P L D 1954 Sind 54 (PLP)

LARI, J.‑The plaintiffs and defendants entered into an agreement on 25th September, 1951, One of the conditions of the contract was that all disputes were to be referred to arbitration under rules of the Karachi Cotton Association Ltd., Karachi. Some dispute arose between the parties and the plaintiffs appointed Mian Muhammad Aslam as their Arbitrator on 2nd February 1952 and served a notice on the defendants intimating the appointment of Mian Muhammad Aslam as their Arbitrator and inviting them to appoint their Arbitrator within 15 days of the receipt of the notice. The defendants failed to appoint their arbitrator and thereupon the plaintiffs appointed Haji Muhammad Umar to act as an Arbitrator on their behalf and intimated the same to the defendants on 20th February, 1952. The Arbitrators selected Mr. Muhammad Shafi as an umpire and fixed 7th March, 1952 for proceeding with the arbitration. The defendants did not make any appearance before the arbitrators who entered into arbitration proceedings on 12th March, 1952. All the steps as to appointment of arbitrators were taken by the plaintiffs in accordance with Bye‑law No. 39 of the Karachi Cotton Associa tion Bye‑laws. The arbitrators filed the award on 13th August. 1952 pursuant to the provisions of section 14 (2) of the Arbitration Act, 1940 and rule 282 (i) of the Sind Chief Court Rules at the request of the plaintiffs. The defendants put in an application under section 30 of the Arbitration Act read with rule 284 of the Sind Chief Court Rules and prayed that the Award be set aside. The first contention of the defendants is that the contract between the parties was Factory Selection Contract and arbitration with reference to such a contract is governed by Bye‑law 140 and not (by ?) Bye‑law 39 of the Karachi Cotton Association Ltd., Karachi. Bye‑law 39 lays down that one arbitrator has to be appointed by each party and in case of failure by anyone party to appoint an arbitrator the other party has the right to appoint the second arbitrator. The two arbitra tors so appointed have to appoint an umpire to whom the matter has to be referred in case the two arbitrators cannot agree among themselves. Bye‑law 140 on the other hand lays down that there will be a panel of 36 arbitrators consisting of 18 from buyers Exporters and 18 from sellers/Others group appointed by the Board and all disputes arising out of the Factory Selection Contract shall be referred to the arbitration of two disinterested arbitrators drawn by ballot. one from the sellers panel and the other from the buyers's panel of arbitrators. A recital would make it clear that the plaintiffs bad proceeded under Bye‑law 39 and not (under ?) Bye‑law

140. Bye‑law 140 did not exist on the date of the contract i.e. on 25th September, 1951 and was framed and given effect to ;on 29th October, 1951. The dispute, however, arose subsequent to adoption of Bye‑law

140. The learned counsel for the defendants argued that the contract in question being a Factory Selection Contract reference could only have been made in accordance with the Bye‑law 140 and that not having been done the very constitution of the arbitrators is illegal and the award is bad in law on that account. Reliance is placed in a case Messrs. Universal Corpora tion v. Messrs. S. A. Rauf & Co. reported in (P L D 1953 Sind 18.). This case is on all fours with the facts of the present case and entirely supports the contention of the defendants. My brother Muhammad Bakhsh, J. held. "In this case the Arbitrators were appointed in January 1952, and it is, therefore, clear that Bye‑law 140 which applied to the contract in suit and which came into effect from 29th October, 1951 was not complied with. The very constitution of the Arbi tration Tribunal therefore is illegal." The learned counsel for the plaintiff, however, argued that the case was not rightly decided and the learned judge did not consider that on the date of the contract Bye‑law 140 was not in existence and, therefore, the contract which provided for arbitration could not refer to Bye‑law 140 and arbitration proceedings pursuant to that contract must be held in accordance with Bye‑law

39. It is true that Bye‑law 39 was alone in existence on the date of the contract and the clause was to the effect that all disputes were to be referred to arbitration under rules of Karachi Cotton Associa tion Ltd. The argument of the learned counsel for the plaintiffs assumes that agreement was to refer to arbitration under the rules of the Karachi Cotton Association as in force on 25th September, 1951. I find no warrant for this suggestion. Every organisation is entitled to change its rules and does in fact, change, its rules. The intention could only be that the dispute will be referred to arbitration in accordance with the rules that would be in existence on the date when the question of arbitration arise. It is true that the condition in question is followed by a sentence which runs thus :‑ "All other terms and conditions subject to the Bye‑laws of the Karachi Cotton Association Ltd. in force from time to time." And that lends force to the contention that so far as condition as to arbitration was concerned it was to be governed by the rules of the Karachi Cotton Association as in force on the date of the contract but on the whole and particularly keeping in view the observation of my senior brother justice Muhammad Bakhsh, I am of opinion that I should stick to the view taken in the case mentioned above. I accordingly give effect to the objection allowed and dismiss the application. I make no order as to costs. The defendants raised some other objections but it is not necessary to deal with them. A. H. Application dismissed.