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The Limitation Period u/A 178 applies only when a party files an application before the Court seeking a direction to the Arbitrator to file the Award --- It does not apply to Awards filed by the Arbitrator on their own or at the request of a Party --- Islamabad High Court, Islamabad

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Islamabad 23-12-2024: The Islamabad High Court (IHC) has set aside an order by the Additional District Judge declaring an arbitration award as time-barred, delivering a judgment that underscores the procedural flexibility afforded to arbitrators in filing awards and the importance of adhering to established precedents.

The case involved a contractual dispute between The Imperial Electric Company (Pvt) Ltd (Appellant) and M/s Zhongxing Telecom Pakistan (Pvt) Ltd (Respondent). The arbitrator issued an award on December 29, 2020, entitling the appellant to Rs. 33.52 million along with 14% annual interest. However, the award was first filed in a Court lacking pecuniary jurisdiction due to a bona fide error. After rectification, the award was eventually filed in the appropriate Court on September 1, 2022, leading to objections by the respondent on grounds of limitation.

The Additional District Judge declared the award time-barred under Article 178 of the Limitation Act, 1908, which prescribes a 90-day limitation for filing arbitration awards in Court. The appellant challenged this order under Section 39 of the Arbitration Act, 1940.

Mr. Justice Miangul Hassan Aurangzeb of the Islamabad High Court (IHC) ruled that the limitation period under Article 178 applies only when a party files an application before the Court seeking a direction to the arbitrator to file the award. It does not apply to awards filed by the arbitrator on their own or at the request of a party. The Court emphasized that no statutory limitation is prescribed for arbitrators filing awards.

Citing several precedents, including Champalal Vs. Mst. Samrathbai (AIR 1960 SC 629) and Muhammad Shafi Vs. Muhammad Sabir (PLD 1960 Lahore 591), the Court held that the Additional District Judge’s interpretation of Article 178 was legally flawed.

The Islamabad High Court (IHC) also addressed the procedural aspect of the appeal under Section 39, noting that the impugned order did not fall under its enumerated categories. To avoid a failure of Justice, the Court converted the appeal into a revision petition under Section 115 of the Civil Procedure Code, 1908.

The Court set aside the impugned order and remanded the case to the Additional District Judge with instructions to decide the pending applications on merit. The judgment also highlighted the need to focus on substantive Justice over procedural technicalities, particularly when procedural errors are bona fide and do not prejudice any party.