P L D 1959 (W (PLP)

WAHIDUDDIN AHMAD, J.‑This is an appeal from the order of Inamullah, J. in Suit No. 979 of 1953 dated 13‑9‑1956 dismissing the objections of the appellants under section 30 of the Arbitration Act, and refusing to set aside the Award. The appellants entered into four contracts with the respon dents for the sale of cotton bales two contracts on 22‑9‑1951 and the other two on 24‑9‑1951. The delivery of the cotton bales under all the contracts was to be effected by the 25th of January 1952. Dispute arose between the parties in respect of the breach of these contracts. The parties referred their dispute for settlement to two arbitrators under the bye‑laws of the Karachi Cotton Association Limited. The arbitrators appointed did not agree and the dispute was ultimately referred for decision to Mr. Hamid Dawood Habib, an umpire appointed by the arbitrators. The umpire gave an Award on 20‑7‑1953 in favour of the respondents for a sum of Rs. 14,250 carrying interest 'at 9%. The umpire filed .the Award under section 14 (2)_of the Arbitration Act,, 1940 on the Original Side of the Chief Court of Sind. On 27‑I1‑1953 the appellants moved the Chief Court of Sind to set aside the Award, amongst others, on the ground that the umpire has mis-conducted in not filing the documents and other record of the arbitration proceedings as required by section 14 of the Arbitration Act, that the umpire was not an impartial person, that the umpire was guilty of misconduct as he failed to refer important questions of law for the opinion of the Court and that the Award should be set aside as there was an error apparent on the face of the Award as the damages could not be calculated on the rates prevalent or the 14th of March 1952. After full hearing Inamullah, .I. dismissed these objections. In support of the appeal Mr. Ibadat Yar Khan, the learned counsel for the appellant, strenuously argued that there was enough material on the record to establish that the umpire was not an impartial person, that he was not qualified to hold the arbitration proceedings and that the Award cannot be maintained as the umpire refused to refer to Court, in spite of a definite promise, important questions of law involved in the matter in dispute. The learned counsel also urged that the umpire in not producing all the record of the arbitration proceedings has committed misconduct and the Award is liable to be set aside. We will consider these objections separately. The learned counsel invited our attention to certain facts to show that the umpire in this case was not a disinterested person and was partial towards the respondents. According to the learned counsel, the umpire had business dealings with the respondents. He had a claim of Rs. 80,000 against the respondents firm and therefore was not a tit person to act as act umpire in the matter in dispute. In support of his contention the learned counsel invited our attention to two decisions reported in Yusuf Khan v. Riyasat Ali (A I R 1926 Oudh 307) and Nihal Chand and another v. Shanti Lal (A I R 1935 Oudh 349). In A I R 1926 Oudh 307 the arbitrator concerned was examined in Court and admitted that he would get a share out of the money which was to be decreed to the plaintiffs on the strength of the award and the learned Judges were perfectly justified in holding that he was directly connected with the matter in litigation and that he was not a qualified person to hold arbitration proceedings. Similarly, in A I R 1935 Oudh 349, the arbitrator was related to one of the defendants and had monetary dealings with the other defendants. The learned Judges set aside the Award as these facts were not disclosed to the plaintiff at the time of referring the dispute to arbitration. In the body of the judgment of this case the learned Judges also referred to a decision of the Calcutta High Court reported in I L R 29 Cal. 278 in which it was held that if an arbitrator is indebted to one of the parties at the time of the reference or becomes so indebted after the reference, and in either case does not ‑ disclose the fact to the other party, such c party would be entitled to revoke the reference upon discovery of fact, and any Award made by such arbitrator would be invalid on the ground of judicial misconduct. No body can dispute the propositions of law relating to arbitration proceedings. The allegation in the present case is that the umpire was expecting the satisfaction of his claim from the plaintiff in case the plaintiff had any money to pay and thus the umpire in his own interest, in collusion with the plaintiff gave this Award against the defendant which is neither just nor equitable. The particulars of this allegation were for the first time disclosed in the deposition of Riaz Hassan, witness No. 3, examined on behalf of the appellants. This witness stated that the umpire during the arbitration proceedings took him aside and told him that the respondents owed huge amounts to him and if they would pay something towards this Award, he would be able to realise that amount from the plaintiff. This talk took place on the 8th of June 1953, but strangely enough neither this fact was mentioned in the objections under section 30 of the Arbitration Act nor in the application moved by the appellants as early as the 18th of June 1953 under sections I I and 12 of the Arbitration Act. We are not at all impressed by the statement of this witness. If there would have been the slightest truth in this allegation the appellants would have mentioned it on the very first available opportunity. There is no explanation why these facts were not disclosed in the petition filed in Court on the 18th of June 1953. But .it is urged that the appellant's and his son Mr. Riaz Hassan's statements on oath stand unrebutted and in the absence of any statements to the contrary, these facts should be taken as proved. There is no force in this contention. The value and weight of such evidence primarily depends on their veracity. If the evidence on the face of it is a tissue of lies, the fact that the other side has not produced any evidence in rebuttal will not make any difference and Courts will be entitled to reject it as unreliable evidence. It appears to. us that in such circumstances also the statement of the witness will be open to the same criticism as in those cases where a party has produced evidence in rebuttal. In the present case, the alleged talk did not take place in the presence of the respondents or any of their representatives and even if they would have chosen to come forward in the witness box they would not have been able to make any useful statement about it. The appellants called the umpire as a witness but they gave him up at the hearing. The respondents took note of this fact and at once applied to the Court that they may be allowed to examine the umpire as a witness, but this request was turned down. We consider that in cases where allegations are made by parties against an umpire or arbitrator, it is always better to examine the umpire or arbitrator as Court witness and it would have been much better if the umpire would have been called as a Court witness to meet the allegations made against him in respect o partiality. But in this case the 'non‑observance of this rule o prudence has not caused any prejudice and we are satisfied that the allegation against the umpire is without any foundation. The learned counsel for the appellants further contended that at least it was clear on the record that the umpire had a claim against the respondents, that the dispute between the respondents and the umpire was referred to arbitration and that the umpire had obtained an Award in his favour against the respondents in the sum of Rs. 80,

000. The learned counsel laid stress on the fact that the business dealings between the respon dents and the umpire raised reasonable apprehensions in the mind of the appellants that the umpire will decide the matter against them and led them to move the Court for revocation of the Umpire's authority to proceed with the arbitration. He urged that the fact that the umpire was a creditor is a good ground to hold‑ that he was not a fit person to be an Umpire and the non disclosure of this fact amounted to a judicial misconduct. We are not at all impressed by this argument. The case of those arbitrators who are indebted to the parties or are relater to the parties and the failure to disclose these facts to tile parties at the time of referring the matter in dispute to arbitration stand entirely on a different footing. If the Umpire or the arbitrator happens to be a creditor of some person, that does not mean that lie will become partial or have interest in his debtor. No analogy can be drawn between this case and those cases where the superior Courts transfer a case from the subordinate Cow: on grounds of reasonable apprehension III our opinion the face that the umpire or arbitrator is a creditor is no ground to hold that he is disqualified to decide arbitration disputes. No disclosure of this fact cannot also be said to be a judicial misconduct. There must be some evidence to show that he was predisposed to his debtor. In the absence of such evidence on this ground must fail. The next contention of the learned counsel for the appellants that the umpire promised to refer the important questions of law involved in this matter to arbitration is Also without founda tion. He drew our attention to appellants' representation dated the 11th of June 1953 to the umpire to show that such a request was made to the umpire; who at first agreed; but in order to favour the respondents resiled from his promise. The learned Judge on the Original Side has disbelieved this story. We are also satisfied that the letter dated the 11th of June 1953 was never sent to the umpire. The oral statements of the appellant and his son Riazul Hassan in this respect are not worth reliance. If this was a fact, there was no need to make an application on the filth of June 1953 for getting the question of law referred to Court. The appellants would have definitely stated in this application that the umpire had agreed to refer it but there is no trace' of it. It appears that the appellants were not confident of getting a favourable decision from the umpire and were sitting on the fence. The reason for making the said application was only to create some sort of evidence against the umpire. 1n our opinion the question on what basis the damage should he assessed is purely a question of fact and it was not at all necessary to obtain the opinion of the Court on such questions. Lastly, the learned counsel for the appellants urged that the failure to file the record of the arbitration proceedings is fatal to the validity of the Award. According to the learned counsel a direction to this effect in section 14 (2) of the Arbitration Act is of a mandatory character. In the alternative he argued that the failure to do so has caused great prejudice to the appellants otherwise it could be shown that there are errors apparent on the face of the record. In this connection the learned counsel invited our attention to a decision reported in Yusuf Khan v. Riyasat Ali. In that case the arbitrator converted his pencil notes of depositions into written depositions without having taken any steps to ensure that they were accurately transcribed, omitted to take on such transcriptions signatures of the parties or to take other steps to ensure their accuracy. This was con sidered to be a neglect of duty and responsibilities laid on the arbitrator and the award was set aside for such neglect. The learned Judges of the Oudh Court, however, observed that the mere fact that an arbitrator has omitted to file along with his Award the depositions of the witnesses examined by him or the documentary evidence filed before him would not justify a Court in holding that the Award on that ground is invalid. They further observed that there may be a case in which the procedure adopted by the arbitrator in not filing evidence before the Court may lead one to the conclusion that the arbitrator did not act in accordance with law, and that he was therefore guilty of mis conduct as stated in para. 15 of Schedule II of the Civil Procedure Code. No such inference can be raised in the present case. The learned counsel for the respondent has invited our attention to the documents filed by the parties. It is apparent from the documents that the appellants kept the contract alive till March 1952. The Award does not say on that basis the damages have been assessed. But even if it would have said that the damages were based on the rates prevalent in March, 1452 it would prima facie have been a good decision. The direction given to the arbitrators under section 14 (2 is only of a directory nature. The breach of this direction cannot make the Award as inoperative. In case the intention of the legislature would have been otherwise, they would have clearly stated so. In our opinion this direction is only for the con venience of the parties and is not in the nature of public duty, the failure of which is considered to be fatal: We also consider that the breach of this direction is only an irregularity. After careful consideration of the matter, we ‑are satisfied that the umpire in this case did not misconduct himself, and that there are no grounds to set aside the Award. We are in complete agreement with the view of Inamullah, J. in the matter under consideration. For these reasons the appeal is dismissed with costs. A.H. Appeal dismissed.