Sitting Panel: Sh. Riaz Ahmed, C.J., Mian Muhammad Ajmal and Muhammad Nawaz Abbasi, JJ

Summary: This case involved appeals concerning the striking off of the defense of Westinghouse Electric Corporation (respondents) and the subsequent decreeing of a suit filed by WAK Orient Power and Light Limited (appellant). WAK Orient had filed a suit for declaration, permanent injunction, specific performance, and recovery of damages. The trial court, without proper service of the defendants or disposal of their application under Section 34 of the Arbitration Act, 1940 (raising a jurisdictional objection), directed the defendants to file a written statement. When the written statement was not filed within the given time, the trial court invoked Order VIII, Rule 10, C.P.C., struck off the defense, and decreed the suit. The High Court subsequently set aside this judgment and remanded the case, a decision challenged by WAK Orient.

The Supreme Court upheld the High Court’s decision, emphasizing that striking off a defense under Order VIII, Rule 10, C.P.C., is not justified when defendants are not properly served or when a recognized agent has not filed a power of attorney. The Court stated that an order for filing a written statement cannot be passed without proper service. Furthermore, it was improper for the trial court to invoke penal provisions and pass a decree without first deciding the crucial question of the court’s jurisdiction and disposing of the application under Section 34 of the Arbitration Act, 1940, as proceedings without such determinations could prove futile. The Supreme Court concluded that the defendants’ conduct was neither “contumacious nor contemptuous,” and therefore, the invocation of Order VIII, Rule 10, C.P.C., was not justified. The case was remanded for the trial court to decide the jurisdictional issue as a preliminary matter and then address the arbitration application before proceeding further, with the respondents required to furnish a bank guarantee.