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All Pakistan CNG Association (APCNGA) is a Trade Organization and Incorporated Company has a legal personality of its own which is distinct from that of its members therefore could initiate the Arbitration Proceedings on behalf of its Members --- Islamabad High Court, Islamabad

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All Pakistan CNG Association (APCNGA) is a Trade Organization and Incorporated Company has a legal personality of its own which is distinct from that of its members therefore could initiate the Arbitration Proceedings on behalf of its Members --- Islamabad High Court, Islamabad

Islamabad 30-04-2024: The Honourable Judge Mr. Justice Miangul Hassan Aurangzeb decided [WP No. 4100 of 2022] pertaining to Arbitration Award. The Learned Civil Court dismissed the objections filed by the respondent, Pakistan State Oil Company Limited (“PSO”) under Sections 30 and 33 of the 1940 Act to the arbitration award dated 10.08.2015 were allowed and the said award was set-aside and the Learned Additional District Judge, Islamabad dismissed the appeal filed under Section 39 of the Arbitration Act, 1940.

According to the facts, the petitioners have been granted marketing licences by the Oil and Gas Regulatory Authority (“OGRA”) to operate Compressed Natural Gas (“CNG”) filling stations and PSO also granted licences to conduct CNG filling operations at designated spaces at PSO’s filling stations. Under Article 4 of licences, the petitioners were liable to pay a franchise fee to PSO for using the designated spaces at PSO’s filling stations to conduct CNG filling operations. The Ministry of Petroleum and Natural Resources (“Ministry of P&NR”) and the Ministry of Finance consulted with the All Pakistan CNG Association (“APCNGA”) and CNG marketing companies to address the issue regarding the increase in the cost of CNG that was being charged from consumers. These consultations led to the execution of a Memorandum of Understanding (“MoU”) dated 25.08.2008 between APCNGA and the Government of Pakistan whereby the maximum price of the different components of the price of CNG, including the franchise fee (albeit called “Rental / OMC Margins”), was agreed upon. After the execution of the MoU, the Federal Government, in exercise of its powers under Section 2 of the Regulation of Mines, Oil Fields and Mineral Development (Government Control) Act, 1948 amended the CNG (Production and Marketing) Rules, 1992 through notification dated 13.03.2009. This empowered OGRA to notify from time to time the maximum price of CNG which a CNG operator could charge from the consumer.

It is the petitioners’ case that the Rental / OMC Margins replaced the franchise fee payable under Article 4 of the licences granted by PSO to CNG operators. The petitioners’ stance was that it could not pay the franchise fee under Article 4 of the licences as well as the Rental / OMC Margins, as both were paid for the same purpose. The petitioners took the position that the inclusion of the Rental / OMC Margins in the maximum sale price fixed by OGRA would result in modifying Article 4 of the licences. On 07.04.2010, the CNG operators issued a legal notice to PSO seeking a satisfactory settlement of the dispute failing which the dispute would be referred to arbitration. This notice contains a list of the CNG operators on whose behalf the said notice was issued. Article 17 of the licences provided for the disputes and differences arising from and related to the terms of the licences to be discussed mutually so as to arrive at an amicable settlement failing which the disputes could be referred to arbitration by Director General (Gas), Ministry of P&NR or his nominee to act as the sole arbitrator.

On 09.07.2010, APCNGA issued a notice to the Director General (Gas), Ministry of P&NR requesting him to act or appoint his nominee as a sole arbitrator to resolve the disputes between the parties to the licences. The Director General (Gas), Ministry of P&NR nominated Masood Ahmed Javed, Deputy Director (F&P), Ministry of P&NR as the sole arbitrator, who entered upon reference and conducted the arbitration proceedings. These proceedings culminated in the award dated 17.09.2010. APCNGA applied to the Court for the said award to be made a rule of Court, whereas PSO is said to have filed objections to the same. Vide order dated 17.04.2015, this Court set-aside the award and remitted the matter to the arbitrator for reconsideration. Thereafter, the arbitrator rendered award dated 10.08.2015. In the said award, the arbitrator directed the parties to reconcile their payable / receivable position and settle their dues within a period of three months from the date of the award bearing in mind the earlier award dated 17.09.2010. Again PSO filed objections to the said award, whereas APCNGA applied to the Court for the said award to be made a rule of Court. Vide judgment and decree dated 15.06.2017, the learned Civil Court allowed PSO’s objections and set-aside the said award. The appeal preferred by APCNGA under Section 39 of the 1940 Act against the said judgment and decree dated 15.06.2017 was dismissed by the learned Appellate Court vide judgment and decree dated 24.02.2018. The said concurrent judgments and decrees passed by the learned Courts below have been assailed by the petitioners / CNG operators in the instant writ petition.

It is observed by the Honourable Islamabad High Court, Islamabad that APCNGA is a trade organization having been licenced by the Federal Government under the provisions of the Trade Organizations Act, 2013 to inter alia protect the interests of CNG operators. It is a company incorporated on 01.09.2005 under the provisions of the erstwhile Companies Ordinance, 1984 and has a legal personality of its own which is distinct from that of its members. The licences / agreements were executed between PSO and CNG operators individually. APCNGA is not a party to any of these licences / agreements. There is no legal impediment in APCNGA representing its members / CNG operators in arbitration proceedings. But it is the CNG operators, as parties to the licences / agreements, who could initiate the arbitration proceedings. And where the award is in their favor, it is only they and not APCNGA who could file an application for the award to be made a rule of Court.

The petitioners / CNG operators did not even file an appeal against the said judgment and decree dated 15.06.2017. After the appeal was filed by APCNGA the petitioners, in order to overcome the ground on which the learned Civil Court had set aside the award, filed an application under Order VI, Rule 17 C.P.C. for filing an amended memorandum of appeal in which the petitioners / CNG operators are impleaded as appellants. This application was filed on 14.09.2017 and dismissed through the impugned judgment dated 24.02.2018 on the ground that since the applicants were not parties in the proceedings before the learned Civil Court, their application for impleadment could not be entertained by the appellate Court. The instant petition has been filed by the petitioners / CNG operators who were neither parties to the proceedings before the learned Civil Court or the learned appellate Court nor were in the arbitration proceedings instituted at their instance.

Finally it is held that I do not find any jurisdictional infirmity or irregularity in the current judgments and decrees passed by the learned Courts below, the instant writ petition is dismissed. The petitioners shall bear the respondent’s costs.