1986 PLP 359 (CLC)

(a) To restrain the respondents from proceeding with the arbitration. (b) To set aside the appointments of respondent No. 2 Mr. Muniruddin Alvi as arbitrator of respondent No. 1 and thereafter as Sole Arbitrator. (c) To appoint two arbitrators for entering upon the arbitration and giving the award. (d) To pass such other orders as this Hon'ble Court may deem fit and proper in the circumstances of the case. (e) Cost of the application.

2. The facts giving rise to this application are that the applicant and respondent No. 1 entered into a partnership agreement on 14‑10‑1984 for carrying on the business of construction, supplies and other allied business in the name and style of "Hassan Company". The partnership was at will. It was provided in clause 13 of the said partnership agreement that in case of dispute the matter shall be referred to arbitration. Clause 13 reads as under:‑ "That all disputes and question, whatsoever, which shall either during or after the termination of the Partnership, arise between the partners or their legal representatives shall be referred to two Arbitrators appointed and nominated by each party whose decisions shall be binding on the parties. In case of difference of opinion between the Arbitrators, the matter will be decided by an Umpire unanimously appointed by the Arbitrators according to the Provisions of the Arbitration Act." After sometime the differences arose between the parries and respondent No. 1 on 22‑5‑1985 retired from the partnership

3. Respondent No. 1 through his counsel intimated the applicant by letter, dated 31‑7‑1985 (wrongly typed in the letter as 31‑8‑1985) that respondent No. 2 has been appointed as his arbitrator. The applicant was also required through the same letter, dated 31‑7‑1985 to appoint arbitrator from his side within one week. It was followed by another letter, dated 19‑8‑1985 addressed to the applicant on behalf of respondent No. 1 to appoint an Arbitrator from his side within a period of 15 ' days, as provided under section 9(b) of the Arbitration Act, 1940. The applicant failed to, rather refused to appoint arbitrator on his behalf on the ground that since the arbitrator appointed by respondent 1 was acting as an Advocate for him, he was not acceptable to the applicant as arbitrator. Respondent No. 1 was duly informed of it by letter, dated 2‑9‑1985. On the expiry of the period given in the notice, dated 19‑8‑1983 and the applicant failing to appoint an arbitrator on his behalf, respondent No. 1 who had already appointed his arbitrator before giving the said notice, appointed respondent No. 2 to act as sole arbitrator in the reference. The said sole arbitrator entered on the reference on 13‑10‑1985 while he issued a notice to the parties for preliminary proceedings to be held on 23‑10‑1985. However, in the meantime the applicant filed this application challenging the arbitration reference and appointment of respondent No. 2 as arbitrator and then as sole arbitrator on the following grounds, namely:‑‑ (i) the appointment of respondent No. 2 by respondent No. 1 as his arbitrator is improper and contrary to the provision of the arbitration clause and as such he is also not competent to be appointed as Sole Arbitrator. (ii) respondent No. 2 was acting both as Advocate and arbitrator at the same time and he will have interest upon his decision as an arbitrator and/or as a Sole Arbitrator. (iii) the notice, dated 31‑7‑1985 of respondent No. 1 through. respondent No. 2 requiring the applicant to appoint his arbitrator is invalid and of no legal effect."

4. I have heard Mr. Saleem lqbal, learned counsel for the applicant and Mr. Abdul Majeed Khan, learned counsel for respondent No. 1 and also respondent No. 2, the sole arbitrator.

5. As regards the first contention, learned counsel for the applicant submitted that as per clause 13 of the Partnership deed the arbitrators are to be appointed collectively by the parties and with mutual consent. Respondent No. 2 was appointed by respondent No. 1 as his arbitrator contrary to the provisions of the said arbitration clause, and since the appointment of the arbitrator is not in accordance with the arbitration clause, the arbitrator or arbitrators should be appointed by this Court under section 8 of the Arbitration Act.

6. The contention of the learned counsel is misplaced. The arbitration clause does not say that the two arbitrators are to be appointed collectively by the parties or with their consent. In fact, the arbitration clause specifically says that the dispute shall be referable to two arbitrators appointed and nominated by each party. Since tile applicant deliberately failed to appoint arbitrator on his behalf, the provisions of section 9(b) were attracted in the case and the appointment of respondent No. 2 not only as arbitrator but as sole arbitrator cannot be said to be improper or contrary to the provisions of the Arbitration Clause and the law.

7. The second contention of the learned counsel for the applicant that as respondent No. 2 was acting both as Advocate and arbitrator at the same time, he will not be impartial; thus he should be removed. Learned counsel for the applicant failed to cite any authority in support of his submission that an arbitrator merely by acting as an advocate before his entering on reference will amount to misconduct or that his impartiality can be doubted. On the other hand, Mr. Abdul Majeed relied on a case reported as Rajendra Nath Das v. Abdul Hakim Khan A I R 1918 Cal.

399. The relevant portion from the said judgment is reproduced as under:‑‑ "It is a common case that members of the legal profession are appointed arbitrators in suits even in cases where they are engaged for one of the parties. I have seen many cases where the counsel engaged on one side has been appointed arbitrator to decide the case. There is no reason to think that merely on that ground the gentleman appointed as arbitrator will not honestly and fairly determine the suit." It may also be stated that respondent No. 2 entered on the reference on 13‑10‑1985 when he issued notice to the parties for preliminary hearing and not before. Reliance is placed on a decision reported as Sind Cotton Exporters v. A.B. Sadiq Brothers P L D 1965 Sind

268. Thus, it cannot be said that respondent No. 2 was acting both as an Advocate and as an arbitrator at one and the same time.

8. The third contention that the notice, dated 31‑7‑1985 of respondent No. 1 through his counsel requiring the applicant to appoint his arbitrator is invalid carried some weight because the said notice required the applicant to nominate his arbitrator within a week of the receipt of the said notice which is contrary to the provisions of section 9(b) of the Arbitration Act, 1940. It appears that being conscious of that legal position, another notice, dated 19‑8‑1985 was issued to the applicant requiring the applicant to nominate his arbitrator within a period of fifteen days, which is perfectly valid. The applicant did not pay any heed to that notice, leaving respondent No. 1 to appoint his own arbitrator as sole arbitrator for which he should thank himself.

9. Mr. Salim lqbal lastly submitted that the applicant was under a misapprehension of the legal position and as such he may be allowed to appoint arbitrator on his behalf. The jurisdiction of this Court in the matter of appointment of arbitrator is provided in section 8 of the Arbitration Act, 1940. I am afraid the provisions contained in section 8 of the Arbitration Act cannot be invoked as none of the conditions specified in this section are applicable to the facts of the present case. Moreover, the applicant has neither taken this plea in any of his letters written by his counsel to the counsel for respondent No. 1 nor has taken any such plea in the above application.

10. In the result the application is dismissed with no order as to costs,

11. Before parting with the case, I may add that Mr. Muniruddin Alvi, Advocate, the sole arbitrator stated before me that no unjust or illegal act or proceeding shall be conducted on his part, and complete impartiality according to law shall be maintained by him for giving the award in accordance with law.

12. I would, however, like to observe for future guidance that an arbitrator who has been acting as an advocate for the same party, after his acceptance to act as an arbitrator in the same matter should, in all propriety, refrain from acting any more as an Advocate, to remove an impression of partisanship, as the duties of an advocate and the arbitrator in the same cause are inconsistent. This is all the morel advisable in the present social context of our Society. A . A . Application dismissed.