2004 PLP 667 (MLD)

(iii) In absence of evidence of any plausible witness, fraud or forgery in execution of arbitration agreement and the making of award by the nominated arbitrator remained unproved; (iv) Hiba Nama (Exh. P-8 and Exh. P-9) dated 14-2-1976 in favour of Naik Muhammad i.e. a minor stranger with no relationship with Babu, was invalid and void, wherefor, sale-deed dated 14-9-1976 (Exh. D-1) in favour of the petitioner Muhammad Gulzar was also invalid; and (v)There was no need for registration of the award (Exh. P-5) as per the learned Appellate Court who upholding the judgment of the learned Civil Judge dated 15-6-1981 dispensed with the requirement of registration and directed decree to be drawn up for making above award Rule of the Court.

6. To challenge the above referred judgments and decrees of the learned Courts below, present civil revision was filed by Muhammad Gulzar petitioner on 27-4-1992. In this civil revision, Rana Abdul Jabbar the beneficiary of the award was impleaded as respondent No.1, but upon his death, his legal heirs were substituted as respondents No.1(i) to (xi). Arbitrator Anwar Khaliq was made respondent No.2, while Babu deceased was represented through his legal representative Sher Muhammad as respondent No.3.

7. By judgment dated 3-7-1997, this civil revision was accepted with the following observations:-- "The scrutiny of the award makes it obvious that no reasons whatsoever have been recorded in terms of section 26-A of the Arbitration Act, to enable the Court to appreciate the questions of law arisen in the award. This being so, the award will have to be remitted to the arbitrator for recording his reasons. For what has been observed above, this revision petition is accepted, the impugned orders are set aside, the award is remitted to the arbitrator who shall state sufficient reasons therefor and re-submit the same to the trial Court within four months. After re-submission of the award, the trial Court shall proceed in the matter in accordance with law and on its own merits." 7-A. The above judgment was, however, challenged by respondents at serial No.1 before the Hon'ble Supreme Court of Pakistan in Civil Appeal No.1645 of 1997 titled "Rana Imtiaz Ahmad and 10 others v. Muhammad Gulzar and another" which was decided by the Hon'ble Supreme Court with following observations:-- "Learned counsel for the parties submit that Arbitrator to whom the case was remitted by High Court had expired on 5-10-1995. Both counsel submit that the case be remanded to High Court for deciding it afresh according to law and both parties be allowed to raise further pleas in support of their respective case. Order accordingly."

8. Pursuant to above remand order, the civil revision was heard by this Court.

9. Learned counsel for the petitioner i.e. Hafiz Khalil Ahmad, Advocate contended that after amendment in Arbitration Act through Arbitration (Amendment) Ordinance (Ordinance XV of 1981), section 26-A was added mandatorily providing for arbitrators and umpires to state reasons for the award insufficient detail, to enable the Court to consider any question of law arising out of the award. And that in absence of reasons in the award, the same was to be remitted back to the arbitrator for re-writing together with reasons under subsection 2 of section 26-A. And that the award in question did not state any reasons wherefor it had to be remitted to the arbitrator. He also emphasized that the learned Courts below misread the evidence and committed material irregularity to hold that gift-deed in favour of Naik Muhammad from Babu and sale-deed in favour of petitioner from the said donee Naik Muhammad were invalid. And that the learned Courts below did not properly examine the evidence, which prove that the stamp papers for the arbitration agreement and award were not purchased by Babu and he did not affix his thumb-impressions thereupon, wherefor, the same were fraudulent and forged and the matter was never referred by him to arbitration of the then arbitrator. Further contended that Arbitrator Anwar Khaliq was son-in-law of Ran Abdul Jabbar deceased; the beneficiary of the award and that no consideration as alleged in the agreement was paid by Rana Abdul Jabbar for the land. He further contended that award was compulsorily registerable and no evidence or proceedings were submitted to show that arbitrator proceeded in terms of the legal requirements to announce the award. He further contended that stamp vendor, while appearing as a witness, admitted that the agreement as well as the award, were in his handwriting and he had written the same upon directions of Rana Abdul Jabbar.

10. Learned counsel for the respondents, however, supported the impugned judgments and decree to state that under section 3 of the Arbitration (Amendment) Ordinance, 1981, it was Court's discretion to remit an award subject to pending proceedings, if the Court finds that an award did not state reasons with sufficient detail. And that in the present case exercise of discretion was not needed, The learned counsel for the respondents read out the impugned judgments to support his contention that gift in favour of Naik Muhammad and sale-deed in favour of the petitioner were invalid documents and did not confer any locus standi on the petitioner to file the present civil revision. -

11. I have considered the submissions of the learned counsel for the parties. As above stated, initially through judgment dated 3-7-1997, this civil revision was accepted by this Court and the award was remitted to the arbitrator for recording reasons thereof. However, Hon'ble Supreme Court of Pakistan accepted the appeal thereagainst and remanded the case to this Court for decision afresh in accordance with law, as the arbitrator to whom the case was remitted by this Court had expired on 5-10-1995. The question thus arises as to the course available with this Court.

12. The proceedings under section 14 of the Arbitration Act to make the award Rule of the Court, were pending in the Court of learned Civil Judge, Sargodha, when on 11-5-1981 Arbitration (Amendment) Ordinance (Ordinance XV of 1981) was promulgated. The newly introduced section 26-A in Arbitration Act through the said Amending Ordinance of 1981, was not attracted. This section was applicable to future awards of the arbitrators or umpires who were enjoined to state reasons for the award. But section 3 of the above referred Ordinance of 1981 met the cases in which proceedings in relation to awards were pending in any Court before commencement of the Ordinance. The section 3 of the said Ordinance reads that:-- "Power of Court to remit cases pending at commencement of Ordinance. (1) If, in any case in which proceedings in relation to an award which has been filed in Court are pending in any Court immediately before the commencement of this Ordinance, the Court finds that the award does not, or does not in sufficient detail, state the reasons for the award, the Court may remit the award to the arbitrators or umpire with a direction to state the reasons for the award in sufficient detail. (2) Where an award is remitted under subsection (1) the Court shall fix the time within which the arbitrator or umpire shall submit to the Court an award stating the reasons therefor in sufficient, detail: Provided that any time so fixed may be extended by subsequent order of the Court. (3) Any award remitted under subsection (1) shall become void on the, failure of the arbitrator or umpire to submit it in accordance with the directions of the Court."

13. Under the above reproduced section 3, the Court on finding that the award does not, or does not in sufficient detail state reasons, has the discretion to remit the same to the arbitrator (s) to state the reasons for the award in sufficient detail, within the time fixed by the Court. On failure of the arbitrator (s) to re-submit the award remitted to him, the earlier award was to become void.

14. The award (Exh. P-5) announced by the then arbitrator in this case, was re-examined to determine as to whether any reasons in sufficient details were given therein or not. The opening lines of the award (Exh. P-5) are that statements of the parties were recorded upon summoning them. Furthermore, frequent reference in the award was made to these statements purported to have been recorded. The award was - based upon the said statements and the documents referred to therein. Neither the said statements nor documents nor proceedings of arbitration were filed with the award by respondent No.1 or the arbitrator Anwar Khaliq during the proceedings under section 14 of the Arbitration Act.

15. Learned counsel for the respondents was asked a direct question as to whether such proceedings were filed or not. The learned counsel admitted that such proceedings 'were not filed and do not part of the record. This situation leads to obvious results. In absence of proceedings, the statements and the documents, the questions involved in arbitration cannot he held to have been settled and decided by the arbitrator with reasons in sufficient details. The base material for the award was not submitted for scrutiny by the Court Neither was the same relied upon or filed by the respondent No. l to enable .this Court to form an opinion different from the one above recorded. Furthermore as per the provisions of section 3 of the Ordinance of 1981, the Court only has to examine the award to determine absence of reasons or sufficient details for such reasons for deciding to remit the award to the arbitrator. Absence of reasons is also patent on bare reading of the award (Exh.P-5) Under these circumstances, the learned Courts below committed material irregularity and failed to exercise their jurisdiction by not adverting to the effect of absence of reasons in terms of section 3 of Arbitration (Amendment) Ordinance, 1981. Having come to the conclusion that award (Exh. P-5) is deficient in reasons as well as in sufficient details thereof, the award (Exh. P-5) has become remittable to the arbitrator for re-decision.

16. This case however presents a complex problem. The award has though become remittable to the arbitrator but cannot be so remitted. The then arbitrator Anwar Khaliq has died. The parties were therefore asked) as to whether they would like to appoint an arbitrator to enter upon reference and to re-decide the dispute. Both the parties for their reasons denied to do. The award thus cannot be re-sent to any arbitrator. The award (Ezh. P-5) in any case cannot be sustained. Under these circumstances, the only option available to this Court is to declare the award as void in exercise of powers akin to subsection (3) of section 3 of Arbitration (Amendment) Ordinance, 1981 and section 16(3) of the Arbitration Act.

17. On recording the above conclusion, the question of locus standi of petitioner Muhammad Gulzar becomes irrelevant. Even otherwise the Court can suo motu exercise powers of revision to set aside or remit an award without reasons in view of mandatory compulsions of law enacted in section 3 of the Ordinance of 1981. Furthermore, the petitioner has also challenged the findings of the learned Courts below on the question of gift-deed to Naik Muhammad and sale-deed from Naik Muhammad to him. I deem it appropriate not to give any definitive findings on this question to avoid prejudice to the case of the parties in view of what has been observed hereinafter.

18. This Court has declared the award as void in absence of willingness of the parties to appoint a new arbitrator and also because of unremittability of the award to any arbitrator. As a result, the intention and arbitration agreement of the parties to refer the matter to arbitrator cannot be given effect to. It is wherefor obvious that the agreement as' well as the reference to arbitration have frustrated. This case is therefore an apt case to invoke section 19 of the Arbitration Act and to declare that reference be superseded and the arbitration agreement shall cease to have effect with respect to the difference referred therein to deceased arbitrator.

19. Under these circumstances, the parties may invoke jurisdiction of the learned Civil Court under section 9' of the Civil Procedure Code for seeking effective adjudication of their differences/disputes/causes of action/objections, by filing a proper suit. The period between the commencement of the arbitration and this judgment declaring arbitration agreement to have become ineffective, shall of course be excludable under section 37 (5) of the Arbitration Act, 1940 in computing the period prescribed in the Limitation Act, 1908.

20. In view of the above observations, the impugned judgments and decrees respectively passed by the learned District Judge, Sargodha and the learned Civil Judge, Sargodha on 7-4-1982 and on 15-6-1981 are set aside and this civil revision is decided in above terms with no order as to costs. M.H./M-12/L Order accordingly.