1996 PLP 674 (MLD)

5. The term 'referee' has come under consideration before the superior Courts at various occasion. In Sher Zaman Khan v. Noor Zaman Khan and another PLD 1977 Lah. 672, it has been laid down as under: ‑‑ "There is a clear distinction between an arbitrator and a referee. An arbitrator as held by the West Pakistan High Court and Supreme Court of Pakistan is a person who decides a dispute after an inquiry. The determination of the dispute by such a person is essentially by following a judicial procedure keeping in view the principles of natural justice and the law of the land. Such decision is known as an award and can be made a rule of the Court after following the procedure of the Arbitration Act. The statement of a referee is not his finding. It is statement made before the Court on the basis of knowledge or belief of the referee and has all the characteristics to operate as an admission of the parties in which a decree can be based by the Court." It was further laid down in the said judgment that: "Statement of referee made on basis of inference drawn from evidence taken by him is an award and not a statement under section 20 of the Evidence Act, 1872, referee submitting a report after making inquiries on spot and taking evidence in presence of parties but not appearing in Court‑‑‑Petitioner resiling from his statement of agreement to refer dispute to referee‑‑‑Reference, though under section 20, Evidence Act, 1872 and referee expected to make statement presumably before Court on basis of his knowledge or belief and not on basis of inquiries made by him in a judicial manner agreement of reference ceased to be effective as soon as referee appeared in Court and impliedly proved his ignorance about matter and inability to make a statement‑‑‑Held further, parties having intended referee to make a statement before Court and such statement not having been made and petitioner having already resiled from his agreement of reference, petitioner even otherwise ought to have been allowed to revoke his statement." Similarly in another judgment reported as Kashmira v. Mst. Malkho NLR 1992 Civil 318, the judgment and decrees of the Courts below which were entirely based upon the report and statement of the referee were held to be suffering from material irregularity and were set aside holding that the referee had conducted a probe by associating a number of persons and was influenced by their opinion. A referee is supposed to make a statement or report strictly according to his personal knowledge or belief without conducting an enquiry as held in Muhammad Hanif Khan and others. v. Ghulam Fareed and others PLD 1988 Lah. 250.

6. Similarly it has been held in another judgment reported as Rafiud Din and another v. Ali Hussain PLD 1977 Lah. 418 that a referee is a person who acts on his own knowledge and belief and not a person who is appointed to decide the matter after inquiry and after taking other evidence. In the present case it appears that the witness Khan Mushtaq Ahmed Khan has not acted as a referee but as an arbitrator or a Local Commissioner. There is a lot of difference between a referee and an arbitrator. The witness has based his opinion not on his personal knowledge but on material gained and collected by him from other sources which may not be authentic having not been subjected to cross‑examination by the parties. Reference in this behalf may also be made to Fazal Bibi v. Abdul Hameed and 5 others 1994 MLD 560 (Lahore).

7. Another ‑important aspect of the case has not been gone into by the learned Appellate Court that though the parties agreed for appointment of Khan Mushtaq Ahmed Khan as solitary witness but before his statement could be recorded, an application was made by the petitioner that he would not accept the statement of the solitary witness as he had no confidence upon him. The said application was dismissed on 14‑9‑1991 and after dismissal of the application, the witness was examined and the case was decided there and then on the same date. Even if it is accepted that the parties agreed for appointment of the solitary witness but subsequently by making an application, petitioner resiled therefrom, hence the contract stood abrogated. The decision based on the statement of the solitary witness is illegal on this ground also because the contract ceased to exist between the parties before his statement was recorded. In this connection reference may be made to Muhammad Akbar and another v. Muhammad Aslam and another PLD 1970 SC 241 wherein it was held that "parties to a suit coming to an agreement that suit may be decided in accordance with statement to be made by a third person as to matters in dispute between them‑‑‑Agreement later retracted by appellant before recording of statement of third person by trial Court‑‑‑Such agreement not covered by any statutory provision‑‑‑Held, a contract and does not amount to an adjustment of suit. An agreement that the Court may decide the matters in dispute between the parties in accordance with the statement of a third person is not covered by the provisions of any one of these statutes". The relevant observation in this connection is at page 243 which is reproduced below: "A number of precedent cases were cited from the Bar both for and against the proposition whether the parties to such an agreement can retract before the third person has made the statement before the Court regarding matters in dispute between them. The decision in some of the cases is based on the Oaths Act, 1873, in some on the provisions of rule 3, Order XXIII, C.P.C. and in others on the provisions of Arbitration Act. In our view an agreement that the Court may decide the matters in dispute between the parties in accordance with the statement of a third person is not covered by the provisions of any one of these statutes.

8. It was laid down by the Hon'ble Supreme Court in Ghulam Farid Khan v. Muhammad Hanif Khan and others 1990 SCMR 763 that dispute between parties referred to a referee by Court on consent of the parties‑‑‑Referee submitted his "Faisala" to Court in respect of reference whereupon. Court passed a decree in accordance with "Faisala" of referee. "Faisala" of referee whether to be treated as a settlement furnishing information within the meaning of Article 33 of Qanun‑e‑Shahadat, 1984 or an award within the meaning of section 14 of Arbitration Act. Their Lordships of the Supreme Court observed: "Even though in the suit the appellant had laid claim to only some of the properties yet the parties by common consent asked Hafiz Nasrullah Khan to settle all the disputes arising between them with regard to the entire estate left by the old Nawab. They were obviously not seeking any information from Hafiz Nasrullah Khan but a ' Faisala'. Thus, despite the use of the word 'referee' in the joint application and settlement of 20‑5‑1989, the real intention of the parties was to appoint an arbitrator for resolving the dispute. It is also to be noticed that Hafiz Nasrullah khan also did not regard that he had been appointed to merely furnish information on the controversy raised by the appellant in his suit but thought and quite rightly so, that he had been called upon to apportion the entire estate left by the late Nawab among his various heirs. . By his ' Faisala' , he not only divided the movable and immovable properties left by the Nawab among his heirs, he even awarded cash amounts to some of them by way of compensation on equitable considerations. He also directed the cancellation of certain mutations of inheritance which had already been effected in the Revenue Record. His ' Faisala", therefore, could hardly be treated as a statement furnishing information. Quite clearly, he understood his role as that of an arbitrator and proceeded accordingly, even though in keeping with the statements made by the parties, he described himself as a referee. In the circumstances the contention of the learned counsel for the appellant that the ' Faisala' filed by Hafiz Nasrullah Khan, was an admission within the meaning of Article 33, Qanun‑e‑Shahadat cannot be accepted. It was quite clearly an award and the High Court was right in holding that it could not be made rule of the Court without giving an opportunity to the parties, if they so desired, to file objections thereto."

9. It is also pertinent to mention that parties were present at the time of appointment of solitary witness but their statements were not recorded by the learned Additional District Judge and in the absence of the parties, the solitary witness could not be appointed by the Court on mere agreement of the counsel. In this connection reliance is placed upon Alamgir Khan v. Rashid 1988 CLC 1171 wherein it was held that where parties are present before Court or Tribunal instead of counsel the statement of parties must be recorded. In their absence counsel should make a statement that he was doing so as attorney of his client and on his behalf. Where this procedure is not followed, agreement held not binding on party. In the present case the important aspect which lost notice of the Appellate Court is that agreement related to the evidence of the solitary witness. When one of the parties to the agreement had resiled, the consent thereof stood revoked and as such the Court was not justified to act upon such an agreement. The petitioner had already before the statement of solitary witness could be recorded made an application that he had lost confidence in the witness agreed upon. In these circumstances the agreement had lost its validity and the learned Appellate Court was not justified to act upon the evidence of such a witness regarding whom the parties' consent was no more there. The witness also appears to have acted as an arbitrator or a local commission and not as a referee. He has not made a statement on the basis of his personal information but because of inquiries held at the spot, measures taken and evidence collected, and then he deposed before the Court a referee could only make a statement regarding fact which was in his personal knowledge without probing into it from any other material. In view of the law laid down in the abovementioned judgments, it is clearly established that the witness has not acted as a referee but as an arbitrator or Local Commission and his statement was more or less an award or that of a local commission and for making the award rule of the Court or if it was treated as report of the local commission, the learned Appellate Court have not followed the prescribed procedure and thus committed an illegality while holding that he had not appointed any Local Commissioner and that the term referee was a misnomer. The statement of the mlita,v witness recorded after the petitioner had expressed his no confidence in him, could not have been made the basis of the decision of controversy between the parties. Appellate Court has erred in law in not examining the evidence of the parties‑produced before the trial Court and as such the judgment and decree is not maintainable being contrary to the authorities referred to above. This being so, the impugned judgment and decree are set aside and the case is remanded to the learned District Judge for its decision afresh on the basis of the evidence of the parties recorded by the trial Court and by treating the statement of Khan Mushtaq Ahmad Khan as non existent. The parties are left to bear their own costs. A.A./M‑2634/L Case remanded.