1989 PLP 2229 (CLC)

(iv) In P L D 1982 Karachi 378, it was observed by Mr. Justice Zafar Hussain Mirza (now, Judge of the Supreme Court) that the Act imposes certain disabilities on partners seeking to enforce certain claims in the Civil Courts by section 69 which lays down that any firm which is not registered will be unable to enforce its claims against third parties in the Civil Courts; and any partner who is not registered will be unable to enforce his claim against either third parties or against his fellow‑partners except to and for dissolution of the firm. After discussing some material facts as to the effect of filing of suit by a non‑ partner, it was further observed that:‑ "Therefore, there was no privity of contract between him and the society. The present suit has been brought in the name of the partnership firm by the said Muhammad Khan as managing. partner. He, was therefore, not a registered partner in the original firm m whose name the suit has been brought. Subsection (1) of Section 69, Partnership Act lays down a legal bar on such person to bring a suit whose name is not shown as partner in such registered firm. The present appellant had, therefore, clearly no locus standi to bring the suit. I have, therefore, come to the conclusion that the suit was not maintainable and has rightly been dismissed by the learned Single Judge." (v) In A I R 1970 Mysore 299, it was observed that the provision of Section 69 (2) of the Partnership Act specifically bars the institution of a suit by or on behalf of a firm to enforce a right arising from a contract unless the conditions specified in Section 69 (2) are satisfied. The use of the expression "No suit ....shall be instituted in any Court ...." clearly indicates the intention of the Legislature to make this provision mandatory. The two requirements which must be fulfilled before a suit can be instituted to enforce a contractual right by the firm or on behalf of the firm are: (i) that the firm is a registered one and (2) that the persons suing are or have been shown in the register of firms as partners of the firm. As these are the conditions for the institution of the suit, the relevant? ate with respect to which these conditions must be satisfied is the date of the institution of the suit. On the date of the institution of the suit, the firm must be a registered one and the persons suing must either be partners or persons whose names are shown in the register of firms as partners. Both the conditions are mandatory and must be fulfilled. The suit would be wholly incompetent if either of these conditions is not fulfilled. The learned Judge held that:‑ "In my opinion, the persons suing must either in fact be partners on the date of suit or must be persons whose names are shown as on the date of suit in the Register of firms as partners of the firm. Even if the names of the partners suing have not yet been entered in the Register of firms, they can still institute the suit by proving that they were m fact partners of the firm on the date of suit. That can only be proved by evidence other than the Register of firms. I therefore respectfully disagree with the view taken by Justice Deo in the decision reported in A I R 1952 Nag.57. In my opinion, oral evidence other than the Register of Firms or its extract can be adduced to prove that the persons suing are partners of the firm as on the date of suit." (vi) In A I R 1970 Rajasthan 86, in a suit by Partnership firm it was found on disclosure of the names of the firm under Order 30, rule 3 that the names of some of existing partners were not included in the Register of firms the suit was held not maintainable, as the persons suing are all the partners of the firm at the relevant date and none of them can, for obvious reason, be left out for purposes of the suit. It was further held that it is incorrect to say that subsection (2) of Section 69 merely requires that only person or persons actually signing the plaint on behalf of the firm should be shown m the Register of firms as its partners. (vii) In A I R 1971 Jammu & Kashmir 109 the suit was held not maintainable as hit by subsection (2) of Section 69 of the Partnership Act, as the plaintiff was not a registered firm m accordance with law.

5. Having considered the law placed at the Bar it is noticed that the law cited by the learned counsel for the plaintiff is, in fact, beside the point. A I R 1961 Supreme Court 325 is a decision under Order 30, rule 1, C P C. The suit was instituted by a duly constituted attorney of the plaintiff firm, which was a foreign firm at Singapore. Section 69 (4) itself provides that the provision of Section 69 (2) are not applicable to a foreign firm, so the question in that case did not come in the way of the plaintiff in that suit. In fact, Order 30 Rule 1, C P C was not to apply to a foreign firm and so application under Order 6, Rule 17 for amendment was moved therein. P L D 1964 Karachi 290 is also the case of a foreign firm. The question as to the applicability of Order 30, Rule 1 C.P.C. arose therein as the benefit of the rule was not available to a foreign firm and so an application for amendment was moved. Section 69 (2) of the Partnership Act was in fact not considered at all in that case. In A I R 1952 Allahabad 695: the suit was instituted in the name of the firm as was signed by a partner, which is not the case here. In A I R 1965 Supreme Court 1718, the suit was not by a firm; it was against the firm, one of the defendants judgment‑debtors was a Ruler of a State, the decree was thus held inexecutable against him. No question arose as to the applicability of Section 69 of the Partnership Act in that case. The decisions reported in PLD 1972 Quetta 5 and P L D 1987 Karachi 180 are not even suits, they are rent cases. There can be no question of advertence to Section 69 of Partnership Act therein. In any case the Code of Civil Procedure is not applicable to proceedings under Rent Restriction Ordinance and Appeals there under. P L D 1973 (Note 330 Lahore 41 is also not a case under Section 69 of the Partnership Act. A 1 R 1927 Allahabad 514 is on the face of it not applicable as the decision pertains to a period when the Partnership Act 1932 had not come into force. A I R 1961 Bombay 292 is also not a case under Section

69. Moreover the fact of not signing the plaint in accordance with the provision of C P C was perhaps remedied and thus it was held that a decree could be passed in the suit.

6. On the other hand, the cases cited by the learned counsel for the defendant lend support to the submission made by him, particularly the cases reported in A I R 1944 Madras 443, A I R 1951 Bombay 6, P L D 1982 Karachi 378, AIR 1970 Mysore 299 and A I R 1970 Rajasthan 87. 1 may also refer to the observations of a Division Bench of Punjab High Court, reported as Dr. S.V. Bahal v. S.L. Kapur and Company (A I R 1956 Punjab 24), which reads as follows:‑ "There is no doubt that in a sense the, firm itself is a person but to my mind there can be no doubt that the words, `persons suing' here mean persons in the sense of individuals and that the only individuals referred to must in my opinion be the partners in the firm...:' Reference may also be made to the case of Bank of Koothattukulam v. Itten Thomas and another (A I R 1955 TC 155), Wherein it was held that: "It is necessary not only that the firm should be registered, but the person suing must be shown as a partner in the firm, and when it is found that on the date when the plaint is filed the second part of this condition has not been carried out then Section 69 (2) is not complied."

7. Subsection (2) of Section 69 requires fulfillment of two pre‑conditions? before a suit to enforce the right under a contract can be instituted in a Court of law on behalf of the firm against a 3rd party: firstly that the firm should be registered, and secondly, the person suing must have been shown in the Register of Firms as partner in the firm. The bar contained in Section 69 of the Partnership Act, 1932 against institution of suit on behalf of the firm by a person who is not a partner is not restricted to the institution of suit, but it equally applied to other proceedings including Arbitration proceedings.

8. The submissions of Mr. Iqbal Kazi that the plaint is signed by Imam Patel as provided under Order 30, rule 1 or Order 6, rules 15 & 16 is misconceived inasmuch as the provisions as contained in the Civil Procedure Code with regard to signing or verifying the plaint are procedural and directory in: nature but in none of those cases relied on by him the suit was challenged under Section 69 of the Partnership Act, which is mandatory in nature.

9. I am, therefore, in full agreement with the learned Arbitrator that Imam Patel who had sued the defendant and submitted a claim on behalf of the firm not being a partner of the said firm, the suit as well as the reference to the Arbitration proceedings were incompetent, and accordingly the claim was rightly dismissed.

10. Learned counsel for the defendant also raised a plea that the Arbitrator is a Judge of facts and law and the award cannot be set aside even if it is shown that the Arbitrator has taken a wrong view on law. He also referred to a number of cases to support his plea, namely: (i) Firm Chairagh Hassan v. Kh. Habib Joo (1980 C L C 1740), (ii) Suleman Haji Mohammad & Co. v. State Bank of Pakistan (P L D 1960 Karachi 78), (iii) Azad Government of the State of Jammu & Kashmir and another v.Ghulam Rasul Lone (1983 C L C 926), (iv) The Karachi Electric Supply Corporation Ltd. v. Consortium 2000 P.E.C.H. Society Karachi (1986 C L C 1350), (v) Reghupati Dutt and others v. Ram Gopal Dutt and others (A I R 1939 Calcutta 557), and (vi) Ashfaq Ali Qureshi v. Municipal Corporation, Multan (1985 SCMR 597). (i) In the first named case (1980 C L C 1740) it was held that it is now very well settled that the Arbitrator is a Judge of both questions of fact and law and so a party cannot be allowed to show that his decision is wrong on merits of the case. The Court is not supposed to sit in judgment on the award of the Arbitrator. (ii) In the second case (P L D 1960 Karachi 78) Waheeduddin, J. as he then was, observed that the powers of the Court to set aside the award are confined to the provisions of Section 30 of the Arbitration Act. It was thus held that the mere error of law does not vitiate the award. To set aside the award the error in law must appear on the face of it and not on the face of the record. (iii) In the third case (1983 C L C 926) (Azad Jammu & Kashmir) (DB) it was observed that the Court cannot sit as Court of appeal in an award made by Arbitrator and substitute its view for one held by Arbitrator. Reliance was placed on a decision, reported in A I R 1948 Nag. 162, wherein it was held that: the Arbitrators are Judges of fact as well as of law and have the jurisdiction to decide the matter rightly or wrongly. Accordingly, it was opined, if they reach a decision and reach it fairly after hearing both the parties, their award cannot be attacked and Court on filing the award has no power to sit in appeal on the decision of the arbitrators. (iv) In the fourth case (1986 C L C 1350) it was held that Arbitrators/Umpire being Judges of law and facts the Courts are not expected to act as Courts of appeal over the award/decision given by them. (v) In the fifth case (A I R 1939 Calcutta 557) it was contended by the appellants that the Arbitrators have acted on wrong legal principle in making those various items of award, it was observed that: they may or may not have taken an erroneous view of the law on some of the items, it is impossible for us to say, although we may surmise. But if they have taken erroneous views of the law in certain parts of the case, it must be remembered that they were requested by all the parties to deal with matters in dispute and decide them. It was also observed that doubtless the parties considered that their knowledge of law was sound and having chosen their tribunal to decide the matter in dispute, the Courts are very reluctant to interfere with the decision of the tribunal and will only do so in cases mentioned in Sch.2, paras. 14, 15 and 16 of the Code. (It may be noticed that this Judgment was pronounced in appeal when Arbitration Act 1940 had not been promulgated). (vi) In the last case (1985 SCMR 597), it was observed as under:‑‑ "It is a well‑established rule of law that where a dispute is referred to an arbitrator of the choice of the parties and he makes an award, it becomes the duty of the Court to give every reasonable intendment in favour of the award and lean towards upholding it rather than vitiating it. In this connection I may usefully reproduce the dictum of Koy, L.J., in? re: Heihley, Maxsted & Co., and Durnant & Co., (1893) 1 Q B 405 at p.414: "The Courts have already been exceedingly cautious in dealing with awards. Prima facie, an award is final and not subject to appeal; the arbitrator is chosen by the parties who presumably prefer a domestic tribunal which is not bound rigidly by the rules of evidence: and a mistake of law or fact is not, per se, a ground for sending back the award of such a tribunal." A similar view has been expressed in‑Abdul Rauf v. Muhammad Saeed Akhtar, in the following words: "A well‑settled rule of construction of award is that the award should be construed liberally and in accordance with common sense, and it should be so read that it can be given effect to, and not so that it would nullify the efforts of the arbitrators appointed by the parties themselves." The arbitrator is the judge of all matters arising in the dispute whether of fact or of law and the Court is not to act as a Court of appeal sitting in judgment over the award. Nor is it proper for the Court to proceed to scrutinize the award in order only to discover an error for the purpose of setting it aside. The error must be apparent on the face of the award and not latent such as can be discovered only after a scrutiny of the material beyond the award: See MA. Ali Mian v. Green & Co. White Ltd., P L D 1964 Dacca

527. The award in the present case did not, in our view suffer from any patent infirmity for which it ought to have been remitted or set aside:'

11. Mr. Iqbal Kazi, learned counsel for the plaintiff submitted that the Court cannot interfere into a decision on a question of law specifically referred to the Arbitrator but it can interfere into the finding on law by the Arbitrator if the whole case, on facts and law, is referred to him, without specifying a question of law to be answered by the Arbitrator. In support of his submissions he placed his reliance on the following cases:‑ (i) Champsey Bhara Company v. The Jivraj Balloo Spinning and Weaving Company Ltd. (1923 Privy Council 66), (ii) Abdul Halim v. Ismail Momin (A I R 1925 Patna 465), (iii) Hamdard Dawakhana (Wakf), Karachi v. M/s. K.B. Joseph & Co. Ltd., Lahore and another (P L D 1971 Karachi 279) and (iv) M/s Jaffer Bros. Ltd. v. Islamic Republic of Pakistan and another (P L D 1978 Karachi 585). (i) In the Privy Council case (A I R 1923 P.C. 66) reference was made by the learned counsel to the following paragraphs: "The law on the subject has never been more clearly stated than by Williams, J. in the case of Hodgkinson v. Fernie (3 C.B.N.S. 189). "The law has for many years been settled, and remains so at this day, that, where a cause or matters in difference are referred to an arbitrator lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact ..... The only exceptions to that rule are cases where the award is the result of corruption or fraud, and one other, which though it is to be regretted, is now, I think firmly established viz., here the question of law necessarily arises on the face of the award or upon some paper accompanying and forming part of the award. Though the propriety of this latter may very well be doubted, I think it may be considered as established:" The view has been adhered to in many subsequent cases, and in particular in the House of Lords in British Westinghouse Company v. Underground Electric Railways Company (1912 A.C. 673). The question to be decided is: Does the error in law appear on the face of the award? In the British Estinghouse case it clearly did. The arbitrator had stated a special case and got an opinion of the Divisional Court: in making his award he stated that opinion and founded his award upon it. The opinion as given was held to be erroneous, and so there was an error in law on the face of the award." (ii) In Patna case (A I R Patna 465) it was held that an arbitrator is ordinarily free from the fetters of adjective law, but that does not make him free from the fundamental principles of justice. (iii) In the case (P L D 1971 Karachi 279), after referring to the settled rule of law that an award can be set aside only if "there an error of law appears on the face of the award", observation of Lord Wright with reference to this principle at page 615 of the Report was relied on which reads as follows:‑ "The rule was again restated with approval by Lord Dunedin giving the opinion of the Privy Council in Champsey Bhara & Co. v. Jivraj Balloo etc. 1923 A C 480. 1 know of no authority that limits its application so as to exclude cases in which a question of law must necessarily arise; indeed, if that were so, the rule would be in effect meaningless. The rule in truth applies to the ordinary case where, in the words of Lord Dunedin (1923 AC 438), the submission refers 'to the arbitrator the whole question whether it depends on law or on fact.' To be contrasted with such cases there is the special type of case where a different rule is in force, so that the Court will not interfere even though it is manifest on the face of the award that the arbitrator has gone wrong in law. This is so when what is referred to the arbitrator is not the whole question, whether involving both fact or law, but only some specific question of law in express as the separate question submitted, that is to say, where a point of law is submitted as such, that is, as a point of law, which is all that the arbitrator is required to decide, no fact being, quoted that submission, in dispute." The counsel, thereafter referred to the following observation of the learned Judge in the case cited by him which reads as under:‑ "The principle laid down in both the judgments cited is that an award will not be set aside on account of an apparent error of law only when that error is with regard to a question of law expressly referred to the arbitrator, and further in both the judgments it has been laid down that in order to determine whether a question of law was expressly referred to the arbitration and the pleadings of the parties before the arbitrator." (iv) In the next Karachi case (P L D 1978 Karachi 585), it was held that, where an arbitrator states reasons for his decision, and they arc erroneous on a point there is an error of law on the face of the award and the award is liable to be set aside. 12. 1 may also refer to a judgment of mine sitting with my learned brother Fakhruddin G. Ebrahim, J., as he then was, delivered by me in the case of Badruddin H. Mawani v. Government of Pakistan (1981 C L C 339). In that case it was held by us that the award cannot be set aside unless it is shown that the arbitrator has misconducted himself or the proceeding or that award has been improperly procured or is otherwise invalid. For that view, reference was made to the cases of Abdul Rahman Munshi v. Abdul Malik and others (1968 S C M R 275) and Province of East Pakistan v. M/s. Architect Engineer and Co. (P L D 1968 Dacca 245).

13. Having considered the case‑law cited at the Bar on the question of interference of the Court with an award the burden under Section 30 of the Arbitration Act, 1940 to set aside the award is on the objector. An award under Section 30 can be challenged on any of the grounds, namely that the arbitrator or umpire has misconducted himself or the proceedings or an award has been made after issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35 or that an award has been improperly procured or is otherwise invalid. The Court, generally speaking, leans in favour of the award. It does not sit as a Court of appeal. However, the award can be set aside if there is an error apparent on the face of award or that error should be of a jurisdictional nature or some fraud has been practiced in obtaining award. Every case depends on its own merits. What is an error on the face of award justifying the setting aside of the award depends on the facts and circumstances of each case.

14. This award has been challenged by Mr. Kazi. learned counsel for the plaintiff, under Section 30 which reads as below:

30. Grounds for setting aside award.‑‑An award shall not be set aside except on one or more of the following grounds, namely:‑ (a) that an arbitrator or umpire has misconducted, himself or the proceedings; (b) that an award has been made after the issue of an order by the Court superseding the arbitrator or after arbitration proceedings have become invalid under section 35; (c) ?????? that an award has been improperly procured or is otherwise invalid. Mr. Kazi frankly conceded that his objection is confined to clause (a) only and submitted that the learned arbitrator by deciding wrongly a question of law relating to section 69 (2) of the Partnership Act has technically misconducted himself and has made his award liable to be set aside. As regards upsetting of the arbitrator's finding on law by the Court, a distinction can be made in this behalf. If a specific question of law has been referred to arbitrator by parties, the award cannot be set aside on the arbitrator's decision on the said specific point of law, even if an error of law is apparent on the award. But if the dispute, as a whole involving both questions of facts and law, unspecified, has been referred to the arbitrator, the award can be set aside if the error of law is apparent on the face of award, (I do not mean, apparent on the record). Reliance is placed by me on P L D 1971 Karachi 279 and P L D 1960 Kar. 78 and 1985 S C M R 597.

15. Russel on Arbitration has quoted from some decisions of English Courts, while stating that "The rule that an error of law, if it appears on the face of the award, is a ground for remitting it or setting aside,. is an exception to the general rule that an award is final as to both fact and law. Cf. Racecourse Betting Control Board v. Secretary of State (1944) Ch. 114 at pp. 125, 127 explained in R. v. Northumberland Compensation Appeal Tribunal (1951) 1 K.B. 711 at p.721, affirmed (1952) 1 K.B. 338.

16. Lastly I may also quote, with advantage, a passage from American Jurisprudence, Volume 3 (Ist Ed.) page 135, which reads as under:‑ "Since an award of arbitrators upon a matter in difference between parties is regarded as the judgment of a Court of last resort for that controversy and all reasonable presumptions will be entertained in its favour, but none to overthrow it, the Courts will permit it to be avoided or impeached only in a very clear case; at common law it is more final than a judgment in this respect ?

17. In the case before me the learned counsel for the plaintiff has not been able to convince me that there is an error of law apparent on the face of award which constitutes a misconduct on the part of the arbitrator. For the reasons discussed above, the objections to the award are dismissed. The award filed in Suit No.397 of 1985 is made rule of the Court and Suit No.178 of 1983 stands dismissed accordingly. There will, however, be no order as to costs. A.A/S‑444/K ????????????????????????????????????????????????????????????????????????????????????? ??????????????????????????????????? Order accordingly.