IN THE SUPREME COURT OF PAKISTAN
(APPELLATE JURISDICTION)
PRESENT:
MR. JUSTICE IJAZ UL AHSAN
MR. JUSTICE SAYYED MAZAHAR ALl AKBAR NAQVI
MR. JUSTICE JAMAL KHAN MANDOKHAIL
Civil Appeal No.3 15 of 2022
(On appeal against the judgment dated 27.04.2017
passed by the Peshawar High Court Peshawar in
RFA No. 328-P of 2016)
Shahin Shah
Versus
Appellant
The Government of Khyber Pakhtunkhwa 
Respondents
through Secretary Irrigation Department,
Peshawar and others.
For the Appellant(s): 
Qazi Jawad Ehsanullah, ASC.
Ch. Akhtar All, AOR.
For the Respondent(s): 
Mian Shafaqat Jan, Addl. AG, KP.
Nemo (for respdt.#6)
Date of Hearing: 
20.06.2022.
JUDGMENT
IJAZ UL AUSAN, J: - The Appellants through the
instant appeal have challenged a judgment of the Peshawar
High Court, Peshawar dated 27.04.20 17 passed in Regular
First Appeal No. 128-P of 2016 ("Impugned Judgment").
Through their Regular First Appeal ("RFA"), the Respondents
had challenged the judgment and decree of the Trial Court
dated 19.03.20 16 whereby, the Arbitration Award given in
favour of the Appellants was made a Rule of Court. The
learned High Court set aside the judgment and decree dated
9,03.2016 and remanded the matter back to the Trial Court.
2. The case at hand has a complicated history,
hence, for the sake of clarity, the necessary facts of the case
Civil Appeal No.315 of 2022. 
2
are divided into two parts i.e., the background of the case
containing facts from the award of the tender to the first
decision of the Trial Court and the history of litigation
comprising of the remand and post remand proceedings and
their outcome.
Background of the Case: -
On 01.03.2001, a tender submitted by the
Appellant for a contract for remodelling of the Surface
Drainage System in Tanda Dam, Kohat, was approved.
Resultantly, an Agreement dated 25.03.2001 between the
Appellant and the Respondents ("Agreement") was signed. In
the Agreement, Clause 21 provided that all disputes between
the parties would be settled by way of arbitration. The
Respondents (as alleged by the Appellants) did not hand over
the site in time, resulting in a dispute arising between the
parties. Consequently, a suit for recovery of damages was
filed by the Appellant on 16.01.2004. The suit was
accompanied by an application filed by the Appellant under
Section 8 of the Arbitration Act, 1940, seeking a direction by
the Trial Court to refer the matter to arbitration as provided
in clause 21 of the contract between the parties.
Subsequently, the Respondents also filed an application on
06.03.2004 for the grant of a stay in the suit to resolve the
dispute through arbitration.
The Appellant and the Respondents agreed that
the matter should be referred to Arbitration under the Rules
of Reconciliation and Arbitration of the International
r r
Civil Appeal No.315 of 2022. 
3
Chambers of Commerce. The applications to stay the suit
were dismissed and on 24.07.2004. However, the Trial Court
passed an order referring the matter to arbitration. The
Appellant and the Respondents submitted their nomination of
arbitrators on 17.02.2005.
The arbitration proceedings were conducted, both
parties freely and voluntarily participated in the proceedings.
The arbitrators appeared before the Trial Court to seek
extension of time to complete the proceedings and render an
award. Two-months time was granted to the arbitrators to file
the Arbitration Award ("Award"). The matter was then
adjourned to 14.02.2005. The arbitrators once again
appeared before the Trial Court on 14.02.2005 and sought a
further extension of two months, which was granted by the
Trial Court and the case was fixed for 15.07.2005. On
15.07.2005, the arbitrators sought another extension to file
the Award and were again granted two further months to ifie
the Award.
Ultimately, the Award was filed in Court on
15.09.2005. The case was adjourned to 15.10.2005. The
Appellant filed objections to the Award on 15.10.2005. The
Respondents filed their objections to the Award on
05.0 1.2006. The Respondent's objections to the Award were
replied to by the Appellants on 24.01.2006 as inter alia,
barred by time. The Respondents, on 26.07.2006, submitted
an application for condonation of delay in support of the
Civil Appeal No.315 of 2022. 
4
.4
objections filed by them which were filed four months beyond
the period of limitation.
Finally, the Award was made Rule of Court on
27.11.2006.
History of Litigation: -
The Respondents filed RFA No. 94/2007 against
the judgment and decree of the Trial Court dated 27.11.2006
whereby the award was made a rule of the Court. The RFA
was allowed. The matter was remanded to the Trial Court vide
judgment of the High Court dated 24.06.2009. However, in
post remand proceedings, the Award was once again made
Rule of Court vide judgment and decree dated 12.09.2009.
The Respondents filed another RFA No. 225/2009
on 17.11.2009. This RFA was also allowed on 13.10.15.
Resultantly, the matter was again remanded to the Trial
Court with directions to record statements of the Arbitrators.
The order of the trial Court regarding dismissal of objections
petition filed by the Respondents as barred by time was not
interfered with. Having not been challenged before any higher
forum by the Respondents, it attained finality. On
08.12.2015, the Respondents filed an application before the
trial Court for filing fresh objections against the award. The
said application was dismissed on 07.01.2016. Such
dismissal was not challenged before any higher forum.
Thereafter, the statements of the two Arbitrators
were recorded on 01.02.2016 and they were cross-examined
V
Civil Appeal No.315 of 2022. 
5
by the Respondents. Finally, the Award was once again made
Rule of Court vide judgment and decree dated 19.03.2016.
Aggrieved, the Respondents filed an RFA against the
judgment dated 19.03.2016. Vide the Impugned Judgment,
the Award was set aside, and the matter was once again
remanded to the Trial Court to commence the proceedings
from where the Arbitrators were appointed.
Aggrieved by the decision of the learned High
Court, the Appellants have approached this Court.
3.
Leave to appeal was granted by this Court vide
order dated 09.02.2022 in the following terms: -
"After hearing the learned Counsel for the Petitioner
and the learned Counsel for the Respondents, who has
appeared pursuant to our notice to the Respondents, leave to
appeal is granted to examine, whether the petitioner was
non-suited on the ground that on account of delay in passing
the award, the arbitrators committed misconduct and
whether the learned High Court misread the evidence and
the record to come to the conclusion that the arbitrators had
committed misconduct, despite the fact that in the three
rounds of litigation, the award had repeatedly been upheld
by the Civil Court. Further, whether the High Court has
correctly interpreted the law of limitation..."
4.
The learned ASC for the Appellant submits that
the High Court could not have exercised jurisdiction as a
Court of Appeal over a judgment making an Arbitration Award
a Rule of Court. Arbitration awards can be interfered with on
limited grounds provided in the law. He further submits that
when an Award has been rendered by an Arbitrator(s) in
accordance with the law, the High Court as per Section 17 of
the Arbitration Act, 1940 ("Act, 1940") cannot set aside the
judgment and decree making an Award, Rule of Court, except
where the Award rendered is against the law. Learned ASC for
the Appellants further submits that the Objections to the
Civil Appeal No.315 of 2022. 
6
Award filed by the Respondents were barred by time which
fact was not interfered with by the High Court in the
Impugned Judgment. As such, the High Court could not have
remanded the case to the trial Court for the third time. The
learned ASC has further argued that, after the case was
remanded for the second time, the Respondents filed
objections which were dismissed vide order dated 07.01.16
and, the said order was never challenged or questioned by the
Respondents, therefore, the order dated 07.01.2016 had
attained finality and could not be reopened by the High
Court. The learned ASC for the Appellants further submits
that the filing of the Award beyond the period of limitation of
04 months was not fatal and, was within the confines of
Section 28 of the Act, 1940 which provides that an extension
of time for the submission of an Arbitration Award may be
sought from, the Court. The learned ABC further argued that
notice as per Section 14 of the Act, 1940 was served by the
arbitrators and, the High Court misread the record in holding
that no such notice was served and, even if no such notice
was served, substantial compliance of Section 14 of the Act,
1940 was done since the Award was filed in Court in the
presence of the parties and their counsel. He has submitted
that the statements of the two Arbitrators were recorded and
the Award was tendered in evidence on which no objection
was raised. Learned ASC has further argued that Section 34
of the Act, 1940 was not attracted in the present case arid,
that if objections in this regard were not raised before the trial
Civil Appeal No.315 of 2022. 
7
Court, such objections could not be raised before the High
Court.
5. The learned Additional Advocate General, Khyber
Palchtunkhwa ("AAG KP") argued that the entire proceedings
before the Trial Court were illegal since the Trial Court failed
to observe the procedure provided in Section 34 of the Act,
1940 before sending the reference to arbitrators. Learned AAG
KP, while accepting that the objections filed by the
Respondents were barred by time, has further argued that the
Trial Court was bound to examine the Award notwithstanding
the delay in filing the objections. Learned AAG KP further
argued that since the Act, 1940 was not followed in letter and
spirit, therefore, the High Court correctly remanded the case
to the Trial Court to be examined afresh, in the interest of
justice. The learned AAG KP has further argued that the
Arbitrators misconducted themselves by not filing the Award
within the prescribed time limit of 04 months, which itself
was sufficient to render the Award invalid.
6. We have heard the learned Counsel for the parties
and perused the record. The questions which require
adjudication by this Court are as follows: -
(I) 
Was the order of the Trial Court making the
Arbitration Award, Rule of Court, appealable?
(ii) 
Did the Arbitrators misconducted themselves by
not filing the Arbitration Award within time?
Whether notice under Section 14 of the Arbitration
Act, 1940 was serued by the Arbitrators Were the
Arbitrators required to file the Arbitration Award in
Court within 90 days as per Article 178 of the
Limitation Act, 1908?
Civil Appeal No.315 of 2022. 
8
(iv)
Was the fact that the Respondents did not file their
objections to the Arbitration Award within time,
fatal to the Respondent's case?
(v)
Were the proceedings before the Trial Court illegal
due to the absence of a formal order under Section
34 of the Act, 1940?
WAS THE ORDER OF THE TRIAL COURT MAKING THE
ARBITRATION AWARD, RULE OF COURT, APPEALABLE?
7. Section 39 of the Act, 1940 provides five instances
in which an aggrieved party may file an appeal against an
order passed under the Act, 1940. Section 39 of the Act, 1940
is reproduced below: -
"39 Appealable orders: (1) An appeal shall lie from the
following orders passed under this Act (and from no others)
to the Court authorised by law to hear appeals from original
decrees of the Court passing the order: -
An order-
(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;
(u)staying or refusing to stay legal proceedings where there is
an arbitration agreement;
(vQsetting aside or refusing to set aside an award:
Provided that the pro visions of this section shall not
apply to any order passed by a Small Cause Court.
(2) No second appeal shall lie from an order passed in appeal
under this section, but nothing in this section shall affect to
take away any right to appeal to the Supreme Court."
The aforenoted provision of the Act, 1940 restricts
and limits the instances in which an appeal may be filed. This
is evident from the words "and from no others" provided in
Section 39 ibid which essentially means that except for an
appeal that falls in the limited parameters provided in the
aforenoted provision, no appeal would be competent. The use
of specific words by the legislature is an expression of the
legislative intent and, Courts cannot interfere with the same
unless a literal interpretation of the law would not correct the
7
Givil Appeal No.315 of 2022. 
9
mischief sought to be corrected. As evident from the grounds
agitated by the Respondents in RFA No. 94/2007, the
Respondents inter a/ia, out rightly denied the existence of an
Arbitration Agreement; denied the existence of an arbitrable
dispute between the parties, and essentially, prayed for the
Arbitration Award to be set aside. This Court's discussion,
therefore, will be confined in the present question to Section
39 (vi) which covers the situation where an order is passed
that either sets aside the Arbitration Award or refuses to set
aside an Arbitration Award.
8. The Respondents are aggrieved of a "composite
order" dated 19.03.2016, passed by the Trial Court, whereby
the objections filed by the Respondents were dismissed and
the Arbitration Award was made Rule of Court. The word
"composite" means that the order is comprised of two distinct
elements or parts. An example of a composite order can be
seen in the case titled Rashida Begum v. Ch. Muhammad
Anwar and Others (PL.D 2003 Lahore 522) in which, the
objections raised by the Appellant (before the High Court then)
were dismissed and, the Court made the award rule of Court,
followed by a decree dated 05.03.1985. The said order is a
"composite order" because it comprises two distinct parts i.e.,
the dismissal of the objection petition filed by one party and,
the making of an arbitration award, Rule of Court. Another
example of a composite order can be seen in the case of
Muhammad Alam Khan v. Jewan Khan (PLD 1985 Lahore
181) in which, the Court held as follows:-
Civil Appeal No.315 of 2022. 
lii
"It would be seen that under clause (b) the relief claimed is
undervalued. Therefore, the Court after determination of the
real value should direct the plaintiff to correct the valuation
in the relevant para of the plaint within the specified time. It
means that order under clause (b) is to be followed by order
under clause (c) to make up the deficiency in the court-fee. It
may be a composite order. Conversely speaking when the
plaintiff is directed under clause (b) to correct the valuation
of the suit for purposes of court-fee and jurisdiction, then it
becomes his duty not only to amend the plaint but also to
pay the court-fee accordingly. This means making up of the
deficiency in the court-fee in cases covered by clause (b) is
automatic. To mu mind, the proper order would be a
composite order i.e. the plaintiff should be directed to amend
the plaint and also to fix the court-fee accordingl y and the
failure shall entail the rejection of the plaint. But in a case
under clause (c) the relief claimed is valued properly but
plaint had been written upon a paper insufficiently stamped,
therefore, the Court would simply direct the plaintiff to
supply the requisite stamp paper within the time to be fixed
by the Court. This way there is a clear distinction between
the two provisions. The same was not kept in mind by the
Thai Court while invoking clause (b) of Order VII, Rule 11,
C.P.C. in this case. "(Underlining is ours)
In the present case, the Trial Court's order has
two distinct parts as well. The Trial Court has not only
dismissed the objections of the Respondents as being barred
by time by four months but has also made the Arbitration
Award, Rule of Court.
9. The learned High Court has held that even where
an application to set aside an Award is rejected by the Trial
Court under Section 17 of the Act, 1940, nonetheless, the
right of an aggrieved party under Section 39 of the Act, 1940
cannot be circumscribed since, in a composite order, each
part of the order may be taken as an independent and
separate order and can be challenged under Sections 39 and
17 separately. The learned High Court has further held that a
challenge under Section 17 "shall only be maintainable if
conditions laid down in Section 17 of the Act were met". It,
therefore, becomes necessary to examine Section 17 of the
Act, 1940, which is reproduced as under: -
Civil Appeal No.315 of 2022. 
11
"17. Judgment in terms of award. Where the Court sees
no cause to remit the award or any of the matters referred to
arbitration for reconsideration or to set aside the award, the
Court shall, after the time for tucking an application to set
aside the award has expired, or such application having
been made) after refusing it, proceed to pronounce judgment
according to the award, and upon the judgment so
pronounced a decree shall follow, and no appeal shall lie
from such decree except on the ground that it is in excess of
or not otherwise in accordance with, the award."
Section 17 ibid provides that an appeal under the
said provision may only be filed against a decree on the
grounds that (a) the decree is in excess of the award and (b) it
is otherwise not in accordance with the award.
10. The difference between Section 39 and Section 17
is that Section 39 provides more grounds under which an
order passed under the Act, 1940 may be challenged, than
the grounds of challenge under Section 17. It is evident from
the grounds taken by the Respondents in RFA 94/2007 that
they did not dispute the decree of the Trial Court as being
either in excess of the Arbitration Award or otherwise, against
the Arbitration Award. The learned High Court conceded that,
for a challenge to be maintainable under Section 17, the
conditions prescribed therein must be met. However, it
escaped the learned High Court's notice that the Respondent
had not challenged the decree of the Trial Court on the
grounds mentioned in Section 17 (supra) inasmuch as it was
not the stance of the Respondents that the judgment and
decree of the Trial Court was either in excess of the
Arbitration Award or otherwise against the Arbitration Award.
Since the Respondents had not taken the stance that the
decree of the Trial Court was in excess of or against the
Arbitration Award; they effectively admitted that the decree of
Civil Appeal No.315 of 2022. 
12
the Trial Court was correct to the extent that the decree was
in accordance with the Award. As such, the findings of the
learned High Court in this respect are in our opinion
erroneous and unsustainable. If the High Court found that
the order of the Trial Court had two distinct parts, then, it
had to examine whether the Respondents had challenged
both parts of the order independently by raising independent
grounds in terms of Section 17 and Section 39. The High
Court could not have suo motu implied that such grounds had
been taken. The High Court was required to proceed on the
basis of record which clearly showed that the Respondents
had nowhere taken the stance that the decree of the Trial
Court was in excess of or against the Arbitration Award. As
such, the Nigh Court could not have assumed jurisdiction in
the matter, especially when the Respondents did not question
the decree on the grounds mentioned in Section 17 of the Act,
1940. Even otherwise, the failure of the Respondents to
agitate the grounds mentioned in Section 17 before the Trial
Court barred them from raising any such grounds before the
High Court since the Respondent was appealing against the
judgment of the Trial Court. They were to show that the
judgment of the trial Court was hit by any of the grounds
available under Section 17 ibid which they failed to do. The
High Court, in our opinion, erred in law and exceeded its
jurisdiction in proceeding beyond the grounds agitated by the
Respondent in its appeal.
DID THE ARBITRATORS MISCONDUCTED THEMSELVES
BY NOT FILING THE ARBITRATION AWARD WITHIN
TIME?
Civil Appal No.315 of 2022. 
13
11. Section 39(vi) of the Act, 1940 provides that an
order shall be appealable which either sets aside or does not
set aside an Arbitration Award. The grounds under which an
Arbitration Award may be set aside are enumerated in Section
30 of the Act, 1940 which reads as follows: -
1130. Grounds for setting aside award. An award shall
not be set aside except on one or more of the following
grounds, namely: -
(a) that an arbitrator or umpire has misconducted himself or
the proceedings;
(b)that an award has been made after the issue of an order
by the Court superseding the arbitration or after arbitration
proceedings have become invalid under section 35;
(c) that an award has been improperly procured or is
otherwise invalid'
It has been argued by the Respondents that the
Arbitrators misconducted themselves within the meaning of
Section 30(a) by not filing the Arbitration Award within time.
It is further alleged in the grounds of the RFA that the
Arbitrators were close friends of the Appellant, they did not
provide a proper hearing to the Respondents and they did not
properly scrutinize the record before rendering the Award.
The learned High Court has, however, only given a finding on
the fact that the Arbitrators misconducted themselves only to
the extent of not filing the Arbitration Award within time. The
heart of the Respondent's argument, therefore, is, that the
alleged misconduct of not filing the Arbitration Award within
time was so glaring that, if it is overlooked, it would lead to a
miscarriage of justice. We, therefore, deem it appropriate to
examine the term "misconduct" on part of the Arbitrator. The
term misconduct was interpreted in the judgment titled
Gernis International (Pvt.) Ltd v. Aeroflot Russian
ciiñl Appeal No315 of 2022. 
14
International Airlines 12018 SCMR 662 Supreme _Q0U41
wherein, this Court held as follows:
"(27) Misconduct is of two types: legal misconduct' and
moral misconduct. Legal misconduct means misconduct in
the judicial sense of the word, for example, some honest,
though erroneous, breach of duty causing miscarriage of
justice; failure to perform the essential duties which are cast
on an arbitrator; and any irregularity of action which is not
consistent with general principles of equity and good
conscience. Regarding moral misconduct; it is essential that
there must be lack of good faith, and the arbitrator must be
shown to he neither disinterested nor impartial, and proved
to have acted without scrupulous regard for the ends of
justice."
The term "misconduct" was further interpreted in
the case of Pakistan Steel Mills Corporation. Karachi v.
Messrs Mustafa Sons (Put.) Ltd. Karachi (PLD 2003
Supreme Court 301) in which, the Court held as follows: -
"The word 'misconduct" with reference to arbitration
proceedings, is interpreted in the sense in which it is used in
English Law and it is not akin to fraud, but it means neglect
of duties and responsibilities of the Arbitrator." (Underlining
is ours)
This Court in the case of GernIs International
(supra) further held that the misconduct alleged by the
parties must be prima fade apparent on the surface of the
Arbitration Award and, that the Court cannot sit as a Court of
Appeal on the award given by the Arbitrator(s) and substitute
its view for the one taken by the Arbitrator(s). The aforenoted
view of this Court finds support from the case of A.
Qutubuddin Khan v. CHEC Mill Wala Dredging Co. Put.
Ltd. 12014 SCMR 1268) As such, the Court cannot
reappraise the evidence relied upon by the Arbitrator(s) and
engage in a roving inquiry to discover infirmities in the
Arbitration Award. The illegality or infirmity in the Arbitration
Award must be apparent on the lace of the Award. Reliance in
this respect is placed on Mian Corporation through
IT
0ft4L Appeal No.315 of 2022. 
15
Managing Partner v. Messrs Lever Brothers of Pakistan
Ltd (PLD 2006 Supreme Court 169) and National
Construction Co. a WAPDA (1987 PLD 461 Supreme
Court). The Court is required to examine the Arbitration
Award filed in Court to see whether there was an infirmity
within the Award itself. We have gone through the judgment
of the Trial Court dated 19.03.2016. The judgment of the Trial
Court, making the Award Rule of Court is comprehensive and
touches upon all aspects of the case. The learned Trial Court
in paragraph 12 of its judgment has held as follows: -
'It is a hard fact that Arbitrator being final judge on question
of law and fact, his decision is entitled to utmost respect and
weight unless misconduct was alleged and proved against
him to the satisfaction of the court. Although the objection on
Award was filed beyond the period of limitation, but the
objection so filed if gone through, no allegation of misconduct
is either alleged or proved. "(Underlining is Ours)
It is clear and obvious to us that the Trial Court
not only considered the Award but also examined the
objections raised by the Respondents. The Trial Court in
paragraph 13 of its judgment has minutely examined the
record and concluded that a total of fourteen meetings were
held by the Arbitrators in which the controversy was sought
to be resolved. The Trial Court, therefore, judicially
scrutinized the record by applying its mind to the facts and
circumstances of the case. As such, the findings of the High
Court that the Trial Court did not act properly, are repelled
and held to be factually and legally unsustainable.
12. The learned Counsel for the Appellant has taken
us to the orders of the Trial Court, whereby, the Arbitrators
CiuiIAppeaI No.315 of 2022. 
16
were given extensions in time to file the Arbitration Award
vide orders dated 14.03.2005 and 15.07.2005. It is apparent
from the orders of the Trial Court that the parties i.e.,
Appellant and Respondents were present at the time when the
Arbitrators sought extensions of time to file the Award. There
is nothing on the record to show that the Respondent's
Counsel objected to any extension in filing the Award. As
such, the plea that the Arbitrators committed misconduct and
should have filed the Award within four months is totally
misconceived. If the Respondents were aggrieved by the Trial
Court's orders dated 14.03.2005 and 15.07.2005, they ought
to have challenged the same. In absence of any appeal against
the aforenoted orders, the said orders attained finality.
13. The record indicates and it is an admitted position
that the Respondents participated in the arbitration
proceedings despite extensions without raising an objection
whatsoever. It is categorically mentioned in the minutes of the
arbitration proceedings that the Respondents "expressed their
confidence" in the nominated Arbitrators i.e., Mr Imdad
Hussain and Mr Inamullah Khan. As such, the argument that
the Arbitrators were "close friends" of the Appellant is
baseless and unsubstantiated. As such, when the
Respondents were present before the Trial Court and did not
raise the objections to extension of time and voluntarily
participated in the proceedings without raising any objection
at any stage, they could not be allowed to change their stance
at the appellate stage having practically waved their right to
object to extension of time. If they were aggrieved of the
Civil Appeal No.315 of 2022. 
17
conduct of the Arbitrators, they could have filed an
application under Section 11 of the Act, 1940 which
empowers the Court to remove an arbitrator if the conditions
in Section 11 are fulfilled. No such application is available on
the record.
14. It is pertinent to mention that the time limit of
filing an Arbitration Award within four months is not
absolute. Section 28 of the Act, 1940 clearly provides that
said time limit can be enlarged. As such, the non-filing of an
Award within four months does not ipso facto make the
Award invalid. For ready reference, Section 28 of the Act,
1940 is reproduced as under: -
"28. Power to Court only to enlarge time for making
award. (1) The Court may, if it thinks fit, whether the time
for making the award has expired or not and whether the
award has been made or not, enlarge from time to time the
time for making the award.
(2) Any provisions in an arbitration agreement whereby the
arbitrators or umpire may, except with the consent of all the
parties to the agreement, enlarge the time for making the
award, shall be void and of no effect."
We have already found that the time limit
mentioned in Section 28 ibid was enlarged by orders of the
Trial Court in presence of the parties and even otherwise the
Respondents by willingly and voluntarily participating in the
proceedings held during extended periods had waved their
right to object, the fact that the Award was filed after expired
the four-month period was not fatal and the finding of the
High Court with all due respect has been found by us to be
legally and factually erroneous and unsustainable. Reliance
in this respect is placed on the case of WAPDA v. Khanzada
Cluil Appeal No 315 of 2022. 
IS
Muhammad Abdul Hague Khan Ehattak & Co (PLD 1990
SC 359)
WHETHER NOTICE UNDER SECTION 14 OF THE
ARBITRATION ACT, 1940 WAS SERVED BY THE
ARBITRATORS & WERE THE ARBITRATORS REQUIRED
TO FILE THE ARBITRATION AWARD IN COURT WITHIN
90 DAYS AS PER ARTICLE 178 OF THE LIMITATION ACT,
1908?
The record indicates that the Arbitrators had duly
served notice of signing and making of the Award to the
Respondents in substantial compliance of the provisions of
Section 14 of the Arbitration Act, 1940. There is clear
misreading/non-reading of the record on the part of the High
Court in holding that such notice was not served by the
Arbitrators. Notice in question which bears the date of signing
by the Arbitrators on 14.09.2005 is available on the record.
Such notice was filed in Court with the Award as is apparent
from the notice itself which bears the signatures of the Trial
Court on the date when the Award was filed in Court on
1509.2005. Even otherwise, if an Award is filed by the
Arbitrator in Court in the presence of the parties or their
authorized agents then the requirements of Section 14 qua
serving of notice of signing and making of the Award are
substantially met. This is on the basis of the principle of the
issuance of notice of making and signing of the Award under
Section 14 is connected with the start of period of limitation
as prescribed in Article 158 of the First Schedule of the
Limitation Act, 1908 to file objections on the Award. The
rationale is that the parties must know that the Award has
been filed in Court and if the Award is filed in Court in the
presence of parties or their authorized representatives then in
Cvil Appeal No315 of 2022. 
19
that case strict compliance of serving of notice is not
mandatory. Reference in this regard may be made to Tribal
Friends Co. Province of Balochistan 12002 SCMR 1903),
Pakistan through General Manager Pakistan Railways (PLD
1990 Sc 800), Ashfap Ali Oureshi v. Municipal Corporation
Multan (PLD 1985 Sc 597) and Sheikh Mehboob Alam v.
Sheikh Mumtaz Ahmed (PLD 1956 (WP) Lahore 276).
15. As far as the question of limitation is concerned,
Article 178 of the Limitation Act, 1908 provides a 90-day
limitation period from "the date of service of notice of the
making of the award" to file an application for the Arbitration
Award to be made Rule of Court. This provision applies to
situations where a party to arbitration receives notice from
the Arbitrator(s) to the effect that an Arbitration Award has
been made. The parties then either request the Arbitrator(s) to
file the Arbitration Award in Court or, file an application
before the Court to direct the Arbitrator(s) to file the
Arbitration Award in Court so that it may be made a Rule of
Court. As such, Article 178 of the Limitation Act, 1908
applies to parties to an arbitration agreement who have been
given notice of making of the award and not to the
Arbitrator(s). The Arbitrator(s) must be requested by the
parties to file the Arbitration Award or must be given a
direction by the Court to do so. The said view is further
provided in Section 14 of the Act, 1940 which reads as
under:-
j4• Award to be signed and filed. (1) When the arbitrators or
umpire have made their award, thew shall si gn it and shall give
notice in writing to the parties of the making and signing thereof
Civil Appeai No.315 of 2022. 
20
and of the amount of fees and charges payable in respect of the
arbitration and award.
(2) The arbitrators or umpire shall, at the request of any partg to
the arbitration agreement or any person claiming under such paTti,
or if so directed bit Court and upon payment of the fees and
charges due in respect of the arbitration and award and of the
costs and charges of filing the award, cause the award or signed
copy of it, together with any depositions and documents which mall
have been taken and proved before them, to be filed in Court, and
the Court shall thereupon give notice to the parties of the filing of
the award.
(3) Where the arbitrators or umpire state a special case under
clause (b) of section 13, the Court, after giving notice to the parties
and hearing them, shall pronounce its opinion thereon and such
opinion shall be added to, and shall form part of the award?
(Underlining is ours)
This view finds reliance from the case of Inagat
IJllah Khan v. Obaidullah Khan and Others 11999 SCMR
2 702) in which, this Court held as follows: -
X6 Moreover, in view of the special Article 178 of the Limitation Act
which governs an application for filing in Court of an award to be
made rule of the Court under the Arbitration Act the question of
applying the residuary Article 181 of the Limitation Act would not
arise. In Article 178 the period is 90 days from the date of service
of notice of the making of the award as rule of the Court and in the
circumstances of this case the said Article would apply. The
judgments referred to by the learned counsel in his support are
distinguishable as PLD 1972 SC 123 deals with a case under
section 20 of the Arbitration Act, whereas present is the case
covered by section 14 of the Act and both the sections regulate
entirely distinct situations. The judgment reported as AIR 1941
Peshawar 3 appears to have dealt with the original Article 178
which then applied only to the application under the Civil
Procedure Code and not to the amended Article 178 which
specially covers section 14 of the Arbitration Act. Even otherwise,
this point could lose significance and nothing would turn on it
because in the latter part of this judgment we are going to hold that
the arbitrators bu themselves were not com petent to file the award
in Court as such filing of an award was not envisaged under
section 14 of the Act because the arbitrators had neither been
requested by any party to the arbitration agreement to file the
award in Court nor had been so directed bu the Court.'
(Underlining is Ours)
17. It has been argued by the learned Counsel for the
Respondents that the Arbitrators did not serve a notice on the
Respondents under Section 14 of the Act, 1940. The learned
High Court has held that there is nothing on the record to the
effect that the said notice was served before the Arbitration
Award was signed. We are unable to agree with the High
Court. It is pertinent to mention that the parties were present
before the Trial Court when the Arbitration Award was filed in
Cft4I Appeal No.315 of 2022. 
21
Court, as such, they had knowledge of the proceedings and
had notice of the same. Substantial compliance of Section 14
of the Act, 1940 was made. Since the parties were present in
Court when the Arbitration Award was filed, issuance of
formal notice under Section 14 of the Act, 1940 was a mere
technicality which could not vitiate the proceedings. The
purpose of a notice is to inter alia make the parties aware of
the proceedings before a Court so that they may participate
or, as in the present case, may file objections, if any, within
the prescribed time provided by law.
18. It is a settled principle of the law that the law
favours the vigilant and not the indolent. If the Respondents
were present before the Trial Court, they cannot object on the
ground that formal notice to them was not issued. Reliance in
this respect is placed on Ash fag All Oureshi v. Municipal
Corporation, Multan and another (1984 SCMR 597) in
which the Court held as follows: -
"9. Apparently, the prevalent view is that as the provision of
the law is meant to enable the parties to know that the
award has been filed in Court so that they may file their
objections, if any, within the time prescribed, a - formal
would be a mere technicality. Even otherwise, an objection
on this score had neither been taken before the Trial Court
nor in the memorandum of appeal before the High Court and
was, therefore, only an afterthought not entitled to serious
consideration." (Underlining is ours)
The Respondents have argued that the Court
should have issued a formal notice in terms of Section 14 of
the Act, 1940. We are unable to agree with this argument. In
Civil Appeal No.315 of 2022. 
22
ordinary circumstances, a Court of law is required to issue
notice to the parties so that they may be able to participate in
the proceedings. However, if the parties were present in Court
and were aware that the award had been signed and filed. If
at all a formal notice was not issued it was inconsequential
and would in any event have been an exercise in futility. In
such circumstances, the doctrine of substantial compliance
would apply which provides that the procedural fault in
complying strictly with a provision of the law is so minor that
it does not have a bearing on the essence of the dispute and
the object sought to be achieved. The applicability of the
doctrine of substantial compliance depends on the facts and
circumstances of a dispute. It is for the Court to determine
whether the object, purpose, and intent of a statutory
prerequisite have been fulfilled and, formal compliance would
be unimportant. The question of substantial compliance arose
in the case of The State through Regional Director ANt v.
Imam Bakhsh (2018 SCM]? 2039) wherein, this Court held
as follows: -
"To distinguish where the directions of the legislature are
imperative and where they are directory, the real question is
whether a thing has been ordered by the legislature to be
done and what is the consequence, if it is not done. Some
rules are vital and go to the root of the matter) they cannot be
broken; others are only directory and a breach of them can
be overlooked provided there is substantial compliance. The
duty of the court is to try to unravel the real intention of the
legislature. This exercise entails carefully attending to the
scheme of the Act and then highlighting the provisions that
actually embody the real purpose and object of the Act. A
provision in a statute is mandatory if the omission to follow it
renders the proceedings to which it relates illegal and void,
while a provision is directory if its observance is not
necessary to the validity of the proceedings. Thus, some
parts of a statute may be mandatory whilst others may be
directory. It can even be the case that a certain portion of a
provision, obligating something to be done, is mandatory in
nature whilst another part of the same provision, is directory,
owing to the guiding legislative intent behind it. Even parts of
CÜ4I Appeal No.315 of 2022 
23
a single provision or rule may be mandatory or directory. "In
each case one must look to the subject matter and consider
the importance of the provision disregarded and the relation
of that provision to the general object intended to be
secured. Crawford opined that "as a general rule, fthose
provisions that] relate to the essence of the thing to be
performed or to matters of substance, are mandatory, and
those which do not relate to the essence and whose
compliance is merely of convenience rather than of
substance, are directory.' In another context, whether a
statute or rule be termed mandatory or directory would
depend upon larger public interest, nicely balanced with the
precious right of the common man. According to Maxwell,
"Where the prescription of statute relates to the performance
of a public duty and where the invalidation of acts done in
neglect of them would work serious general inconvenience or
injustice to persons who have no control over those entrusted
with the duty without promoting the essential aims of the
legislature, such prescriptions seem to be generally
understood as mere instructions for the guidance and
government of those on whom the duty is imposed or in other
words as directory only. The neglect of them may be penal
indeed, but it does not affect the validity of the act done in
disregard of them. Our Court has held while determining the
status of a mandatory or directory provision that 'perhaps
the cleverest indicator is the object and purpose of the statute
and the provision in question.' And to see the 'legislative
intent as revealed by the examination of the whole Act."
19. The legislative intent of Section 14 of the Act, 1940
can be ascertained from a reading of the provision which is
that parties should be aware of the filing of an Award before
the Court through their participation in the proceedings. This
is because the parties either request the arbitrator to file an
Award in Court or, seek a direction from the Court in this
respect to be given to an arbitrator. In the present
controversy, since the parties were aware of the date when
the Award was going to be filed and were present on such
date, strict compliance with Section 14 was not required and,
the argument of the Counsel for the Respondents in this
respect is misconceived. The High Court of Peshawar
examined a similar situation in Labab Gut a Badshah Gui
(PLD 1952 Peshawar 23) wherein, it was held as follows:-
"I do not think the failure by the arbitrators to give a notice
under section 14 of the Act i5 such an omission which would
invalidate the award. It should be noticed that an award
Civil Appeal No.315 of 2022. 
24
cannot be set aside except on one or more of the grounds
given in section 30 of the Act. They are, (a) that an arbitrator
or umpire has mis-conducted himself or the proceedings, (/4
that an award has been made after the issue of an order by
the Court superseding the arbitration or after arbitration
proceedings have become invalid under section 35, and (c)
that an award has been improperly procured or is otherwise
invalid. The omission to give notice cannot be covered by (a)
or (/4, and this is even conceded by the learned counsel for
the appellant. He, however, wishes to bring it under
otherwise invalid" mentioned in (c). By no stretch of
imagination can it be said that the omission to give the notice
can invalidate the award, and I consequently hold that it is
not covered by "otherwise invalid' too. In any case, I do not
think that it is the intention of the law that notice in order to
be valid should be given by all the arbitrators. If a notice is
given by one, arbitrator only, it shall be deemed to have been
given by all, unless the contrary is proved, and it will thus be
a perfectly good notice."
20.
The Arbitrators were summoned before the Trial
Court and their statements were recorded, who had tendered
the Award in evidence as Ex.CW. 1 / 1 to 1/4. The Respondents
neither raised any objection to the filing of the Award nor was
the question of limitation raised. In any event there was, in
our opinion, no question of operation of law of limitation
involved in the facts and circumstances of this case.
WAS THE FACT THAT THE RESPONDENTS DID NOT FILE
THEIR OBJECTIONS TO THE ARBITRATION AWARD
WITHIN TIME, FATAL TO THE RESPONDENT'S CASE?
21.
The learned High Court has held that even though
the Respondent's objections were filed beyond the prescribed
period of limitation of 30 days, nonetheless, the Trial Court
was required to examine the Award to do complete justice
and, by not doing so, the Trial Court committed illegality. It is
manifestly clear from the judgment of the Trial Court that it
did not merely dismiss the objections of the Respondents as
barred by time without examining the Award. The Trial
Court's judgment in paragraph 10 specifically notes that the
Respondents were given a chance to cross-examine the
Cvil Appeal No.315 of 2022 
25
Arbitrators who appeared as CW-01 and CW-02. The Trial
Court has further held that the Arbitrators remained firm in
their viewpoint. The Trial Court at paragraph 12 categorically
stated as follows:
although the Award was filed beyond the period of
limitation but the objection so filed if gone tbram-gtb no
allegation 
of misconduct 
is 
either alleged 
or
proved. "(Underlining is Ours)
A bare perusal of the aforenoted excerpt
establishes that the objections filed by the Respondents were
examined by the Trial Court which also applied its mind to
the contents of the award and thereafter an opinion was
formed that it was appropriate to make it a rule of Court. We
are satisfied that the trial Court fulfilled its duty to examine
the Respondent's objections as well as the award before
making it a rule of Court. As such, the finding of the High
Court to the effect that the Trial Court erred in law in making
the award a rule of Court is unsustainable and against the
record.
22. Even otherwise, it is to be noted that the first
objections filed by the Respondents were barred by 04
months. The prescribed limitation period as provided in the
Limitation Act, 1908 is 30 days from date of notice of filing of
the award to object to an Award being made a rule of Court. A
party must explain each day of delay and, the Court ought to
adjudge whether each day of delay has been sufficiently
explained to the satisfaction of the Court with evidence. If
such discretion has been exercised properly, then, an
appellate Court cannot arbitrarily disregard the reasons so
Civil Appeal Nc.315 of 2022. 
26
given by the Trial Court while discounting the reasons
provided by one party in an application for condonation of
delay by the Trial Court unless there is misreading or non-
reading of the record. It is a matter of record that the
Respondents first filed objections on 05.0 1.2006 which were
barred by time and, not in the proper form as admitted by the
Respondents since they sought permission from the Trial
Court during post-remand proceedings on 08.10.20 15 to file
their objections afresh in "proper form". The said application
was dismissed on 07.01.2016. As such, in the facts and
circumstances of the case, the belated objections were fatal to
the Respondent's case because (a) they were filed after a delay
of 04 months (b) they were not in proper form (c) the
application for condonation of delay was rejected (d) the
Respondents were well aware of the filing of the Award in
Court.
WERE THE PROCEEDINGS BEFORE THE TRIAL COURT
ILLEGAL DUE TO THE ABSENCE OF A FORMAL ORDER
UNDER SECTION 34 OF THE ACT, 1940?
24. The High Court has held that the proceedings
carried out by the Trial Court were in violation of Section 34
of the Act, 1940 and, the proceedings in the suit were not
stayed. We are unable to agree with this conclusion. The
parties had mutually agreed to refer their disputes arising out
of their contract to be resolved under the Rules of
Reconciliation and Arbitration of International Chamber of
Commerce (hereinafter referred to as the "ICC Rules"). The
Respondent, however, out rightly argued that the trial Court
lacked jurisdiction. This plea was rejected by the Trial Court
Clvi? Appeal No.315 of 2022. 
27
vide order dated 24.07.2004 while relying on the provisions of
the Agreement. The Counsel for the Respondents has been
unable to take us to any document to show that the
Respondents ever challenged the order dated 24,07.2004. It is
essential to point out that the ICC Rules do not divest the
Courts in Pakistan of their jurisdiction. This matter was
decided by this Court in the case of Hitachi Limited and
Another a Ru pall Polyester and others (1998 SCMR
1618) in which, it was held as follows: -
"The legal position obtaining in Pakistan is that the L C. C.
Rules are recognised but they cannot divest the Courts of the
jurisdiction vested in them under the law. In England the
English Courts recognise the I.C.C. Rules and they decline to
exercise discretionary jurisdiction under the English
Arbitration Act in derogation to the I.C.C. Rules not because
of lack of jurisdiction but to ensure that the parties should
adhere to their contractual commitment. It may be pointed
out that it has also been consistently held by the English
Courts that they have the power to pass appropriate order in
a fit case notwithstanding the application of I. C. C. Rules. In
this regard, reference may be made to a recent judgment in
the case of Coppee-Lavalin v. Ken-Ron Chemicals Ltd. (1994)
2 All England Law Reports 449), in which the House of Lords
directed for the deposit of costs of arbitration for the
respondent though the LC. C."
Even otherwise, Article 21(1) of the ICC Rules
provides the following: -
'The parties shall be free to agree upon the rules of law to be
applied by the arbitral tribunal to the merits of the dispute. In
the absence of any such agreement, the arbitral tribunal
shall apply the rules of law which it determines to be
appropriate."
The record shows that the parties decided that the
law of Pakistan would apply to the case at hand. As such, the
intent of the parties is clear insofar as the law governing the
Arbitration proceedings is concerned. The question is whether
the Trial Court performed functions of a faciliatory nature or,
was it required adjudicate on the merits of the case. If the
trial Court facilitated the Arbitration, then, it did not commit
Civil Appecil No.315 of 2022. 
28
any illegality. It is clear from the orders of the Trial Court
that it acted in a faciliatory manner. The Trial Court
facilitated the arbitration and did not adjudicate the merits of
the (is. When the Respondents objected to the jurisdiction of
the Trial Court; the Trial Court rejected the objections while
relying upon the Agreement between the parties and,
proceeded to refer the matter to Arbitrators nominated by the
parties as per Section 8 of the Act, 1940. Essentially, the
Court referred the matter to Arbitration nominated/ appointed
by the parties. Nowhere have the Respondents argued that
they had filed a written statement which constituted a step in
the proceedings within the meaning of Section 34 of the Act,
1940. The minutes of the Arbitration Proceedings are
available on the record which show that the Arbitrators
adjudged the merits of the case. As such, proceedings in the
suit were stayed for intents and purposes with express or
implied consent of the parties who consciously, willingly and
voluntarily participated in the proceedings throughout. At
this stage, the respondents cannot be heard to say that
certain technical and procedural formalities were not followed
stricto sensu. While they never raised any objections to the
same during the arbitration proceedings and even during
multiple rounds of litigation in Courts.
25. The Respondent took an objection to the
proceedings as an afterthought when the Award was made
Rule of Court, which cannot be permitted. It is worth
mentioning that when parties opt to settle their disputes out
of Court, they must be facilitated and, they ought to live up to
IT
Civil Appeal No3150f 2022. 
29
the terms that they agree upon in Eckhartd & Company v.
Muhammad Ilanif 11993 PLD 42 Supreme Court) in which
Ajmal Mian, J (as he then was) opined as follows:-
"I may observe that while dealing with an application under
section 34 of the Arbitration Act in relation to a foreign
arbitration clause like the one in issue, the Courts approach
should be dynamic and it should bear in mind that unless
there are some compelling reasons, such an arbitration
clause should be honoured as generally the other party to
such an arbitration clause is a foreign party. With the
development and growth of International Trade and
Commerce and due to modernization of
Communication/ Transport systems in the world, the
contracts containing such an arbitration clause are very
common nowadays. The title that the Court should not lightly
release the parties from their bargain ) that follows from the
sanctity which the Court attaches to contracts, must be
applied with more vigour to a contract containing a foreign
arbitration clause. We should not overlook the fact that any
breach of a term of such a contract to which a foreign
company or person is a party, will- tarnish the image of
Pakistan in the comity of nations. A ground which could be in
contemplation of party at the time of entering into the
contract as a prudent man of business, cannot furnish basis
for refusal to stay the suit under section 34 of the Act. So the
ground like, that it would be difficult to carry the voluminous
evidence or numerous witnesses to a foreign country for
arbitration proceedings or that it would be too expensive or
that the subject matter of the contract is in Pakistan or that
the breach of the contract has taken place in Pakistan, in my
view, cannot be a sound ground for refusal to stay a suit
filed in Pakistan in breach of aforeign arbitration clause
contained in contract of the nature referred to hereinabove. In
order to deprive a foreign party to have arbitration in a
foreign country in the manner provided for in the contract, the
Court should come to the conclusion that the enforcement of
such an arbitration clause would be unconscionable or would
amount to forcing the plaintiff to honour a different contract,
which was not in contemplation of the parties, and which
could not have been in their contemplation as a prudent man
of business.
The crux of the matter is that once a party has
agreed to arbitration, it should be the Court's responsibility to
either facilitate the said party in the arbitration while staying
within the confines of the Act, 1940 or, to compel the party to
abide by the terms and conditions of a contract. The purpose
of arbitration is defeated if a party refuses to abide by the
agreed mode of dispute resolution. This trend must not be
encouraged.
CirAl AppeoNo.3I5of 2022. 
30
I
26.
The High Court has proceeded on erroneous
grounds and has misapplied the applicable law to the facts
and circumstances of the instant controversy, which warrants
interference of this Court. We have been unable to agree with
the conclusions reached by the High Court in the Impugned
Judgment. Accordingly, the Impugned Judgement is found to
be unsustainable in law as well as facts and is therefore set
aside. \1IS.A 
IA
27.
Consequently, the judgment and decree dated
19.03.20 16 whereby the Award was made Rule of Court is
restored and affirmed and the
arbitrators is made Rule of Court.
 
ISLAMABAD, THE
20th of June, 2022.
Hafs Ishtiaq/*
tApproved ForRQ4rttg'
