' This revision calls in question order dated llth July 1977, passed by the learned Civil Judge Ist Class, Lahore whereby the application filed by the petitioner under section 5 of the Arbitration Act was dismissed.
2. The facts necessary for the purposes of this revision, briefly stated, are that the respondent was awarded a contract for supplying, laying, jointing and testing of trunk sewers of 24" and 30" in diameter along Ferozepur Road in L.M.P. Block, Gulberg III, Lahore. This contract contained an arbitration clause as well. Dispute having arisen between the parties, the respondent made an application before the learned Civil Judge, Lahore under sections 8 and 20 of the Arbitration Act for filing of the agreement containing the arbitration clause and for appointing a Sole Arbitrator to enter upon reference and thereafter to file an award in the Court. This application was filed on 20th March, 1976. Notice to Secretary to the Government of Punjab, Local Government and Social Welfare Departments, Lahore and to the Executive Engineer, Public Health Engineering Division Ferozepur Road, Lahore was issued by the trial Court for appearing on 15th May 1976 and filing a reply to the application. The reverse of the notice to the Executive Engineer bears initials of some person as the recipient thereof but no seal of the office is affixed thereunder.
3. On 15th May, 1976 the learned Civil Judge passed an order that the reply to the application had been filed and no objection had been raised thereto. It was directed that names of 2/3 persons be given on 7th June, 1976 from amongst whom the arbitrator might be chosen. On 7th June, 1976, the order was to the effect that the counsel for parties were present and had jointly stated that Mr. Muhammad Rashid Ahmad Advocate be appointed as the Sole Arbitrator. The matter in dispute was, therefore, referred to him. Subsequent to this reference some proceedings before the Sole Arbitrator were held when on 28th February, 1977 an application was filed on behalf of petitioner No, 2 under section 5 of the Arbitration Act praying for revoking the authority of the Arbitrator alleging that his appointment was obtained from the Court by committing fraud and forgeries and keeping the Department in dark, presumably in collusion with some official of the Department. This application was contested by the respondent inter alia on the ground that the petitioners having participated in the proceedings before the arbitrator cannot now turn around and seek revocation of this authority. The allegations as to the commission of fraud and forgeries were also controverted. The learned Civil Judge after hearing the arguments of the parties rejected the application filed by the petitioners under section 5 of the Arbitration Act by his order dated 11th July, 1977, against which this revision has been filed.
4. The learned counsel for the petitioners contended firstly that no notice was served upon Lahore Improvement Trust, Public Health Engineering Division, the relevant authority who was in fact the party to the contract by the Court before the appointment of arbitrator ; secondly that the notice was intentionally got served on another Division of the Public Health Engineering Department in order to keep the matter out of the sight of the concerned authorities ; and thirdly that appearance before the Sole Arbitrator was under the bona fide belief that the appointment had been made in a regular manner ; and that the Department was not aware of the forgeries committed till the date when on inspection of the file of the Court it revealed that signatures on the reply filed on behalf of the Department to the application of the respondent under sections 8 and 20 of the Arbitration Act were forged and that no lawyer was appointed to conduct the case on behalf of the petitioners, at the time the appointment of the Sole Arbitrator was made. It was also submitted on behalf of the petitioners that there is neither any Power of Attorney on record in favour of any lawyer from the.
Executive Engineer concerned nor the lawyer had signed on the aforesaid reply allegedly submitted in the Court on behalf of the Department. The learned counsel for the petitioners also pointed out that the name of the lawyer who allegedly appeared on behalf of the petitioners was nowhere to be found on the record of the Court below. He also submitted that in fact no lawyer was appointed on behalf of the petitioners (respondents before the Court below) at the time the alleged reply to the application for reference to arbitration was filed or at the time the alleged statement for appointing Mr. Rashid Ahmad, Advocate, as Sole Arbitrator was made. He pointed out that the request for appointment of a counsel was made by the Executive Engineer to the Solicitor to the Government in January, 1977 and as such no counsel duly authorised could appear before the trial Court on 15th May 1976, to file the reply and on 7th June 1976, to make a statement agreeing to the appointment of any Sole Arbitrator.
5. The learned counsel also contended that the Court below fell into an error while holding that application under section 5 of Arbitration Act was not maintainable. He relied on Messrs A. J. Bag.
Corporation v. I akistan and 3 others in support of his above contention.
6. The last contention raised by the learned counsel for the petitioners was that the learned trial Court did not afford any opportunity to the petitioners to prove fraud and forgeries committed by the respondent in procuring an order from the Court for appointment of a Sole Arbitrator. It was urged that in view of the serious nature of the allegations contained in the application and controverted in the reply the only proper course for the Court below was to have framed an issue pertaining to the controversy involved and allowed the parties to lead evidence and then decide the matter.
7. On the other hand learned counsel for the respondent contended that section 5 of Arbitration Act is only an enabling provision and in order to seek revocation of authority of the appointed Arbitrator, the case had to be necessarily brought within the purview of sections 8 and 11 ibid and that in case it does not fall within the purview of the aforementioned sections, the authority of the Arbitrator cannot be revoked.1
8. The only other submission made by the learned counsel for the respondent was that the appointment of the Sole Arbitrator having been made, may be in any irregular manner, but the petitioners having participated in the arbitration proceedings cannot be now allowed to object to the appointment as they shall be deemed to have waived their right. He relied in this regard on Province of Punjab and another v. Messrs Industrial Machine Pool, Lahore.
Learned counsel for the petitioners in reply to the arguments of the learned counsel for the respondent argued that fraud being involved in the appointment of the arbitrator, the rights of the petitioners to object to the appointment of arbitrator could not be taken away.
10. Having given serious consideration to the controversy involved, I am of the view that the contentions raised by the learned counsel for the petitioners have substance and that the learned lower Appellate Court acted in haste in dismissing the application of the petitioners under section 5 of the Arbitration Act,
11. A perusal of the record of the lower Court shows that the application for filing of the agreement and appointment of an Arbitrator was made by the respondent on 20th/24th March, 1976. The Court passed an order on the same day for issuing notice to the respondents for 15th May, 1976. On 15th May, 1976 a reply to the application aforementioned was filed, raising no objection to the application of the respondent. The Court adjourned the case to 7-6-1976 for furnishing names of 2/3 persons from amongst whom an Arbitrator was to be appointed. On 7-6-1976 the order was made to the effect that both the counsel had agreed to the appointment of Mr. Muhammad Rashid Ahmad Advocate as the Sole Arbitrator upon which the direction was given to the said Arbitrator to enter upon reference and submit a report. Now the lower Court file shows that there is neither any power of attorney in favour of any counsel to appear on behalf of the petitioners before it nor there is a memo of appearance filed by any counsel. The reply to the application allegedly filed by the petitioners is also not signed by any counsel. The name of the counsel who allegedly appeared on behalf of the petitioners in the Court below is nowhere to be found on the file. The notice issued to petitioner No, 1 by the trial Court had been received allegedly by someone else whose identity is not traced and there is no seal of the office of respondent No, 2 under the signatures of the recipient of the notice. This is correct that some proceedings had taken place before the Sole Arbitrator, before the application out of which the present revision has arisen was filed by the petitioners. There is, however, an application on the record of the Court below made by the petitioner No, 2 on 26-2-1977 for inspection of the file. Immediately after this inspection of the file the application under section 5 of the Arbitration Act was moved by the petitioners on 28-2-1977 inter cilia alleging therein that petitioner No, 2 came to know about the fraud committed in seeking appointment of the Arbitrator only on 26-2-1977 on inspection of the file ; that the letter (presumably A referring to the reply to the application under sections 8 and 20 of the Arbitration Act had been forged and signatures thereon had also been forged ; that no notice from the Court was received by petitioner No, 2 and the summons allegedly bearing acknowledgment by petitioner No, 2 also seemed to have been forged, that the Department did not know about the proceedings in Court by which the Arbitrator was appointed; that the forgery and fraud were committed possibly in collusion with any official of the Department by the contractor/respondent as it had been found that in other cases also one official of the Department colluded with the contractor to have some Arbitrator appointed through fictitious and unauthorised statement ; that no counsel was appointed on behalf of petitioners at the time of appointment of Arbitrator and the presence of counsel marked on the order sheet of the Court below was wrong ; that the Arbitrator appointed was not the person who could be appointed Arbitrator under the relevant clause in the agreement that the dispute relates to 1966- 67 whilst the application for reference to arbitration was filed in 1976 and the claim had become barred by time ; and that in the whole of the proceedings culminating in the appointment of Sole Arbitrator fraud and forgeries had been committed.2
12. Without commenting on the merits of the allegations levelled in the application under section 5 of the Arbitration Act, it may be observed that the disposal of the case only on the basis of a reply filed by the respondent and after hearing the arguments is to say the least not comprehensible.
The averments made in the aforementioned application did show the very serious nature of the allegations and prima facie also disclosed fraud and forgeries having been committed. In any case they was a serious controversy which to my mind could not be resolved except by allowing the parties to prove their respective stands by leading evident and substantiating their contentions by other records, etc. Since I intend to remand the case to the learned trial Court for properly, adjudicating it, I am refraining from commenting upon the merits of the allegations as any observation made by me of whatever tentative nature that may be is likely to cause prejudice to the case of any one of the parties.
13. It may be pointed out here that the contention raised by the learned counsel for the respondent that having participated in the proceedings before the Arbitrator the petitioners stand precluded from raising objection to the appointment of the Arbitrator and seeking revocation thereof in the attendant circumstances of this case has no force.
14. It is well settled that fraud vitiates most solemn of the proceedings and therefore, the mere participation of the petitioners in the arbitration proceedings which participation was according to the learned counsel for petitioners under a bona fide mistake of fact cannot take away the right of the petitioners to object to the appointment of the Sole Arbitrator on fraud and forgery coming to their knowledge especially when the award had not yet been given by the Arbitrator.
15. Similarly the other contention raised by the learned counsel that section 5 of the Arbitration Act is governed by the provisions of sections 8 and 11 ibid has no premises. A bare reading of the section shows that no limitations have been placed on the power of the Court to revoke the authority of an appointed Arbitrator.
16. The authority cited by the learned counsel for the respondent also does not advance the case of the respondent in that the said authority is clearly distinguishable as it proceeded on absolutely different facts wherein there was no dispute to the appointment of the counsel and his having appeared in the Court at the time of appointment of Arbitrator. The admitted position in that case was that the identity of the counsel who appeared for the Government was not in dispute and the learned counsel was the one who was borne on panel of Government pleaders authorised to act for Government in respect of any judicial proceedings.
17. The learned Court below, as already pointed out above, acted in haste and with material irregularity in deciding the case without allowing the parties to lead evidence on the controversial question of fraud and forgeries allegedly involved. The order therefore, cannot in sustained,
18. In view of the foregoing I accept this revision and setting aside the impuged order of the lower Court dated 11th July, 1977, remand the case for adjudication afresh in accordance with law. The lower Court shall frame issue/issues pertaining to the controversy involved and allow the parties to lead evidence thereon and then decide the matter.
' The parties are, however, left to bear their own costs. 1973 SCMR 98 PLD 1978 Lah. 829 revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.