1984 PLP 597 (SCMR)

M.S.H. QURAISHI, J.‑‑ This appeal by leave of the Court is directed against the judgment dated 8‑12‑1981, whereby the Lahore High Court in First Appeal from Order, set aside an award which had been made the rule of the Court, and directed the arbitrator to give a fresh award.

2. Appellant Ashfaq Ali Qureshi had undertaken three contracts for construction on behalf of the Multan Municipal Corporation, of which one was completed but the second was rescinded while the third abandoned. He put up a claim but having failed to get the same settled, applied to the Civil Court under section 8(2) of the Arbitration Act for appointment of an arbitrator in his dispute with the said Corporation and the Development Authority (M.D.A). At first, two Superintending Engineers had been successively appointed as arbitrators but finally Mr. Shams‑ul‑Haq Executive Engineer, Local Government, was appointed by the Court, who gave his award on 4‑3‑1980, awarding Rs.8,31,603 in favour of the appellant against the Corporation in respect of the second and the third contracts, the dispute in regard to the first having been settled by the award given earlier by Malik Iqbal Ahmad Sabir, Superintending Engineer, Public Health Engineering, which had been accepted by the parties. The same day, he filed the award in the Court with intimation to the parties supplying them each a copy of the award. On receipt of the award, the Civil Court on 6‑3‑1980, issued notice to the parties for 8‑3‑1980. On the latter date, in the presence of the counsel for the parties, the Court adjourned the matter to 9‑4‑1980, directing the parties to file their objections before that date. An objection was filed on behalf of the Corporation on 9‑4‑1980 but the same was held to be time‑barred and in the result the award was made the rule of the Court and a decree was ordered to be drawn up in accordance with .the award, vide order, dated 29‑4‑1980. The Corporation by an appeal and the M. D. A. by a revision before the High Court challenged this. The revision was held to be not competent but the appeal was allowed.

3. The High Court was of the view that the service on the respondents not having been made in accordance with the provision of Order XXIX, C.P.C., there was no proper service and that as such the trial Court had erred in holding that the objection filed by the Corporation was barred by time. The High Court also held that even in the absence of an objection, the Court was not expected to act blindly on the award; that the Arbitrator had given no finding as to the legality of the rescission and abandonment of the contracts nor had he given reasons or justification for the payments awarded. The High Court further held that the provision of section 26‑A of the Arbitration Act requiring the Arbitrator to give reasons for the Award, though enacted on 11‑5‑1981, which was after the award had been given and made rule of the Court, could, nevertheless, be invoked by the appellate Court under section 3 of the Arbitration (Amendment) Ordinance (XV of 1981). The High Court, therefore, found that the decision to make the award the rule of the Court was erroneous and instead of remanding the matter to the Civil Court to consider the objections, itself set aside the award and directed the Arbitrator "to give a fresh award giving reasons for it and also decide the question of rescission or abandonment of the contract." The High Court, however, did not fix the time for the purpose as required by section 3(2) of the said Ordinance.

4. The case of the appellant, for the consideration of which leave was granted by this Court, was that the respondents had been served and had appeared through counsel before the Court on 8‑3‑1980 and that, in any case, an objection in regard to service by the Court had neither been taken in the objection petition nor during the hearing before the trial Court nor even in the memorandum of appeal before the High Court. Secondly, that the question of examination of the effect of rescission or abandonment of the contract, by the Arbitrator did not arise because no such question had been referred to him and also because the appellant had claimed only the payment for work actually done and for refund of security deposits and that, therefore, there being no illegality apparent on the face of the award nor any such illegality having been pointed out in 'the objection petition, the trial Court had no cause to remit the award. In this connection he further submitted that there having been no dispute on the issue of rates which had been settled by the earlier award dated 27‑6‑1979 given by Malik Iqbal Ahmad Sabir, Superintending Engineer, and the amount awarded being based only on the quantity of work actually done at the agreed rates, the Arbitrator was not expected to give elaborate reasons for the award. As a decree had been ordered to be drawn up on the basis of the award, the appellant also challenged the maintainability of the appeal except within the limited scope of section 17 of the Arbitration Act.

5. Unfortunately, there is no reply to these above contentions, for the respondents neither filed a concise statement nor made appearance during the hearing of appeal. 6, we may first deal with the question of notice. Section 14(2) of the Arbitration Act requires the Court to give notice to the parties, of the filing of award by the arbitrator. Where a party be a Corporation the service is to be effected as laid down by Order XXIX, rule 2 C.P.C., that is:‑ (a) on the Secretary or on any director or other principal officer of the Corporation, or (b) by leaving it or sending it by post addressed to the Corporation at the registered office or' if there is no registered office then at the place where the Corporation carries on business. As the proceeding‑sheet of the Arbitrator, dated 4‑3‑1980 would show, the award had been signed and announced on that date by the Arbitrator in the presence of the parties, the original had been filed in Court and copy had been supplied each to the claimant, the Corporation and the M . D. A . Notice of filing the award hall been given by the Court on 6‑3‑1980 for 8‑3‑1980. The record does not show if the notice had been served in accordance with the provision of Order XXIX, rule but we may presume on the basis of the judgment of the High Court that it had been so served. The point, therefore, arises whether the' service of notice, if not in strict conformity with the provision of Order XXIX, rule 2, C.P.C. was altogether bad in law.

7. There appears to have been same controversy over the question whether a formal notice is necessary even though the parties or their counsel have knowledge of the filing of the award and have even in furtherance of that knowledge. In Chatarbuj Das v. Ganesh Ram ILR 20 All. 474 it had been held that the Court was 'pound to give notice even if the party had knowledge of the filing of the award. This authority had been followed in Ranjit Chandra v. Bissay Ram AIR 1926 Cal. 1018, Punno Ram v Nabh Ram A I R 1930 Lah. 228 and Holaram v. Governor‑General A I R 1947 Sind

145. In this latter authority it had been observed: "If it is the statutory right of a party to be served personally, he can ignore the fact that his Advocate has been served with a notice."

8. However, his view was not shared by most of the Courts in the sub‑continent. In Valchand v. Gulba A I R, p1926 Bomb.312, it, was held : "If the parties ‑or their pleaders bring in an award and ask that it should be filed, and the Court informs the pleaders or the parties that they should file objections within the time provided by the Limitation Act. namely, ten days then it seers to me everything that is required by the law has been done. Then it cannot be said that because after giving notice to the parties or to their pleaders if the parties are not present, and the Court does not issue further notice to the parties a material irregularity has been committed which entitles this Court to set aside the whole of the proceedings." The Calcutta High Court in Saroj Bala v. Jatindra Nath Bose A I R 1927 Cal. 619, held that where a notice of Filing of and is not given to the party but the order riling the award is communicated to his pleader and the pleader admits such communication, it is a sufficient compliance with the mandatory provisions of the relevant law. This view was followed in Bholanath Roy v. Bata Krishna Roy A I R 1927 Pat. 135 and Cayan Singh v. Harbijas A I R 1930 Lah.

711. In Imam Din v. Allah Rakha and others A I R 1942 Lah. 190, the view expressed was that: "The notice, of course, need not necessarily be in writing, formally delivered to the parties: it might be given orally if the parties are present in Court personally or by authorised agent at the time of the filing of the award." This view has been followed by the Indian Courts even after the Partition. See Bhola Nath v. Mahadev, A I R 1952 Cal. 226, Kawalsingh v. Baldeosingh A I R 1957 Nag. 57, and E.C. Corporation v. Madras Port Trust, A I R 1968 Mad.

335. The same view came to be followed by the Courts in Pakistan. See Mahboob Alam v. Mumtaz Ahmad PLD 1956 Lah. 276, and Shafi Corporation Ltd. v. Government of Pakistan P L D 1981 Kar.

730. In the former case it was held that the notice under subsection (2) of section 14 given to the pleader of the party is a perfectly valid notice and satisfies the requirements of the subsection. In the Karachi case, after a discussion of the precedent law on the subject, it was held that: "There is, therefore, no warrant on the plain language of the section to interpret the expression 'give notice to the parties' to mean only a formal written notice served upon a party in the prescribed manner and exclude a constructive, oral or an informal notice. "

9. Apparently, the prevalent view is that as the provision of the law is meant to enable the parties to know that the award has been filed in Court so that they may file their objections, if any, within the time prescribed, a formal compliance in strict conformity with the relevant provision of law is not to be insisted upon when substantial compliance has been made of it. In keeping with this view where the fact of filing of the award by the Arbitrator had already been in the knowledge of the parties and their counsel had in response to notice issued by the Court appeared and taken time to file their objections, as is in the present case, an insistence on a formal service of notice under Order XXIX would be a mere technicality. Even otherwise, an objection on this score had neither been taken before the trial Court nor in the memorandum of appeal before the High Court and was, therefore, only an afterthought not entitled to serious consideration.

10. As regards the duty of the Court not to act blindly on an! award, which had weighed with the High Court, it is no doubt true that mere absence of objection was not altogether to absolve the Court from its responsibility of deciding whether the award was valid on the face of it. An award may be remitted under section 16 if: "(i) the award leaves any of the matters which were referred to arbitration, undetermined: (ii) a part of the award is upon a matter which was not referred to arbitration and that part cannot be separated from the remaining part without affecting the decision of the matter which was referred to arbitration; (iii) the award is so indefinite as to be incapable of execution (iv) there is an objection to the legality of the award and such objection is apparent upon the face of it." An award can be set aside on one of the following grounds: (i) that an arbitrator or umpire has misconducted himself; (ii) that an arbitrator or umpire has misconducted the proceedings; (iii) that the award is made after the arbitration is superseded; (iv) that the award is made after the proceedings become invalid under section 35; (v) that the award is improperly procured; and (vi) that the award is otherwise invalid." The only ground noticed by the High Court was that the Arbitrator had not given any finding as to the legality of the rescission or abandonment of the contract. The submission made by the appellant in this regard, and there is nothing to contradict it, is that as he had only claimed payment against actual work done, the Arbitrator was not bound to go into the question. The material before us does not show that the respondents before the Arbitrator in this regard had taken an objection. It can, therefore, be safely presumed that either the objection had not at all been taken or if taken, had been rejected. It is significant to note that no such objection had been taken even in the objections belatedly filed, before the Civil Court. Instead, allegation had been made therein of misconduct and collusion with the appellant on the part of the Arbitrator but even then no specific instance was cited nor was any found by the High Court to support such allegation.

11. It would also not be correct to say that the Arbitrator had failed to give reasons for award. After noting that the earlier Arbitrator, Malik Iqbal Ahmad Sabir, S.E.P.H.E., Multan, had given an award in respect of claim No. 1 (not in dispute in the present proceeding) which had been accepted by both sides, the Arbitrator proceeded to record: "Arbitrator had an amicable verdict concerning the fundamental and major points, pertaining although only to claim No.l above, but, since both other claimed projects are s1tuated In the same General Bus Stand, at the same site, tendered and accepted simultaneously by the same parties, under identical terms and conditions, executed at the same time and by the same staff and also, because major part of the following two claims comprises same points of dispute. I have, therefore, while deciding the following claims Nos. 2 and 3, had no hesitation in taking guidance from the said award dated 27‑6‑1979. This has, however, been done only to confirm any independent findings on the basis of record and evidence."

12. 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 In re: Heihley, Maxsted & Co. and Durant & Co., (1893) I 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 was expressed in Abdul Rauf v. Muhammad Saeed Akhtar, in the following words: "A well‑settled rule of construction of the 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 arbitrator 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 M.A. Ali Mia v. Green & Co. White Ltd., P L D 1964 Dacca

527. The approach of the High Court, we may say so with respect, has not been consistent with these well‑accepted principles relating to awards. 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.

13. The appeal is, therefore, accepted, the judgment of the High Court is set aside and that .of the trial Court restored. As the respondents did not appear, no order is made as to costs. S. Q. Appeal accepted.