2013 PLP 871 (CLD)

ABDUS SATTAR ASGHAR, J.

This First Appeal under section 39 of the Arbitration Act, 1940 is lodged against two separate orders dated 13-4-1998 passed by the learned Civil Judge 1st Class, Faisalabad whereby while dismissing the objections of the appellants the learned trial court refused to set aside the Award dated 10-3-1996 and proceeded to make the said Award a rule of the Court.

2. Succinctly facts leading to this appeal are that the respondent a Private Limited Company filed an application under sections 8 and 9 of the Arbitration Act, 1940 for appointment of Arbitrator in view of clause 33 of the Contract between the parties. The respondent had also proposed the name of an Arbitrator. The appellants resisted the application raising objections on the appointment of the proposed Arbitrator and contended that the respondent be asked to propose some other officers as Arbitrator. To avoid unnecessary details it will be expedient to mention that with the concurrence of the parties two Arbitrators, one from each of the parties, were appointed. Both the Arbitrators announced the Award on 9-1-1993 for the sum of Rs.2,72,

523. The Award dated 9-1-1993 however later on was set aside by the learned trial Court vide order dated 26-1-1993 on the basis of objections raised by the respondent company. Subsequently two other Arbitrators were appointed but they were removed in terms of sections 11 and 12 of the Act ibid and sole Arbitrator was appointed vide order dated 4-12-1995. The respondent Company filed its claim before the Arbitrator, however the appellants' right to defend was struck off on 18-2-1996. After recording the ex parte evidence on 26-2-1996 the Arbitrator announced the Award on 10-3-1996 and filed the same in the court on 14-3-1996. Appellants also filed the objections under section 30 of the Act ibid on 11-4-1996. The respondent Company filed reply to the objections on 22-4-1996. The learned trial Court instead of framing any issues on the material controversy between the parties with regard to the objections, framed a single issue on 25-11-1997 on the basis of divergent pleadings of the parties as under:-- "Whether the Award dated 10-3-1996 is liable to be made rule of the Court?" However, later on even the above issue was recalled by the learned trial Court vide impugned order dated 13-4-1998 and made the Award rule of the Court. Appellants' objections under section 30 of the Act ibid were also dismissed through separate order dated 13-4-1993. Both the orders have been assailed through this appeal.

3. It is argued by the learned counsel for the appellants that the appointment of the sole Arbitrator was violative to the arbitration clause No.33 of the Contract between the parties; that the appellants being aggrieved had impugned the appointment of the sole Arbitrator before this Court by filing a civil revision, however no injunctive order was granted by this Court in the said civil revision; that the Arbitrator during the pendency of the said civil revision however hurriedly announced the impugned Award by closing the appellants' right to defence, resultantly the said civil revision became infructuous; that the Arbitrator before proceeding ex parte against the appellants did not serve any notice upon them; that the Arbitrator misconducted himself as well as the proceedings to pronounce the impugned Award; that the impugned Award was without lawful authority as well as beyond the terms of reference pertaining to the real matter in controversy between the parties; that the objections raised by the appellants in terms of section 30 of the Act ibid and denied by the respondent could not be dismissed without framing issues and having recourse to evidence; that the impugned orders dismissing the objections and making the Award Rule of the Court are against the law and facts violative to the principle of natural justice causing serious miscarriage of justice, are liable to set aside.

4. The appeal is resisted by the learned counsel for the respondent with the contentions that the impugned orders dated 13-4-1998 do not suffer from any factual or legal infirmity; that the appellants have been participating in the proceedings before the Arbitrator and wilfully declined to cooperate with the Arbitrator rather disassociated themselves with the proceedings at their own accord, therefore they were lawfully proceeded against ex parte; that the Award dated 10-3-1996 as well the impugned orders are well reasoned and based on the true appreciation of the material available on the record; that the impugned orders do not suffer from any factual or legal infirmity or any jurisdictional error, therefore the appellants' appeal being devoid of any merit deserves dismissal.

5. Arguments heard. Record perused.

6. At the out-set it may be expedient to reproduce hereunder the provision of section 17 of the Arbitration Act, 1940 which is relevant for the determination of the instant controversy between the parties:-- "

17. Judgment in terms of award.

Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award."

7. Bare perusal of the above quoted provision of law-makes it crystal clear that the Award is to be made rule of the Court only if the Court sees no reason to set aside it or to remit it. It is therefore incumbent upon the Court to satisfy itself that the Award does not suffer from any illegality or defect necessitating either the setting aside or its remission to the Arbitrator. Therefore, even in absence of any objection the Court has inherent powers to set aside the Award which exceeds Arbitrator's jurisdiction or if a material irregularity appears on the face of the Award. Reliance be made upon Ashfaq Ali Qureshi v. Municipal Corporation Multan and another (1985 SCMR 597). In the present case appellants had raised serious objections on the Award as well as the conduct of the Arbitrator alleging that he misconducted himself as well as the proceedings besides jurisdictional defect, lack of authority and excess of exercise of powers and material irregularities. The respondents have categorically resisted the objections by filing contesting written reply thereto. Therefore, keeping in view the circumstances it was not the case in which the objections could have been repelled without framing issues and having recourse to evidence. Therefore, the impugned orders dated 13-4-1998 passed by the learned trial Court dismissing the objections and making the Award Rule of the Court on wrong premises of law and facts violative to the principles of natural justice are not sustainable in the eye of law and liable to set aside.

8. For the above reasons, this F.A.O. is allowed and both the impugned orders dated 13-4-1998 are set aside with the result that the objections shall be deemed to be pending and to be decided by the learned trial court after framing issues, recording evidence and attending to the questions observed herein above. The case is therefore remanded back to the learned Senior Civil Judge Faisalabad who shall decide the objections under section 30 of the Arbitration Act, 1940 and in the light of the observations in accordance with law within a period of three months under intimation to the Additional Registrar (Judicial) of this Court. KMZ/F-3/L Appeal allowed.