' This civil revision is tiled on behalf of a minor, the son of respondent No,4, who challenges the judgment of the learned Appellate Court dated 22-9-2004 reversing the order of the learned trial Court dated 12-6-2002 that dismissed the application under sections 14, 17 of the Arbitration Act, 1940 filed by respondents Nos.1 to 3 to make the arbitral award dated 17-7-1995 (Exh.A-2) a rule of Court. By the same judgment, the learned trial Court allowed an application under sections 30 and 33 of the Arbitration Act, 1940 filed by the father of the petitioner, respondent No,4, challenging the validity of the aforesaid award dated 17-7-1995 (Exh. A-2).
2. The short question raised in this civil revision petition is whether an arbitration award can lawfully be given against a person who is not party to the underlying arbitration agreement. In the present case, the arbitration agreement dated 9-7-1995 (Exh.A/1) was entered between four brothers inter se namely, respondents Nos.1, 2, 3 and the petitioner's father, respondent No,4. This agreement does not include the petitioner as party thereto nor has been signed on his behalf by a legal guardian.
Nevertheless, the award (Exh.A-2) made pursuant to the said arbitration agreement by respondents Nos.5 to 8 as arbitrators, deals in its finding No,2 with the property of the petitioner, namely, portion measuring 8 x 15 feet of two shops which are acknowledged in the award as belonging to the petitioner, who is stated to be a minor son of respondent No,4. As such it is contended on behalf of the petitioner that the award made in respect of petitioner's property is without jurisdiction, for being beyond the scope of the reference, because it deals with property and rights of a person who is not a party to the arbitration agreement. As such it is prayed that to the extent of the interest of the petitioner, the impugned appellate judgment is liable to be set aside as being contrary to law.
3. The learned counsel for respondents Nos.1 to 3 entered appearance in order to contest the position taken by the petitioner. Although the respondent No,4 also entered appearance personally, however, he did not contest the petition. The remaining respondents Nos.5 to 8, who were arbitrators are stated by the learned counsel for the petitioner to have been impleaded as pro forma respondents. They did not appear in the proceedings clearly because they are non- contesting parties.
4. With respect to the plea taken by the petitioner, learned counsel for the contesting respondents accepts that factually the petitioner is not a party to the arbitration agreement (Exh.A-1). The signature affixed on the arbitration agreement (Exh.A-1) by the respondent No,4 is for himself and not in any capacity of a guardian of the petitioner. It is also clear from finding No,2 given in the arbitration award dated 17-7-1995 (Exh.A.2) that the property of the petitioner has been allocated by the arbitrators to one of the respondents as part of the overall resolution of the dispute. The arbitrators did so with knowledge, duly recorded in the award, that the owner of the said property is the petitioner, who is a minor. It appears that the arbitrators dealt with the petitioner's property despite his minority because the award requires respondent No,4 to take steps to obtain certificate "Jannasheeni" in respect of such property. This direction must in the context of the facts of the case, be read to mean a guardianship certificate to effect the transfer directed by the award. Learned counsel for the respondents defended the arbitrators approach by stating that respondent No,4 did in fact file an application for appointment of guardian on 3-9-1995 but subsequently withdrew that application on 23-10-1995. As such the learned counsel implied that respondent No,4 misled the arbitrators and the petitioner is therefore estopped from seeking the vitiation of the arbitral award.
5. Learned counsel for the contesting respondents Nos.1 to 3 elaborated his stand with the explanation that the property of the petitioner, namely, a portion in the shops located in Muslim Bazar, Sargodha was actually purchased by respondent No,4 and had been competently transacted by him through the award because it was his Benami property recorded in the name of the petitioner. In the alternative, he took the plea that respondent No,4 is the natural guardian of the petitioner who acquired the disputed property for the petitioner and is competent to dispose of it for the benefit and welfare of the petitioner. The impugned disposition of the petitioner's property is such a transaction procured by respondent No,4 and is therefore, valid and binding on the petitioner. On the foregoing submissions, it was contended that award dated 17-7-1995 (Exh.A.2) is valid and binding on the parties and has been rightly upheld by the learned appellate Court.
6. In support of the submissions recounted above, the learned counsel for the respondents relied upon the following judgments: Rai Tulley Khan v. Ahmad Hassan Khan and others (1981 SCM R 1075), Dr. Khalida Malik and 2 others v. Mst. Farida Malik and 7 others (1994 M LD 2348), Yamin Khan and 5 others v. Rais Jhangli Khan and another (1999 CLC 1755) and Muhammad Bakhsh v. Province of Punjab through Collector Jhang and 2 others (2003 YLR 1231).
7. There can be no, cavil with the principle laid down in the aforesaid judgments to the effect that transactions of a minor's property that are made for his welfare by his natural guardian are valid and binding. The consistently reiterated feature of this principle is that such transactions be meant for the manifest benefit or legal necessity of the minor. In the above mentioned authorities the learned Courts concluded upon a consideration of the evidence on record that the impugned transactions of minor's property were carried out for his benefit and welfare. The present case on the other hand has significant differences from the precedents cited. Firstly, the impugned transaction of the petitioner's property is caused by arbitrators and not through a transfer made by the respondent No,4. The award is made with reference to the dispute referred and not in deference to the interest of the petitioner as the sole consideration of the award. There is otherwise no material on record that shows that transfer of the property directed by the award is meant to promote or otherwise cause the petitioner's welfare. Accordingly, this plea raises an argument that is not based on the record.
8. The plea of the learned counsel for the respondents that property of the petitioner was owned Benami by respondent No,4 was not pursued in arguments by the learned counsel for the respondents. Moreover there is nothing on record to sustain it. Accordingly, the plea has no merit.
9. The important, objection by the petitioner that remains unanswered by the respondents is that the arbitrators/respondents Nos.5 to 8, derive their jurisdiction to undertake dispute resolution from the consent of the parties as recorded by the arbitration agreement. In the present case the petitioner is not a party to the arbitration agreement and therefore the arbitrators altogether lack jurisdiction to adjudicate in respect of the petitioner's rights or property. The fact is that the arbitrators have in their award usurped such jurisdiction upon the mistaken premise that the respondent No,4 could lawfully implement the award in respect of the transfer of petitioner's property by obtaining validation from the competent Court. Leaving aside the misplaced optimism of the arbitrators about the legal effect and validity of a party's B compliance with an unauthorized direction, the fact is that the award was not accepted and was challenged by the natural guardian as well as the minor on this score. The argument of the learned counsel for the respondents alleging collusion between father and son is irrelevant and devoid of force. The legal position on the invalidity of the award (Exh.A-2) in relation to the rights and property of the petitioner is absolutely clear. Arbitrators derive their authority from the consent of the parties to the agreement of reference. Arbitrators cannot travel beyond the limits of the particular matters submitted to them for decision. This was held by the Hon'ble Supreme Court in the case of Farida Malik v. Khalid Malik (1998 SCM R 816). The corresponding principle that an arbitration agreement is binding on the parties thereto is equally well settled. The immunity of non-parties to the arbitral agreement from action by the arbitrators has been recognized in different contexts, namely in, Inayatullah Khan v.
Obaidullah Khan (1999 SCMR 2707), Province of Punjab v. Sher Muhammad & Co., (2001 CLC 613) and Pakistan v. Dallah Real Estate Co., (2003 CLC 1411). Therefore as in the present case an award is void and has no effect upon the rights and interest of persons who are not parties to arbitration.
10. The, learned counsel for the respondents Nos.1 to 3 finally expressed apprehension that if the impugned order of the learned appellate Court is set aside then the order of the learned trial Court should not be revived fully. He submitted that the petitioner's objection to the award, at best vitiates only a part of the award, whereas the learned trial Court has committed the error of setting aside the award as a whole. Learned counsel for the petitioner was quick to clarify that his challenge to the award is confined to the extent of the rights and interests of the petitioner only and does not touch any finding regarding the dispute resolution made with respect to the properties of the parties to the arbitration agreement (ExIt.A.1), namely, respondents Nos.1 to 4. The law recognizes severability of an award and therefore upholds partial validity thereof. A statement of this principle of law is laid down by the Hon'ble Supreme Court in the following judgments: M/s National Construction Co., v. The West Pakistan Water and Power Development Authority through its Chairman. (PLD 1987 SC 461) and Ghulam Abbas v. Trustees of the Port of Karachi (PLD 1987 SC 393).
11. Reinforced by the law laid down and referred above, it is held that the award dated 17-7-1995 (Exh.A.2) is invalid and ineffective to the extent that it deals with and disposes the rights and interest of the petitioner measuring 8 x 15 feet in the two shops located in Muslim Bazaar, Sargodha.
To the remaining extent the said award is upheld and made a rule of Court. The impugned judgments of the learned lower Courts are modified accordingly. The civil revision is allowed in the above terms.