M/s Tariq and Saad Associates Vs M/s Coronet Foods (Pvt) Ltd

JUDGMENT SHEET

PESHAWAR HIGH COURT

ABBOTTABAD BENCH

(Judicial Department)

RFA No. 02-A/2026

M/s Tariq and Saad Associates.

Appellant(s)

V e r s u s.

M/s. Coronet Foods (Pvt) Limited.

Respondent(s)

Present: M/s. Malik Akhtar Abbas, Syed Jaffar, Abuzar Gul Chughtai and Shahrukh Sheikh Advocates for petitioner.

Mr. Javed Qureshi, Advocate for respondent.

Date of hearing: 21.05.2026.

JUDGMENT

SYED MUDASSER AMEER, J. Through this appeal filed under Section 9 of the Khyber Pakhtunkhwa Resolution of Commercial Disputes Act, 2022, the appellant has called in question order dated 04.12.2025 passed by learned Judge Consumer Protection/Resolution of Commercial Disputes, Haripur, whereby an application filed by the appellant under Section 20 of the Arbitration Act, 1940 was returned to the learned Civil Court on the premise that the Commercial Court lacked jurisdiction to entertain and decide the same.

2.Briefly stated, the appellant, M/s Tariq and Saad Associates, entered into a Consultancy Agreement dated 03.04.2014 with respondent M/s Coronet Foods (Pvt.)

Limited for provision of architectural consultancy,

planning, engineering design, interior design and advisory services in connection with the respondent's commercial project situated at Haripur. Disputes subsequently arose between the parties regarding payment of consultancy dues.

According to the appellant, despite rendering services in terms of the agreement, an amount of Rs.25,33,625/- remained outstanding.

3.The Consultancy Agreement contained an arbitration clause whereby disputes arising out of or in connection with the agreement were to be referred to arbitration under the Arbitration Act, 1940. Upon failure of the respondent to concur in the appointment of an arbitrator, the appellant instituted an application under Section 20 of the Arbitration Act, 1940 before the learned Civil Court, Haripur on 21.06.2016 seeking filing of the arbitration agreement and reference of the dispute to arbitration.

4.During pendency of the proceedings, the Khyber Pakhtunkhwa Resolution of Commercial Disputes Act, 2022 (the ‘Act of 2022’) came into force. By operation of law, the matter stood transferred to the Commercial Court constituted under the said enactment. Thereafter, the learned Commercial Court assumed jurisdiction and actively supervised the arbitral process. Two arbitrators submitted divergent reports. An umpire was appointed on 14.09.2024.

The umpire rendered an award on 18.02.2025. Objections were filed. The matter reached the stage of final adjudication. However, vide the impugned order dated

04.12.2025, the learned Commercial Court returned the proceedings to the learned Civil Court on the ground that an application under Section 20 of the Arbitration Act, 1940 was required to be decided by the ordinary Civil Court and not by the Commercial Court. Hence, this appeal.

5.Learned counsel for the appellant argued that the dispute admittedly arises out of a commercial consultancy agreement and squarely falls within the definition of a ‘commercial dispute’ under Section 2(d) of the Act of 2022.

It was contended that Section 3(2) confers exclusive jurisdiction upon Commercial Courts in respect of all suits and proceedings arising from or connected with commercial disputes. It was further argued that once the matter stood transferred under Section 7 of the Act of 2022 and the Commercial Court exercised jurisdiction throughout the arbitral proceedings, it could not lawfully decline jurisdiction at the concluding stage of the matter.

6.The controversy lies within a narrow compass. The question is not whether the proceedings arise under the Arbitration Act, 1940. The real question is whether, after enactment of the Act of 2022, a proceeding under the Arbitration Act arising out of a commercial dispute falls within the jurisdiction of the Commercial Court or remains triable by the ordinary Civil Court.

7.The answer must be found from a harmonious reading of the Arbitration Act, 1940 and the Act of 2022.

8.The dispute between the parties arises out of a consultancy agreement executed in connection with commercial activities and concerns a monetary claim far exceeding the statutory threshold prescribed under the Act of 2022. Section 2(d) of the Act of 2022 defines a ‘commercial dispute’ in broad terms to include disputes arising out of contractual relationships relating to trade, business or commerce. The present controversy plainly falls within that definition.

9.Having determined the nature of the dispute, one must next examine the forum designated by the legislature for adjudication of such disputes. Section 3(2) of the Act of 2022 provides:

“Subsequent to the commencement of this Act, all suits and proceedings, arising from or connected with commercial disputes, shall only be entertainable, heard and decided by the Commercial Courts.”

10.The language employed by the legislature is significant. It does not confine itself to suits alone. It extends to “all suits and proceedings” arising from or connected with commercial disputes. Equally important are the words “connected with”. Those words are of the widest import and are intended to bring within the fold of the statute every proceeding having a direct nexus with the underlying commercial dispute.

11.Proceedings under Section 20 of the Arbitration Act do not exist in isolation. They derive their entire existence from the commercial dispute between the parties and constitute the procedural machinery selected by them for its resolution. A proceeding seeking filing of an arbitration agreement, appointment of arbitrators, appointment of an umpire, consideration of an award, or adjudication of objections thereto, is not extraneous to or detached from the underlying commercial dispute. It is a proceeding connected with and arising directly from that dispute. Consequently, once the underlying dispute answers the statutory description of a commercial dispute, proceedings under the Arbitration Act relating thereto necessarily travel along the same jurisdictional path unless expressly excluded by law. No such exclusion is found in the Act of 2022.

12.The matter does not end there. The Arbitration Act itself points towards the same conclusion.

13.Section 2(c) of the Arbitration Act defines "Court" as:

“...a Civil Court having jurisdiction to decide the questions forming the subject matter of the reference if the same had been the subject matter of a suit.”

14.The definition is functional rather than institutional.

The statute does not ask which court originally entertained the proceedings. It asks which court presently possesses

jurisdiction to decide the subject matter if the dispute were instituted as a suit.

15.If the present dispute were instituted today as a suit, there can be little doubt regarding the answer. By virtue of Sections 2(d), 3(2) and 7 of the Act of 2022, the dispute would be triable exclusively by the Commercial Court and not by the ordinary Civil Court. Therefore, for purposes of Section 2(c) of the Arbitration Act, the Commercial Court answers the statutory description of the "Court" competent to entertain the arbitration proceedings.

16.The conclusion is further reinforced by Section 7 of the Act of 2022. Section 7(a) provides that all suits and execution petitions connected with or arising from commercial disputes pending in any court of original civil jurisdiction shall stand transferred to the concerned Commercial Court. Section 7(b) authorizes the Commercial Court to proceed with such matters from the stage at which they stood transferred. The legislative objective is continuity, not disruption. The statute contemplates a seamless transition from the ordinary civil forum to the specialized commercial forum.

17.In the present case, the transfer was not effected at the request of either party. It occurred by operation of law.

Upon such transfer, the Commercial Court assumed jurisdiction and proceeded with the matter. The arbitral process thereafter unfolded entirely under its supervision.

Arbitrators were appointed. Divergent reports were received. An umpire was appointed. An award was rendered. Objections were entertained. Arguments were heard. Having exercised jurisdiction throughout the proceedings and carried the matter to its final stage, the Commercial Court could not lawfully divest itself of jurisdiction by returning the matter to the ordinary Civil Court.

18.The scheme of Section 31 of the Arbitration Act leads to the same destination.

19.In Province of Punjab through Secretary to Government of Punjab v. Messrs Muhammad Tufail and Company (PLD 2017 SC 53), the august Supreme Court explained that Section 31 is designed to clothe a single court with jurisdiction over arbitration proceedings so as to avoid conflict of jurisdiction and ensure that matters once initiated and dealt with by one court continue before the same forum.

20.Likewise, in Peoples Steel Mills (Pvt.) Ltd. v. Asian Consul Engineers (Pvt.) Ltd. (2004 MLD 1708), it was observed that the principal question to be kept in view is the jurisdiction and not the court by itself, and where jurisdiction stands vested in a successor forum by operation of law, that successor forum occupies the same position for purposes of the Arbitration Act.

21.These principles are directly attracted to the present case. The Commercial Court became the statutory successor forum upon enactment of the Act of 2022 and transfer of pending proceedings thereunder. To return the matter to the ordinary Civil Court after years of proceedings would create the very fragmentation and multiplicity of forums which Section 31 seeks to avoid.

22.The impugned order also overlooks the overriding effect conferred by Section 10 of the Act of 2022, which provides that the provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Thus, even if any doubt were assumed to exist regarding the interaction between the Arbitration Act and the Act of 2022, such doubt must yield to the express legislative command embodied in Section 10.

23.There is yet another reason why the impugned view cannot be sustained.

24.The Act of 2022 was enacted to establish specialized forums for resolution of commercial disputes.

Its preamble recognizes the close relationship between commerce, economic development and expeditious dispute resolution. The rationale underlying specialized commercial courts has also received judicial recognition. In Ghulam Asghar Pathan v. Federation of Pakistan (PLD 2023 Sindh 187), the Sindh High Court emphasized the necessity and

utility of specialized commercial forums for efficient and expeditious adjudication of commercial disputes and observed that commercial matters should not be submerged within the broader stream of ordinary civil litigation.

25.Courts do not interpret statutes in a manner that defeats their evident purpose. The legislature created Commercial Courts to provide a dedicated forum for commercial disputes. An interpretation requiring a commercial dispute to leave that specialized forum after years of proceedings and return to the ordinary Civil Court would undermine the legislative design, frustrate the objective of specialization and delay the very adjudication which the statute seeks to expedite.

26.The chronology of the present case itself demonstrates the infirmity of the impugned approach.

Jurisdiction was not declined at the threshold. It was declined after transfer of the proceedings, after assumption of jurisdiction, after supervision of the arbitral process, after appointment of an umpire, after rendition of the award, and after hearing of objections. Such an approach neither advances the cause of justice nor accords with the statutory scheme governing commercial disputes and arbitration proceedings.

27.For the reasons discussed above, the learned Commercial Court committed a material error of law in returning the proceedings to the learned Civil Court. The

present dispute is a commercial dispute within the meaning of Section 2(d) of the Act of 2022. The proceedings under the Arbitration Act are proceedings arising from and connected with that dispute. Upon transfer under Section 7, the Commercial Court became the competent forum within the contemplation of Section 2(c) of the Arbitration Act and was fully empowered to continue and conclude the proceedings. The contrary view taken in the impugned order cannot be sustained.

28.Consequently, this appeal is allowed. The impugned order dated 04.12.2025 passed by learned Judge Consumer Protection/Resolution of Commercial Disputes, Haripur is set aside. It is declared that the learned Commercial Court possesses jurisdiction to entertain, proceed with and decide the application filed under Section 20 of the Arbitration Act, 1940 and all proceedings arising therefrom or connected therewith.

29.The learned Commercial Court shall resume the proceedings from the stage at which the matter stood interrupted and shall decide the same strictly in accordance with law through a reasoned order.

Announced.

(Tahir C/S)

JUDGE

HEADNOTES

Khyber Pakhtunkhwa Resolution of Commercial Disputes Act, 2022, Sections 2(d), 3(2), 7 and 10---Arbitration Act, 1940, Sections 2(c), 20 and 31---Commercial dispute---Arbitration proceedings arising out of commercial contract---Jurisdiction of Commercial Court---Scope---Proceedings under Section 20 of the Arbitration Act do not exist in isolation but derive their entire existence from the commercial dispute between the parties and constitute the procedural machinery selected by them for its resolution---Once the underlying dispute answers the statutory description of a commercial dispute, proceedings under the Arbitration Act relating thereto necessarily travel along the same jurisdictional path unless expressly excluded by law. [Paras 11, 27]

Khyber Pakhtunkhwa Resolution of Commercial Disputes Act, 2022--- Section 3(2)---Expression "all suits and proceedings arising from or connected with commercial disputes"---Interpretation---Language employed by the legislature extends not merely to suits but to "all suits and proceedings" arising from or connected with commercial disputes---Words "connected with" are of the widest import and bring within the fold of the statute every proceeding having a direct nexus with the underlying commercial dispute. [Paras 9-10]

Arbitration Act, 1940---Section 2(c)---Definition of "Court"---Scope--- Definition is functional rather than institutional---Statute does not ask which court originally entertained the proceedings but which court presently possesses jurisdiction to decide the subject matter if the dispute were instituted as a suit---Where, by virtue of the Khyber Pakhtunkhwa Resolution of Commercial Disputes Act, 2022, the dispute would be triable exclusively by the Commercial Court, such Court answers the statutory description of "Court" for purposes of the Arbitration Act. [Paras 13-15] Khyber Pakhtunkhwa Resolution of Commercial Disputes Act, 2022--- Section 7---Transfer of proceedings---Effect---Transfer of pending commercial disputes takes place by operation of law---Upon such transfer, the Commercial Court is authorized to proceed with the matter from the stage at which it stood transferred---Legislative objective is continuity and not disruption. [Paras 16-17]

Arbitration Act, 1940---Section 31---Object and purpose---Held, Section 31 is designed to clothe a single court with jurisdiction over arbitration proceedings so as to avoid conflict of jurisdiction and ensure that matters once initiated and dealt with by one court continue before the same forum---Returning the matter to the ordinary Civil Court after years of proceedings would create the very fragmentation and multiplicity of forums which Section 31 seeks to avoid. [Paras 19-21]

Arbitration Act, 1940---Section 31---Successor forum---Jurisdiction---Where jurisdiction over the subject matter stands vested in a successor forum by operation of law, the principal consideration is the jurisdiction and not the court by itself---Commercial Court, upon transfer of proceedings under the Act of 2022, became the statutory successor forum for purposes of arbitration proceedings arising from commercial disputes. [Paras 20-21] Khyber Pakhtunkhwa Resolution of Commercial Disputes Act, 2022--- Section 10---Overriding effect---Held, even if doubt were assumed to exist regarding the interaction between the Arbitration Act, 1940 and the Act of 2022, such doubt must yield to the express legislative command embodied in Section 10, which provides that the provisions of the Act shall have effect

notwithstanding anything inconsistent therewith contained in any other law for the time being in force. [Para 22]

Commercial Courts---Purpose and legislative object---Specialized forums for resolution of commercial disputes---Courts do not interpret statutes in a manner that defeats their evident purpose---Legislature created Commercial Courts to provide a dedicated forum for commercial disputes and an interpretation requiring a commercial dispute to leave that specialized forum after years of proceedings and return to the ordinary Civil Court would undermine the legislative design, frustrate the objective of specialization and delay the very adjudication which the statute seeks to expedite. [Paras 24-25] Commercial Court---Assumption of jurisdiction---Exercise of jurisdiction throughout arbitral process---Jurisdiction declined at concluding stage of proceedings---Legality---Where proceedings stood transferred under the Act of 2022 and the Commercial Court supervised the arbitral process, appointed an umpire, received the award and entertained objections thereto, it could not lawfully divest itself of jurisdiction by returning the matter to the ordinary Civil Court at the final stage of adjudication. [Paras 17, 26-28] Khyber Pakhtunkhwa Resolution of Commercial Disputes Act, 2022, Sections 2(d), 3(2), 7 and 10---Arbitration Act, 1940, Sections 2(c), 20 and 31---Commercial dispute---Proceedings under the Arbitration Act connected with such dispute---Jurisdiction---Held, upon transfer under Section 7 of the Act of 2022, the Commercial Court became the competent forum within the contemplation of Section 2(c) of the Arbitration Act and possessed jurisdiction to entertain, proceed with and decide the application filed under Section 20 of the Arbitration Act together with all proceedings arising therefrom or connected therewith. [Paras 27-29]