P L D 1949 Lahore 278 (PLP)

Cornelius, J.‑The facts of the case out of which this petition arises are as follows. The petitioner Sardar Abdul Halim Khan was a con tractor employed by the Lahore Improvement Trust to carry out certain works. A dispute arose between the parties, relating to the contract, the details of which are not material for the purposes of this case. Under the terms of the contract, such a dispute was required to be referred to the arbitration of the Superintending Engineer, III Circle, P. W. D. (B. & R.), Lahore. An application was made by the petitioner to the Court of Sodhi Durga Pershad, Sub‑Judge 1st Class, Lahore, under section 20 of the Arbitration Act, 1940 for filing the agree ment to refer, and making a reference in accordance therewith. By an order, dated the 19th April, 1947, acting under subsection (4) of section 20, the Court referred the dispute to the arbitration of Mr. Tareen Superintending Engineer of the aforesaid Circle. No time was fixed for making the award, but under paragraph 3 of the first Schedule to the Arbitration Act, the statutory period of four months is to be read as one of the terms of reference. This period is, of course, susceptible of extension. The arbitrator did not make his award until the 4th May 1948, more than twelve months after the making of the reference. On the 28th May 1918, the petitioner applied to the Court for an order to the arbitrator to file his award, and such an order having been made, the award was actually filed on the 29th June 1948. Thereupon, the petitioner filed certain objections to the validity of the award and prayed that it should be set aside. At a some what late stage of the proceedings in that petition, on the 20th January 1949, the fresh objection was taken on behalf of the petitioner that the award was invalid by reason of having been made after the pres cribed period of limitation viz., four months. The plea was taken for the opposite party that this objection had been raised after the prescribed period of limitation, which under Article of the Indian Limitation Act, 1908, is one month. The learned Sub‑Judge (Shiekh Faruq Ahmad) held that the award was clearly made after the period of time prescribed the statute and that there was nothing to show that any extension of time had been allowed by the Court which made the reference. As to the plea taken by the respondent it was held that this could be raised at any time and in fact the Court could have taken the objection of its own motion. In the result, the learned Sub -Judge made an order that the award, having been made after the expiry of the prescribed period, was invalid and was not binding upon the petitioner. The final direction in the order is " The application to be filed", but the exact purport of this direction is not apparent. An appeal was taken by Sardar Abdul Halim Khan before the District judge, and the point was raised that after having set aside the award, the Court should have made a supplemental order in compliance with sections 19 and 25 of the Arbitration Act. The learned District judge was of the opinion that the appellant's grievance was genuine but that he himself was powerless to remedy the grievance, since the Act "does not provide for any appeal against the failure of the Court to comply with the provisions of sections 19 and 25." He considered that the trial Court had failed to take further proceedings " only through ignorance or by oversight," and that the proper course was for the appellant to apply to the trial Court for further action. With this expression of opinion the appeal was dismissed, and the petitioner has now come up before this Court in revision. There can be no doubt that the application made by Sardar Abdul Halim Khan in the first instance was correctly laid under section 20 of the Arbitration Act, seeking intervention of the Court where there) was no suit pending. This section provides that an application may be made to a competent Court by persons who have entered into an arbitration agreement seeking that such agreement may be filed in Court, prior to the institution of any suit with respect to the subject‑matter of the agreement. Just an application is to De registered as a suit any notice is to be given to all parties to the agreement other than the applicant, to show cause why it should not be filed. Subsection (4) of section 20 runs as follows: " Where no sufficient cause is shown the Court shall order the agreement to be filed, and shall make an order of reference to the arbitrator appointed by the parties, whether in the agree ment or otherwise, or, where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the Court." The last subsection provides that the arbitration is to proceed in accordance with, and to be governed by, " the other provisions of this Act so far as they can be made applicable". It is unnecessary to refer to the provisions of the Act relating to the conduct of proceedings before the arbitrator. Those proceedings were carried to their con clusion and an award was eventually made. The application of Sardar Abdul Halim Khan to have this award declared invalid was instituted under section 33 of the Act, which contains general provisions appli cable to all arbitrations. In this Chapter provision is also made for the setting aside of awards in section 30, of which clause (c), embody ing the ground that the award "has been improperly procured or is otherwise invalid" appears to be relevant in this case. Paragraph 3 of the First Schedule to the Act, embodying conditions implied in arbitration agreements unless a contrary intention is expressed in such agreements, provides that "the arbitrators shall make their award within four months after entering on the reference or after having been called upon to act by notice in writing from any party, to the arbi tration agreement." The judgment of the learned Sub‑Judge shows that the arbitrator in the case entered upon the reference on the 22nd December 1947, having been called upon to act by an application from the petitioner received by the arbitrator on the 25th November 1947. An award in May 1948, was clearly made more than four months after time had started to run for the purposes of this paragraph and as the provision is expressed in mandatory terms, its contravention involves avoidance of the award. Consequently, it cannot be said that in making an order setting aside the award, the learned Sub‑Judge acted in excess of his jurisdiction, or irregularity in the exercise of jurisdic tion vested in him. It is urged, however, on behalf of the petitioner that it was necessary for the learned Sub‑Judge in view of the pro visions of section 19 of the Arbitration Act, also to make and order stating whether or not the reference was superseded. Section 19 is in the following terms :‑ "Where an award has become void under subsection (3) of section 16 or has been set aside, the Court may by order supersede the reference and shall thereupon order that the arbitration agreement shall cease to have effect with respect to the difference referred." The provisions of section 16 are not attracted in this case, and, the section is applicable by reason of the award having been set aside. It is also sufficiently clear that by the operation of subsection (3) of section 20, to which reference has been made above, the provisions of section 19 are applicable to a case falling under section

20. On the other hand, section 25 appears in the Chapter relating to arbitration in suits. The proviso to section 29 states that in any case in which the Court's power of appointing arbitrators and umpires in cases where the parties fail to make the appointments or an arbitrator or umpire is removed by the Court, is attached, the Court may instead supersede the arbitration and proceed with the suit, and further goes on to say that where the Court supersedes the arbitration under section 19, it shall proceed with the suit. Obviously, this section which was invoked in the proceedings before the learned District judge has no application to a case like the present, where there is neither suit nor plaintiff upon which the Court could proceed after superseding the reference. But the variant provision in section 25 serves to indicate that section 19 is applicable to a case falling under section 20, where there is no pending suit, but the agreement to refer has been filed in Court, and the Court is invested with power thereafter to make orders of reference on the basis of such agreement. The consequence of the agreement having been filed under section 20 is that the parties cannot thereafter make a reference to arbitration on the basis of such agreement under Chapter II of the Act, on the other hand, there is nothing to suggest that in a proper case they may not apply to the Court after the agree ment has been filed, for an order of reference to arbitrator. Reading this subsection with section 19, it seems to me that the latter section provides the Court with power, in a proper case, to make an order whereby the agreement filed before it would be deprived of it before i.e., that Court has power under section 19 when it has set aside an award made upon reference under subsection (4) of section 20, to supersede the reference and thus avoid the arbitration agreement. It would also seem to follow that where a Court, while making an order under section 19, does not expressly supersede the reference and direct that the arbitration agreement shall cease to have effect, it must be deemed to have declined to exercise the power, and consequently that the arbitration agreement notwithstanding that it has been filed in Court, still remains of full for according its tenor, not only with respect to the difference which was referred to arbitration, but also with refer ence to all disputes between the parties which properly fall within the agreement. In this view of the matter it would seem that the petitioner's prayer that the trial Court in this case should be required to make an order under section 19, either superseding or not superseding the reference, is unnecessary, and indeed misconceived, for the order already made by the learned Sub‑Judge must be deemed to include an order declining to supersede the reference, and consequently, it would seem to follow that the arbitration agreement filed in the Court still remains of full force, according to its tenor, and consequently, as has been indicated above it would seem to be open to either party to the agree ment to make an application before the Court seeking a reference of the difference here in question to an arbitrator in accordance with the agreement. Such an application would lie under subsection (4) of section 20 and the Court would be required to take action thereon, subject to such pleas as may be raised by the opposite party, one of which may conceivably be that the terms of the arbitration agreement are of such a nature that a single reference to arbitration and an award thereon exhausts the power given by the agreement notwithstanding that the award may have been set aside by the Court later in accordance with law. That, however, is not a point with which I am called upon to deal in the present case. The petitioner's learned counsel assures me that his client is anxious that the matter should be referred again to arbit ration in accordance with the agreement, and that he has in fact instituted an application before the trial Court for his purpose. If that is the case, I can see nothing in law to bar the making of such an appli cation on which the Court would be required to adjudicate as indicated above. In any case, no reason appears why I should interfere with the order already made by the learned Sub-Judge. I accordingly dismiss this petition, but as the point raised was one of considerable difficulty, I leave the parties to bear their own costs. K. M. A. Petition dismissed.