2026 PLP 872 (CLC)

GUL HASSAN TAREEN, J.

The captioned petitions carry common questions of law and facts; therefore, they are decided together through this common judgment. FACTS OF C.Ps. Nos. 513 and 514 of 2023:

2. Suleman Tahir and others (petitioners in C.P. No. 513 of 2023 and respondents Nos. 3 to 7 in C.P. No. 514 of 2023) ( petitioners ) instituted a civil suit for declaration and perpetual injunction against Muhammad Younus and others (respondents Nos. 6 to 14 in C.P. No. 513 of 2023 and respondents Nos. 8 to 16 in C.P. No. 514 of 2023) ( respondents ) in respect of land described at paras 1 and 2 of the plaint. Likewise, respondent 7 instituted a civil suit for declaration, possession and perpetual injunction against the petitioner 2, Hassan Naseer and officer incharge of Police Station Brewery Road, Quetta. During pendency of suits, to resolve the differences, petitioners and respondents appointed, Dr. Munir Ahmed Kasi and 4 others (respondents Nos. 1 to 5 in C.P. No. 513 of 2023) as arbitrators vide an arbitration agreement dated 7 February 2020. The respondents Nos. 1 to 3 made an arbitration award dated 11 February 2020 ( the Award ), which was not signed by the two arbitrators, i.e. respondents Nos. 4 and

5. Respondents Nos. 1 to 3 made an application under section 14, the Arbitration Act, 1940 ( Act ) for making the Award as rule of the court. Respondent No. 4 submitted his written statement. Petitioners filed a common written statement and in prayer clause, sought recovery of Rs.20,000,000/- on account of breach of the Award by the respondents by invoking penalty clause in the Award. Respondents submitted contesting counter-affidavit. The Trial Court framed four issues and proceeded to record statements of two AWs. The Notary Public (AW-1) produced in evidence the arbitration agreement as Ex.A/1-A and the Award as Ex.A/1-B. The Trial Court framed the following additional issue on 15 February 2022: - Whether application is maintainable under the Arbitration Act, 1940? Record reveals that respondents had also made an application under sections 33 and 30, the Act for setting aside the Award, which was contested by the petitioners and the respondents Nos. 1 to

3. The Trial Court vide common order dated 30 July 2022 dismissed respondents Nos. 1 to 3 s application under Order VII rule 11, the Code of Civil Procedure, 1908 ( Code ) and also dismissed respondents application after holding it having become infructuous. Petitioners and respondents Nos. 1 to 3 assailed the order of the Trial Court by filing Arbitration Appeals 53 and 58 of 2022, respectively. The appeals came up for hearing before the Court of learned Additional District Judge-IX, Quetta. The Appellate Court vide impugned common order dated 8 April 2023 dismissed both the appeals. Petitioners and the respondents 1 to 3 have impugned the concurrent findings by filing C.P. No. 513 of 2023 and C.P. No. 514 of 2023, respectively. FACTS OF C.P. 764/2022:

3. Muhammad Mehdi (respondent No. 1 in this petition and respondent No. 7 in C.P. No. 513 of 2023) ( respondent ) instituted suit for declaration, possession and perpetual injunction against Habib Tahir (petitioner in this petition and petitioner 2 in C.P. No. 513 of 2023) ( petitioner ), Hassan Naseer and officer in-charge, Police Station Brewery Road, Quetta. Petitioner made an application under Order VII rule 11(d), the Code read with sections 31 and 32, the Act for dismissal of suit on the strength of Award. The application was contested by the respondent and the Trial Court vide order dated 14 December 2021 dismissed the application. Petitioner impugned the order of the Trial Court in Civil Revision Petition No. 01 of 2022, which came up for hearing before the Court of learned Additional District Judge-IV, Quetta. The Revisional Court vide impugned order dated 10 May 2022 dismissed the petition. Petitioner has impugned both the orders in this constitution petition.

4. Mr. Habib Tahir (petitioner No. 2 and learned counsel for petitioners Nos. 1 and 3 to 5 in C.P. No. 513 of 2023 and petitioner in C.P. No. 764 of 2022) submitted that the differences were referred to the respondents Nos. 1 to 5 with consent of respondents, therefore, they had no locus standi to make an application for setting aside the Award. He submitted that the arbitrators had rightly made an application for making the Award as rule of the court. However, the two courts have incorrectly interpreted section 21, the Act. Next submitted that the Trial Court in its order has incorrectly placed reliance on the case law reported as Abdul Manan v. Asmatullah (2019 CLC 1056), which was distinguishable.

5. Mr. Sultan Khalid, learned counsel representing the respondents Nos. 1 to 3 in C.P. No. 513 of 2023 and petitioners in C.P. No. 514 of 2023 submitted that the arbitrators he represents had made their award, which was acknowledged by the co-arbitrator; therefore, they had rightly made an application under section 14, the Act for making the award as rule of the court. He submitted that parties had appointed the arbitrators with mutual consent; therefore, the Trial Court should have made the Award as rule of the court.

6. Mr. Mehmood Sadiq Khokar, learned counsel for the respondents supported the impugned concurrent orders and submitted that though, civil suits were pending between the parties, however, the differences were referred to the arbitrators outside the court, therefore, the award couldn t have been made rule of the court without consent of all the parties; thus, the provision of section 21 has rightly been interpreted by the two courts. Representing respondent in C.P. No. 764 of 2022, he submitted that as the award was not made rule of the court, therefore, suit instituted by the respondent was not incompetent under section 32, the Act.

7. Heard parties learned counsel and have gone through the record and the relevant provisions of the Act.

8. Admittedly, civil suits were pending between the petitioners and the respondents and they had referred the differences to the arbitrators vide arbitration agreement dated 7 February 2020. The three arbitrators made their award dated 11 February 2020 and they made an application under section 14, the Act for making the Award as rule of the court. Chapter IV, the Act (sections 21 to 25) provides procedure with regard to the arbitration in suits. Section 21 is relevant which reads as:- Parties to suit may apply for order of reference. Where in any suit all the parties interested agree that any matter in difference between them in the suit shall be referred to arbitration, they may at any time before judgment is pronounced apply in writing to the Court for an order of reference. On such application being made (application under section 21), the Court shall appoint arbitrator/s in such manner as may be agreed upon between the parties under section 22, the Act. Thereafter, the Court shall, by order, refer to the arbitrator the matter in difference which he is required to determine, and shall in the order specify such time as it thinks reasonable for the making of the award (section 23). The provisions of other chapters of the Act shall apply to arbitrations under section 21, the Act (section 25). Apart from section 21, the Court has no power to make a reference for arbitration during pendency of a suit. Section 21 gives all the parties interested in the suit the right to apply in writing to the Court for an order referring a dispute to arbitration. however, the section confers a right on the parties to avail the assistance of the Court if they so desire. The section doesn t bar any reference by the parties themselves without the intervention of the Court. Thus, where the Court makes an order of reference under section 21, then the provision of other chapters of the Act shall, so far as they can be made applicable, apply to arbitration under Chapter IV. And after making an award, the parties may apply for, making it as rule of the court or for setting it aside under sections 14 or 30, the Act, respectively. Thus, during pendency of a suit, parties may apply to the Court for an order of reference. However, during pendency of suit, the parties may resolve their differences through arbitration. When arbitrator/s made an award during pendency of a suit otherwise then in accordance with section 21, the Court may, with the consent of all the parties, take such award as a compromise or adjustment of the suit. Where the Court makes an order of reference under section 21, then the Court can make the award as rule of the court after discarding objections raised by any party (if any). However, where an arbitration award is procured during pendency of a suit and without intervention of the Court before which suit is pending then it cannot be made rule of the court under section 14, the Act unless with the consent of all parties interested, it can be taken into consideration as a compromise or adjustment of the suit under section 47, the proviso, the Act, which reads as: - 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. Where the parties to a pending suit proceed to arbitration without invoking provision of section 21, the arbitration is not under the provisions of the Act and an award obtained cannot be enforced under section 14 of the Act. However, proviso of section 47 applies to such an award which empowers the court to take the same into consideration as a compromise, however, subject to consent of all the parties interested. The joint consent of all parties is mandatory when the Court is to take the award into consideration as a compromise or adjustment of the suit. In a pending suit, where the parties want to get their suit decided by arbitration, they must comply with the provisions of sections 21 to 25, the Act. Thus, reference to arbitration and an award procured in a pending suit without intervention of the Court is nullity and such an award cannot be made rule of the court under sections 14 and 17, the Act. However, an award procured without recourse to the provisions of Chapter IV is saved by proviso to section 47 from being altogether a nullity and same can be considered as a compromise or adjustment of the suit, if all the parties to the award give consent thereto.

9. In the instant matters, parties had entered into arbitration and appointed five arbitrators without recourse to the provisions of Chapter IV, the Act. They departed from the mandatory provisions of sections 21 to 25, therefore, the Award was not enforceable at law, and, thus, could not be made rule of the court. At the most, same could be considered as a compromise or adjustment of suits under proviso to section 47 read with Order XXIII rule 3, the Code yet, with consent of all the parties. Reliance is placed on the case reported as Farmers Equity Private Limited v. Mehboob Alam (2013 CLC 434). Relevant in the case law reads as: - 5 If the parties want to get their suit decided through arbitration, they must resort to the provisions of sections 21 to 25 of the Act. Reference to arbitration and an award procured in a pending suit without intervention of the court, are nullity and such an award cannot be made rule of the court in accordance with the provisions of sections 14 and 17 of the Act. However, an award procured without recourse to the provisions of sections 21 to 25 of the Act are saved by section 47 of the Act from being altogether a nullity, provided the requirements of the proviso to section 47 are complied with. The proviso confers power on the court to take into consideration the award obtained, other than through the procedure prescribed in the Act as the compromise or adjustment of the suit, if all the parties to the award give consent thereto In view of the afore discussed provisions of the Act and the case law, the suits were pending between the parties and without intervention of the Trial Court, the differences were referred to the arbitrators for decision and since the arbitrators couldn t have been appointed without the intervention of the Trial Court as contemplated in section 21, therefore, the Award was not legal and cannot be made rule of the Court.

10. For the foregoing reasons, the impugned orders, whereby arbitrators application for making the award as rule of the court was rejected, are well-reasoned and speaking and do not suffer from the error of section 21, the Act. On this sole count, both the constitution petitions are not competent.

11. Apart from what has been discussed above, the parties who had appointed the arbitrators did not make an application for making the Award as rule of the Court, however, the arbitrators (petitioners in C.P. No. 514 of 2023) were bent on to make the Award as rule of the court. Arbitrator/s can file an award in the Court under section 14(2), the Act either at the request of any party or if so directed by the Court. However, the arbitrator/s cannot make an application for making his/their award as rule of the court. Thus, petitioners/arbitrators were not competent to make an application under section 14, the Act to make their award as rule of the court. The petitioners/arbitrators who were neither requested by any party to the arbitration agreement to file the award in the Court nor by the Trial Court, thus, they were not competent to apply for making their own award as rule of the court. Arbitrator/s should exhibit impartial conduct and after issuing notice of the, making and signing an award and cost of arbitration under section 14(1), the Act, they become functus officio and thereafter they shall file the award in the Court either at the request of any party to the arbitration agreement or if directed by the Court. Reliance is placed on the case reported as Inayatullah Khan v. Obaidullah Khan (1999 SCMR 2702). Relevant in the case law reads as: - Even otherwise, this point could lose significance and nothing would turn on it because in the latter part of this judgment we are going to hold that the arbitrators by themselves were not competent to file the award in Court as such filing of an award was not envisaged under section 14 of the Act because the arbitrators had neither been requested by any party to the arbitration agreement to file the award in Court nor had been so directed by the Court. It is also interesting to note that after the three arbitrators jointly failed to make award rule of the Court, then only one of them took upon himself this responsibility and filed appeal against it. This besides being violation of section 14 of the Act, also supports the objection of the appellant that they were motivated by personal interest and acted as partisan, because one of the arbitrators according to the learned counsel for the appellant happens to be son -in-law of Obaidullah respondent No. l, who all alone supported the award. We are, therefore, of the view that award drawn under such a background could not be sustained on the touchstone of section 30 of the Act as it is invalid and had been improperly procured. The view taken in this regard by the appellate and trial Court appears to be in consonance with the provision of section 14 of the Act while the conclusion of the High Court in reversing that finding is the result of misconstruing and misinterpreting section 14 of the Act, as it has read in the section which is not there and that is clear from the following observation in the judgment. The arbitrators made application for making their award as rule of the court and after dismissal of application, they filed appeal and thereafter filed Constitution Petition No. 514 of 2023 before this Court.

12. For the aforementioned reasons, on this count too, the application made by the arbitrators for making the Award as rule of the court couldn t have been allowed. Thus, both constitution petitions are liable to dismissal.

13. As far as C.P. No. 764 of 2022 is concerned, petitioner made an application for rejection of the plaint on the strength of afore discussed Award. The Award was nullity; thus, it cannot be made a ground for rejection of plaint under section 32, the Act. As the Award was not made rule of the court, therefore, respondent s suit could not be rejected under section 32, the Act as the said provision was not attracted. It is a settled proposition of law that, where in a pending suit, an award is not made rule of the court then the Court shall proceed with the suit and decide it on the basis of available record and in accordance with law. Petitioner had made an application for rejection of the plaint on the strength of Award which was not made rule of the court. Thus, the sole ground agitated by the petitioner for rejection of the plaint was no more available with him. Section 32, the Act bars a civil suit upon the existence, effect or validity of an arbitration agreement or award nor shall any arbitration agreement or award be set-aside, amended, modified or in any way effected otherwise than as provided in the Act. In his suit, respondent had not asked for a decision upon the existence of the Award nor he had sought enforcement or setting aside of the Award. Thus, his suit was not barred by section 32, the Act. The suit was instituted on 7 February 2019 and the arbitrators made the Award on 11 February, 2020. The award was made subsequently; thus, at the institution of suit, there was neither any arbitration agreement nor the Award.

14. For the aforesaid reasons, the impugned orders, whereby petitioner s application was concurrently dismissed, do not suffer from any error of section 32, the Act and Order VII rule 11(d), the Code. Consequently, we dismiss these Constitution Petitions. No costs. MH/132/Bal Petition dismissed.