' MIAN SAQIB NISAR, J.---The noted objection petition, filed by the objector, the Insurance Companies, under section 30 of the Arbitration Act, 1940, calls in questions the validity of the Awards dated 9-5-1991, made and pronounced by Mr. Justice (R.) Salahuddin Ahmed and Chief Justice (R.) (late) Anwar ul Haq, on the claim initiated by Sibbac Textile Industries Ltd., previously called Attock Textile Mills Limited (ATM), against the three Insurance Companies, namely Premier Insurance Company of Pakistan Ltd., the Universal Insurance Company Ltd., and Silver Star Insurance Co. Ltd. (the objectors),in the following terms:-- "(a) that the three respondent's Insurance Companies do pay to the Claimant A.T.M. L. Within a fortnight from the date of this award, an aggregate sum of Rupees One Crore, twenty-six lacks, ninety-six thousand, nine hundred and thirty seven only;
(b) that the three Insurance Companies are jointly liable to pay the aforesaid amount in accordance with the percentages as mentioned in the relevant Insurance Policies;
(c) that out of this amount, when realized, the ATML shall pay to the National Bank of Pakistan, Rawalpindi Cant: a sum of Rupees One Crore, eighteen lacks, eighty-six thousand, nine hundred and thirty seven only as mortgagees of the properties pledged with them; and
(d) that in default of payment within a fortnight as directed, the respondents shall be liable to pay to the ATML, interest on the outstanding amount of award, in terms of section 47-B of the Insurance Act, calculated at monthly rests at five per cent above the prevailing Bank rate."
2. The broader and almost undisputed facts of the matter are, that the claimant, ATM, took out 4 Fire Insurance Policies from the objectors including Fire Policy No,P/L/CEP/CM-3032/85 in the sum of Rs,1,72,00,000 in respect of stocks of cotton and man-made fore, which were stored and/or lying in the open compound and/or Godowns of the Mills of ATM. Since the said stocks of cotton and man-made fore were pledged with the National Bank of Pakistan, the Bank was a co-insured in the aforementioned Policies as agent of the Insured, subject to the terms of Bank's Mortgage clause.
' In between the night of 2nd and 3rd February, 1986, a fire broke out in the godown of the Mill, ATM filed claim on 5-2-1986 for loss of Rs,1,47,38,944 in respect of 1148 man-made Polyester Fibre bales and Rs,19,47,400 in respect of 749 cotton bales, which were claimed to be completely destroyed ATM further claimed that loss was also caused to finished yarn, stock in process building and machinery. On being informed about the fire by ATM, the objectors/respondents appointed M/s. Ghafoor and Associates, R.A. Malik and Co. And G.M. Awan, as surveyors to survey and assess the losses.
' The said surveyors took some time in accomplishing the above job, who reached to the following conclusions:--
(i) That circumstances of reported fire and cause thereof as stated by the insured's and their employees, is not established.
(ii) The insured's (mortgagors) have committed willful misstatements by declaring highly exaggerated value for stocks of Polyester Fibre and Cotton for the, purpose of pledging and insurance, so as to gain undue/unlawful advantage from the mortgagee banks and the insured's.
(iii) The insured's claim for a total amount of Rs,2,06,62,275 appears to be willfully inflated, e.g. Weight, rate and quality of allegedly destroyed stocks is proved to be false as a result of investigation of the surveyors, as also subsequently admitted by the insured's, when after unearthing of facts, they themselves submitted photo copies of another set of invoices pertaining to polyester fiber.
(iv) In support of their claim the insured's seem to have willfully made false statements, forged and/or tampered with documents, photo copies of which, they submitted in proof of their claim.
Numerous instances of forgery and/or fraud are cited under para. 14 of the Survey Report. The instances of defrauding first the bankers and subsequently the insurers, are in contravention of Policy Conditions 1 and 13.
(v) Insurance is a contract of utmost good faith. The insured's have evidently violated the utmost good faith required of them, as such, the policies of insurance are null and void. Assessment of quantum of loss made in respect of building, machinery and stock-in-process under Para. "15" ibid (when the fraudulent nature of the claim was not yet discovered), is for the information of the insurers and does not constitute any liability on their part.
3. According to ATM, in the initial stage of the survey, the Secretary of ATM by "mistake" or some confusion, supplied to the Surveyors, copies of certain incorrect documents in respect of the manmade Polyester Fibre bales, but on coming to know of it, ATM supplied new documents including invoices of 1188 man-made Polyester Fiber Bales purchased from National Fibre Ltd., along with Truck Receipts and copies of their cash book, ledger, balance sheet, etc. On account of the reason that earlier the correct and true information was not provided by ATM, the surveyors discarded the claim of the assured, who declined to assess the loss, followed by the repudiation of the claim by the Insurance Companies.
4. In the above circumstances, the ATM filed a civil suit for recovery inter alia against NBP, and during the pendency of the said suit, the ATM and the objectors/respondents agreed to refer the matter to the arbitration.
5. Pursuant to arbitration agreement dated 23-10-1990, ATM filed claim before the Arbitrators asserting that since the fire was caused by peril insured against, the objectors/respondents were liable to compensate ATM under the said Policies to the tune of Rs,2,06,62,275 along with interest at 15% per annum, jointly and severally or each for such portion thereof, as each be found liable ATM also prayed for costs of the arbitration. .' The claim of the ATM was refuted by the respondents. On thepleadings of the parties, the following issues were framed by the Arbitrators.
' ISSUES:
(1) Whether the claim is liable to be repudiated in whole or in part under conditions Nos.1 and 13 of Insurance Policies?
(2) Whether the claim is fraudulent and exaggerated?
(3) Whether the fire was fortuitous or deliberate act of arson?
(4) Whether the claimant is entitled to the award Rs,227,61,661.20?
(5) Whether respondents are entitled to the cost of arbitration?
' The learned arbitrators, have made and pronounced their award on 9-5-1991, awarding an aggregate sum of Rs,1,26,96,937 to ATM. They disallowed interest because of the change of a stance and production of different sets of documents by ATM, but allowed the interest in case of default of payment of the awarded sum within a fortnight, in terms of section 47-B of the Insurance Act, 1988, calculated at monthly rests at 5% above the prevailing Bank rate.
6. On the application of the objectors/respondents moved under section 14(2) of the Arbitration Act, 1940, the arbitrators filed the award in the Civil Court at Lahore which was entrusted to Mr. Zahoor ul Haq Rana, Civil Judge, for adjudication. But on an application bearing No,409/C/1991, under section 24(b)(1), read with section 151, C.P.C. Before this Court, seeking the transfer of the proceedings under section 14(2) of the Arbitration Act, from the Court of learned Civil Judge, Lahore to the Original side of this Court for making the award dated 9-5-1991, rule of the Court. This court vide order dated 30-7-1991, was pleased to withdraw the matter from the Court below for decision in exercise of its extraordinary civil jurisdiction. This includes the objections filed by the objector, numbered as C.O.No,17-C/1991, which are primarily under adjudication by this Court.
10.(sic) During the proceedings before this Court, an application bearing C.M.No,3252/C/91, was filed by National Bank of Pakistan (NBP), for implement under Order 1, rule 10 read with section 151, C.P.C., which was contested by the objectors/respondents. However, this application was accepted by this Court vide order dated 12-4-1993 in the following terms:- "6. After hearing the learned counsel for the parties, I am of the view that without final decision being rendered on the question, as to whether or not applicant was a party to the arbitration agreement or to the reference proceedings before the arbitrators, the applicant be impleaded as party to these proceedings subject to the final decision after hearing the parties on merits of the main case."
11. The ATM also filed C.M.No,1/C/91 in C.O. No,17/C/1991, seeking the grant of interest on the award money to the payment of which ATM is entitled under section 47-B of the Insurance Act, 1938. This application has also been contested by the objectors/respondents and shall also be disposed of through this judgment.
12. The respondents/objectors seek the setting aside of the award inter alia, on the following grounds:-
(1) The learned Arbitrators, while making the award proceeded with erroneous assumption of nature of duty of Arbitrators.
(2) The learned Arbitrators in paras. 2 and 3, in the award of Justice (Retd.) Salahud din Ahmed, acted contrary to law, while dealing with the position of National Bank of Pakistan in the arbitration proceedings.
(3).(a) The learned Arbitrators committed legal misconduct by awarding interest under section 47- B of the Insurance Act, 1938.
(3).(b) That the learned Arbitrators have conducted themselves contrary to law by granting future interest of ATM, while violating the mandatory provisions of the Arbitration Act, 1940.
(4) The role of the Surveyors has been misconstrued by the learned Arbitrators, which also constitutes and error apparent on the face of the record.
(5) The learned Arbitrators have misconceived, misunderstood and misinterpreted the contract of insurance and have failed to correctly apply the principles of uberrima fides.
(6) The learned Arbitrators have also misunderstood, misconceived and misinterpreted the Ambit, nature and scope of conditions Nos.1 and 13, as contained in the relevant Insurance Policies, which were in fact based on the principles of uberrima fides.
(7) Since the claim as lodged with the respondent Insurance Companies was based on fraud, therefore, such claim was liable to be repudiated because of breach of the principles of uberrima fides.
(8) That the learned Arbitrators were misguided while applying section 17 of the Contract Act:
(9) The despite overwhelming ocular and documentary evidence available on the record to the contrary the learned Arbitrators have erred in law on the face of the award, while misconstruing, fraudulent claim and equating the same with exaggerated claim.
(10) That the learned Arbitrators without applying the standard of balance of probabilities as per evidence available on record erroneously held that the fire was accidental.
(11)(a) That the learned Arbitrators failed in law to maintain distinction between admissibility of evidence and sufficiency of evidence, while making this award.
(11)(b) That the learned Arbitrators have decided the disputed question of act regarding quantum of loss arbitrarily in complete disregard of the conclusive evidence on record.
(12) That the award given by the Arbitrators is replete with bias and prejudice against the Surveyors and the Insurance Companies.
13. While dilating upon the above pleas, Mr.Saleem Sehgal and thereafter Mr. Naeem Sehgal, the learned counsel for the objectors has submitted that there are certain fundamental principles, for testing the validity of the award; such as "perversity of reasoning; which means that the reasoning is against the evidence on the record; in this behalf, he has drawn support from the two judgments reported as M/s. Joint Venture KG/Rist v. Federation of Pakistan, through Secretary Food, Agricultural and Corporation and 2 others PLD 1996 SC 108 at page 119/B) and Qazi Ghulam Ahmad v. J.F.Elah, Election Tribunal, Chakwal and others PLD 1962 Lah.
786. He also submits that the award can also be set aside on the ground of misconduct by the Arbitrators, with reference to section 30 of the Arbitration Act and such misconduct means, in relations to the arbitration proceedings and the decision rendered by the Arbitrators, being illegal and unlawful. In this regard, reference has been made to the cases reported as Messrs Afiluddin Brothers Ltd. v. Messrs Pak. Jute Balers Narayanganj 1970 SCMR 1 and Federation of Pakistan v. Yusuf Ali Khan PLD 1977 SC 237. He further argued that with the insertion of section 26 in the Arbitration Act, the arbitrators are supposed to give detailed reasons otherwise, the award stand vitiated; reliance is placed upon the case reported as J.F. C. Gollaher v. Samad Khan 1993 MLD 726 at 751).
Moreover, that after insertion of section 24-A of the General Clauses Act, the Arbitrators have to decide the matter in a just and fair manner and the reasons should correspond to the rules of justice and fairness, which according to him, are lacking in the present case. He thus submits that the award, can be set aside within the purview of section 30 of the Arbitration Act, if the award is not based upon the evidence or is opposed to the evidence on the record or is based upon perverse approach. Judgments to support the above plea, cited at the bar, are reported as Gulzar Hussian Awan v. Akbar 1984 CLC 3164 at page 3166, Messrs Ibad& Co. v. Government of Sindh and others PLD 1981 Karachi 236 at page 241 and Government of N.-W.F.P. Through Secretary Forest, Peshawar and 4 others v. Aziz urRehman 1991 MLD 422 at page 425.
' In further elaborating his contentions, the learned counsel has made the following submissions:-- SUBMISSION NO.1
14. That the Arbitrators are supposed to decide the matter before them in accordance with law and not in violation thereof; the principles of equity, which are against 'the legal provisions, cannot be made the basis, to justify and award, which should' be set aside, he submits that the Arbitrators are cast with the duty to dispense justice according to the established legal norms and principles and not according to the notion commonly known a substantial justice, which may tantamount to the decision on the basis of the whims of the Arbitrators, which is absolutely impermissible under the law; he submits that the ATM is guilty of fraud, inasmuch as the fraudulent claim was propounded before the Surveyors by deliberately supplying the inaccurate and false particulars about the quantum, price and the origin of the polyester bales, alleged to have been burnt/lost in the fire, thus the ATM could not be allowed to take the advantage of its fraud, according to the established policy of law, that "no man shall be permitted to take the chance of committing a fraud, without running any risk of loosing by the event, when it is detected (Per Lord Kenyon in Master v. Miller 4 TR 320 at page 329); he also states that ATM, having deliberately provided the fraudulent figures and particulars, in relations to the claim, therefore, has breached the rule of uberrima fides (good faith), which disentitles them to the claim; but learned Arbitrators unfortunately, have misunderstood the rule and have proceeded on the assumption, it the principle of caveat emptor, was applicable to the instant case. He read certain paragraphs of the award attempting to establish that the award of the arbitrators is _based upon surmises and conjectures.
SUBMISSION NO.2.
15. That the Arbitrators have committed an error, apparent on the face of the record and acted contrary to law, while dealing with the position of National Bank of Pakistan and have ignored that if the allegations of ATM about the negligence pertaining to the fire against National Bank of Pakistan, are proven, the objectors/respondents were entitled to be subrogated in the matter under the doctrine of subrogation. Secondly, that the National Bank of Pakistan, did not participate in the proceedings before the Arbitrators, though their counsel admitted to be bound by the outcome of these proceedings, thus the National Bank of Pakistan, would be deemed to have admitted the allegations, levelled by the ATM, against the Bank, about the negligence.
SUBMISSION NO.3.
16. That under the provisions of the Banking Companies (Recovery of Loans) Ordinance, 1979, the jurisdiction to decide about the subject-matter, exclusively vested in the special Court, constituted under the law, resultantly, the arbitration agreement can neither be entered into between the parties, nor the arbitration proceedings could be held or award could be made.
SUBMISSION NO.4.
17. That the Arbitrators have erred in law by awarding interest under section 47-B of the Insurance Act, 1938. It is submitted that the award of interest under section 9 of the Arbitration Act, is only within the discretionary authority of the Court, but the Arbitrators have no power in this behalf; reliance in this regard is placed upon the judgments reported as Ghulam Abbas v. Karachi Port Trust PLD 1987 SC 393, Sh.Mahboob Alam v. Sh. Mumtaz Ahmad PLD 1960 Lah. 601 and Messrs A.Z.
Company v. Messrs S. Maula Bukhsh Muhammad Bashir PLD 1965 SC 505.
SUBMISSION NO.5
18. The role of the Surveyors as construed by the learned Arbitrators runs counter to the express provisions of law, therefore, the award under the consideration, suffers from an error apparent on the fact of the record. It is submitted that the Arbitrators have completely disregarded section 44- A, 44-A-7 and 44-B of the Insurance Act, 1938, inasmuch as describing the Arbitrators as agents of the insurer, who in fact is an independent person to decide the claim of the insured vis-a-vis the Insurance Company and not at all agent or even participant.
SUBMISSION NO.6.
(a) It is reiterated that the arbitrators have misunderstood and misconceived the contract of insurance particularly, clauses 1, 5 and 13, and have miserably failed to correctly apply the principle of Uberaba fides. Elaborating his plea on the above principle, it is submitted that the contract of insurance is based upon utmost good faith, which it n.9t observed by either party, the contract can be avoided by a opposite. According to the counsel, the duty arises under this principle is threefold,
(i) duty to disclose material facts and (ii) a duty not to misrepresent material facts and (iii) a duty not to make fraudulent claims. As a consequence of the principles that a contract of insurance is one of Uberrima fides, a fraudulent claim entitles the insurer to avoid the contract. Reference has been made to various books on the General Laws of Insurance and number of cases from the foreign jurisdiction such as McGillivray and Parking ton on Insurance Law Paras 1925 to 1928E.R.HardyIvamy 5th Edition Pages 407 to 411 (c) Chitty on Contract para.39-024 and 39-60; (d)
Good Faith and Insurance Contract by Contracts by Peter Macdonald Eggers Patrick Foss, pages 11.12, 11.13, 11.5, 11.26, 11.33, 11.34, 11.35, 11.54, 14.108 and 14.109(e) American Jurisprudence Second Edition Vol. 44 page 299 Article 1371(t) Digest of United State Supreme Court pages 204 (h) Brooms Legal Maxims 10th Edition page 94-97 and State Life Insurance Corporation v. Mst. SarwatKazmi 1979 SCMR 295, Mohsin A. Rehmanv.Messrs Premier Insurance Co. Of Pakistan PLD 1967 Kar. 204, MessrsBurjorArdeshir Industries Ltd. Karachi v. The Employer's LiabilityAssurance Corporation Ltd.
Karachi PLD 1970 Kar. 462, Norwich Union Life Insurance Society v. Mst. ZainabBibi 1981 CLC 1722, State Life Insurance Corporation v. Mst. Begum Jan PLD 1983 SC 421 and State Life Insurance Corporation v. Mamoor Khan 1993 CL 790.
SUBMISSION NO.7.
20. On the assertion that the claim of the respondent was fraudulent, reference has been made to the case reported as Galle Gowns Ltd. v. Licences and General Insurance Company Ltd. (1933) 47 LI.L.Rep. 186 K.B. And Derry v. Peek (1986-90) All English Reports, page 1, at pages 22 and 23, where it has been held inter alia that fraud is proved when. It is shown that a false representation has been made knowingly or without belief in its truth or recklessly careless whether to be true or false.
SUBMISSION NO.8.
21. It was not established that that the fire was accidental and not a deliberate act of arson. The learned counsel submits that at different point of time, different pleas were raised by the representative about the cause of fire; however, eventually, it was alleged that same was result of spark, short cut of electric but it has been proved on the record that there was no permanent electricity wiring in godown. Moreover, in their suit, the ATM has alleged the negligence and lack of due care by the National Bank of Pakistan and when it was not so proven, the ATM was not entitled to the claim and the learned Arbitrators in this behalf, have given absolute unconvincing reason to discard the plea of the respondent.
' Certain allegations about the bias, etc. Are also made against theArbitrators.
22. Raja Muhammad Akram, learned counsel for the respondents has rebutted the above arguments and by relying upon the judgment reported as Joint Venture KG/Rist. v. Federation of Pakistan PLD 1996 SC 108, which is also cited by the learned counsel for the objectors, as also Khan Brothers and Association v. Director General Foods, Government of Pakistan 1998 CLC 1671, Zulfiqar Ali Khan v. Federation of Pakistan PLD 1998 Lah. 132, World Circle Limited v. State Cement Corporation of Pakistan 1997 CLC 212, Quality Builders Ltd. v. Karachi Metropolitan Corporation 1999 CLC 1777, Ghee Corporation of Pakistan Ltd. v. Broken Hill Proprietary Co. Ltd. PLD 1999 Kar. 113, Abdullah Traders v. Trading Corporation of Pakistan 1999 CLC 2047, Income Services v. Sui Gas Transmission PLD 1993 Kar. 429,Aslam Saeed and Co. v. Trading Government of Pakistan PLD 1985 SC 252, Trustees of the Port of Karachi v. Iftikhar Brothers 1993 CLC 1491 at 1495, A.Z. Company v. S. Maula Bukhsh Muhammad Bashir PLD 1965 SC 507 and Shafi Corporation Ltd. v. Government of Pakistan PLD 1994 Kar. 127, has argued that while considering the objections to an award, the Court does not sit in appeal and is not supposed to fish for the errors latent in the proceedings or the record, but such error must be floating on the surface of the award and should be pointed out by reference of the award itself. It is submitted that the Court should first look into the material used by the Arbitrators and then compare the same with the reasoning's given in the award in order to discover the error in the award. On the factual premises, he has submitted that both the Arbitrators, who were the nominees of the respective parties, have unanimously concluded that the occurrence of the accident of fire was not a deliberate attempt on part of the ATM; the plea that it was caused due to negligence of the National Bank of Pakistan was never raised before the Arbitrators and therefore, the view Of the Arbitrators based upon the record that the fire had occurred on account of an accident, cannot be substituted by this Court. On the submission about the principles of good faith and the alleged fraudulent claim of the ATM, Raja Muhammad Akram, submitted that the Secretary of the Company did file the incorrect documents to support the claim, which were handed over to the Surveyors, however, while realizing the inaccuracy, but before any decision was taken by the Surveyors, or the insurance companies, ATM moved to them for the substitution with the correct documents. By that time, the Surveyors had not acted upon the earlier set of documents and thus before anything material could be based upon the documents, the ATM could always supply the correct material. Even otherwise, this was not an act of fraud, but incorrect supply of documents and the determination of the question, about the fraud or inaccuracy in submission of the claim by ATM, was within the domain of the Arbitrators, who have adjudged the same in favour of the ATM, resultantly, reasoning's given by the Arbitrators in this behalf, either on account of rule of uberrima fides or on the basis of the clauses 9 and 13 of the Insurance Company, cannot be set aside by the Court.
23. On the other submissions about the grant of interest, Raja Muhammad Akram Advocate states that in the award, the interest has been given only in the situation of default by the objector to make the payment awarded and this is permissible under section 47-b of the Insurance Act, 1938. It is also argued that there is no misconduct on part of the Arbitrators, rather they have thoroughly examined the record, appreciated the evidence, both of them were most seniors and eminent former Judges of the Honourable Supreme Court of Pakistan and their appraisal of the evidence, cannot be interfered only for the reasons that another conclusion could possibly be drawn by the Court, while reexamining the record. He also submits that the attribution of perversity to the Arbitrators is absolutely misconceived and unfounded. He submits that no legal misconduct has been committed by the Arbitrators, there is no violation of any rule of law, the principles of uberrima fides was not applicable to the present case, and the judgments cited by the objectors' counsel of the foreign jurisdiction, are neither relevant nor binding upon the Arbitrators, moreover, the claim was to be dealt in accordance with the law of Pakistan and no judgment has been cited from the Pakistani jurisdiction to show that in the facts of the case, the claim of the respondent could be rejected on the touchstone of the said doctrine.. Without prejudice to the above, it is stated that in the award of Justice (R.) Anwar ul Haq, reference has been made to number of the judgments, which draws the distinction between the fraudulent and an exaggerated claim and the learned Arbitrators have come to the conclusion that the present is not a case of the first category, rather the second. This conclusion of the Arbitrators, according to the law, also cannot be interfered by the Court, while examining the validity of the award.
24. I have heard the learned counsel for the parties. Before dilating upon the propositions involved in the matter, I feel it expedient to reiterate the basic principles, which should prevail with the Court while considering the objections to an award and the criteria on the basis of which, an award should be set aside. The statutory grounds in this behalf are clearly provided in sections 30 and 33 of the Arbitration Act. And on the basis of catena of judgments of the superior Courts of our country, it is well-settled by now that an arbitration is a forum, which is chosen by the parties out of their own free-will and consent, for the resolution of the dispute inter se them; such forum has the sanctity of the confidence of the parties reposed upon it and to all intents and purposes, the Arbitrators are the Judges of law and fact and can accordingly decide the dispute. It also cannot be disputed that the Arbitrators have the full A authority to appreciate the facts of the case, according to their own perception, expertise, knowledge and wisdom, and such appreciation of facts, if not suffering from the vice of any misreading and non-reading of the record, shall not be interfered with by the Court only on account that another conclusion is possible. There also can be no cavil that the Court while considering the validity of the award should not sit as a Court of appeal, trying to fish or dig out the latent errors in the proceedings or the award, but should only confine to examining the award by ascertaining, if there is any error, factual or legal, which floats on the surface of the award or the record and if such an amiss is allowed to remain, grave injustice shall be done to the aggrieved party. The perversity about the reasoning, in view of the dictum of the Honourable Supreme Court, though is a ground for the interference in the award, but the Court should not infer the perversity because of the factual conclusion being wrong, rather it should be taken to be analogous and akin to "perverse verdict" which means that the factual conclusion drawn is against the law; obviously this shall include the decision of the Arbitrator on the facts of the case being based upon the misreading and the non-reading of the evidence/record. In my considered view, the award of an Arbitrator, who is the Judge selected by the parties themselves, should not be lightly interfered with until and unless as earlier held that it is established, that the error committed by him is so glaring that if it is overlooked, it shall lead to miscarriage of justice.
But certainly the award cannot be intercepted on the ground that on the reading of the evidence, a conclusion other than arrived at by the Arbitrator, is possible.
5. Now considering the objections to the award on the basis of the above criteria and before dealing with the propositions raised by the objectors' counsel that:-
(i) the reasoning's of the Arbitrators given in the award are perverse;
(ii) they have misconducted the proceedings;
(iii) the awards suffer from misreading and non-reading of the evidence on the record and thus the Arbitrators have misconducted themselves;
(iv) the doctrine of uberrima fides has been misconstrued and misapplied;
(v) the Arbitrators have misinterpreted clauses 1, 5 and 13 of the policy; ' I find expedient to deal with the other issues raised and find no substance in the argument about the position of the National Bank in the proceedings and the rule of subrogation being applicable thereto, because respondents were enforcing the insurance contract against the objectors, the Insurance Companies. And even it under the contract, National Bank was a co-insured, yet for the purpose of the present recovery suit, it is a pro forma party to the case, and has supported the claim of the ATM. Thus, even it the allegations of negligence have been propounded by the objectors against the National Bank, but as these were not proved on the record against the bank, therefore, on account of the above, neither the claim of ATM can be rejected not the award can be set aside.
26. As regards the submission that the awards do not contain the reasons and therefore, violates the provisions of section 24-A of the General Clauses Act and section 26 of the Arbitration Act, is absolutely misconceived, rather both the awards have provided adequate reasons and there is no breach of either of the above quoted provisions. It is also not well-founded to argue that the matter falls within the exclusive jurisdiction of the Banking Court under the Banking Companies (Recovery of Loans) Ordinance, 1979, the arbitration agreement could not be entered into between the parties, suffice it to say that the dispute raised in the suit of the ATM was for the enforcement of its insurance claim and had nothing to do with the loan/finance, besides, it was not a dispute between the borrower or the Banking Company falling within the exclusion domain of the special Court.
27. As regards the submission that the position and the role of the Surveyors have been misconstrued, as they were not acting as agents of the insurance company, it may be held that even if it is otherwise, yet this plea has no much legal impact upon the validity of the awards, because even if not the agents in the stricto senso, from the record it is spelt out that the Surveyors were playing the role of the representatives of the insurance company, because they acted on behalf of the insurance company in collecting the requisite material about the incidents and also for the verification of the claim, etc., thus describing the Surveyors as agents by the Arbitrators, would make no much difference; I am also not impressed with the general plea/submission made by the learned counsel for the objectors that the Arbitrators have proceeded on erroneous assumption or imported equitable principles to decide the matter in violation of the law and have misconstrued the record, that the rule of probability has been erroneously applied; any inadmissible evidence has been accepted and was made the basis of the order or if there was any bias of the Arbitrators, while deciding the matter. All these pleas are farfetched, unfounded and not well-conceived, therefore, are hereby repelled.
28. On the question of uberrima fides, the respondent did, at a point of time, submit certain documents to support their claim, but before any conclusive action was taken by the Surveyors or the insurance company on the basis of such document, these were withdrawn by the respondent company and were replaced/substituted by another set of the document. While considering this aspect of the matter, the two Arbitrators, in their separate awards have come to the conclusion that it is a case of incorrect submission of the documents, rather any fraudulent intent, and no law prohibited the respondent from withdrawing the incorrect and inaccurate documents by substituting with correct set thereof. The learned counsel for the objectors has overemphasized upon the rule of uberrima fides and wants this. Court to hold that once the wrong documents were filed by the insured along with his claim, it should necessarily be construed as an act of fraud, so as to attract "uberrima fides". I am afraid that he has not been able to cite any statutory law under which, this could be done. Though "uberrima fides" i,e, utmost good faith is a universal rule, applicable to the insurance contracts, but at the same time there is a clear distinction between a fraud, practiced by a party in submitting a claim and/or mistake or in this regard. This obviously is a question of fact, which has been adjudged by the Arbitrators against the objectors and I do not find that the said conclusion is against the record.29.As regards the submissions that inadmissible evidence has been taken into consideration by the Arbitrators and the quantum of loss has been arbitrarily assessed, are also not well-conceived. No such vice has been shown to be apparent on the face of the award or the record. For the argument about the future interest, it has been rightly pointed by Raja Muhammad Akram, Advocate that such interest has only been granted in the situation, where the claim of the respondent was not met by the objectors within time, and this is permissible under the Insurance Law.
29. For the submission, that the fire has been deliberately caused by the respondent and in this behalf, the argument that there was no electricity connection in the go down and, therefore, the very cause propounded by the respondent of the fire that it was due to short circuit, is false. It may be held that this again is a. Question of fact, which has been quite profoundly considered by the two Arbitrators, who held that the fire did take place and it was not caused by the respondent.
30. The last proposition, if clauses Nos.1, 5 and 13 of the insurance agreement have been misconstrued and misapplied by the Arbitrators, suffice it to say that they have considered these clauses and by enumerating the facts of the case and giving reasons in this behalf, have rejected the plea of the petitioners about the allegations of fraudulent claim of the respondent.
31. Before parting, it may be held that C.M.No,1-C of 1991, which is an application by the ATM for the grant of future interest upon the award, has not been much pressed by Raja Muhammad Akram, learned counsel for the ATM, as no arguments have been addressed on this application. Besides, I do not find that the ATM has any claim for the future interest upon the amount awarded to them.
Resultantly, this application is hereby rejected.
' In the light of above, the objections filed by the objectors- Insurance Companies are hereby dismissed and by allowing C.O. No,17-C of 1991, the award dated 9-5-1991, passed by the Arbitrators, is made rule of the Court, with a decree to follow accordingly.
Award made rule of the Court.