SYED HAMID 'ALI SHAH, J. --- Property bearing No. 6-R64-S, commonly known as Srinagar Market and Hotel, is a three-storey building, in the name of ownerships of a 'private company (limited by shares) i.e. Saadat Enterprises, (Pvt.)- Ltdirespondent No 1. The assets and liabilities 'of Saadat Construction Company (a partnership concern), stood transferred to respondent No. 1, at the time of its incorporation. Case of the appellants, as set out in the .Memorandum of appeal, is that appellants and Khawaja Safdar Ali, agreed to raise new construction, after demolition of the existing construction at the afore-mentioned property, in a manner that both the parties-will invest and share profits equally. Respondent resiled from its contractual obligation, which led to referring the dispute ,to arbitration through named arbitrators (respondents Nos. 2 and 3). Khawaja Safdar Ali, General Manager ofrespondent No. 1, signed the arbitration agreement dated 5.8.1991, whereby the parties agreed for arbitration and respondents NOS. 2 and 3, were appointed as arbitrator. -Another arbitration, agreement dated 12.8.1991 (Exh.
A/1) was executed and signed by appellant No. 1, whereby the consent for resolution of the dispute through the named arbitrators, was reduced into writing, regarding rendition of accounts.. Named arbitrators, gave their award by concurrence, on 22.8.1991. The arbitrators divided the property equally between the two parties. Respondent No. 1 moved an application on 18.9.1991 by invoking provisions of Section 14 of the. Arbitration Act, for filing the' award in the Court and for permission to file' objections to the award. Appellants also moved an, application under. Sections 14 and 17 of the Arbitration Act of 1940, for making the award rule of the Court. Learned Trial Court directed the arbitrators to file the award in the Court, which was accordingly filed on 2.7.1992.
Respondent No. 1 _ filed objection to the award on 18.7.1992. Learned Trial Court framed issues and recorded the evidence of the parties and thereafter, vide order dated 26.3.1996, remitted the award back to the arbitrators, for its re-filing in the Court after incorporating the reasons. Parties again appeared before the appointed arbitrators and were heard. The arbitrators announced the award with proper reasoning on 31.3.1996. Learned court, vide impugned judgment and order dated 4.3.2004, dismissed the application' for making the award rule of the Court. Hence this appeal.
2. Learned counsel for the appellants has submitted that the objections,' on award, were not filed within the prescribed period. Objections beyond the time, have no value and it is the duty of the Court,' in such circumstances, to reject objection and to make the award rule of the Court. Learned counsel supported this contention by referring to the cases of "Province of West Pakistan (Punjab) through Secretary Irrigation and Power Department and another v. Mian Abdul Hamid and Co."
(1985 CLC 1170), "Mst. Ghafooran Bibi v. Abdul Hafeez etc." (NLR 1994 CLJ 56), "Muhammad Suleman Khawar v. Board of Directors, Sindh Provincial Co-operative Bank Ltd., Karachi and two others" (PLD 1989 'K 261) and "Province of Baluchistan v. Tribal Friends Company, Loralai" (PLD 1986 Quetta 321). It is contended further by learned counsel for the appellant that period of 30 days, for filing the award, cannot be extended by the Court. Reliance in this regard was placed on the cases of "Province of Punjab through its Secretary Communication and Works Department, Lahore v. M/s. M.A. Rashid Saeed. A/am Khan" (NLR 1990 AC 679), "Muhammad Iqbal v. Riaz Sabir" (1984 CLC 2375), "A. Qutab-ud-Din Khan. v. Chec Mill Wala Dredging Co. (Pvt.) Ltd., Karachi"(2001 MLD 115) and "Project Director Peoples Programme v. Kh. Muhammad Sarwar" (1989 CLC 1030). Learned counsel added further that by failing to file objections within the stipulated period, valuable rights accrue to a party in whose favour: award has been given by the arbitrators. Learned counsel, in this regard, found support from . The cases of "M/s. International Development Association Limited v. Shaheen Foundation P.A.F." (1986 MLD 1753), "Mst. Waqar Bano v. Syed Sher Ali and others"- (1987 MLD 146), Learned counsel has referred to the concise statement of the petition for leave to appeal filed by the respondents, wherein, it was admitted that the arbitrators were appointed.. He then referred to its clause "K", which transpires that Khawaja Safdar was general attorney of respondent and represented the principal. Reference was then made to the written agreements of Khawaja Safdar Ali. Having referred to these documents, it was contended that respondent No. 1 participated in arbitration proceedings and the party participating in 'the arbitration proceedings, is debarred from challenging the validity of arbitration agreement. While referring to the case of "Chief Engineer Building Department v. Pakistan National Constructions" (1988 SCMR 723), it was submitted that acquiescence of counsel or of agent, binds the principal. Learned counsel went on to ,argue that rejection of application vide order dated 13.12.1999 for correction of order sheet; dismissal of revision petition (C,R. No. 1892-1999), vide order 'dated 12.12.2001 and dismissal of transfer application (No. 186- 2000) vide order dated 6.4.2000 prove that Khawaja Safdar All is general attorney of respondent No. 1. Learned counsel has referred to the case "Haji Ilyas, Haji Esa and 9 others v. Haji Ahmad and 7 others" (1987 CLC 2509), "Abad Ullah Khan v. Lnayat Ullah Khan" (NLR .1998 Civil 581) and "M/s. James Construction Co. (Pvt.) Limited through Executive Director v.
Province of Puniqb through Secretary to the GoVernment of Punjab (Communication and Works)
Department, Lahore and others " (PLD 2002 SC 310) and contended that unstamped award or arbitration agreement is a curable defect.
3. Learned counsel for the respondent ,has contended that Khawaja Safdar Ali was appointed as 'attorney by Saadat Construction, a partnership concern. He added that Saadat Enterprises (Pvt.)
Ltd. Is distinct entity from Saadat Construction and the former had never appointed Mr. Safdar as its attorney. The company never participated in the arbitration proceedings and the respondent came, to know about the award, when its announcement was conveyed through mail on 25.8.1991.
Learned counsel has contended that property vests in the name and ownership of the company and appellant No. 1, while appearing as AW-1, has admitted that Khawaja Safdar owed them money and the -amount was never given to Saadat Enterprises. The witness further stated that they (petitioners) have their dispute with Mr. Safdar. Learned counsel has vehemently argued from the perusal of arbitration proceedings that respondent never participated in the arbitration proceedings or marked himself present or had recorded any statement. The award is the result of collusion. Arbitration agreement is on a stamp paper, which "Anjumane-Tajran" has purchased.
Anjuman is not a party to the arbitration proceedings. Learned counsel has submitted that one of the arbitrators (Abdul Waheed) has stated that due to his hospitalization in May Hospital, he has not written the award himself and got it written through a writer (Katib), while the fact is that so- called the arbitrator, was not admitted in the hospital during-those days. Learned counsel has submitted that instant appeal, is not competent and supported this contention by referring to the cases of "Dr.. Khalid Malik and 2 others v. Dr. Farida Malik and 7 others" (1994 MLD 2348) and "Puppalla Raurupu v. Nagidi Apalaswami (AIR 1957 Andra Pardesh 11).
4. Heard learned counsel for the parties and record perused.
5. Learned Trial Court, while dismissing the application of appellant for making the award rule of the, Court, has found Khawaja Safdar Ali, who statedly signed Shah, J. and executed arbitration agreernent on behalf of company, had no valid authority to enter into a valid agreement, on behalf of the company. It has been observed that the respondent has not conferred him an authority through resolution of Board of Directors in this regard. To ascertain that findings of the Court are correct conclusions, it 'will be advantageous to examine the arbitration agreements before analyzing the above conclusion of learned Trial Court. There are three arbitration agreements. First agreement dated 5.8.1991, is on a stamp paper of the value-of Rs. 10 (ten), wherein Saadat Enterprises (Pvt.)_Ltd., through their. General Manager Khawaja Safdar Ali, acknowledged that two sums. i.e. Rs. 3,00,000/- (three lacs) and Rs. 1,45,000/- (one hundred and forty-five thousands) are outstanding against the appellants as loan/advance for sales, in the accounts of company. It is mentioned in this document that shop No. 11, in the ground floor, has been allocated to Fazal Din (predecessor of petitioners), against these amounts. Two arbitrators namely Malik Abdul Waheed and S.M. Sadiq Shah were appointed for the purpose of determination of accounts. Second agreement dated 12.8.1991 (Exh. Ni), having the same title i.e. "(lqrar mama Salsi)", is on a stamp .Paper of the, value of Rs. 40/- (forty). It pertains to the same property (S-64- R-6), but amount of investment mentioned therein is Rs. 14,42,176/-. It is stated in. This document that property in dispute; was purchased from the investment of appellants and they have equal share in the investment and also in the profits, There is also mention of two agreements dated 14.5.1990 and 24.12.1990 in this document, whereby the parties agreed for- the resolution of dispute.
Through arbitration, but the arbitrators,could not announce the award:. The dispute was referred to the same arbitrators once again. This agreement is signed by appellant No. 1 and his late father (Sheikh Fazal Din). Third arbitration agreement (Exh. A/2) is undated and executed on a rough.
(plain) paper. Here in this agreement, there is no mention of the company or its assets. The agreement between the appellant and his late father on one hand and Khawaja Safdar Ali, on the other hand. Same arbitrators have been appointed, but the dispute as mentioned in this document is:--- {{URDU TEXT}}
6. All the three agreements have different subject-matters or the dispute. First agreement pertains to an amount of Rs. 4,45,000/-. Second pertains to Rs. 14,42,176/-, while speaks about some verbal arrangements. First agreement has been signed by Mr. Khawaja.As General Manager of the Company, second has not been signed by him, while third agreement transpires that it was signed by him in his personal capacity. Third agreement, as is evident from its title is in the form of an application, but its contents transpire that it is an arbitration agreement. These agreements run counter to each other.
7. Perusal of the record reflects that the award was made/announced on the basis of arbitration agreements dated 5.8.1991 and 12.8.1991. Arbitration agreement dated 5.8.1991 is with regard to a dispute of an amount of Rs. 4,45,000/- and pertained to shop No. .11 at ground floor. The . Other agreement dated 12.8.1991 provides for a dispute in respect of Rs. 14,42,176/-, which the appellants have given to Khawaja Safdar Ali, statedly for construction and purchase of property No. S-64-R-6.
This agreement has not been signed by any one, on behalf of company or by Khawaja Safdar Ali in his personal capacity. The dispute, on the basis of unsigned arbitration agreement, cannot be resolved through arbitration, unless it is proved that the parties intended for resolution of their dispute through arbitration. The question, which needs determination is that these arbitration agreements can bind the company and named arbitrators can enter upon the reference on the basis of these agreements.
8. According to Section 10 of the Contract Act, 1872, an agreement is contract only when it is made by the parties competent to contract. An agreement, on behalf of a company, has to be signed by a competent/authorized person.
Company is, an artificial person and it can enter into a contract, through its agent, who is appointed according to requirements of Memorandum of Association and Articles of Association of the . Company. Normal mode is through a resolution of Board of Directors of the Company. A third party dealing with the agent of company, cannot rely upon the apparent authority, but is bound to acquaint himself with Memorandum and Articles' of Association of the company. As authority for this proposition, the reference can be made to the cases reported as (1937) 1 All LR 231 and (1982)
52 Company Cases 293. A Director is an individual and has no power to act on behalf of company.
He is one among the body of Directors called board and along has no power except' the one delegated to him by the Board. General' Manager figures, nowhere in the affairs of.The company'.
His status is that of an employee and cannot act on behalf of the Company. His act binds the company only when appointment , as an agent, is made in writing and conferred by the Board of Directors through a resolution and under/ seal. Section 196 of the Companies Ordinance, 1984, provides and- business of the company is managed by+ the Board of Directors by means of resolution passed in the .Meeting, while Section 212 pr6vides that person empowered on behalf of the company to enter into contract, has to sign the deed on behalf of the company under his seal.
A contract by ;agent. Is void, if it is made in excess of and beyond the scope of his authority, within the contemplation of Section 228 of the Contract Act, 1872 section 283 of the Ordinance, 1984 envisages that comp/any can refer an existing or future dispute between itself and other person through a written agreement. The arbitration award has been announced without examining that no written agreement was in existence on behalf of company for referring the matter to. arbitration. 'Khawaja Safdar All had no authority to refer the matter to arbitration. The awards, on this score alone, is not sustainable in the eyes of law and rightly held so by learned Trial Court.
Participation in arbitration proceedings, if any, by Khawaja Safdar Ali, does not validate the proceedings, if his participation is without a valid authority. The findings of learned Trial Court that award cannot be made rule of the Court, as the arbitration agreements, which resulted into arbitration proceedings and an award, have not been signed on behalf of company, are devoid of any illegality or legal 'infirmity. The reasons, which the arbitrators have submitted, are also erroneous conclusions. The arbitrators have found that payment made by the appellants to the tune of - Rs. 7,25,000/- was for the purchase of property. The arbitrators, while reaching his conclusion, -have relied upon Para-5 of letter dated 18.3.1988 of Zafar Shah and Company , (Chartered Accountants), which was addressed to I.T.O., Circle Ill, Zone A. Perusal of letter shows that the said amount is shown as loan/advance and not money paid towards purchase of property, as concluded .By the arbitrators. Arbitrators cannot interpret a document in a manner to replace their on view, as against the express stipulation in that document. The amount of Rs.
7,25,000/-, according to letter dated 18.3.1988, is loan or advance and it cannot be given any other meaning so that it be interpreted as investment for the purchase of property.
9. Discussion on other issues, is unnecessary, as the decision that arbitration agreements, having been executed by an unauthorized and incompetent person, renders other issues as redundant.
Therefore, we will not dilate upon them.
10. For the foregoing, the judgment impugned, in this appeal, is upheld. This appeal has no merit and is accordingly dismissed with no orders as to the costs. .