1. NAIMUDDIN, I.-This High Court Appeal is directed against the judgment dated 1-12-1976, delivered by a learned Single Judge of this Court in Suit No. 344 of 1975, whereby he dismissed the objections under section 30 of the Arbitration Act, 1940 (hereinafter called the Act) filed by the appellant against the award dated 2-6-1975 passed by Mr. Zahid Hussain, Superintending Engineer, Quaid-]- Azam Mazar, Karachi as sole arbitrator in a dispute between the parties to the appeal and making the award rule of the Court in the following circumstances.
2. The respondent who is a building contractor claimed a sum of Rs. 12,37,500 from the Government on account of a building contract dated 15-5-1971 which related to construction of a school. The appellant disputed the claim of the respondent. Therefore, pursuant to the arbitration clause contained in the building contract the respondent appointed Mr. Zahid Hussain as arbitrator on his behalf and required the appellant to appoint his arbitrator and on appellant's failure to appoint his arbitrator appointed Mr: Zahid Hussain as sole arbitrator and referred the dispute to him. The sole arbitrator entered upon reference on 30-10-1974 as stated in the memo. Of appeal, but the hearing was adjourned from time to tune when the appellant filed objections to the jurisdiction of the arbitrator but the same were overruled by the Arbitrator. Thereafter the arbitrator on 7-2-1975 filed an application dated 3-2-1975 under section 28 of the Act, being J. Misc. No. 16 of 1975 for extension of time for giving the award in this Court. This application it is agreed on all hands was consented by both the parties as would also appear from the record of J.M. No. 16 of 1975. It would be convenient, if we reproduce herein the contents of the application which are as follows:- "Application under section 28 of the Arbitration Act, 1940.
3. The above-named applicant begs to submit as under:--
(1) The applicant is the Sole Arbitrator appointed to adjudicate upon disputes between the parties.
(2) That the applicant was appointed as Sole Arbitrator and, entered upon the reference on 30-10- 1974.
(3) That the applicant requires an extension of two months more for the completion of the Arbitration proceedings and for making the awards, the initial time of four months is due to expire: on 28th February, 1975, and it is not possible to complete the proceedings within the initial period aforesaid.
(4) Since the parties have also requested and consented to the extension of time for a further period of three months as abundant documentary evidence is to be led in respect of constructions and/or the claims and the same is to be taken to the consideration. Therefore the required time extension is reasonable.
4. It is therefore prayed that this Honourable Court will be pleased to enlarge time for the three months from the date of the order.
5. Karachi(Sd.) Applicant Dated 3-2-1975 (Sole Arbitrator)
6. The parties above-named do hereby consent to the above extension prayed.
7. (Sd/) Defendant.(Sd.) Plaintiff: Signatures verified by me.
8. S.A. Mannan, Hon. Legal Adviser Quaid-i-Azam Mazar, Advocate."
9. The application wag granted by the Court on 3-3-1975 and time was extended upto 3-6-1975.
10. The appellant without any protest continued to participate in the proceedings by filing the written statement and documents upto 14-4-1975, but thereafter he stopped participating in the proceedings before the arbitrator. However, the arbitrator on 2-6-1975 gave his award for Rs.
11. 3,43,260.87 to which objections were filed and dismissed by the learned Single Judge leading to the filing of this appeal.
12. We have heard Mr. A.R. Akhtar, Advocate for the appellant and Mr. A.A. Fazeel, Advocate for the respondent.
13. The learned counsel for the appellant has repeated before us the same objection as was raised before the learned Single Judge namely, the reference was invalid. It is submitted by the learned counsel that the appointment of the sole arbitrator was invalid as only a Superintending Engineering of the Department could have been appointed under the arbitration agreement. Since the sole arbitrator was not a departmental Engineer he had no jurisdiction to give the award. In support of his submission the learned counsel relied on Munawar & Co v. Messrs S.A. Rauf & Co. (1), Abdul Wahid Khan v. The Custodian of Evacuee Property, West Pakistan, Karachi and others (2), Ghulamali v. Pakistan (3), Messrs Oil & Gas Development Cor--poration v. Messrs Karachi Builders
(4) and on a passage from the Principles and Digest of the Law of Evidence, Vol. 2, p. 1315. He further submitted that the principle of acquiescence, waiver, or estoppel did not apply to the proceedings.
14. He also submitted that any variation in the contract should have been in writing and in this connection be relied on Nalini Kanta Roy v. The Province of East Pakistan and another (5).
15. On the other hand Mr. A.A. Fazeel learned counsel for the respondent submitted that the appellant had not only acquiesced in the appointment of the arbitrator and waived the objection by taking part in the proceedings without any objection but is also estopped from questioning the award on that ground. In this connection he relied on a passage from Russell on the Law of Arbitration, 1963 Edition, page 215 and the following cases of our own Court and from Indian jurisdiction and other jurisdiction: Messrs Habib & Sons v. Messrs Virk & Co. (6), Karachi Co-operative Housing Societies Union Ltd. v.
16. Safia Bai and 12 others (7), Messrs Deve--lopment Construction Corporation Ltd., Karachi v. West Pakistan P. W. D. And 2 others (8), Union of India v. K P. Mandal (9), Municipality of Ahmedabad v.
17. Ravjibbai Contractor (10), Union of India v. Ch. Radhanath Nanda and another (I1), Manindra Nath Mandal and others v. Mahanande Roy and others (12), Ratan La1 and another v. Mohammad Hamidullah Khan (13) and Dakland Metal Co. Ltd. v. Benaim & Co. Ltd. (14)..
(1) PLD 1959 Kar. 325(2) PLD 1962 Quetta 72
(3) PLD 1960 Kar. 581(4) 1978 SCMR 278
(5) PLD 1961 Dacca 536(6) PLD 1957 Kar. 245
(7) PLD 1970 Kar. 379(8) PLD 1971 Kar. 292
(9) AIR 1958 Cal. 415(10) AIR 1935 Bom. 127
(11) AIR 1961 Orissa 143(12) 15 C L J 360
(13) AIR 1921 All. 65(14) (1953) 2 All E R 650 Now, we would first deal with the submissions of Mr. A. R. Akhtar learned counsel for the appellant. It was submitted that in accordance with the arbitration agreement only the Superintending Engineer of the Department could be appointed and no other person and since Mr. Zahid Hussain was not the Superintending Engineer of the Department his appointment was invalid and therefore the award given by him is also invalid. There cannot be any quarrel with proposition that an arbitrator named in the arbitration agreement either by name or by designation only has jurisdiction to decide the dispute between the parties under the arbitration agreement but if subsequently the parties agree to the arbitration of another person or they acquiesce with full knowledge of all circumstances in the appointment ` .Participating in the arbitration proceedings without any objection or protest then they will be precluded from objecting to such appointment. In the instant case, no doubt on 18-1-1975, the appellant had objected to the jurisdiction of the arbitrator but subsequently not only he continued without any objection or protest to participate in the proceedings before the arbitrator but also consented to the application made by the arbitrator for extension not time. Thus this is a clear case of acquiescence in the proceedings and waiver of objection and the principle of estoppel would also be attracted to this case, for according to Russell on the Law of Arbitration, Seventeenth Edition, page 215", if the parties to the reference either agreed beforehand to the method of appointment, or afterwards acquiescence in the appointment made with full knowledge of all the circumstances, they will be precluded from objecting to such appointment as invalidating subsequent proceedings. Attending and taking part in the proceedings with full knowledge of the relevant fact will amount to such acquiescence". The learned Single Judge has also referred to a passage from P. .L. Paruck on Arbitration Act 1940, 2nd Edition, page 372 which is based on two decisions mentioned therein. It would be useful to reproduce the same here ; "A defect in the nomination of the arbitrator can be cured by waiver by the party going before the arbitrator and taking his chance of a favourable decision, but not if the party appears under protest, Sheonath v. Ramnath (10 M A A 414 at p. 426). If there is irregularity in the appointment of the arbitrators, and if any party knowing such irregularity takes part in the proceedings and does not raise the point at the first opportunity and an award to be wade without raising any protest, he will be deemed to have acquiesced and waived his objection; but the waiver to be effective must be an intended act and with knowledge of the necessary facts, Chaturbhuj v. Deokaran. (26 Bom. L R 84 at p. 96)." . It is not the case of the appellant that he -had` no knowledge of the defect in the qualification of Mr. Zahid Hussain. He .Fully knew that Mr. Zahid Hussain was not a Superintending Engineer from the Department. Thus the principle enunciated in the above-mentioned passages is fully attracted to this case.
18. Now, we would discuss the case cited by Mr. A.R. Akhtar. In Munawar & Co. v. Messrs S. A. .Rauf & Co: the question of waiver, acquiescence or estoppel did not come up for consideration at the stage of appeal. The decision in this case was given in a miscellaneous appeal which arose out of a decision of a Single Judge reported in PLD 1954 Sind 30. In the judgment of the trial Court it was held that there can be no waiver without knowledge of material facts and since the defendant did not know that the umpire was not a member of .The Karachi Cotton Association, the plea of waiver was not available. The decision of the learned Single Judge that is PLD 1954 Sind 30 was discussed and distinguished by a Division Bench of this Court in Messrs Habib & Sons v. Messrs Virak Co. At page 251 of the report as follows : "The learned counsel or the respondents has relied on two authorities one reported in Munawar & Co. v. S. A. Rauf & Co. PLD 1954 Sind 30 and the other J. G. Smith and others v. Ludha Ghella Damodar I L R 17 Bom.
129. In the first decision our learned brother, Bachal, J. Held that if any party without knowledge of any defect in the appointment of the arbitrators appeared before them, then the party concerned was entitled to raise objections before the Court and he cannot be said to have waived his right to do so by merely appearing before the arbitrators. In I L R 17 Bom. 129 the two abitrators on difference asked the Chamber of Commerce to appoint an umpire. They appointed an umpire who surveyed the goods in dispute and took a final decision in the matter.
19. Then party disputing the validity of the appointment of the umpire never appeared before him. In fact they had no knowledge of the defect till the matter was raised in Court. The ratio decidendi, therefore, in the last two cases was entirely on different considerations. It was based on the ground that the parties concerned had no knowledge of the irregularity, and we are in respectful agreement with the observations made in those authorities. The cases of waiver proceeds on the principle that if the party concerned knows of a defect in the appointment of an arbitrator in the proceedings and nevertheless goes on with the reference before the arbitrator, he cannot be allowed to raise an objection at the trial as he must be taken to have waived the irregularity."
20. "Applying the above-mentioned test in the present case, there is no doubt in our minds that the respondents in the present case knew fully well that the arbitrators ought to have been appointed under bye-law 40 of the Karachi Cotton Association ; that they were not so appointed but appointed under Bye-Law 39 of the said Association. They could have raised objections to the jurisdiction of the arbitrators to proceed with the matter; they did not choose to do so and allowed them to proceed with the arbitration proceedings and permitted them to give an award in respect of the matters in dispute between the parties. After participating in the arbitration proceedings and by not raising any objection to the jurisdiction of the arbitrators, in our opinion, they waived their objection to the jurisdiction of the arbitrators to deal with the matter, and any irregularity in the appointment of the arbitrators on account of this conduct of the respondents was cured. They could not, at the time of the hearing of objections in the trial Court be allowed to agitate the question about the defect in the appointment and jurisdiction of the arbitrators to decide the matter."
(1) 31 A 209(2) PLD 1955. Sind 268 Reliance was also placed in this case on a decision of this Court by Inamullah, J. (as he then was in Messrs Sand Cotton Exporters v. Messrs A. B. Sadiq Brothers (2) wherein reliance was placed on the passage from P. L. Paruck which we have already quoted hereinbefore and on which reliance has been placed by the learned Single Judge in judgment under appeal. We may here also refer to Messrs Development Construction Corporation Ltd. v. West Pakistan P. W. D. And others also relied upon by Mr. A. A. Fazeel which follows Messrs Habib Sons v. Messrs Virak Co. We need not refer to several decisions relied upon by Mr. A. A. Fazeel from Indian jurisdiction or other jurisdiction except one namely, Union of India v. K. P. Mandal wherein the facts were almost same. In this case arbitration clause in the contract for execution of certain works by `A' with the Government of India provided that except where otherwise provided in the contract, all questions and disputes arising out of or relating to the contract would be referred to the arbitration of the "Superintending Engineer of the Circle for the time being". Disputes having arisen between the parties, the Government appointed one M as an arbitrator to adjudicate on the claim made by it against A and informed A about the appointment. Both the parties knew that M was not competent to act as arbitrator according to- qualification prescribed by the arbitration clause. There was also an application for extension of time, as in the present case. It was held that in the circumstances, although there could be no representation by A as to the actual competence of the arbitrator, the rule of estoppel would still bind him and would still prevent him from contenting that M was not qualified under the terms of the agreement to arbitrate in the dispute. It may be useful to reproduce paragraph 13 of the judgment here. It reads: "It may however, be said that strictly speaking these cases are not relevant, because in none of them was there any basic incompetence or lack of qualification in the arbitrator himself, but was only an irregularity in the manner of his appointment. This distinction, however, seems to me to be irrelevant when the question is one of estoppel. It may be that in a particular case there was not and could not be any representation by the party, sought to be held to an estoppel, as to the competence of the arbitrator, but if knowing of his incompetence be submitted to arbitration by him, there was clearly a representation that there was no intention to object to the arbitrator on the ground of his incompetence and that there was willingness to go to arbitration before him. With respect, Sarkar, J., was not as I have already said,-right in thinking that if there could be no representation by the respondent as to the competence of the arbitrator, no question of estoppel could at all arise, because, in my view, even if there could be no representation of that fact, there could still be a representation of the attitude of the respondent and if there was such a representation on the faith of which Government proceeded with the arbitration, there would be sufficient basis on which estoppel could be grounded. The principle applicable to such cases was very lucidly and forcibly expressed by the, House of Lords in the case of Caimeross v. Lorimer (1860)
21. 3 Macq 8277 Jur. N S 149. The facts in that case were that, for many years, there had been a dissenting congregation called "the United Original Seceders". Some of the members of the congregation acquired as trustees and managers a piece of ground upon which they built a chapel and certain other buildings. The congregation continued to use the chapel for a number of years when large majority of the members including the minister, resolved to join another dissenting body, called "the Free Church", which was considered to bold substantially the same doctrine. The minister was then admitted as a member of the Free Church and the congregation was declared to belong to that body of Dissenters. Some time later, the minister died and a successor to him was appointed. Thereafter, certain person who were members of the original congregation instituted a suit for a declaration that the chapel and the ground belonged to them and such other persons as adhere to the original doctrine, for recovery of the properties and also, it would appear, for a declaration that the minister had no right to hold the office. It was found that the plaintiffs and others had for many years acquiesced in the possession of chapel and the ground by the person who had seceded from the seceders and also acquiesced in the appointment of the minister and on that finding it was held that the plaintiffs were estopped from claiming any of the reliefs wanted by them. "The doctrine will apply", observed Campbell L C "which is to be found I believe, in the Laws of all civilised nations, that if a man, either by words or by conduct has intimated that he consents to an act which has been done, and that he will offer no opposition to it, although it could not have been lawfully done without his consent, and he thereby induces other to do that from which they otherwise might have abstained, he cannot question the legality of the act he had so sanctioned, to the prejudice of those who have so given faith to his words, or to the fair inference to be drawn from his conduct." And again "I am of opinion that, generally speaking, if a party has an interest to prevent an act being done and acquiesces in it, so as to induce a reasonable belief that-he consents to it, and the position of others is altered by their giving credit to his sincerity, he has no more right to challenge the act to their prejudice than he would have had if it had been done by his previous licence". To my mind, these observations are peculiarly apposite in the present case. A representation in order to attract the rule of estoppel need not always be a representation of a physical fact, but may as well be the representation of an attitude or a state of mind. As has been pithly observed, the state of a man's mind is as much a matter of fact as the state of his digestion. Here, the act that had been done was the appointment of Sri Malik by Government as the arbitrator and the representation which the respondent made was that he would not offer any opposition to it, although the appointment could not lawfully, have been made without his consent. By such representation he induced Government to proceed with arbitration by Sri Malik from which they might have abstained if the respondent had questioned its legality. In the words of the second passage I have read from the judgment, the respondent by his conduct induced a reasonable belief in Government that he consented to the appointment of Sri Malik and Government proceeded with the arbitration by giving credit 'to the respondent for sincerity. It appears to me that in those circumstances, although there could be no representation by the respondent as to the actual competence of the arbitrator, the rule of estoppel will still bind him and will still prevent him from contending that Sri Malik was. Not qualified under the terms of the agreement to arbitrate in the dispute."
22. Now, remain two cases cited by the learned counsel for the appellant on the point under consideration, to be discussed. In Oil & Gas Develop--ment Corporation v. Messrs Karachi Builders the facts were: On the 20th of January 1976 the Award was filed by the Arbitrator in the High Court under section 14 of the Arbitration Act. The Court thereupon issued notices to the parties and both the parties submitted their objections. The contractors' objection was that the Award had been given by the Deputy Chief Engineer and since he could not arbitrate as the Arbitration had to be done by the Production Manager the Award was therefore invalid. The Corporation on the other hand contended that since the Deputy Chief Engineer was incharge of the Engineering Section and was performing the duties of Production Manager he was therefore competent to arbitrate. The learned Single Judge however by his order dated the 14th of March 1977 held that the intention of the parties was to appoint the Production Manager as Arbitrator and not any other officer performing the functions of the Production Manager in addition to his duties. He therefore set aside the Award under section 30 of the Arbitration Act on the ground that. Khawaja Masihuddin was not competent to arbitrate: On these facts it was held by the Supreme Court that the High Court was perfectly justified in holding that the arbitration had to be done by the Production Manager of the Corporation and not by any other officer perform--ing the said duties in addition to his own. No infirmity or illegality could be pointed out in the orders of the learned Judges of the High Court and we therefore dismissed the petition.
23. It will be seen that the question of acquiescence, waiver estoppel did not come up for consideration in this case, therefore, this case is distinguishable.
24. Ghulamali v. Pakistan the plea of estoppel was not accepted on the facts of that case. Therefore, the cited case is also of no help to the counsel for the appellant.
25. It was next submitted that the Government was not estopped by the conduct of his officers and the appellant could not have waived the objections to the appointment of the arbitrator. However, it is not disputed by the learned counsel for the appellant that the appellant throughout before the arbitrator and in J. M. No. 16 of 1975 and in this Court has been appearing. It is claimed that the appellant signed the written statement before the arbitrator, signed and consented to the application for extension of time and he has also signed objection to the award. The application for extension of time and the objections to the Award are before us and they have been signed by the appellant. We are entitled- to presume that he had authority to waive the objection for under section 114 (e) of the Evidence Act there is presumption as to regularity of performance of official acts. No evidence was produced to show that he had no such authority. No provision has been brought to our notice in negative terms wherein the appellant was not authorised to sign to the application for extension of time and not to conduct the proceeding in the manner except rules 2.68 and 2.69 which provide as follows :- "2.68. Engineers and their subordinates are responsible that the terms of contracts are strictly enforced and that no act is done tending to nullify or vitiate a contract. All contract needs must be executed on one or other of the standard forms, but they may be modified to suit. Local requirements after consultation with the legal advisers of the West Pakistan Government. All agreements or security bonds entered into with the Buildings and Roads Department by contractors for the execution of work or for securing the due performance of contracts are exempt from stamp duty. Registration fees on all contracts for manufacture and supply of bricks must be paid by the contractor as he is required to register the tender.
(2) When according to the terms of the contract, a Superintending Engineer acts as an arbitrator.
26. He should, in giving an award, keep in view the instructions contained in Appendix VI.
27. 2.69. No authority lower than an officer in charge of a Division can accept any tender or make a contract for public works. The different classes of deeds, contracts and other instruments which may be executed by thisDepartment and the authorities empowered to execute them are - detailed in Appendix I, while the financial limits upto which the - authorities are authorised to determine the terms of deeds, are set forth in Annexure B' of this Chapter."
28. It will be seen that the action of the Chief Engineer does not fall within any of the above-mentioned two clauses nor is bit by them. In fact this point was not urged before the learned Single Judge nor were these rules cited before him. Reference was made to Ghulamali v. Pakistan. in this case the building contractor had resumed work on P. W. D. Executive Engineer's recommendation for higher rates of payment than those agreed upon in view of the increase in costs. But the recommendations were rejected by the superior officer after a lapse of one year, it was held that rule of estoppel was not applicable against the Department. This case is quite distinguishable on facts. Reliance was placed by Mr. Akhtar also on Abdul Wahid Khan v. The Custodian of Evacuee Property, West Pakistan, Karachi and others.It was held therein that the principles of estoppel does not operate unless party acts on representation of other party and thereby changes its position.
29. There cannot be any dispute with the proposition which this case lays down. But the facts that the appellant participated in the proceedings after having initially objected to the jurisdiction of the arbitrator without any protest, and subsequently consented to the application for extension of time for giving award made by the arbitrator, .And took chance for a favourable decision do, in our view, attract the principles of acquiescence, waiver and estoppel.
30. We, therefore, find no merits in this appeal and dismiss it with costs.