P L D 1966 Azad J & K 19 (PLP)

"Subject to the provisions of section 46, and save in so far as is otherwise provided by any law, for the time being in force, the provision of this Act shall apply to all arbitrations and to all proceedings thereunder : provided that an arbitration award otherwise obtained may with the consent of all the parties interested be taken into consideration as a compromise or adjustment of a suit by any Court before which the suit is pending." Section 47 is a residuary section. If an award is obtained otherwise than in accordance with the provisions of the Arbitra tion Act, about a matter with respect to which a suit is pending in a Court, it may nevertheless be accepted as a compromise or adjustment of the suit provided all the interested parties agreed before the Court to this being done. Sections 21 to 25 make provisions for a reference to arbitration in suits pending in a Court of law. If the parties to a suit desire to have disputes decided through arbitration they must proceed according to the provisions of those sections. If they make a reference direct, that is without the intervention of the Court, the award of such an arbitrator would be a nullity. The proviso however makes an exception in the case of these awards to the filing of which all the interested parties give their consent. If all the interested parties agree to the acceptance of the award, the Court may take it into consideration as a compromise or adjust ment under Order XXIII, rule 3, C. P. C. Section 47 does not amend or over‑ride section 20 of the Arbitration Act. It simply lays down that the provisions of the Arbitration Act shall apply to all arbitrations, i.e., arbitrations which do not arise out of any agreement by the parties but arise out of certain statute and also provide for the case where a reference is made to arbitration in a pending suit without the intervention of the Court. The cases cited by the learned counsel for the appellant are all cases which go to the root of the jurisdiction of the arbitrator to whom reference is made: A I R 1937 All. 65 and A I R 1946 P C 72 are cases where a reference agreement was entered into by the guardian of a minor without the express leave of the Court and it was held that unless the express leave of the Court is obtained a reference to arbitration on behalf of the minor is without jurisdiction and is a nullity. P L D 1959 Kar. 325 and P L D 1954 Sind are all cases where reference had been made to an arbitrator other than the arbitrator named in the agreement without revoking the authority of the arbitrator named in the agreement. In the present case before us the authority of the named arbitrator had been revoked by the Court so it cannot be said that the arbitrator to whom reference was made by the Court was acting without jurisdiction even though we are of the opinion that the authority of the named arbitrator cannot be revoked before a reference is made to him. The Courts have jurisdiction to decide right as well as wrong. We may say that the order of the learned Single Judge in revoking the authority of the named arbitrator before a reference had been made to him, is wrong but .it cannot be said that the order referring the dispute to an arbitrator other than the named arbitrator was without jurisdiction. Our answer to the firs point of reference is that if the authority of the named arbitrator is revoked prior to hiss entering upon the reference and another arbitrator is appointed by the Court, such a course would not vitiate the award subsequently given by the arbitrator so appointed though of course objection can be raised to the validity of the order of reference made to the arbitrator other than the arbitrator named in the agreement. Point of reference No. 2.‑It was argued by the learned counsel for the respondent that the appellant having furnished a panel‑of names for appointment of an arbitrator, there was a fresh arbitration agreement between the parties ; and that the appellant could not raise any objection to the appointment of the second arbitrator or to his award. Section 2, clause (a) defines "arbitration agreement" to mean a written agreement to submit present or future difference to arbitration where an arbitrator is named therein or not. When the learned Single Judge revoked the authority of the named arbitrator, he called upon the parties to‑furnish a panel of names for appointment of a fresh arbitrator. The appellant, in obedience to the order of the Court, furnished a panel of names. This cannot be, said to be the execution of a fresh arbitration agreement between the parties. Section 2 requires the arbitration agreement to be in writing and where is the written agreement? It was laid down in P L D 1959 Kar. 325 that :‑

"Alteration relating to the appointment of Umpire or arbitrator are alterations of a substantial condition of the agreement and such‑alterations are to be evidenced by writing. That is the demand of section 2 of Arbitration Act. The appointment of an arbitrator or umpire is a matter which pertains to jurisdiction, and when a departure in this respect is made from the written agreement, that departure must be with the consent, in writing, of the parties. Mere submission to the alteration is not enough. It is a material alteration in the agreement and is required to be in writing under section 2 of the Arbitration Act. The umpire who gave the award had no jurisdiction to enter upon the reference and if the parties submitted to his arbitration by conduct, submission did not confer jurisdiction upon him. Submission should have been in writing." We are in agreement with the learned Judges deciding P L D 1959 Kar. 325 when they say that the material alteration of the agree ment in writing should also be in writing. Section 30 of the Arbitration Act provides that :‑ "An award shall not be set aside except on one or more of the following grounds, namely: (a)

. . ; (b)

. (c) that an award has been improperly procured or is other wise invalid." The words "or is otherwise invalid" are comprehensive enough to include all kinds of objections. An objection to the validity of the reference to arbitration on the ground that the reference was illegal because of the absence of leave falls within the purview of this clause. Any objection to the award on the ground that it is not an award or on the grounds of its invalidity or on the ground that the Court had no jurisdiction to make the reference should be made at the time the award is filed. Objections which have not been taken before the arbitrator or before the Court after the award has been filed, cannot be allowed to be raised for the firs time in appeal. Where an order directing an award to be filed and a decree in accordance with the award are not separately passed but the Court disposed of the whole case by a single order, the appeal under section 39, clause (vi) of the Arbitration Act shall be held in proceedings to be an appeal from an order directing the award to be filed and competent. It is not right to pass composite orders. The proper procedure is to pas two separate orders and on two separate sheets of paper, one deciding the objections to the award and the other directing a decree to be passed in terms of the award. Section 39 confers a right of appeal against an order refusing to set aside an award. Where a consolidated order is passed and appeal is filed thereon and the order rejecting the objections to the award is challenged, the appeal may be construed as being one against the order refusing to set aside the award. The fact that a decree has been passed does not preclude an appeal against the order refusing to set aside an award. It was argued by the learned counsel for the respondent that the remedy of the appellant against the order of reference by which the authority of the named arbitrator was revoked and the dispute was referred to Mirza Nazir Hussain Khan as the arbitrator, was by way of an appeal and he could not be allowed to re-agitate the matter at the stage of an appeal from the award. It is, no doubt, correct that a Division Bench of this Court has laid down in Civil Appeal No. 1‑A of 1964 "Azad J. & K. Government v. Shaheen Timber Trading Co." decided on 6‑4‑64 that "the order of a learned Single Judge in so far as it revokes the authority of the arbitrator named in the agreement and appoints another person as arbitrator is appealable under section 13(iii) f the Azad J & K Courts and Laws Code Act because an application made under section 20 of the Arbitration Act is a suit within the meaning of the said section.. But our attention was drawn towards section 105, C. P. C. which provides that .‑ "Save as otherwise expressly provided, no appeal shall lie from any order made by a Court in the exercise of its original or appellate jurisdiction ; but, where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal." An error, defect or irregularity in any order may be raised as a ground of objection in an appeal from the decree if such error, etc., should have affected the decision of the case. The words "affecting the decision of the case" mean according to all the High Courts, affecting the decision of the case on the merits. It was laid down in A I R 1939 Sind 241 that :‑ "the validity of an order setting aside an award can be attacked in appeal, under the provisions of section 105." It was held in A I R 1916 Pat. 21 that :‑ "The acceptance or supersession of an award affects the decision on the merits of the case." It was held in 1888 Punjab Record No. 134 page 363 (366) (D. B.) that . "An order directing the filing of an award can be questioned in an appeal against the final decree on ground of absence of agreement to refer." Our answer to the second point of reference is that objection to the validity of the reference can be raised at the stage of appeal provided it was raised before the learned Single Judge but cannot be raised for the first time in appeal if it was not taken earlier. Point of reference No. 3.‑It was argued by the learned counsel for the appellant that the omission on the part of the appointed arbitrator to adjudicate on some of the issues framed by him is an illegality which would vitiate the award. On the other hand it was argued by the learned counsel for the respondent that the arbitrator is not bound by the technicality of the law of evidence or procedure ; and that it is not at all necessary for him to decide all issues framed by the Court so long as he decides the whole dispute between the parties. Mr. Siraj ul‑Haq cited A I R 1934 All. 493 which is a Division Bench case and it was laid down in this authority that :‑‑ "Where an arbitrator neglects to consider some of the matters referred to arbitration, he is guilty of an irregularity under Schedule II, rule 14 and the award is vitiated." On page 494 of this report column 2 it is observed by the learned fudges that: "Despite the finding of the learned arbitrator that the plaintiff's are not entitled to rendition of accounts in respect of the firms already mentioned by the defendant and his refusal therefore, to consider issue No. 5, he awards sums amounting to about Rs. 4,000, which are sums covered by the defendant's plea of bar". In their Lordships' opinion, therefore is that the learned Arbitrator had clearly been guilty of an irregularity under rule 14 of Schedule II of the C. P. C. inasmuch as he had left undetermined some of the matters referred to arbitration. The question whether the loan in respect of which he awarded the plaintiffs the sum of Rs. 4,000, were time‑barred, was raised by the parties in issue No.

5. The arbitrator had neglected to consider and decide this issue and their Lordships were, therefore, of the opinion that his award was vitiated by this fact. The learned counsel for the respondent cited A I R 1947 Lah. 177 and A I R 1943 Lah.

186. Rehman, J. laid down in A I R 1947 Lah. 177 that :‑ "There is no rule of law that an arbitrator must decide all the issues framed in the suit expressly as long as the whole suit is decided by him. He is not bound by any rules of procedure or those of evidence, and it is not open to the parties to pick holes in the decision by a tribunal of their own choice on these grounds." This was a suit for pre‑emption in which one of the issues between the parties was as to the existence of a custom of pre emption. The suit was referred to the arbitrator and the arbitrator decreed the plaintiffs' suit. The learned Judge observed that "the finding with regard to the existence of custom is inherent in the decree in the plaintiff's' favour and no objection can be taken to the award on the ground that the arbitrator had not decided the question as to the existence of custom". It was further held in this authority that "where an appeal is filed from an order disallowing objections to award, objections not raised in the trial Court cannot be taken in the appeal". It was held in A I R 1940 Lah. 186 (D B) that :‑ "An arbitrator is not bound by the technical rules of procedure which the Court must follow, nor need he record separate findings on the various points on which the parties are at issue, or write a reasoned judicial decision. All that he is required to do is to give an intelligible decision which determines the rights of parties in relation to the subject matter of the reference." It is, no doubt, correct that the arbitrator is not bound by the technicalities of the rules of procedure or of the Evidence Act. It is not necessary for him to frame issues or to give separate findings on all the issues so long as he substantially decides the whole case but where the arbitrator framed issues and chalked out a certain procedure for himself he should follow that procedure and decide the issues so framed though it is not necessary that he should decide all these issues separately and give separate findings but` then he should decide all the issues so framed. The learned counsel for the respondent argued that it was wrong to say that the arbitrator had not decided all the issues. He asserted that the arbitrator had decided all the issues. It is for the Division Bench to see whether the arbitrator has decided all the issues or not: We are in respectful disagreement with Rahman, J. when he says that it was not necessary for the arbitrator to decide the question of the existence of the custom of pre‑emption prevailing in the locality. This was a point of dispute between the parties and should have been decided by the arbitrator because on the existence of the custom, the right to pre‑emption depended. In A I R 1940 Lah. 186, in spite of the fact that the issues has been framed by the Court, the parties had executed an arbitration agreement in general terms. Our answer to the 3rd point of reference is that though the arbitrator is not bound by the technicalities of the Law of Evidence or procedure and it is not necessary for him to frame issues or to give separate findings on issues yet if he elects to frame issues, he must decide all these issues though he may not deal with these issues separately or give separate findings. Point of reference No. 4.‑The learned counsel for the respondent cited A I R 1927 All. 385 (D B) in which it has been laid down that:‑

"A recital of a receipt in a deed will not operate as an estoppel, under any application of the principle embodied in section 115 (as opposed to the terms of that section) because such recitals do not operate by way of estoppel." Ashworth, J. held that "under the English Law the General Rule appears to be that a person who is a party to a deed is estopped from denying its contents, but to this general rule there is the exception that a receipt‑in a deed does not amount to an estoppel generally, either at law or in equity". The learned counsel for the appellant argued in favour of the rule of estoppel on the basis of section 115 of the Evidence Act. The preamble to the Evidence Act recites that it applies to all Judicial proceedings in or before any Court but not to an affidavit presented to any, Court or officer, nor to proceedings before an arbitrator. The Evidence Act as the preamble shows was not intended to apply to proceedings before an arbitrator, therefore, our answer to the 4th point of reference is in the negative. The record shall go back to the Division Bench seized of the appeal. S. A. H. Reference answered.