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 question the validity of the Awards dated 9.5,1991, made and pronounced by Mr. Justice (R) Salahuddin Ahmed and Chief Justice (R) (Late)
Anwarul 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., 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 lac, 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 mention in the relevant Insurance Policies;
(c) that out of this amount, when realized, the A.T.M.L. Shall pay to the National Bank of Pakistan, Rawalpindi Cantt: a sum of Rupees one crore, Rawalpindi Cantt: a sum of Rupees one crore, eighteen lac 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 A.T.M.L, interest on the outstanding amount of award, in terms of Section 47-B of the Insurance Act, calculated at monthly rests at five per percent above the prevailing Bank rate."
2. The broader and almost undisputed feats of the matter .Are, that the clamant, ATM, took out 4 Fire Insurance Policies from the objectors including Fire Policy No. P/L/CED/CM-3032/85 in the sum of Rs. 1,72,00,000/-, in respect to stocks of cotton and man-made fiber, 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 manmade fiber were pledged with the National Bank of Pakistan, the Bank was a co-insured in the afore-mentioned 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 1h 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 Fiber 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 & 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 wilful mis-statements by declaring [1] highly exaggerated value for stocks of Polyester Fiber exaggerated value for stocks Polyester Fiber and Cotton for the purpose of pledging and insurance, so as to gain undue/unlawful advantage from the mortgagee banks and the insured.
(iii) The insured's claim for a total amount of Rs.. 2,06,62,275/- appears to be wilfully 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 will fully 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 Repot. 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 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 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 man- made Polyester Fiber bales, but on coming to know of it, ATM supplied new documents including invoices of 1188 Man-made Polyester Fiber, bales purchased from National Fiber Ltd. Alongwith Truck Receipts and copies of their case book, lager, 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 a peril insured against, the objectors/respondents were liable to compensate ATM under the said policies to the-tune of Rs. 2,06,&2,275/- alongwith interest @ 15% per. Annum, jointly and severally or each for such portion thereof, as each be found liable.
ATM also prayed tor costs of the arbitration.
The claim of the ATM was refuted by the respondents. On the pleadings 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 of 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, 1938, calculated at monthly sates 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, CPC 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, nuhibered as G.O. No. 17-C/1991, which are primarily under adjudication by this Court.
10. During the proceedings before this Court, an application bearing O.M. No. 3252/C/91, was filed by National Bank of Pakistan (NBP), for impediment under Order I, Rule 10 read with Section 151 CPC, 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 imp leaded 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 CM No. 1/C/91 in C.O. No. 17/C/1991, seeking the grant of interest on the awarded 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 off 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). Salahuddin 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 an 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 tides.
(7) Since the claim as lodged with the respondent Insurance Companies was based on fraud, therefore-, such claim was liable to the repudiated because of breach of the principe[es 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 MT. Naeem Sehgal, the learned counsels 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 vs. Federation of Pakistan, through Secretary Food, Agricultural & Corporation and 2 others (PLD 1996 SC 108 at page 119/B) and Qazi Ghulam Ahmed vs. J.F. Elah,- Election Tribunal, Chakwal & others (PLD 1962 Lah.,786). Her 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 relation 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. Vs. Messrs Pak.
Jute Balers Narayanganj (1970 SCMR i) and Federation of Pakistan vs. 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. Gollahervs. 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 fai'rness, 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 pleas, cited at the. Bar, are reported as Gulzar Hussain Awan vs. Akbar (1984 CLC 3164 at page 3166), Messrs Ibad & Co. Vs. Government of Sindh & others (PLD 1981 Karachi 236 at page 241) and Government of N.W.F.P through Secretary Forest, Peshawar and 4 others vs. Aziz-ur Rehman (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 an award, which^should be set aside; he submits that the arbitrators are case with the duty to dispense justice according to the established legal norms and principles and not according to the notion commonly known as 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 figure^ 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, if the principle of caveat- emptor, was applicable to the instant case. He read certain paragraphs of the award attempting to establish that the aware pf 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 fir against National Bank of Pakistan, are proven, the objectors/respondents were entitled to the 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 awarding inters u/s. 47-B of the Insurance Act, 1938. in is submitted that the award of interest u/s. 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 vs. Karachi Port Trust (PLD 1987 SC 393), Sh.
Mahboob Alam Vs. Sh. Mumtaz Ahmad (PLD 196Q Lah. 601) and Messrs A.Z. Company vs. Messrs S. Maula Bukhsh Muhammad Bashir (PLD 1965 SC 505).
SUBMISSION NO. 5
18. The role of the surveyor 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 fanes of the record, in is submitted that the arbitrators have completely disregarded Sections 44-A, 44-A-7 and 44-B of the Insurance Act, 1938, inasmuch as describing the arbitrators as agents of the insurer, who infect is an independent person to decide the claim of the insure viz-a-viz the Insurance Company and not all agent or even participant.
SUBMISSION NO. 6
19. 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 uberrima tides. Elaborating his plea on the above principle, it is submitted that the contract of insurance is based upon utmost good faith, which if not observed by either party, the contract can be avoided by a opposite. According to the counsel, the duty arises under this principle is three- fold, (i) duty to disclose material facts, (ii) a duty not to misrepresent material facts, and (if) a duty not to make fraudulent claims. As a consequence of the principle that a contract of insurance, is one of uberrima tides, a fraudulent claim entitles the insurer to avoid the contract. Reference has been made to various books on the General, Law of Insurance and number of cases from the foreign jurisdiction such as (a) Mac-Gillivry and Parking-ton on insurance Law paras. 1925 to 1928,
(b) E.R.Hardy Ivamy 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 MafcDonald 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, (f) Digest of United State Supreme Court page 204(h) Brooms Legal Maxims. 10th ' Edition pages 94-97 and State Life Insurance Corporation vs. Mst. Sanwat Kazmi (1970 CMRR 295), Mohsin A. Rehman vs. Messrs Premier Insurance Co. Of Pakistan (PLD 1967 K 204), Messrs Burjor Ardeshir Industries Ltd., Karachi vs. The Employer's, Liability Assurance Corporation Ltd., Karachi (PLD 1970 K 462), Norwich Union Life Insurance Society, vs. Mst.- Zainab Bibi (198l CLC 1722), State Life Insurance Corporation vs. Mst. Begum Jan (PLJ 1983 SC 386) and State Life Insurance Corporation vs. Mamoor Khan (1993 CLC 790).
SUBMISSION NO. 7
10. On the assertion that the claim of the respondent was fraudulent, reference has .Been made to the case reported as Galle Gowns Ltd. Vs. Licences and General Insurance Company Ltd. (1933) 47 L1. L. Rep. 186 K.B and Derry vs. Peek (1886-90) 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 as 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 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, shortcut 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 the arbitrators.
22. Raja Muhammad Akram, learned counsel for the respondents had rebutted the above arguments and by relying upon the judgment reported as . Joint Venture ' KG/Rist vs. Federation of Pakistan (PLD 1996 SC 108), which is also cited by the learned counsel for the objectors, as also Khan Brothers & Association, vs. Director-General Foods, Government of Pakistan (1998 CLC 1671), Zulfiqar Ali Khan, vs. Federation of Pakistan (PLD 1998 Lah. 132), World Circle Limited, vs. State Cement Corporation of Pakistan' (1997 CLC 212), Quality Builders Ltd. Vs. Karachi Metropolitan Corporation (1999 CLC 1777), Ghee Corporation of Pakistan Ltd. Vs. Broken Hill Proprietary Co. Ltd.
(PLD 1999 Kar. 113), Abdullah Traders vs. Trading Corporation of Pakistan (1999 CLC 2047), Income Services vs. Sui Gas Transmission. (PLD 1993 Karachi 429), Aslam Saeed & Co. Vs. Trading Corporation of Pakistan (PLD 1985 SC 252), Trustees of the Port of Karachi vs. Iftikhar Brothers (1993 CLC 1491 at 1495), A.Z. Company vs. S. Maula Bukhsh Muhammad Bashir ( PLD 1965 SC 507), and Shaft Corporation Ltd, Vs. 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 aware itself, in 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 conclude 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 submitted 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 hot 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 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 reasonings given by the arbitrators in this behalf, either on account of rule of uberrima tides' or oh the basis of the clauses 9 and 13 of the Insurance Company, cannot be set aside by the Court.
23. On the other submission 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 u/s. 47(b) of the Insurance Act, 1938. in 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 senior and eminent former Judges of the Honourable Supreme Court of Pakistan and their appraisal of the evidence, cannot be interfered only for the reason that another conclusion could possibly be drawn by the Court, while re-examining 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 tides 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 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 principle, 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 pf the dispute inter se them; such forum has the sanctity of the confidence of the parties reposed upon it and for all intents and purposes, the arbitrators are the Judges of Law and fact and can accordingly decide, in also cannot be disputed that the arbitrators have the full 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 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 no 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 abdut the reasoning, in view of tjie 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 verdi Gt" 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 until and unless as earlier held that in is established that the error committed by him is so glaring that if it is over-looked 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.
25. 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 reasonings of the Arbitrators given in the award are perverse;
(ii) they have misconduct 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 tides 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 Companies. And even if under the contract, National Bank was a co-insured, yet for the purpose of the present recovery suit, it is a proforma party to the case, and has supported the claim of the ATM. Thus, even if the allegations of negligence have been propounded by the objectors on the record against the Bank, therefore, on account of the above, neither the claim of ATM can be rejected nor the award can be set aside.
26. As regards the submission that the awards do not contain the reasons and therefore, vilafes 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, in is also not well-founded to argue that the matter falls within the exclusive jurisdiction of Banking Court under the Banking Companies (Recovery of Loans) Ordinance, 1979, the arbitration agreement could not be entered into between th 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 not much legal impact upon the validity of the awards, because1 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 here 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 tides, 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 tides and wants this Court to hold that one the wrong documents were filed by an insured alongwith his claim, it should necessarily be construed as an act of fraud, so as to attract "uberrima tides". I am afraid that he has not been able to cite any statutory taw under which, this could be done. Though "uberrima tides" i.e. Utmost good faith is a universal rule, applicable to the insurance contracts, but at the same time, there i& a clear distinction between a fraud, practiced by a party in submitting a claim and/or mistake or inadvertence in this regard.
This obviously is a question of fac 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.
30. 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 godown and, therefore, the very cause propounded by the respondent of the fire that it was due to short circuit, is false. in 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.
31. 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.
32. Before parting, it may be held that C.M. No.1- C/199i, which js 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.