' SYED MANSOOR ALI SHAH, J:- Brief facts are that the petitioner filed suit for recovery of money in the sum of Rs,23,000 against respondent No,
1. During the pendency of the suit, the said respondent filed an application under Order VII Rule 11 C.P.C, to the effect that the suit is barred by law because the subject matter of the suit is based on the decision of a Panchayat which is equivalent to an award of an arbitrator under the Arbitration Act, 1940. The said application was allowed and the suit was dismissed on 18-9-2006. Petitioner preferred an appeal, which was also dismissed vide order dated 24-2-2007 on the same grounds.
2. On the question whether the decision of the Panchayat can be treated as proceedings under Arbitration Act, 1940, Mr. Faisal Naqvi, Advocate Supreme Court, was appointed as an Amicus Curiae, to assist the court.
3. The learned amicus curiae made the following submissions:-
(i) In the absence of the written arbitration agreement between the parties, the dispute does not fall within the Arbitration Act, 1940; Under Section 2(a) of the Arbitration Act, 1940 arbitration agreement has to be in writing and in the absence of same, the matter cannot be considered under Arbitration Act, 1940. He placed reliance on "Baratilal Baijnath v. Bindabai AIR 1963 Madhia Pardesh 122 (at 123)", "Belli Gowder v. Joghi Gowder, AIR 1951 Madras 683 (at 684)", "Firm Narain Das v. Bhagwan Das AIR 1951 Allabad 860 (at 863)" for the above contention.
(ii) He further submitted that the instant matter does not arise out of a decision of the Panchayat but is based on mediation. By referring to the plaint, learned Amicus Curiae pointed out that respondent No, 1 "agreed to "pay" before the Panchayat and therefore, the instant matter was "mediated" by the Panchayat rather than "decided". Therefore the question of arbitration does not arise. Regarding the difference between mediation and arbitration learned Amicus relied on "Muhammad Akram and others v. Ch. Muhammad Salim PLD 1964 (W.P.) Lahore 490", "Muhammad Saleem v. Muhammad Akram PLD 1971 SC 516" "Maj. (Retd) Mian Badshah v. Major (Retd) Bahadur Shah 1994 SCMR 384".
4. Learned counsel for the petitioner adopted the arguments of the learned Amicus Curiae.
According to the office report, respondents have refused to accept notice, therefore, they are proceeded ex parte.
5. Arguments heard. Record perused.
6. What requires determination is whether decision of a "Panchayat" amounts to an arbitration award. For this, it is important to explore the concept of resolution of dispute through a Panchayat.
7. Erin Moore in Conflict and compromise: Justice in an Indian Village. New York: University Press of America (1985) has observed:-- "A Panchayat literally means a gathering of five, though today the number holds no significance. It is a term that has been used through the ages for the traditional village assemblies. The leaders, referred to as Panches, are not elected or chosen in any formal way, but are men, who, being respected by the village or by the parties, are asked to assemble to help resolve the problem. It is a voluntary committee that varies in size depending on the gravity of the offence or the importance of the parties involved. There are no formal rules or format. It is a group of friends who will sit and talk-out the problem at hand."
8. In Justice in Practice, Legal Ethnography of a Pakistani Punjabi Village by Muhammad Azam Chaudhry, Oxford University Press, 1999 (page 92-101).
"The consent of both parties is a necessary pre-condition for calling a meeting of a Panchayat. If the other side is unwilling then a Panchayat cannot be initiated There is no fixed, normal proceedings or procedures for the meeting of the Panchayat. According to the given situation and circumstances, the nature of the Panchayat and the procedures change. Procedures of the Panchayats are differentiated on the basis of the purpose for which they are held, e.g. Some Panchayats would decide some types of conflict; others may deliberate on the common stand towards matters concerning the whole group of community...After both sides have had ample time and have talked out their grievances the Panches carry out consultations and work out a compromise. While announcing their decision they seek agreement of both the parties. Some minor adjustments might again be made at the request of one or the other party. One of the important aspect of the proceeding here is to let the people talk out their grievances and make their gelle shikway (complaints to each other). The decisions of the Panchayats are seldom a surprise, as they can already be guessed from private discussions among the people. Panchayat decisions are not abrupt but a gradual development in which their meeting could be seen as the last step of the process.
' If a compromise is arrived at and is accepted by both parties, they are made to stand up to embrace each Vier and shake hands. Embracing and shaking of hands is a symbol of ending the conflict." (Emphasis supplied).
9. From the above literature it appears that Panchayat has a consensual dispute resolution process and the effort is to make the parties arrive at a compromise. This process appears to be broadly similar to the concept of mediation. Mediation "is a flexible process conducted confidentially in which a neutral person actually assists parties in working towards a negotiated agreement of a dispute or difference with the parties in ultimate control of the decision to settle the terms of resolution". (The CEDR Mediator Handbook, fourth edition, 2004 (page 26).
10. The distinctions between mediation and arbitration are as follows:-- "The term "mediation" connotes the act of a third party relating to the settling of a dispute between two contending parties. Whereas arbitration is governed by the arbitration agreement wherein an arbitrator is nominated by the parties. Arbitral award made in conclusion of the arbitration proceedings is binding on the parties to the arbitration. Whereas settlement arrived at the end of mediation does not have such binding effect on the parties. Arbitration means settling of a dispute by an arbitrator. Where arbitrators cannot agree they may appoint an umpire, there is no umpire system in mediation...The decision of an arbitrator is known as an "award". Whereas the decision of a mediator is known as a settlement. The procedure on arbitration is based on the ordinary rule i,e, relevant Arbitration Law and the procedure laid down in the arbitration agreement. Applicability of any such rule is minimal in case of mediation. An arbitral award is treated as a 'decree' and can be enforced legally " (The Arbitration and Conciliation Act, 1996 with Alternative Means of Settlement of Disputes, Central Law Publications 107, Darbhanga Colony, Allahabad, 2006 by Dr. S.C. Tripathi).
11. In the present case, respondent No,1 accepted the contention of the petitioner before the Panchayat. Therefore, the parties arrived at a compromise before the Panchayat and the same was confirmed through a decision. Panchayat is, therefore, at best a variant of mediation and is not in the nature of Arbitration Proceedings. Further, there is no written Arbitration Agreement in order to attract the mischief of the Act. Arbitration Agreement has been defined in section 2(a) of the Arbitration Act, 1940 which states:-- "Arbitration agreement means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not."
12. In present case, there is no written arbitration agreement therefore; the decision of the Panchayat does not amount to an award. Reliance is placed on Messrs Tribal Friends Co. v.
Province of Balochistan 2002 SCMR 1903, Dar Okaz Printing and Publishing Limited Liability Company v. Printing Corporation of Pakistan Private Limited (PLD 2003 SC 808), Messrs Ahmed Constructions through Sole Proprietor v. Messrs Neptune Textile Mills and another (PLD 1990 Karachi 216), Mst. Shamim Akhtar v. Najma Baqai and 3 others (1977 SCMR 409), M.P.A. Inc. Houston, U.S.A.
And another v. Federation of Pakistan and 2 others (PLD 1979 Karachi 453), Messrs Aj-Bag Corporation v. Pakistan through the Secretary, Ministry of Defence, Islamabad and 3 others (1973 SCMR 98), Naveed Ishtiaque and another v. S.S. Associates (Pvt) Ltd. Through Chief Executive (2007 YLR 505) and Yar Muhammad Shah and 2 others v. Government of Sindh, Karachi through the Secretary, Auqaf Department and 4 others (1986 CLC 1666).
13. Reliance of the impugned order on Hassan Ali and Co. v. Ploy Cotton S.A. And others 1996 CLC 1812 is misconceived as in this case an award under arbitration agreement was before the court which is not so in the present case. Decision of the "Panchayat" cannot be considered to be an arbitration for the reasons given above.
14. - Before parting with the judgment, the valuable assistance rendered by Mr. Faisal Naqvi, Advocate Supreme Court/Amicus Curiae is acknowledged and appreciated.
15. For the above reasons, the impugned order dated 18-9-2006 is set aside. Suit for the petitioner shall be deemed to be pending before the learned trial Court and shall be decided within six months from the receipt of this order.
16. This revision petition is therefore, allowed.