2002 C L C 836 http://www.pakistanlawsite.com/Login/PrintCaseLaw?

caseName=2002K247

2002 C L C 836

[Karachi]

Before Ghudam Nabi Soomro and Muhammad Mujeebullah Siddiqui, JJ

CORPORATION ENGINEERING (PVT.) LIMITED‑‑‑Appellant

Versus

PAK ARAB REFINERY LIMITED‑‑‑Respondent

High Court Appeal No.323 of 1999, decided on 4th February, 2002.

Arbitration Act(X of 1940)‑‑‑

‑‑‑‑S. 28‑‑‑Power of Curt to enlarge time for making award‑‑‑Appellant requesting for extension of
time‑‑‑Refusal of Trial Court to enlarge such time‑‑‑Validity‑‑Appellant had not been diligent in pursuing
arbitration proceedings, but had been lethargic and negligent‑‑‑Arbitration proceedings commenced in year
1.984, but even after expiry of 17 years, no progress had been made whatsoever‑‑‑No evidence was left with
respondent, because with the lapse of time, all the concerned persons working with respondent had either
retired or died‑‑‑Appellant had been himself responsible for inordinate delay in completion of arbitration
proceedings‑‑‑Discretion vested in Court could not be exercised fn favour of a per‑son who had adopted
dilatory tactics‑‑‑Even otherwise enlargement of time would amount to putting a premium on a person on his‑
own fault and delaying tactics‑‑‑Trial Court while looking to all the circumstances and facts on record had
rightly refused to extend time, to which no exception could be taken‑‑‑Appeal was dismissed in
circumstances.

Pakistan v. Gayer & Co., Karachi PLD 1964 Kar. 9; Civil Aviation Authority, Karachi v. Rist Consultants
(Pvt.) Ltd. 1998 SCIt1R 2393; Messrs Vaseem Construction Company v. Province of Sindh and 4 others 1985
MLD 397 and J.W. Oliver v. Mian Dost Muhammad AIR 1935 Lah. 191 ref.

Bilal A. Khawaja for Appellant.

H. A. Rehmani for Respondent.

Dates of hearing: 9th; 10th and 16th October, 2001.

JUDGMENT

MUHAMMAD MUJEEBULLAH SIDDIQUI, J.‑‑‑ This High Court Appeal is directed against the order,
dated 22‑9‑1999; by learned Single Judge of this Court in Judicial Miscellaneous No.4 of 1996.

This case has chequered history and it would be appropriate to marshal the entire facts in order to arrive at the
proper conclusion.

The appellant, is an Engineering Company and the respondent is a company carrying on work of transporting

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oil. The appellant and the respondent entered into an agreement on 16‑12‑1979 for the construction of 20"
transfer line from oil terminal at Keamari to the pumping station No. 1. Another agreement for construction of
three 8" "spur line" from refineries to Pumping Station No. 1 was entered into between appellant and the
respondent in December, 1978. According to the facts, stated by the appellant, in Judicial Miscellaneous
.Application No.4 of 1996, Annexure "B" with the memo. of this appeal, the two contracts were entirely
independent of one another. The work on the contract for construction of 20" transfer line was to commence
in April, 1980 and was to be completed by July, 1980. The termination notice of 20" dia transfer line contract
was given by the respondent vide letter, dated 4th May, 1980 and the possession of the site was taken on 11th
May, 1980. According to the appellant the respondent seized possession of all material, stores, tools,
machinery and vehicles lying at the site in the absence of the appellant or its representative and in the process
the respondent also took possession of all equipment and material including his asphalt enamel and 20" dia
line pipe lying at the work site which was in premises of respondent's Cafe Noman Store Yard. The said stores
were issued to the appellant by the respondent for use in the project and were lying at the work site under the
supervision, control and security arrangements of the respondent. According to appellant, he was not
authorized to handle this store without proper authority from the respondent officials.

It is alleged that subsequently the very same contract was collusively handed over to Messrs Marathan
Construction Co. Limited. According to appellant the contract was terminated for the reason of "delay or
negligence". It is further averred that the contract was concluded by Messrs Marathan Construction Co.
Limited, in year 1981, which proves the mala fide of the respondent, who did not allow the appellant to
complete the contract by July, 1980.

The appellant has alleged that finally, in September, 1980, parties came to an amicable settlement as
follows:‑‑

(a) That respondent would not enforce the performance bond in respect of 20" Transfer Line.

(b) That the petitioner would withdraw the Suit No.475 of 1980, which was so withdrawn on 15‑9‑1980.

(c) Neither party would claim against the other in respect of the claims arising out of the termination of the
contract for 20" Transfer Lines.

(d) That the 8" spur line contract would continue to be enforced and implemented irrespective of mutual
decision regarding the contract for the construction of the 20" Transfer Line.

Subsequently, the project of 8" spur line was completed to the entire satisfaction of the respondent. According
to appellant, they were harassed and pressurized by the respondent by withholding the payment of their final
bill for Rs.13.57,989.96 so that the appellant may concede to the illegal and unjust demand of the respondent
to pay the cost of store issued against 20" dia transfer line project. The appellant has submitted that it was
being done, in spite of the fact that both the parties to the contract had relinquished project. It is alleged that
the appellant, in fact, suffered substantial damages because the contract for 20" dia transfer line project was
relinquished in consideration of respondent's agreement not to press for encashment of performance bond or
raise any claim in respect of said 20" dia Transfer Line Project. It is further contended by the appellant that in
any case, the two contracts were entirely independent of one another and .the respondent had no jurisdiction
to deduct the cost of stores issued under 20" Transfer Line Contract against 8" Spur Line Contract. The
appellant complained against the respondent to the Federal Ombudsman, but the Federal Ombudsman refused
to exercise jurisdiction in the matter. Thereafter, appellant issued notice dated 17‑4‑1984 through its Advocate
to the respondent to refer the matter to arbitration and nominated Mr. Kazim Hasan, Bar‑at‑Law, as its

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Arbitrator. In response to appellant's notice, the respondent nominated Mr. Justice (Retd.) Noor-ul‑Arfin as its
Arbitrator. The appellant filed statement of claim with the Arbitrator on 27‑3‑1985 and the respondent filed
reply statement on 7‑11‑1985. The appellant and the respondent filed documents, and admission and denial
thereof were completed. Subsequently, the respondent filed application for amended reply statement which
was granted by the Arbitrator and the respondent was directed to file amended reply statement, which was
filed. In the process, the period of four months expired since the commencement of arbitration proceedings;
hence necessity arose for filing application for extension of time. The appellant filed Judicial Miscellaneous
No.30 of 1986 for enlargement of time, which was granted by the learned Single Judge of this Court on
26‑8‑1986. The time was extended for the period of four months from 26‑8‑1986. It is alleged that the
appellant through its Advocate's letters, dated 13‑9‑1986 and 15‑1‑1987, requested the Arbitrators to appoint
date of hearing but to no avail. Thereafter, the appellant by letter, dated 14‑9‑1987 requested the Umpire to
enter upon reference as the Arbitrators failed to give award. The learned Umpire Mr. Justice (Retd.) Agha Ali
Haider rejected the appellant's application by order, dated 24‑9‑1987 and refused to enter upon the reference.
The application before the Umpire was submitted under section 3 of the Arbitration Act read with rule 4 of
the First Schedule to the Arbitration Act with the following prayer:‑‑

"since the time allowed for .making the award is expired, the learned Umpire may be pleased to enter on the
reference in lieu of the learned Arbitrator and make the award."

A detailed order was made by the Umpire disposing of the objections and contentions pertaining to the
assumption of jurisdiction by him. We would not like to burden this judgment with the production of entire
order. In short, the learned Umpire considered the conflicting rules and declined to ‑assume jurisdiction.

After rejection of the above application, the application through its Advocate's letter, dated 15‑1‑1988,
requested the Arbitrators to fix the date of hearing. The copy of letter was sent to the learned counsel for the
respondent but the appellant was verbally informed on phone by Arbitrator to obtain consent from the learned
counsel for the respondent, which was refused by the respondent. The appellant thereafter filed Judicial
Miscellaneous No.53 of 1988 in this Court for enlargement of time for making award for further period of
four months. The said application under section 28 of Arbitration Act, 1940 came for hearing on 12‑2‑1990.
The learned counsel for the respondent opposed the application for the reason that the appellant has been
lethargic itself protracting the proceedings. However, with the consent of learned counsel for the parties, the
application was granted and the time was enlarged for making the award within a period of two months from
12‑2‑1990. The then learned counsel for the appellant undertook to obtain copy of the order and inform tile
Arbitrator about it and thereafter to inform the Advocate for respondent about the date fixed by the Arbitrator.
While granting the application for extension of time, it was specifically directed as under:‑‑

"In case the arbitration proceedings are not completed within the period of two months, granted in this case,
no further extension of time will be granted."

The counsel for the appellant intimated the Arbitrator regarding the extension of time by this Court for
making award within a period of two months from the date of order, vide his letter, dated 13‑2‑1990. The
copy of the order was also forwarded. The Arbitrators were requested to fix the matter at their convenient.
The copy of letter was forwarded to the Advocate for respondent. It appears that no action was taken and
consequently, a reminder. was issued by the Advocate for appellant to the Arbitrator on 8‑3‑1990. On the
same date i.e. 8‑3‑1990, the appellant received a letter from Mr. Kazim Hasan, Bar‑at‑Law, the Arbitrator
nominated by the appellant, to the effect that there is no question of his acting as Arbitrator in the above
matte, until the additional arbitration fee was received by hire in advance. It is alleged by the appellant that
the Arbitrator appointed by them was already paid the arbitration fee and, therefore, the question of additional

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fee never arose. The appellant contacted Mr. Kazim Hasan and informed that he has already received the fees
settled by him, to which he did not agree. The appellant then agreed to pay additional arbitration fee upon
conclusion of the arbitration proceedings.

On 14‑3‑1990, the appellant received a letter from co‑arbitrator Mr. Justice (Retd.) Noor‑ul‑Arfin, intimating
counsel for appellant that in response to his letter, dated 8‑3‑1990, he had written a letter, dated ,11‑3‑1990 to
the counsel for the appellant asking to contact the co-arbitrator and Advocate for Pak Arab Refinery and Mr.
Ashiq Ali, Incharge of the Legal Department of Pak Arab Refinery personally. It was intimated that none of
these persons have contacted the learned Arbitrator. The counsel for the appellant was further advised to meet
this gentleman and fix a convenient date for hearing of the case. The learned counsel for the appellant was
informed that it would have been more advisable to contact both Arbitrators personally for fixing a
'convenient date to contact of the case. It was intimated that the learned Arbitrator could not fix the date
unilaterally without the consent of the co‑Arbitrator and without consulting the Advocate of Pak Arab
Refinery for a convenient date. The learned counsel for the appellant was intimated that now it was for him to
take action on the lines suggested to him. Thereafter, on 29‑3‑1990, the appellants. Advocate again requested
the Arbitrator to fix the hearing and forwarded the copies of the letter to the Advocate for respondent and
Incharge, Legal Department. of respondent. Subsequently, Mr. Kazim Hasan, the Arbitrator nominated by the
appellant, intimated the appellant through letter, dated 1‑4‑1990 that the appellant has not fulfilled his demand
of additional payment and, therefore; he was withdrawing his nomination as Arbitrator to appellant. He
intimated that the appellant‑was free to nominate another Arbitrator in place of Mr. Kazim Hasan.

In the above circumstances, the appellant filed an application under sections 8, 9 and 28 of the Arbitration
Act, 1940, being Judicial Miscellaneous No.29 of 1990 seeking enlargement of time for the arbitration award
and appointment of another Arbitrator in place of Mr. Kazim Hasan, Advocate. It was suggested that Mr.
Justice (Retd.) Abdul Hafeez Memon placed in the vacancy of Arbitrator due to refusal of Mr. Kazim Hasan.
Vide order, dated 14‑2‑1992, Mr. Justice (Retd.) Abdul Hafeez Memon was appointed co‑Arbitrator in place
of Mr. Kazim Hassn and the period for giving award was extended for four months as prayed in the
application. During the pendency of the application, Mr. G.H. Malik, learned counsel for the respondent was
elevated to the Bench of this Court and, therefore, the notice of the application was sent directly to the
respondent. However, nobody appeared on the date of hearing and, therefore, the order dated 14‑2‑1991 was
made in the absence of respondent.

No progress in the arbitration proceedings were made and according to appellant, it was due to pre‑occupation
of the Arbitrators, with the result that the time extended for making award again expired. Consequently,
another application being Judicial Miscellaneous No.58 of 1991 was submitted, seeking the extension in time.
This application under section 28 of the Arbitration Act came for hearing on 23‑11‑1995. Prior to the hearing
of application Mr. Justice (Retd.) Abdul Hafeez Memon was elevated as Judge of Supreme Court and was
appointed as Acting Chief Justice of this Court. It was, therefore, held vide order dated 23‑4‑1995 with the
consent of learned counsel for the parties that the miscellaneous application was rendered infructuous. The
learned counsel for the appellant sought permission to file fresh proceedings for appointment of new
Arbitrator. However, request was disposed of with the observation that any party may adopt any legal remedy
available to him in law. After dismissal of the above application, the appellant submitted Judicial
Miscellaneous ‑No.4 of 1996 out of which the present appeal arises. The prayer was made for appointment of
another co?-Arbitrator in place of Mr. Justice (Retd.) Abdul Hafeez Memon and for extension of time for
making award.

The respondent filed objection to the application submitted by the appellant. It was contended on behalf of the
respondent that the application amounts to abuse of process of law and Court. The respondent submitted that

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the arbitration proceedings were initiated in the year 1986 and in spite of lapse of about 10 years it was not
concluded mainly due to negligence and evasive attitude of the appellant. According to respondent, several
extensions were sought for completing the arbitration proceedings but due to negligence and/or inaction of the
appellant the proceedings could not be concluded. It was urged that the arbitration proceedings should not be
allowed to linger on any further as it would amount to negation of justice. The respondent submitted that
initially four months time was allowed for completion of arbitration proceedings and it was extended on
26‑8‑1986 but from 26‑8‑1986 till 1988, the arbitration proceedings did not conclude chiefly on account of
negligence/inaction on the part of the appellant. It was further alleged that after expiry of extended time,
granted vide order, dated 12‑2‑1990, with specific direction that no further extension of time shall be granted,
the appellant continued to be lethargic and submitted third application being Judicial Miscellaneous 29 of
1990. According to respondent, the appellant managed to obtain order, dated 14‑12‑1991 behind the back of
respondent, whereby Mr. Justice (Retd.) Abdul Hafeez Memon was appointed co‑Arbitrator, although the
respondent had already filed counter‑affidavit opposing the extension of time. It was further contended that
even after obtaining the order, dated 14‑2‑1991 behind the back of respondent and without pointing out to the
learned Single Judge that vide order, dated 12‑2‑1990, it was specifically directed that no further extension of
time will be granted, the appellant took no steps towards the progress of arbitration proceedings. The
appellant did not even care to intimate to the new co‑Arbitrator about the order, dated 14‑2‑1991 and did not
make request to him to enter into the arbitration proceedings. The appellant, thus allowed to expire third
extension of time granted by this Court for completion of arbitration proceedings. The appellant, thereafter, in
order to prolong arbitration proceedings and cause unnecessary harassment to the respondent submitted fourth
application for enlargement of time Judicial Miscellaneous 58 of 1991. The respondent had filed
counter‑affidavit in January, 1992 but the appellant took no steps for hearing of application. Mr. Justice
(Retd.) Abdul Hafeez Memon was appointed Judge of the Supreme Court of Pakistan in April, 1994 but the
appellant did not take requisite steps to amend the proceedings until the dismissal of application on
23‑11‑1995 and thus the appellant wasted over four years in keeping Judicial Miscellaneous No.58 of 1991
pending, without taking serious steps to proceed with the matter. It was further contended that Judicial
Miscellaneous 30 of 1986 was disposed of on 26‑8‑1986 whereby four months time was allowed and the
second application being Judicial Miscellaneous 53 of 1988 was filed after 22 months of the said order and
after 18 months of expiry of the time extended. In the. meanwhile, the application to the Umpire was
meaningless as the time for completion of arbitration proceedings had already expired and the second
application for extension was submitted after 9 months of the rejection of the prayer for assumption of the
arbitration was rejected by the Umpire. According to respondent all these facts abundantly demonstrate gross
negligence on the part of the appellant and disentitle it for further indulgence.

The Judicial Miscellaneous No.4 of 1996 was heard on 15‑9‑1999 by learned Single Judge of this Court and
was disposed of by the impugned order, dated 22‑9‑1999. The learned Single Judge considered the entire facts
and observed, that Mr. Justice (Retd.) Abdul Hafeez Memon was appointed as Arbitrator on 14‑2‑1991 but
there is nothing on record to show that the appellant either approached the newly appointed Arbitrator or the
co‑Arbitrator Mr. Justice, (Retd.) Noor‑ul?-Arfin for taking necessary proceedings; though the order was
passed in the absence of respondent. He further observed that only contention of the appellant was that Mr.
Justice (Recd.) Abdul Hafeez Memon did not proceed with the matter due to pre‑occupation and thus time
expired. However, the appellant failed to satisfy the Court that any steps were taken by them for conducting
the arbitration proceedings since 14‑2‑1991 onwards. The learned Single Judge further observed that, "it is
pertinent to note that it was on the plea of the petitioner that the arbitration proceedings were initiated in 1984,
though the respondent was reluctant to join the same and respondent had in earlier petition also opposed the
extension of time; but even then the conduct of the petitioner, right from the beginning and more particularly
after February, 1991 shows that they have not been seriously interested to proceed with the matter, and
therefore, the purpose of expeditious proceedings before the Arbitrator was absolutely frustrated". In the

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impugned order, it was held that while dealing with an application under section 28, judicial discretion is to be
exercised looking into the facts and circumstances of the case, specifically, the conduct of the petitioner. It
was held that the facts and circumstances do not favour the petitioner and do not call for the exercise of the
discretion in their favour. In coming to the above conclusion, the learned Single Judge placed reliance on the
following judgments, Pakistan v. Gayer & Co., Karachi. PLD 1964 Kar. 9; (10) Civil Aviation Authority,
Karachi v. Rist Consultants (Pvt.) Ltd. 1998 SCMR 2393 and Messrs Vaseem Construction Company v.
Province of Sindh and 4 others 1985 MLD 397.

For the foregoing reasons, the learned Single Judge held that the appellant was not entitled for the relief
claimed and dismissed the application.

Being aggrieved with the dismissal of the application under section 28 of the Arbitration Act, the appellant
has preferred this appeal. It is contended in the memo. of appeal that learned Single Judge has gravely erred in
not applying his mind to the factual perception. before him and did not appreciate the policy of dispensation
of justice which contemplate freedom of pursuit of respective positions for the contesting parties in litigation
subject to reasonable limitation in the public interest. According to appellant, the learned Single Judge has
committed gross error by shutting the doors of justice upon the appellant. It is contended that with impugned
order, the appellant is left without any remedy and such a situation is disapproved by the civilized judicial
system and amounts to miscarriage of justice. It is further contended that most of the delay in the conduct of
arbitration proceedings was on account of Arbitrators and that the learned Single Judge was not right in
observing that there wits lack of diligence on the part of the appellant in pursuing the case. It has been pleaded
that the learned Single Judge has exercised discretion in unreasonable and arbitrary manner. It has been
prayed that the impugned order may be set aside and the time for making award may be enlarged for four
months. The appeal was fixed for admission before a Division Bench of this Court comprising Sabihuddin
Ahmed and Zahid Kurban Alvi, JJ., and the learned counsel for the respondent raised preliminary objection to
the maintainability of this appeal. Vide order, dated 6‑2‑2001, authored by Sabihuddin Ahmed, J. the
preliminary objection to the maintainability of the appeal was repelled and the appeal was admitted to regular
hearing. It would be appropriate to reproduce the order, dated 6‑2‑2001, which reads as follows:‑‑

1. This is an appeal against an order of a learned Single Judge, dated 22‑9‑1999, refusing to extend time to the
Arbitrator for making an award upon an application made by the appellant under section 28 of the Arbitration
Act.

2. Without going into the merit of the case it may be observed that Mr. H.A. Rehmani, learned counsel for the
respondent raised a preliminary objection as to maintainability of this appeal on the ground that appeals,
against certain specified types of orders were maintainable under section 39 of the Arbitration Act and the
impugned order did not fall within such specified categories. We treated this objection as a preliminary
objection and decided to hear learned counsel at length because the entire appeal could be disposed of if this
objection of fundamental nature was found sustainable.

3. To appreciate the contention of the learned counsel it may be appropriate to reproduce section 39 which
reads as under:‑‑

39. Appealable orders.‑‑‑ (,1) An appeal shall lie from the following orders passed under this Act (and from
no others) to the Court authorized by law to hear appeals‑from original decrees of the Court passing the order‑

An order

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(i) Superseding an arbitration;

(ii) On an award stated in the form, of a special case;

(iii) Modifying or correcting an award;

(iv) Filing or refusing to file an Arbitration Agreement;

(v) Staying or refusing to stay legal proceedings where there is an Arbitration agreement.

(vi) Setting aside or refusing to set aside an award;

(2) no second appeal<shall lie from an order passed in‑appeal under this section, but nothing shall not apply to
any order passed by a Small Cause Court.

4. Mr. Rehmani argued that the aforementioned section 39 only provided appeals against the types of orders
mentioned therein and expressly stipulated that no appeal would lie against. Any other order. Since an order
refusing to grant extension under section 28 did not fall within the described categories, the instant appeal was
not maintainable. We requested learned counsel to satisfy us on the question whether section 39 also barred
appeal preferred under section 15 of Ordinance 10 of 1980, which enables a person to prefer an appeal against
any order passed by a learned Single Judge exercising original civil jurisdiction of this Court to a Bench of
two Judges and whether the impugned orders could not be treated as one superceding an arbitration under
clause, (i) of section 39(1) of the Arbitration Act.

5. As regards the first question M. Rehmani contended that the Arbitration Act was a special law and,
therefore, the specific provisions of section 39 would prevail over those of C.P.C. or any other general law.
Moreover, he referred to the following observation of the Honourable Supreme Court in WAPDA and another
v. Khanzada Muhammad Abdul Haq Khan & Company PLD 1990 SC 359:‑‑

15. Taking up the third contention that the cross‑objections against non‑award of interest by the decree passed
by the learned Senior Civil Judge were incompetent, the argument was that an appeal as provided under
section 39(1) of the Arbitration Act. would lie only from the orders mentioned in that section and from no
other orders. Therefore, no cross‑objections, which are in the nature of cross‑appeal, were maintainable.
Under the Arbitration Act an appeal lies from the following orders‑

(i) An order superseding an arbitration; .

(ii) An order on an award stated in form of special case;

(iii) An order modifying or correcting an award;

(iv) An order filing or refusing to an arbitration agreement;

(v) An order staying or refusing to stay legal proceeding where there is an arbitration agreement;

(vi) An order setting aside or refusing to set aside award;

(vii) ???? .........................................

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But the appellants had also filed an appeal from the decree passed on award and if the trial Court had not
awarded interest as provided in section 29 of the Arbitration Act, the Appellate Court has had ample powers
under Order 41, rule 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 may not have filed any appeal or
objection.

6. We are not certain whether the above observations are of much help to learned counsel inasmuch as though
the first part of the observations tend to support learned counsel's point of view the second part negates that
the general powers available to an Appellate Court under Order 41, C.P.C. were invoked by their Lordships
were dealing with an appeal against a decree to such contentions tends to defeat his basic arguments inasmuch
as if it were to be held that all appellate powers must emanate from the Arbitration Act itself and no other law,
an appeal against a decree would be barred by section 17. Nevertheless we would refrain from expressing a
definite opinion on this aspect of the controversy.

7. Learned counsel also referred to the cases of Pakistan Water and Power Development Authority v. China
International Water and Electric Corporation PLD 1999 Kar. 235 and Union of India v. Mohindra Supply
Company AIR 1962 SC 256‑

In the first case, it was held that when a Local Commissioner was appointed by a learned Single Judge in
exercise of powers under section 41 of the Arbitration Act, an appeal to a Division Bench against his order
was not maintainable in view of section 39 of the Arbitration Act.

In the second case the Supreme Court of India held that no appeal to a Division Bench lay under clause (10)
of the Letters Patent of the Punjab High Court against an order of a Single Judge passed under section 39(1)
of the Arbitration Act in view of the specific bar‑of section 39(2) of the Arbitration Act.

8. Indeed these cases prima facie support Mr. Rehmani's contention, we are restraining ourselves from
rendering any finding opinion as the objection can be decided on another point.

9. With respect to the second question learned counsel argued that the expression superseding an arbitration
was‑ only referable to an order passed under section 19 of the Act, which reads as under:‑‑ (sic)

19. Power to supersede arbitration where award becomes void or is set aside. Where an award has become
void under subsection (3) of section 16 or has been set aside, the Court may by order supersede the reference
and shall thereupon order that the arbitration agreement shall cease to have effect with respect to the
difference referred.

11. Elaborating his contention Mr. Rehmani argued that section 19 was the only provision in the Arbitration
Act, which spoke of supersession of the reference and the provisions of section 39(1) should only be
construed with reference to this provision. In other words an appeal was maintainable only if the award had
become void upon the failure of the Arbitrator to re‑consider it after being remitted by the Court within the
given time or had beers set aside. He urged that when the Legislature had only provided for appeal against
specific types of orders, and barred those against others, there was no justification for the Courts to assume
that the omission was perincuriam. He relied upon the Supreme Court judgment in Sabz Ali v. Bismillah
Khan 1997 SCMR 1781 in support of this proposition.

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12. On the other hand Mr. Balal A. Khawaja, learned counsel for the appellant contended that the logical
consequence of the impugned order was that the reference to arbitration stood superseded. He further argued
that the provisions for an appeal in section 39 were in the nature of remedial legislation and ought to be
liberally construed and a strict technical construction which would deny relief to a large number of people
ought to be avoided.

13. Having carefully examined the respective. contentions of the learned counsel, we have, with profound
respects to Mr. Rehmani, found ourselves unable to share his view that section 39 speaks of supersession of an
arbitration agreement whereas in section 19 the Legislature has used the word `supresession of reference'.
Again the proviso to section 9 enables a Court to set aside the appointment of an Arbitrator and not verily
appoint another but, pass such other order as it thinks fit. Section 11 allows the Court to remove an. Arbitrator
having misconducted himself. Section 12(2) grants the Court the power, after an arbitrator or an Umpire is
removed, either to appoint a person as an Arbitrator or order that the arbitration agreement shall cease to have
effect, the proviso to section 25 stipulates that its any of the circumstances mentioned in sections 8, 10, 11 and
12 of the Arbitration Act instead of filling up vacancies or making appointment a Court may make an order
superseding the arbitration and proceeding with.

14. Having carefully examined the respective contentions of the learned counsel, we have, with profound
respects to Mr. Rehmani; found ourselves unable to share his view that section 39(1)(i) is only relatable to an
order made under section 19. In the first. place section 39 speaks of `supersession of an arbitration agreement'.
Whereas in section 19 the Legislature has used the word 'supersession of reference'. Again the proviso to
section 9 enables a Court to set aside the appointment of an Arbitrator and appoint another but, pass such
other order as it thinks fit. Section 11 allows the Court to remove an Arbitrator having misconduct himself.
Section 12(2) grants the Court the power, after an Arbitrator or an Umpire is removed, either to appoint a
person as an Arbitrator or order that the arbitration agreement shall cease to have effect. The proviso to
section 25 stipulates that in any of the circumstances mentioned in sections 8, 10, 11 and 12 of the Arbitration
Act, instead of filling up vacancies or making appointment a Court may make an order superseding the
arbitration and proceeding with the suit. All these provisions indicate that supresession of an arbitration
agreement is not possible. Merely under section 19, but several other provisions of the Act. Section 19 on the
other hand, only appears to deal with one kind of supersession.

15. It may further be observed that section 19 only deals with situations where an award has become void or is
set aside. Obviously when an award becomes void by operation of law, no question of exercise of judicial
discretion would be involved. Again section 39 makes an order of the Court setting aside an award or refusing
to do so, separately appealable under clause (vi) of subsection (1), therefore, if clause (1) is assumed to relate
to an order under section 19, the aforesaid clause would become entirely redundant.

16. Though no case‑law was cited by Mr. Balal A. Khawaja, we attempted to locate some decided cases from
the Indian jurisdiction to facilitate a better understanding of the legal proposition and were able to lay our
hands on a few judgments. In S.N. Agarwall v. Baidinath Mandal AIR 1972 Pat. 29, a Division Bench of the
Patna High Court held that an order removing an Arbitrator without appointing a fresh one, amounted to
superseding an arbitration in terms of section 39(1)(i) of the Arbitration Act. In M.H. Tejani v. Kulsoom Bai
M. Jetha AIR 1967 Bom. 300 after the Arbitrators appointed by the parties had done nothing for a sufficiently
long period, the: respondent moved an application before the Court, praying, inter alia, that the authority of
the Arbitrators be revoked, that it be ordered that the arbitration had ceased to have effect or alternatively the
disputes between the parties be referred to an Arbitrator appointed by the Court. The Court granted the first
prayer and upon an appeal preferred by the appellant, an objection was raised to the effect that only orders
falling strictly within the four corners of sections 19 and 25, which spoke of supersession of arbitration or

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reference was maintainable, Gokhaley, J., repelled the contention, holding that the scheme of Arbitration Act?
conferred a two‑fold power on the Court. Either the Arbitrator already appointed could be displaced by
another in which case an agreement continued to exist or the arbitration agreement would be ceased to remain
operative. Any order falling under the second category would be appeal able under section 39.

17. From the examination of the case‑law and consideration of the provision of the Arbitration Act, it appears
quite clearly, that irrespective of the question whether arbitration takes place without intervention of the Court
under Chapter 11, is commenced on the direction of the Court under Chapter III (section 23) or is resorted to
in a pending suit under Chapter IV, the Court always has the power to supervise such proceedings and pass
appropriate orders. In a case of arbitration without intervention of the Court, a Court may remove an
Arbitrator who fails to use reasonable dispatch in entering of the reference and making an award under section
11 and when such order has been made the Court may either appoint another person to act as Arbitrator or
order that the arbitration agreement shall cease to have effect with respect to the differences referred in terms
of section 12(ii). Similarly when Arbitrator is appointed in a pending suit, the proviso to section 25 stipulates
that the Court may either displace the Arbitrator initially appointed on grounds contained in sections 8, 10,
and 12 by making fresh appointment or make an order superseding the arbitration and proceed with the suit.
The view expressed by the Bombay High Court in Tejani's case AIR 1967 Bom. 300, therefore, in our opinion
reflects the correct legal position.

18. In the instant case the learned Single Judge refused to grant further extension of time to the Arbitrator
appointed and obviously such Arbitrator could not proceed further in the matter. Perhaps it would have been
desireable to record a consequential order to the effect that the arbitration agreement will cease to have effect
but no other consequence being possible, the mere fact that it was not said so in express term hardly makes
any difference. We are, therefore, of the opinion that the only consequence of the impugned order is that the
arbitration agreement is no longer enforceable and hence it would amount to supersession of arbitration. As
such in our view it is covered by section 39(1)(i) and is appealable. We would, therefore, hold that the
preliminary objection raised by Mr. Rehmani must fail.

19. We have not had the benefit of arguments as to the merits of the appeal, but consider that the impugned
order needs to be examined in some depth and an effort needs to be made for ensuring an early adjudication of
dispute between the parties which have dragged on for more than two decades. We expect that the parties
themselves will propose appropriate measures for doing so. Accordingly we would admit this appeal and fix it
for regular hearing of 14‑2‑2001 at 11‑00 a.m. after notice to the parties. "

After narrating the entire facts, Mr. Bilal A. Khawaja, learned counsel for the appellant has laid great
emphasis on the plea that the appellant was not responsible for the delay in conclusion of arbitration
proceedings. He has submitted that the learned Single Judge has himself observed that after appointment of
Mr. Justice (Retd.) Abdul Hafeez Memon. as Arbitrator, the arbitration proceedings could not proceed due to
his pre‑occupation. The learned counsel has next contended that the power conferred under section 28 of the
Arbitration Act is meant to promote the ends of justice and, therefore, the learned Single Judge ought to have
extended time, first for the reason that the appellant was not responsible for the delay, secondly, for the reason
that it promotes the ends of justice and, thirdly, because the refusal to extend the time has left the appellant
with no remedy and thus it is against the spirit of justice. He has further submitted that the impugned order is
arbitrary in nature and, therefore, requires to be set aside.

On the other hand, Mr. H.A. Rehmani, learned counsel for the respondent has argued that section 28 of the
Arbitration Act vests a discretion in Court and like any other discretionary power, the time is not to be
extended without considering the entire material and circumstances of a case. He has forcefully supported the

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impugned order and contended that the impugned order is in consonance with the scheme of law contained in
the Arbitration Act. According to the learned counsel a discretionary order is to be set aside if it is arbitrary,
perverse, against the material available on record or is contrary to law or in breach of law. He has submitted
that learned Single Judge has exercised his discretion in refusing the further extension of time for making the
award as the appellant is himself responsible for causing delay. He has contended that extension of time is not
a vested right and discretion vested in the Court, should never be exercised in favour of a person, who is
negligent and has adopted dilatory tactics. He has submitted that any party, who is not diligent in pursuing the
remedy and particularly under the scheme of law, which has been designed for speedy disposal of matters, is
not entitled to any indulgence. He has further submitted that the plea that the appellant is left with no remedy
after the refusal of enlargement of time for making award is not a ground for setting aside the impugned order
which is the result of exercise of proper direction.

He has next contended that the negligence on the part of the appellant is established on record. He has drawn
our attention to the delay caused in the arbitration proceedings because of the refusal of Mr. Kazim Hasan, the
nominee of the appellant, to proceed with the arbitration because of dispute between the appellant and his
nominee Arbitrator on the point of fee. He has taken us through the contents of application under section 9 of
the Arbitration Act, 1940, Annexure "B" to the memo of appeal (at this stage it would be appropriate to
observe that the learned counsel for the appellant has conceded during the course of arguments that reference
to section 9 of the Arbitration Act in Judicial Miscellaneous No.4 of 1996 is misplaced). It is stated in para. 22
of the application that on expiry of time for the second time, Judicial Miscellaneous 153 of 1988 was
submitted for enlargement of time for making of the award. The application was allowed vide order, dated
12‑2‑1990; whereby time was extended for two months with specific direction, that in case the arbitration
proceedings are not completed within the period of two months, no further. extension of time will be granted.
The entire extended period was consumed in sorting out the differences between appellant and Mr. Kazim
Hasan, the Arbitrator nominated by the appellant. Mr. H.A. Rhemani, learned counsel for the respondent has
submitted that in spite of clear observation that no further time shall be extended, the Judicial Miscellaneous
29 of 1990 was granted in the absence of respondent vide order, dated 14-2‑1991. Mr. Justice (Retd.) Abdul
Hafeez Memon was appointed Arbitrator in place of Mr. Kazim Hasan. The time was extended for a period of
4 months with further observations that fee payable to the Arbitrator shall be fixed by the Arbitrator Mr.
Justice (Retd.) Abdul Hafeez Memon himself. Mr. Rehmani submitted that appellant has not produced any
material on record to show that the appellant had at any time intimated to Mr. Justice (Retd.) Abdul Hafeez
Memon about his appointment as Arbitrator at the instance of appellant. He has further failed to produce any
material on record to show that the Arbitrator's fee was settled as directed by the Court. He has next pointed
out that the respondent specifically alleged in the affidavit of Muhammad Ahmed Afzal, the Personnel and
Industrial Relations Advisor to the respondent that Mr. Justice (Retd.) Abdul Hafeez Memon was appointed
Judge of Honourable Supreme Court of Pakistan in April, 1994 but the appellant did not take the requisite
steps to amend the proceedings until the said Judicial Miscellaneous 58 of 1991 was dismissed by this Court
vide order dated 23‑11‑1995. This fact has not been denied by the appellant and thus it stands established that
the appellant was not serious in conclusion of the arbitration proceedings and was merely adopting dilatory
tactics to cause harassment to the respondent. Mr. Rehmani has pointed out that this fact was alleged. in para.
12 of counter‑affidavit filed on behalf of the respondent in Judicial Miscellaneous 4 of 1996 ,and in rejoinder
filed by Rizwan Ahmed, the Managing Director of appellant, it was stated in para. 11 that, "the petitioner
several times requested the co‑Arbitrator Mr. Justice (Retd.) Abdul Hafeez Memon for appointing a date 'of
hearing in consultation with other co‑Arbitrator, Mr. Justice (Retd.) Noor‑ul‑Arfin but due to his
pre‑occupation, the time extended for making the award expired. Consequently, the petitioner filed Judicial
Miscellaneous 58 of 1991 for further enlargement of time but during the pendency of the petition, Mr: Justice
(Retd.) Abdul Hafeez Memon was elevated to the Bench and thus the Judicial Miscellaneous 58 of 1991
became infructuous and this Court by order, dated 23‑11‑1995 disposed of the said Judicial Miscellaneous 58

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of 1991. Mr. Rehmani submitted that in the rejoinder, no explanation has been given as to why no steps were
taken by the appellant for appointment of any Arbitrator in place of Mr. Justice (Retd.) Abdul Hafeez Memon
from April 1994 to 23‑11‑1995. Mere assertion that the appellant was active and vigilant, right from the day
one is not sufficient as the circumstances and admitted facts speak for themselves against the appellant.

Mr. H.A. Rehmani, learned counsel for the respondent has further submitted that respondent is a public
limited organization and the matter pertains to the contracts entered into in the years 1978 and 1979. After the
lapse of about two decades all the functionaries related with the contracts in question have either died or
retired. He has submitted that as a result of negligence on the part of the appellant, no evidence has been left
with the respondent after lapse of such a long period and, therefore, it would not be in the interest of justice to
extend the time for making of award, rather it would be an abuse of the process of law. In support of his
contention he has placed reliance on the following judgments:‑‑

(1) Gayer & Co., Karachi PLD 1964 Kar. 33(D.B.) and (2) Civil Aviation Authority, Karachi v. Wrist
Consultation (Pvt.) Ltd. 1998 SCMR 2393.

We have very carefully considered the contentions raised before us and have perused the entire material
available on record. After giving very anxious consideration to the entire material available on record and
contentions raised by the learned counsel for the parties, we are persuaded to agree with the submissions of
Mr. H.A. Rehmani, learned counsel for the respondent that the learned Single Judge has rightly refused to
extend the time for making award.

The question as to how and when the discretion for extension of time should be exercised came for
consideration before Lahore High Court in the case of J.W. Oliver v. Mian Dost Muhammad AIR 1935 Lah.
191. It was a case under Arbitration Act, 1899. Under section 12 of the said Act, the Court had discretion to
extend the time for filing award. The District Judge, Amritsar dismissed the application under section 12 of
Arbitration Act, 1899 for extension of time for filing the award. In the cited case, the matter was referred to
make the award within a period of three months. However, the Arbitrators did nothing for a period of about
one year and in the circumstances, the application for extension of time for 15 days was rejected. The
Division Bench of Lahore High Court, while deciding the civil revision application observed that the award
should have been delivered in May, 1928. The Arbitrator, however, did nothing in the matter and neither party
took any action till the following February when application for extension of time was submitted. It was
observed that petitioner was himself responsible for the delay and, therefore, the application was rightly
rejected. The learned Judges of Lahore High Court further laid down the following dicta:‑‑

"The Arbitration Act prescribes a procedure for the expeditious and speedy settlement of disputes by private
tribunals especially those arising in. commercial transactions, and the Legislature has in the schedule fixed a
period of three months for the delivery of awards in case where no time is fixed in the reference. The Court
has no doubt a discretion to extend time under section 12, but it will do so only if cogent reasons are
forthcoming. Obviously the discretion cannot be exercised in favour of a party who himself has been
negligent and as in the present case, has been guilty of dilatory tactics."

The question again came for consideration before a Division Bench of this Court in the case of Pakistan Gayer
& Co. PLD 1964 Kar. 3; in which the principle laid down in the case of J.W? Oliver (supra) was cited with
approval. In this case, the arbitration proceedings were kept pending from July, 1954 till August, 1957. In this
background, it was held by the learned Members of Division Bench of this Court that learned Single Judge
was perfectly justified in refusing to exercise his jurisdiction in favour of the appellant. The order of learned
Single Judge refusing to extend the time was upheld. The view held in the case of Pakistan v. Gayer & Co.

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PLD 1964 Kar. 3 was approved by the Honourable Supreme Court of Pakistan in the case of Civil` Aviation
Authority v. Wrist Consultation (Pvt.) 1998 SCMR 2393.

Applying the above principles to the facts of the present case, we find that the arbitration proceedings
commenced in the year 1984 and till to date no progress has been made whatsoever. It is abundantly clear that
the appellant was not diligent in pursuing the proceedings and has been lethargic and negligent: We have
already narrated the entire facts in detail from which the only conclusion which can be drawn is that the
appellant has been himself responsible for inordinate delay in completion of arbitration proceedings and
consequently, learned Single Judge has rightly refused to extend time to which no exception can be taken. The
discretion vested in the Court cannot be exercised in favour of a person who has adopted dilatory tactics and
we are persuaded to agree with the contention of Mr. H.A. Rehmani, learned counsel for the respondent that
with the lapse of time, all the persons concerned working with the respondent have either retired or died. With
the result that no evidence is left with the respondent. The enlargement of time would have amounted to give
a premium to a person on his own fault and delaying tactics. It is, therefore, held that the learned Single Judge
has rightly exercised the discretion looking to all the circumstances and record. The impugned order of
learned Single Judge is hereby upheld and the appeal stands dismissed accordingly.

S.A.K./C‑42/K ??????????

Appeal dismissed.

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