' This order will dispose of application under section 12(2), C.P.C. Filed by the applicant in Suit No.896 of 1996 (Ch. Fazal Muhammad v. Ministry of Defence in the Military Lands and Cantonment, Military Estate Office, Hyderabad, Sindh and others) with a prayer to set aside the decree, dated 20-8-1998 by which the award of sole Arbitrator was made the rule of the Court. The application has been filed on the grounds: (1) that there was no agreement between the applicant and the parties of the suit; (2) the applicant was not party in the arbitration proceedings nor the Arbitrator served any notice on the applicant; (3) the applicant was not party in the suit nor summons were served upon him; and, (4) the decree was obtained by fraud.
2. A notice of the application was served upon the respondents. They contested the application by filing counter-affidavits.
3. Brief facts are that Ministry of Defence Government of Pakistan owned land measuring 754.23 acres of Survey No.272 situated at Hyderabad Cantt. The Military Estate Officer leased out the said area for a period of four years for quarrying purpose through tenders to Ch. Fazal Muhammad with effect from 15-4-1963 to 31-3-1967. It appears that Pak. P.W.D. Started constructing a road linking Latifabad with Airport through their contractor. Ch. Fazal Muhammad made a complaint to the Military Estate Officer against the contractor who was constructing the road that certain quarried stone and Bajri belonging to him were being used and he claimed damages. It further appears that on 17-5-1995 the Chief Engineer appointed Mr. S.A. Nizami Additional Secretary (Law) (Retd.)
Government of Pakistan as Sole Arbitrator to adjudicate upon the dispute existed between Ch. Fazal Muhammad and Civil Aviation Authority concerning the construction of road. The Sole Arbitrator issued notice to Chief Engineer Pak. P.W.D. Karachi to appear before him in connection with the arbitration proceedings. Subsequently, on the application of Chief Engineer the Arbitrator joined the Executive Director Construction Civil Aviation Authority, Executive Officer Cantonment Military Estate Cantonment, Hyderabad Sindh and Executive Engineer Pak. P.W.D. Hyderabad as parties. The Military Estate Officer filed comments before the arbitrator informing him that the dispute was between the Chief Engineer Pak. P.W.D. And their lessee Ch. Fazal Muhammad by admitting that they had leased out the area to Ch. Fazal Muhammad, therefore, the said damages might be claimed from Pak. P.W.D. Department. The General Manager Legal (C&S) HQ Civil Aviation Authority filed objections before the Arbitrator in which the jurisdiction of the arbitrator was challenged by taking the plea that they were not party to agreement of arbitration; that there was no dispute between them and the parties concerned; that they were wrongly joined as party in the proceedings as there was no cause of action against them; that the reference of Arbitrator dated 17-5-1995 was issued behind the back of C.A.A., therefore, it is not binding upon them, as such, they did not submit to the jurisdiction of the Arbitrator. They prayed for dismissal of the arbitration proceedings against them. On 30-8-1995 the Arbitrator made the award. The operative part of the award reads as under:-- "The awarded amount shall be payable in the first instance by the defendant No.1 Ministry of Defence in the Military Estates Office, Hyderabad, which amount shall then be recoverable from the others defendant i.e. Nos.2 and 3.
' As none of the parties have paid my fee tentatively fixed though they agreed to pay. Now I fix my final fee at Rs. Two hundred and fifty thousand which the claimant and the defendants shall be liable to pay on fifty fifty. The claimant shall pay the entire fee of two hundred fifty thousand in the first instance and thereafter recover the 50% share of the defendants from them as cost along with the aforesaid awarded amount."
4. It appears that for the first time Ministry of Defence in the Military Lands and Cantonment, Military Estate Office, Hyderabad Sindh was shown as party by mentioning them in the award as defendant No.1, though the said Ministry was neither party in the reference nor the Arbitrator ever served the Ministry with any notice. However, after passing the award a copy of it was sent to Ministry. The award was filed before the Court. The heading of the award was as under:-- "In the sole Arbitrator S.A. Nizami (LL.M. London)
' Additional Secretary (Law) (Retd.) Government of Pakistan Ch. Fazal Muhammad, Contractor, Bungalow No.229, Unit No.2, Latifabad, Hyderabad Sindh...
Claimant/plaintiff versus
(1) Ministry of Defence in the Military Lands and Cantonment, Military Estate Office, Hyderabad Sindh.
(2) XEN Pak. P.W.D., Hyderabad, Sindh.
(3) Civil Aviation Authority, Karachi defendants/respondents."
5. The Court treated it as Suit bearing No.896 of 1996 and issued notice to the above-mentioned parties which were served. The XEN Pak. P.W.D. And Civil Aviation Authority appeared before the Court. After hearing them the Court modified the award to the extent that in the above-mentioned operative part of the award the portion (which amount shall then be recoverable from the others defendants i.e. No.2 and 3) was deleted. Then it was made the rule of the Court and such decree was prepared on 20-8-1998, hence the present application.
6. I have heard D.A.-G. For the applicant, respondents' Advocates and perused the record of this case very carefully.
7. For attracting the provisions of Arbitration Act three essential conditions are required to be fulfilled: (1) there should be agreement of arbitration; (2) there should be dispute between the parties of the arbitration agreement concerning the agreement; and, (3) the matter is referred to the Arbitrator.
8. As regards the condition No.1, parties Advocate have conceded that before referring the matter to the Arbitrator there was no written agreement of arbitration between the Pak. P.W.D., Ch. Fazal Muhammad, C.A.A. Or Government of Pakistan. The learned Advocate for Ch. Fazal Muhammad has stated that through the reference of Chief Engineer, South Pak. P.W.D. Dated 17-5-1995 the parties had agreed to refer the matter to the Arbitrator and subsequently, they surrendered to the jurisdiction of the Arbitrator, as such, impliedly there was an agreement of arbitration between the parties. The important document in this case is the office memorandum/letter issued by Chief Engineer, South Pak. P.W.D. Dated 17-5-1995 on which the Advocate for Ch. Fazal Muhammad has relied upon and the other Advocates have also submitted their arguments on the contents of the said letter. It will be advantageous to reproduce the said letter to arrive at correct implication of the said office memorandum/letter which reads as under:-- "Government of Pakistan Pakistan Public Works Department No.728/283-Legal Dated, Karachi the 17th May, 1995 ' Office Memorandum ' In pursuance of orders as contained in Works Division's Letter No. F.10(35)69/94-WI/ EIII(pt), dated 17-4-1995, Mr. S.A. Nizami, Additional Secretary (Law) (Retd.), Government of Pakistan is hereby appointed as Sole Arbitrator to adjudicate upon the dispute existing between Ch. Fazal Muhammad and Civil Aviation Authority by virtue of the fact that the approaching road from Latifabad to Airport, Hyderabad is presently under the Administrative Control of Civil Aviation Authority.
' The parties are hereby advised to submit their claims and counterclaims before the Sole Arbitrator for adjudication.
(Sarfraz Ahmed Mirza), Chief Engineer (South) Pak. P.W.D. Karachi To, Mr. S.A. Nizami, Additional Secretary (Law) Retd.), 202-203, Asad Chambers, 146A.M. Area, Near Passport Office, Sadar, Karachi.
' Copy to:--
(1) Mr. Muhammad Sabir, Section Officer, EIII, Works Division, Islamabad, with reference to his letter No. Referred to above.
(2) The Director-General, Pak. P.W.D., Islamabad for favour of information as the work stands transferred to Civil Aviation Authority by virtue of merger of Airport Development Authority as they are necessary party. Ministry of Works in their letter referred to above have desired that the agency related with the work may be made a party and accordingly the action has been taken.
(3) The Secretary, Ministry of Defence, Government of Pakistan, Islamabad, for favour of Information and necessary direction to the Civil Aviation Authority.
(4) The Director-General, Civil Aviation Authority, Airport, Karachi, for favour of information and required action.
(5) The Executive Engineer, Central Civil Division, Pak. P.W.D. Hyderabad. He is hereby directed to appear before the Sole Arbitrator and furnish the required documents in the capacity of silent observer and also assist the Civil Aviation Authority in the matter.
(6) Ch. Fazal Muhammad, Contractor, Bungalow No.229, Unit No.2, Latifabad, Hyderabad, for information.
(Sarfraz Ahmed Mirza), Chief Engineer (South)
' Pak. P.W.D., Karachi."
9. From the above letter it is clear that the Chief Engineer South Pak. P.W.D. Appointed Sole Arbitrator in pursuance of Works Division's Letter No.F.10(35)69/94- WI/EIII(pt), dated 17-4-1995, and referred the dispute existed between Ch. Fazal Muhammad and C.A.A. To Mr. S.A. Nizami concerning the approach road from Latifabad to Airport, Hyderabad. The bare reading of the said letter would reveal that it was a unilateral letter issued by Chief Engineer Pak. P.W.D. South without consultation or agreement of Civil Aviation Authority. This can very well be judged from the endorsement made by Chief Engineer (South) while sending the copy of letter to the Director-General Pak. P.W.D.
Appearing at S. No.2 of his letter. Its relevant portion reads: "Ministry of Works in their letter referred to above have desired that agency related with the work may be made party and accordingly the action has been taken". However, the facts of the case clearly shows that there was no dispute between Ch. Fazal Muhammad and. Civil Aviation Authority but the dispute was between Ch. Fazal Muhammad and Contractor of Pak. P.W.D. Who was constructing the road as the allegation was that the said contractor used certain quarried stone and Bajri belonging to Ch. Fazal Muhammad.
From this letter it further reveals that the applicant or the Military Estate Officer were neither shown to be party to the said agreement nor there was a dispute or shown to be existed between them.
The letter simply shows that its copies were sent to officers mentioned thereunder and for the purposes mentioned therein. The letter clearly shows that its copies were sent to the Secretary, Ministry of Defence for a limited purpose i.e. For information and necessary direction to Civil Aviation Authority.
9-A. The learned Advocate for Ch. Fazal Muhammad made great emphasis that the parties appeared before the Arbitrator and submitted their claims, therefore, the award is binding upon them. The question of submissions to the jurisdiction of the arbitrator arises later on but first it is to be shown whether there was agreement of arbitration between the parties, that there was dispute between them, which was referred to the Arbitrator. As such the Arbitrator would assume the jurisdiction after receipt of reference from the parties. If the reference itself is illegal or invalid then through that reference the Arbitrator cannot assume jurisdiction and take further proceedings. The Privy Council examined this aspect of the case in a case of Chhabba Lal v. Kallu Lal AIR (33).1946 PC 72 and observed: "if there is no valid reference, the purported award is a nullity, and can be challenged in any appropriate proceeding". The said observation was made by the Privy Council on the facts that a suit was pending in a Court where some of the defendants were minors. One of the major defendants was appointed guardian ad litem of the said minors. The plaintiff of the suit filed an application before the Court for referring the matter to Arbitrator. The said guardian ad litem was not present and his signature was also not on the application, therefore, the Court called him and on his verification the matter was referred to Arbitrator. Subsequently, award was passed which was filed in the Court where a question arose whether the guardian ad litem had verified the application on his behalf as a defendant or on behalf of guardian ad litem of minors. It was further agitated that as the guardian ad litem had not obtained permission from the Court as provided under Order XXXII, rule 7, C.P.C., therefore, the said guardian ad litem had no authority to refer the matter of minors to the Arbitrator. The Court found that the said defendant did not apply to the Court to obtain such permission nor the Court gave permission, therefore, the Privy Council held that there was no agreement of arbitration for referring the matter to Arbitrator and the reference was found to be invalid, therefore, the award was declared as void.
10. After referring the above authority of the Privy Council a Division Bench of Patna High Court in a case Deep Narain Singh v. Dhaneshwari AIR 1960 Pat. 201 at page 203 has observed:-- "The result is that all the persons interested in the matter of dispute were not parties to the arbitration agreement and it is manifest that when an agreement is not consented to by all, such an agreement is invalid and cannot give the Arbitrator jurisdiction to decide the dispute, and the award given on the strength of such void reference is void. The award passed upon such invalid reference does not bind even the consenting parties. It is void altogether. This does not require a detailed investigation. It has been laid down by their Lordships of the Privy Council in Chhabba Lal v. Kallu Lal AIR 1946 PC. 72 that if there is no valid reference, the purported award is a nullity. As, in the present case, there was no unanimous reference to arbitration the entire award based upon such invalid reference must be held to be a nullity, and on this ground alone the award is liable to be set aside and the plaintiffs unsuited."
11. In the present case, the applicant was not consenting party to the agreement of the arbitration nor the Chief Engineer, South Pak. P.W.D. Was authorized to appoint a Sole Arbitrator or refer the matter to the arbitration on behalf of the applicant nor there was any dispute between the applicant and the parties mentioned in the letter. Furthermore one of the parties viz. C.A.A.
Allegedly interested in the matter of dispute was not party to the arbitration agreement as such the letter dated 17-5-1995, by itself was invalid, which cannot give jurisdiction to the Arbitrator to decide the dispute, as such, the award passed on an invalid reference is void.
12. Apart from the above facts, the record reveals that the C.A.A. Had already challenged the jurisdiction of the Arbitrator and categorically stated in their objections that they did not submit to the jurisdiction of the arbitration. The Military Estate Officer had also filed objections and filed parawise comments in which he categorically stated that there was no dispute between them and Ch. Fazal Muhammad but the dispute was between the Chief Engineer Pak. P.W.D. And their lessee Ch. Fazal Muhammad. The record reveals that Military Estate Officer was not shown party in the reference dated 17-5-1995 but he was subsequently added by the Arbitrator as party. At no point of time the Ministry of Defence was party in the proceedings but it appears that Ministry was shown as defendant No.1 in the award for the first time and that too without serving any notice upon the Ministry. After passing the award a copy of it was sent to the Ministry of Defence through the Military Land and Cantonment Boards Office, Hyderabad Sindh. The name of the Ministry of Defence for the first time shown in the award. The Court after receiving the award issued notice to the Ministry of the Defence on the address shown in the award. It is admitted by all the counsel that the office of the Ministry of Defence is situated at Islamabad but the notice of Ministry of Defence was sent to Military Lands and Cantonment, Military Estate Office, Hyderabad Sindh. Under section 79 of C.P.C. If the Federal Government is made a party then it is to be made through the required Ministry. No such notice was served upon the Secretary Ministry of Defence at Islamabad, as such, the applicant was not properly or legally served by the Court before making the award as a rule of Court.
13. Learned Advocate for Ch. Fazal Muhammad, referred to the proceedings of the arbitration, the Court and argued that the Ministry of Defence had i.Nowledge and was party to the award. When the Arbitrator had no jurisdiction in the matter, on the invalid reference, then all the subsequent proceedings carry no weight.
14. After considering the material available on the record, I am of the considered view that the essential requirements for passing the award were not available in the matter. As the award is void and passed without jurisdiction, therefore, it is liable to be set aside. Consequently, by invoking provisions of section 12(2), C.P.C. The award is set aside. The application is allowed with costs.