In support of this proposition learned counsel referred to Janan Chand Chugh v. Gugal Kishor Agerwal AIR 1960 Cal.
331.
10. We have carefully considered the impugned judgment, the respective contentions of the learned counsel and gone through. The record. In the first place we would observe in all fairness to the learned Advocate-General, Balochistan that the allegation in the application under section 20 of the Arbitration Act to the effect that Bella form part of Karachi District was entirely misconceived.
In this context we entirely agree with the learned Single Judge to the extent that even prior to dissolution of the Province of West Pakistan though Bella was a part of Lasbella District in the Karachi Civil Division, it was never a part of the Karachi District to which the ordinary original civil jurisdiction of the High Court extended. However, though the learned Advocate-General emphatically argued that the allegation that payment was to be made at Karachi was factually incorrect, he was unable to refer to any material on record displacing the appellant assertion of fact. With profound respect we are unable to share the view of the learned Single Judge to the effect that payment to the creditor at a particular place cannot give rise to a cause of action to the creditor. Indeed the learned Single Judge has himself relied upon the age old dictum that a debtor has to seek the creditor. With all respect however, we understand it to mean, in the present context, that in the absence of a provision to the contrary in the contract between the parties the obligation of the debtor is to be discharged where the creditor resides and part of the cause of action would arise where this obligation is not performed. We are, therefore, inclined to agree with Mr. Makhdoom All Khan that the cause of action could also be deemed to have arisen within the District Karachi.
11. In any event the main thrust of Mr. Lakho's arguments was that under section 21, C.P.C. An objection to the territorial jurisdiction of a Court could only be raised at the first opportunity and on account of failure on the part of the respondent to do so upon receipt of notice of the application under section 20 of the Arbitration Act (Suit No,404 of 1973) it could not be allowed to be raised subsequently. Therefore, once the Arbitrator had entered upon the reference pursuant to the order of this Court the Award made by him could only be filed in this Court alone in view of section 31(4) of the Arbitration Act. The question whether section 21, C.P.C. Applied to applications under section 20 of the Arbitration Act appear to have been settled by a Division Bench of this Court in Project Director and another v. Nawab Brothers Limited 1982 CLC 1147. It may also be pertinent to keep in view that while an order A under section 20 of the Arbitration Act can be appeal against under section 39(iv) of the Act the appellant cannot object to the territorial jurisdiction of the Court passing the order in view of the specific bar under section 21, C.P.C.
12. Indeed this contention was also raised before the learned Single Judge but was repelled with the observation that the question has been raised in Suit No,336 of 1975. With profound respect we find ourselves to share the above view. No doubt technically applications under section 20 of the Arbitration Act and awards filed under section 14 are registered as separate suits. The inevitable nexus between two however, cannot be overlooked. It would indeed be anomalous, to say the least, that while a party omitting to have objected to the territorial jurisdiction of a Court while contesting an application under section 20 of the Arbitration Act will be precluded from raising such objection in an appeal against such order, but after having accepted the same and participated in arbitration proceedings would be free to raise this question in case" it was aggrieved by the Award pronounced. In our humble view one of the objects of section 31(4) of the Arbitration Act which has been given an overriding effect over all the provisions of the Act as well as other laws for the time being in force is to avoid such anomalies.
13. The abovementioned section 31(4) of the Arbitration Act stipulates that where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone shall be competent to entertain any subsequent applications arising out of that B reference and the arbitration proceedings. An application under section 20 of the Arbitration Act has been held to be covered by the expression "any reference" in Harbans Singh v. Union of India AIR 1961 Cal.
659. In any event once the respondent failed to object to the territorial jurisdiction of this Court (exercising original jurisdiction) the application was granted and a reference of the Arbitrator was made the respondent lost the right to object to jurisdiction. It inevitably follows that when the Arbitrator filed the award given by him after having entered upon the reference in the presence of the respondent this Court was competent to entertain it. In Kumbha Mawji v. Dominion of India AIR 1953 SC 313 the Supreme Court of India held that the words "in any reference used in section 31(4) are comprehensive enough even to cover an application first made after the arbitration is completed and a final Award is made". It may also be pertinent to refer to a Division Bench judgment of the Allahabad High Court in Shakrullah and another v. Rehmat Bibi and others AIR 1947 All.
304. In this Court a reference to Arbitrator was made by the High Court while hearing an appeal against an order of a Civil Judge staying a suit under section 34 of the Arbitration Act. The Award was filed before the High Court which directed that the same should be filed before the trial Court which passed a decree in terms thereof. Allowing an appeal against the decree their Lordships took the view that the reference to arbitration in the circumstances was invalid. Nevertheless they proceeded further to hold that even otherwise once a reference had been made by the High Court the Award could only be filed before such Court in terms of section 31(4) of the Arbitration Act and the decree of the Civil Judge was without jurisdiction. It may also be useful to reproduce the following observation of Khalil-ur-Rehman Khan, J. (as his Lordship then was) in M.A. Jalil v. Group Captain (Retd.) Salahuddin Khan 1983 CLC 1685:-- "Similarly section 31 of the Act deals with the jurisdiction of Court. It provides that all matters relating to the reference should be made before the same Court in which the first application in connection with the arbitration matter was made and it will be the said Court which alone would be competent to decide all questions in relation to that particular arbitration."
' In view of the above, we entirely agree with Mi. Lakho that in view of section 31(4) of the Arbitration Act this Court is competent to hear and decide the objection of the award.
14. Mr. Ashraf Tanoli learned Advocate-General, Balochistan attempted to argue that the first opportunity to object to the jurisdiction of this Court arose only after a separate High Court for the Province of Balochistan was established. With profound respect we find this contention to be entirely misconceived and stand repelled by the findings recorded in the impugned judgment itself. In the first place it presupposes that the application under section 20 of the Arbitration Act was competently filed before this Court. If that be so the contention that jurisdiction was assumed on account of incorrect statements made in para.7 thereof loses its force. Secondly, Article 4(3) of P.O. VI of 1976 refers to cases automatic transfer of cases wherein a High Court exercising original jurisdiction. The original jurisdiction stipulated in the above President Order, however, is different from the ordinary original civil jurisdiction exercised by the High Court (which is a District Court jurisdiction) in respect of the District of Karachi as subsequently highlighted by the Honourable Supreme Court in Pakistan Fisheries v. United Bank Limited PLD 1993 SC 109 and Brothers Steel Mills v. Mian Ilyas Siraj PLD 1996 SC 543. The findings of a Division Bench of this Court in H.C.A. No,12 of 1977 as well as of a learned Single Judge in the impugned judgment are based upon this contention and we entirely agree with the same.
15. The respondent's case as urged before learned Single Judge and before us as well has been that the cause of action arose outside the limits of the Karachi District, it obviously follows that only Civil Courts having territorial jurisdiction over the areas of Bella and Uthal had jurisdiction to entertain an application under section 20 of the Arbitration Act. This objection was clearly available to them when the application was filed. Since such objection was deemed to have been waived and could not be raised subsequently even an appeal under section 39(iv) of the Arbitration Act, this Court was the only competent Court in which the Award could have been filed in terms of section 31(4) of the Arbitration Act.
16. In any event notwithstanding the specific provision of section 21, C.P.C. And section 31(4) of. The Arbitration Act, the objection raised by the respondent was not even sustainable on general principles. Mr. Lakho placed reliance on the Honourable Supreme Court in Chief Engineer, Building Department v. Pakistan National Construction 1988`" SCMR 723, in this case their Lordships approved the well-settled principle stated by Russel on 'Arbitration" to the following effect:- "If the parties to the reference agreed beforehand to the method of appointment, or afterwards acquiesced in the appointment made with full knowledge of all the .Circumstances, they will be precluded from objecting to such appointment as invalid as proceedings attending and taking part in the proceedings with full knowledge of relevant facts will amount to such acquiescence."
' In the same case their Lordships emphasized the distinction between and inherent want of jurisdiction and an irregular assumption by a tribunal holding that while the first was incurable despite consent of the parties the second was always subject to waiver. They also referred to the pronouncement of Supreme Court of India in Prasun Roy v. Calcutta Metropolitan Development Authority 1989 MLD 3235 wherein it was held that when a party participates in arbitration proceedings despite being aware that because of some disability the matter is legally incapable of being referred to arbitration it cannot be allowed to object to the award on this ground. In Province of Sindh and another v. S. Zaheeruddin Hussain 1982 CLC 175 a Division Bench of this Court took the view that when an objection to the appointment of an Arbitrator was not taken in appeal, a party participating in the proceedings could not be allowed to raise such an objection after the award.
17. Indeed the judgments of the Supreme Court of Pakistan and India were cited before the learned Single Judge nevertheless his Lordship was persuaded to consider the present case as having some peculiarity and observed that the Appellate Court had remanded the case for examination of the contention raised by the respondent as to whether the cause of action or part thereof had accrued within the territorial limit of Karachi District or whether the respondent ordinarily resided or carried on business within such District. This in his opinion opened the question of jurisdiction in respect of the application under section 20 of the Arbitration Act. He however, proceeded to hold that jurisdiction could not be conferred by consent.
18. We have carefully gone through the appellate judgment in H.C.A. No,12 of 1977 and with profound respect must record our inability to subscribe to the opinion of the learned Single Judge. Indeed, their Lordships did observe that it would be open to the learned Single Judge to examine the respondent's contention that the suit did not lie on the original civil side of the High Court for want of jurisdiction. It is nevertheless equally important to observe that the question involved before their Lordships was one of automatic transfer of the suit to the Balochistan High Court and they refrained from making any pronouncement with regard to section 21 C.P.C. Section 31(4) of the Arbitration Act or the effect of respondent participation in the proceedings before the Arbitrator.
Indeed these matters were left open to be decided by the learned Single Judge. We are, therefore, unable to say that weighty observations of the Honourable Supreme Court and the well-settled principles of law would not be applicable to this case.
19. Moreover, with profound respect, we are constrained to observe that there appears another infirmity in the impugned order. The award made by an Arbitrator could only be objected to on the grounds enumerated in section 30 of the Arbitration Act. The tenor of the impugned order shows that it was urged on behalf of the respondent that the same had been illegally procured as the Court appointing the Arbitrator and making the reference had no territorial jurisdiction to do so. In case this objection was liable to be sustained, the award could only be set aside. Nevertheless once the reference and the award made pursuant to the same was held to be valid, a decree in terms of the same could only be made by the Court making the reference in view of the explicit provision of section 31(4) of the Arbitration Act. For the foregoing reasons, we allowed this appeal by our short order, dated 2-6-2001 and remanded the matter to the learned Single Judge for hearing the remaining objections to the award and deciding the matter in accordance with law.