This is a first appeal against the: order of the learned Civil Judge, 1st Class, Lyallpur, dated 9th May 1968 whereby he made the award rule of the Court.
2. Brief facts of the case are that Muhammad Sharif respon--dent filed a suit for dissolution of partnership and rendition of accounts being a partner of Taj Din & Company, Amritsari. During the pendency of the suit the parties agreed to refer their dispute to arbitration, Hafiz Muhammad Ayub was nominated as an arbitrator by the plaintiff while Ch. Muhammad Tufail was selected by the two defendants. It was agreed that in case of difference of opinion between the two arbitrators Ch. Karam Illahi, Advocate, shall act as Sarpanch. The matter was referred to arbitration on 26-9-1963.
On 26-3-1964 Muhammad Hussain. One of the arbitrators applied to the Court that he has examined the books of accounts, but has not reached any conclusion. He was, therefore, unable to give any finding. On 30-3-1964, the predecessor of the learned Civil Judge referred the matter to the Sarpanch for decision on the ground that there was difference of opinion between the arbitrators. This Sarpanch was removed at the instance of defendants 1 and 2 and Haji Muhammad Iqbal Advocate was appointed in his place on 21-7-1964, who filed his award can 9-2-1963. The award was challenged by the appellants and the following, objections were raised :--
(i) That the Sarpanch exceeded his jurisdiction by interfering with the ownership of the suit property and making the plaintiff and the defendant No. 3 as the share-holders therein,
(ii) That the Sarpanch was guilty of misconduct, for he did not look into the account books file in the Curt and n1sc awarded the interest without any reference from the Court.
(iii) That the Sarpanch became partial for the plaintiff and gave his award without assigning an) reason and also he did not conduct himself properly.
The parties produced their evidence in support of their contentions. Ch. Nafis Ahmad Bajwa, Civil Judge, Lyallpur, referred back the dispute to Haji Muhammad lqbal asking him to give his award in determining the price of goodwill of the disputed shop and he submitted his award about it. Few objections were also raised to the second award which are reproduced as under :-
(a) That the suit property being evacuee one, therefore, the Sarpanch was not competent to give his award about that.
(b) That the award was vague and indefinite.
(c) That the third party was adversely affected by the award in question, as such it was liable to be set aside.
(d) That the Sarpanch was not competent to give his award in absence of other arbitrators and about the goodwill of the suit property.
The controversy was again put into an issue and the parties led their evidence. The learned Civil Judge repelled the conten--petition of the appellants and made the award rule of the Court. Both the awards are Exh. R. W. 1 and Exh. R. W. 1/2.
3. Learned counsel for the appellants raised the following contentions :--
(i) The parties agreed to refer the matter to arbitration of the two arbitrators and in case of difference of opinion to the Sarpanch. Since Muhammad Hussain one of the arbitrators refused to act without filling in his vacancy, the matter could knot be adjudicated upon by the Sarpanch alone; as the parties agreed to the appointment of Ch. Muhammad Iqbal as Sarpanch and not as the sole arbitrator.
(ii) The ownership of the shop was not in dispute between the parties and as such no adjudication could be made between the parties regarding its goodwill.
(iii) The land having been provisionally transferred to Anjuman Arthian, being evacuee property, the dispute about it was not within the jurisdiction of the civil Court.
(iv) In any case the award is vitiated since it was made in the absence of Anjuman Arthian which was not a party before the arbitrators.
4. In order to examine the first contention raise by learned counsel for the appellants section 8 of the Arbitration Act has -to be perused. It provides that where any appointed arbitrator or umpire is incapable of acting, or dies, any party shall give potice to the other party for appointment of an arbitrator or empire; as the case may be, and if the appointment is not made 'within 15 days after the notice, on the application of the party the Court after giving notice and affording an opportunity of being heard, shall appoint the arbitrator or the umpire as the case may be.
Admittedly new arbitrator was not appointed in this case. The question for determination is as to whether Muhammad Hussain arbitrator refused to act or whether his incapacity to come to any finding would amount to a difference of opinion between the two arbitrators. The application submitted by Muhammad Hussain arbitrator on 26-3-1964 in my humble view clearly shows that he was incapable to act as an arbitrator since he could not come to any finding. It can by no stretch of imagination be called a difference of opinion since no finding on merits contrary to the other arbitrator was given.
5. The question now remains as to whether in the absence of one of the arbitrators could the umpire act as sole arbitrator. On 21-7-1964, both the parties agreed to the appointment of Ch. Muhammad Iqbal Advocate as Sarpanch. There is not a single word in the order to show that he was appointed as sole arbitrator to determine the dispute. That being the position the question is whether on account of the incapacity of one of the arbitrators he could give an award. The award clearly is vitiated because the Sarpanch could not give the award unless there was difference of opinion between the two arbitrators. I have already observed earlier that in the application submitted by Muhammad Hussain he has not given any finding as to the dispute. Therefore, the question of difference of opinion does not arise. A Division Bench of the former Sind Chief Court in Hariram Khiaram v. Gobindram Rattan Chand (PLD 1949 Sind 30), held that where one of the appointed arbitrators refused to act and no attempt was made to supply the vacancy through the assistance of the Court as provided by section 8, Arbitration Act, 1940, the award vitiated and the dispute had to be determined by the civil Court. In Yar Muhammad and another v. Ghulam Sarwar and others (PLD 1952 Lah. 563) it was held "it would be clear that the refusal of an arbitrator to act would not put an end to the agreement itself, but would enable the Court in the last resort to supply the deficiency. Under section 8(1)(b) of the Act of 1940, it shall be presumed that it was intended that the vacancy shall be supplied and the burden to show otherwise shall rest on the person objecting to it." In the absence of the finding by one of the arbitrators there could not be a difference of opinion. The application of Muhammad Hussain arbitrator clearly shows that he found himself incapable to act as an arbitrator. It would clearly tantamount to the arbitrator's refusal to act as an arbitrator.
There is nothing in the agreement to show that the Sarpanch was competent to decide the dispute in the absence of one of the arbitrators. He could only do so if there was difference of opinion between the two arbitrators. That not being the case; as opined above, the Sarpanch could not give an award and it is clearly vitiated for non-compliance of seceion 8(I)(b) of Act of D 1940. There is nothing on the record to show that the parties agreed to appoint the Sarpanch as the sole arbitrator, in the dispute. The Sarpanch thus; misconducted himself in giving the award of a dispute which was not referred to him by the parties.
6. Admittedly the land on which the construction of the shop was raised was allotted to Anjuman- e-Arthian, but the construction was rised by the firm. Learned counsel for the respondents conceded that his clients do not claim the ownership of the land transferred to Anjuman-e-Arthian, but he insisted that he was certainly entitled to the determination of goodwill if of the firm for whose dissolution and rendition of accounts the suit was filed. The constructions of the shop having been raised on the land allotted to Anjuman-e-Arthian by the firm the arbi--trator was competent to include the amount for goodwill of the firm on remission of the award to him by the Court under section 16 of the Arbitration Act. No doubt the firm was carry--ing on business and had earned some name. If it has to be dissolved, the assets of the firm would include its goodwill as well. Even if it is not specifically mentioned in the plaint, the very act of dissolution of firm and rendition of accounts, in my humble view would include the determination of goodwill of the firm and the distribution of its value as assets of the firm amongst its partners. There is no doubt about the power of remission of the award to the arbitrator under section 16 of the Arbitration Act IL and if the Court has so done, no exception can be taken to it. I, therefore, find no force in this submission of the learned counsel for the appellant.
7. It is conceded that only P. T. O. Has been issued in favour of Anjuman-e-Arthian in regard to the evacuee land allotted to them. In the absence of the P. T. D. The property remains evacuee and any dispute which would include the entitle--ment to its allotment, could not be a subject-matter of dispute in civil Court. It was strenuously argued that the arbitrator was incompetent to make an award in the absence of Anjuman-e---Arthian touching their interest in the property allotted to them. Surely Anjuman-e-Arthian is a necessary party because the land had been allotted to it and on that land construction has been raised by the firm. The arbitrator in tine proceedings before him has thereby touched the interest of the strangers in giving the it award which would be void.
Reliance is placed on Azizud Din Ahmed v. Aaziz Ahmad aid others (PLD 1959 Kar. 497) in which a Division Bench of the Karachi Bench of this Court observed that "under the ordinary law no arbitration is effective unless and until all the parties interested in the dispute join the arbitration proceedings. Both under the English law and Indo-Pakistan law if the arbitrator in deciding tae dispute referred to him touches the interest of strangers, such action is considered to be is excess of his authority and the award is treated as void," With respect I follow the view expressed in the authority cited above.
8. It was half-heartedly argued by learned counsel for the respondents that the appeal was incompetent. Section 39(I)(vi) of the Arbitration Act makes an order appeatable where a Court sets aside or refuses to set aside an award the order is clearly appealable because the learned Judge refused to set aside the award.
9. It was next contended that there was contradiction in the stand of the appellant in accepting the first award and rejecting the second. The submission is ill-founded. Both the awards were challenged before the trial Court on various grounds and challenge has been thrown to both of them in appeal. Lastly it was submitted that assuming if the award is vitiated on account of absence of Anjuman-e-Arthian as a necessary party before the arbitrator, since the said Anjuman has not come up in appeal, the appellant is not entitled to any relief. There is hardly any substance in this objection as well, because any dispute regarding the property transferred to Anjuman-e- Arthian could not be the subject-matter of dispute in the civil Court. Such proceedings in civil Court would be corwn non judice.
10. In conclusion I would, therefore, accept this appeal and set aside the award allowing costs of this appeal.