2009 PLP 29 (SCMR)

SHEIKH HAKIM ALI, J.

Both the above noted civil appeals having arisen from the one and the same judgment, dated 1-6-2001 of the Lahore High Court, Lahore, delivered in Civil Revisions Nos.30 and 31 of 2001, titled Umar Din (deceased) through his Legal Heirs v. Mst. Shakeela Bibi and others, are being disposed of through this single judgment, as the parties, property and the subject-matter of the case is the same.

2. Both these civil appeals have emerged due to grant of leave on 20-9-2002 by this Court, in Civil Petitions for Leave to Appeal No.2328-L and 2535-L of 2001.

3. An arbitration award, taking birth without intervention of the Court, is the subject-matter of discussion of the instant decision, which award was deficient of the basic requirements provided in section 26-A of the Arbitration Act, 1940, which section is being reproduced hereinbelow for ready reference:-- "26-A. Award to set out reasons.

(1) The arbitrators or umpire shall state in the award the reasons for the award in sufficient detail to enable the Court to consider any question of law arising out of the award. (2) Where the award does not state the reasons in sufficient detail, the Court shall remit the award to the Arbitrators or umpire and fix the time within which the arbitrator or umpire shall submit the award together with the reasons in sufficient detail: Provided that any time so fixed may be extended by subsequent order of the Court. (3) An award remitted under subsection (2) shall become void on the failure of the arbitrators or umpire to submit it in accordance with the direction of the Court." To appreciate law point and for the just decision of the case, comprehension of facts is necessary. Facts unveiled by the learned counsel for the parties and gleaned by us from the record are that a Plot No.49 situated in Chak No.45-NB, Grain Market, Sargodha, having Khasra Nos.12, 13, and 14 had become a bone of contention between the appellants and the respondents. To resolve the dispute through an agreement of arbitration, dated 9-9-1989, Haji Muhammad Yar of Allah Yar & Co., Haji Muhammad Nawaz of Haji & Co., Baoo Abdur Rehman of Rehman & Co. Mian Faqir Muhammad of Mian & Co. and Haji Muhammad Latif of Muhammad Latif Commission Shop resident of Ghalla Mandi, Sargodha, were appointed Arbitrators by Umar Din and others the first party (appellants) and Mst. Shakeela Bibi and others (respondents Nos.1 to 9) as the second party. They had to decide the dispute, having arisen between both these parties, with regard to the shares of ownership in the property noted above. The above mentioned Arbitrators made an award on 12-11-1989. To get the award made a rule of Court, Mst. Shakeela Bibi and others, the present respondents, filed an application under section 14 read with section 17 of the Arbitration Act of 1940 before the learned Civil Court at Sargodha along with consequential prayer for issuance of permanent injunction. This application was filed on 29-3-1990, while legal representatives of Umar Din, namely, Muhammad Rafiq, etc. also filed an application under sections 30 to 33 of the above noted Act of 1940, for cancellation of the arbitration agreement, dated 9-9-1989 and declaring the award dated 12-11-1989 to be illegal, invalid and liable to be cancelled. Both the parties contested these applications in the Civil Court. On 16-4-1995, the application filed by Mst. Shakeela Bibi and others, the present respondents, was accepted and the arbitration award was made the rule of Court, while application for cancellation of arbitration agreement and setting aside of the award was dismissed by the learned Civil Judge, Sargodha. Two appeals were filed before the learned District Courts at Sargodha which were decided by learned Additional District Judge, Sargodha on 20-11-2000 who dismissed both these above noted appeals. Civil Revisions Nos.30 and 31 of 2001 were filed in the Lahore High Court which were also dismissed on 1-6-2001 through the impugned judgment. Hence these appeals after grant of leave.

4. Learned counsel appearing on behalf of appellants, although in the beginning of his arguments made efforts to argue the case on many other points, yet at the fag end of his arguments, he raised the last and vital point of his arguments, objecting to the validity of arbitration award dated 12-11-1989, by stating that the award was lacking the essentials of section 26-A of the Arbitration Act of 1940. As per learned counsel, the Arbitrators have failed to state, in the award, the reasons in sufficient detail, for making the award in favour of the parties. He has also stressed upon the point of lack of grant of opportunity of hearing, production and recording of evidence, and considering the documents of ownership deeds etc. thus, rendering the award invalid so as to be made the rule of Court. To support his contentions the learned counsel has referred to Wazir Khan v. Sardar Ali 2001 SCMR 750; Allah Din & Co. v. Trading Corporation of Pakistan 2006 SCMR 614; Muhammad Farooq shah v. Shakirullah 2006 SCMR 1657.

5. Opposing the arguments, learned counsel for the respondents has submitted that award is not a stricto senso a judicial decision at par with a judgment of a Court, which must contain detailed reasons for the Arbitrators' conclusions. According to the learned counsel, the Arbitrators are not required to give the detailed reasons for their decision. Necessary details given in the award would be sufficient to uphold the validity of award. He has placed reliance on two judgments reported in Khalida Malik v. Farida Malik 1994 MLD 2346 and Muhammad Saghir Bhatti & Sons v. Federation of Pakistan PLD 1958 SC

221. Further submits that parties were present and were granted opportunity of hearing before making the challenged award, therefore, the award and the judgment of the learned courts below was correctly upheld by the learned High Court.

6. We have considered the lengthy arguments of both the learned counsel and have gone through the record. To examine the soundness of the arguments of both the learned counsel, it would be necessary to note down the relevant portion of the award in this judgment:

7. The above noted text of the award clearly depicts that the Arbitrators had failed to give out the reasons for reaching to the conclusions of their decision. On the basis of which document, or evidence they had arrived at that conclusion was not given out in the award so as to enable the Court making the award a rule of Court, to examine the correctness of the reasons and conclusions. No sufficient detail has been found by us in the above noted award as envisaged by section 26-A of the Arbitration Act, 1940, to perceive the decision noted in the award. Section 26-A of the Arbitration Act, 1940 which was inserted by Arbitration (Amendment) Ordinance XV of 1981, was not interjected into the Act without any aim or purpose behind it by the Legislature. The Civil Court which had to make the award the rule of Court was granted an opportunity and power to examine the reasons of adjudication of the subject-matter in dispute by the Arbitrators. As to how and on what basis, the Arbitrators had decided and made the award, was to be scrutinized critically by the learned Court, to check-up as to whether the award was based on whimsical grounds, without any foundation or reason or it was supported by and rendered on some basis, evidence and document. In other words, arbitrary, non-speaking, sketchy, careless and sleazy award, deciding the fate of the parties to the dispute was not to be blessed with approval to give them authority of Court, by making it a rule of Court. The award which does not contain reasons in sufficient detail has to be rejected and is not to be approved by the Civil Court so as to make it rule of Court. An arbitration award is enforceable and is to be granted approval of the Court to be transferred into the shape and form of rule of Court, when it complies with the essential characteristics and requirements as are contained in section 26-A of the Arbitration Act of 1940. In the instant case no reason has been given by the Arbitrators for deciding the dispute, Therefore, we fully endorse the view pronounced in 2001 SCMR 750, 2006 SCMR 614 and 2006 SCMR 1657 (supra) as referred to by the learned counsel for the appellants. The judgments in 1994 MLD 2348 (supra) and PLD 1958 SC 221 (supra) referred to by the learned counsel for the respondents are not applicable to the facts and circumstances of the present case, as the present award is devoid of any reason for making a decision.

8. Accordingly we accept both these appeals, set aside the impugned award, dated 12-11-1989 and remit it to the Arbitrators, who are alive and able to deliver the award afresh, with direction to grant the parties full opportunity to prove their case before them. This exercise of making fresh award shall be made by the Arbitrators within three months from the date of receipt of copy of this judgment. M.H./U-4/SC Case remanded.