1991 PLP 1307 (CLC)

Asad Munir for Respondent. Date of hearing: 16th February, 1991. This F.A.O. arises from the composite order dated the 12th of September, 1973, of the learned Civil Judge, Lahore, whereby he refused to set aside the award dated the 4th of November, 1972, and instead made it a rule of Court.

2. The respondent‑Company was awarded a contract on the 30th of September, 1969, by the appellant‑Lahore Improvement Trust for construction of sewerage etc. It contained an arbitration clause reading as under:‑

All disputes not settled by negotiation shall be submitted to arbitration. The demand shall be in writing and shall specify the arbitrator chosen by the party making the demand. Within seven (7) days the other party shall appoint an arbitrator by a written notice......... The two members thus appointed shall agree upon a third member to act as Chairman. If agreement on the third member cannot be reached within fifteen (15) days........such member shall be nominated by the International Chamber of Commerce in Paris, France ........ A dispute arose between the parties whereupon the respondent‑Company made an application to the Court under sections 8 and 20 of the Arbitration Act, 1940, for appointment of an arbitrator. Initially, the appellant‑Lahore Improvement Trust contested the application but subsequently a Committee of three arbitrators was appointed with the parties' consent. The Committee announced the award on the 4th of November, 1972, whereupon objections were called, and as a result the Lahore Improvement Trust filed objections urging that the arbitrators misconducted themselves as also the proceedings. The respondent‑Company, in reply, denied the allegation of misconduct on the part of the arbitrators and claimed additionally that the objections were barred by time.

3. The issues based upon the above contentions were held by the impugned order against the appellant. It, therefore, preferred the present FA.O.

4. Mr. Azam Rasool, Advocate for the appellant, submitted that in so far as the arbitration clause stipulated appointment of the third arbitrator by the two each appointed by the parties, the agreement would be regarded as if it provided for the appointment of an unmpire and not for the appointment of a third arbitrator. He submitted that here, in so far as all the three arbitrators sat together for joint deliberations, rather than the third working as umpire, the whole proceedings before them were vitiated. He sought support for this contention from Chouthmal Jivrahee Poddar v. Ramchandra Jivrajee Poddar, etc. (AIR 1955 Nagpur 126) which impinged upon the necessity of the third arbitrator appointed by the two of each party, acting as an umpire separately instead of joining them in the same sittings for reaching a consensus. On the other hand, stress was laid upon the arbitration clause reproduced above maintaining that its provision that "The two members ........shall agree upon a third member to act as Chairman," indicated the peculiar status or role of the third, essentially meaning that he was to act as head or 'sarpanch' of a body while working together rather than holding a distinct office separable from the other two. The expressions 'sarpanch' or 'panch' were held in Abdul Ghani v. Inayat Karim, etc. (P L D 1960 SC (Pak.) 98) and Lala v. Chaudhari Abdus Samed (17 Indian Cases (Oudh) 320) to be akin to a Chairman and that he could not be regarded as umpire. Correspondingly, an "umpire" conveyed the sense of a separate and superimposed office vis‑a‑vis the two arbitrators acting only when difference arose between them. This is borne out by Abdul Hamid v. H.M. Qureshi (P L D 1957 SC (Pak.) 145). In case these two agreed to a decision, a priori the need to have a third one would not arise. It needs to be kept in mind that the arbitration clause of the agreement in dispute did not envisage the contingency of appointing the third only after difference of opinion between the two arose. In such a situation, the third would be needed compulsively to resolve the difference between the two. But conversely in the case under consideration, the third member has to be appointed by the two post‑haste within fifteen days, that is without waiting for striking of difference between the two. Further, he is styled as "Third member" meaning thereby that he shall be like the other two, or one of the three without any distinctive feather in his cap. Next, the stipulation of referring the matter to the International Chamber of Commerce, Paris, France, visualised possibility of scrapping the appointment of the two members already made, or correspondingly appointing more members than one in addition to them. Vagueness on this score in the arbitration clause could be construed to mean that appointment of the third person as umpire was not the expressed intention of the parties.

6. Section 10 was claimed applicable because of appointing the "third member". It was invocable by means of a deeming clause, which obviously rested on a presumption. The above analysis of the clause largely dispels the impression that the "third n1pmber" was to be inducted with the exalted position of superimposing his decision over that of the other two. Indeed, this was not inferable from the typical expressions used in it.

7. The impugned order discloses that the objection under section 10 ibid, was even earlier rejected by the learned Civil Judge. Since the effort was to get the award set aside, the order was appealable under section 39 of the Arbitration Act. The learned Civil Judge pointed out that the appellant did not challenge his decision in appeal and that the same had become final for all purposes. Mr. Azam Rasool did not address the Court on this point. Since it was categorically stated in the order assailed in this appeal, the presumption would be that he had had nothing to say against it. Refusal to set aside the award was undoubtedly appealable, and failing to file the appeal would preclude the appellant to raise it once again in the present FA.O. Res judicata would apply because section 41 of the Arbitration Act provides for application of the C.P.C. to proceedings taken under the said Act except, of course, the situations which were specifically covered by its own provisions. Accordingly, section 11, C.P.C. would preclude the appellant from raising this point again.

8. No other point was canvassed. The points urged did not appear sufficient to set aside the award. It was rightly made a rule of Court. The appeal has no substance and the same is dismissed with no order as to costs. H.B.T./L‑119/L Appeal dismissed.