' NISAR MUHAMMAD SHAIKH, J.--- This Intra-Court Appeal is directed against the Judgment dated 14-10-2010 and Decree dated 13-11-2010 passed by the learned single Judge in Suit No,896 of 1996 whereby he set aside the Award dated 30-8-1995 of the sole Arbitrator Mr. S.A. Nizami and dismissed the Suit along with listed C.M.A. No,4524 of 1998, with no order as to cost.
2. The brief facts leading to this appeal are that the appellant Ch. Fazal Muhammad was granted a lease of the land admeasuring 754.2 acres, out of Survey No,272 of Deh Nareja, situated in Hyderabad Cantonment, for quarrying purpose, for a period of 4 years from 1-4-1963 to 31-3-1967 vide Lease Deed executed on 18-3-1963 by Military Estate Officer (MEO), Karachi on behalf of President of Pakistan. It was alleged by the appellant that on 4-6-1965 the contractors of Pakistan Public Works Department (Pak. PWD) encroached upon a portion of the leased out land, for construction of a road approaching to Hyderabad Airport and also took away his quarried material (Stones, Bajri, etc). The appellant also alleged for the second incident that on 21-7-1965 the said contractors as per the instructions of SDO of Pak. PWD, also demolished his record room and shelter room of his staff. In this connection, he moved an application dated 23-7-1965 to Military Estate Officer, Karachi Circle, furnishing therein the details of his claim made on the damage/loss sustained by him in the two incidents. He claimed total Rs,1,23,699/- including Royalty charges in respect of the first incident dated 4-6-1965 and Rs,5,870/- for second incident dated .21-7-1965 and thereby his total claim as per his estimation, was for Rs,1,29,569/- only. Thereafter the appellant, through his Advocate Mr. Zahur Hussain Raja, also issued a legal notice dated 31-1-1966 to various officers/departments wherein he, adding further details of the matter, claimed the same amount as mentioned above, plus recurring interest at the rate of 6% per annum, within 60 days.
But, since the grievance of the appellant was not redressed, therefore he approached to the Military authorities. Consequently, the efforts of appellant for his claim resulted in the last Award passed in his favour on 30-8-1995 but the same was set aside by impugned judgment, hence this appeal.
3. We have heard learned counsel for the respective parties and perused relevant record including the R&Ps of Suits Nos.896 of 1996 and 299 of 1977 and Revision Application No,254 of 1986.
4. The contention of learned counsel for the appellant is that there are many enquiry reports and Awards made by the respective officers and Arbitrators in favour of the appellant, yet no compliance is made by the respondents to clear the dues of the appellant. He further submitted that the claim of the appellant has been established throughout as appears from all reports and Awards and it was therefore that the last Award dated 30-8-1995 made by Mr. S.A. Nizami, the sole Arbitrator was liable to be implemented and acted upon by the respondents without further delay but the same has been set aside through impugned judgment and decree which are not sustainable in law.
5. On the other hand, the contention of respective counsel for the different respondents is similar one that all the invalid enquiry reports and previous Awards were made at the instance of local Military authorities as is also evident from their letters issued in favour of appellant and the same are also available on record. They also submitted that even otherwise, all such Awards based on the alleged enquiry reports, were set aside by the competent Courts and were not made the rule of the Court and therefore, the claim of appellant for compensation was rightly rejected in the impugned judgment whereby the last Award was also set aside being invalid, illegal and without jurisdiction.
6. Perusal of record shows that initially, on the approach of the appellant, the Deputy Sub- Administrator Martial Law, Headquarters, Sub-Sector "B" Hyderabad Division, had addressed a letter dated 30-4-1969 to the Director Audit and Accounts, with a copy to the Chief Engineer Buildings and Deputy Chief Engineer, Highways. In response to such letter, Messrs A.R. Khan, Concurrent Audit Officer, GMB, ADC, Hyderabad and Shaikh Shah Nawaz, the Superintending Engineer, Lower Sindh Drainage Circle, were nominated to examine the claim of the appellant who had complained that PWD had interfered with his mining operation resulting in loss to him. These two officers went into this question and came to the conclusion that PWD had in fact interfered with the appellant's mining operation and he was entitled to compensation of the loss sustained by him. However, they stated further that this loss should be assessed by the Defence Department who had leased out the mines to the appellant and then they would recover this loss from PWD and pay the same to the appellant. Such conclusion of the said two officers was communicated to the Deputy Sub- Administrator, Martial Law Headquarters, Hyderabad, vide their letter dated 2-7-1969 which was being described as an Award, and then the same was sought by the plaintiff/appellant to be made rule of the Court, through Suit No,422 of 1972 filed by him before this Court against the Chief Engineer, Pak. PWD. Such suit was disposed of vide judgment of this Court dated 8-5-1973 in which Mr. Justice Fakhruddin G. Ibrahim (as his lordship then was) concluded as under:- "Mr. S. Mahmoodul Hasan the learned Counsel for the plaintiff fairly conceded that there was no agreement to refer the matter to arbitration. He however urged that said Messrs A.R. Khan and Shaikh Shah Nawaz have acted as arbitrators and further proceeded to give an award which is on the requisite stamp paper. What is correct, however, is that the letter dated 2-7-1969 is on stamp paper prescribed for an award. The document itself has not been described as an award nor the persons executing it, as arbitrators. In any event in the absence of an agreement to refer to the arbitration, there is no question of either treating this letter dated 2-7-1969 as an award or to make it a rule of the Court. I therefore, accept the objections to what is mistakenly called an award and refuse to make it a. Rule of the Court. However, in the circumstances of the case there will be no order as to cost.
' Before parting with the case, at the request of the learned Counsel for the plaintiff, I may express a hope that the department concerned will consider sympathetically the claim of the plaintiff for compensation, which in principle has been accepted by the afore-named two officers."
7. It appears that thereafter, Government of Pakistan, Works Division sanctioned Rs,1,23,872/ on 9-9- 1975 which amount was then received by the appellant. This payment, according to Pak. PWD, was a full and final settlement received by appellant without any protest. But, the appellant claimed further damages on the loss sustained by him on account 'of removal of his quarried material used for construction of airport, its parking stand and approach road etc, In this regard, in compliance of the instructions contained in the letter dated 14-10-1975 of Cantonment Executive Officer, the Assistant Maintenance Engineer (Army) Hyderabad conducted enquiry and sent his detailed enquiry report to Station Headquarters, Hyderabad, vide his letter No,6014/602/E-6 dated 24-11- 1975, wherein he worked out the loss on removal of excavated material i,e, Stone, Bajri and Morum and estimated its total cost Rs,4,86,400/- plus interest, royalty charges, escalation cost, etc. He recommended that the decision may be made through arbitration for the reason that these claims are purely based on contractor's own record. He also suggested that the matter may be decided by Military Authorities as the lease agreement of contractor (appellant) was with them and that the cost may however be debited to Pak. PWD as they are responsible for encroachment and using the material.
8. On the basis of the said report of AME(A) Hyderabad dated 24-11-1975, the Chief Executive Officer, Hyderabad representing the Defence Ministry, vide his letter dated 12-12-1975 made a reference for arbitration to a panel of 3 arbitrators namely Messrs S. A. I. Zaidi, G.B. Laghari and A.R. Khan, as under:--- "Ch. Fazal Mohammad, contractor of the subject land has suggested your names as arbitrators, therefore a copy of A.M.E (Army) Hyderabad letter No,6014/602/E-6 dated the 24th November, 1975 giving the details of the subject case is forwarded herewith for necessary action. Expenses incurred in connection with arbitration would be borne by the above named contractor.
' The relevant record if any required may please be requisitioned from the departments concerned."
' Copy of the said letter/reference was also sent to concerned offices including appellant with following endorsement:--- "Ch. Fazal Mohammad, Bungalow No,299, Unit No,2, Latifabad, Hyderabad with reference to his application dated 10-12-75. This department will not however be bound to accept the award given by the arbitrators because the compensation/losses of the material is payable by the Pakistan Public Works Department, Karachi."
9. The panel of Arbitrators then gave their Award dated 9-2-1976 stating therein that they entered upon reference and started proceedings and issued many notices to Chief Engineer Pak. PWD to produce relevant record and to attend proceedings. Lastly after considering the record available before them, they unanimously gave Award that the contractor (appellant) should be paid cost of quantities of the material lifted out from his quarry by Pak. PWD, amounting to Rs,4,86,400/- as worked out by AME (Army), plus royalty and escalation charges, total amounting to Rs,8,60,406/- plus 13% interest since 21-7-1965.
10. The plaintiff/ appellant then filed Petition under section 14 of the Arbitration Act on 15-12-1977 which was registered as F.C. Suit No,299 of 1977 before the Civil Judge 1st Class, Hyderabad and prayed ' for directing the Arbitrators to file their Award in the Court for taking further proceedings under section 17 of the Arbitration Act. But, since the defendants Nos.2 and 3 (Executive Engineer and Chief Engineer PWD) were not present in such arbitration proceedings, therefore, the Court with no objection of plaintiff, ordered on 9-3-1978 for fresh arbitration proceedings and ultimately on 18-3-1978, by consent of the parties, the Court appointed Syed Riaz Hussain, Superintending Engineer, Building Department, for fresh arbitration. He then also gave his Award dated 9-4-1978 whereby he confirmed the previous Award dated 9-2-1976 on the basis of material available before him as the Pak. PWD, after raising certain objections through their Law Officer, did not take further steps and disappeared. Again this Award dated 9-4-1978 was challenged by the same defendants through an application dated 21-5-1981 but on a statement filed by these defendants on 4-4-1982 and with no objection of plaintiff, the Court set aside the Award dated 9-2-1976 vide its order dated 4-4-1982. Subsequently, 1st Senior Civil Judge, Hyderabad vide order dated 8-9-1983 accepted the Petition/Suit No,299 of 1977 and confirmed the Award dated 9-4-1978 of Arbitrator Syed Riaz Hussain as a rule of the Court and passed such Decree dated 13-9-1983 for Rs,8,60,406/- plus interest. However, an application under section 12(2), C.P.C. Was then moved on 31-3-1985 which was allowed by the same Court vide its detailed order dated 26-5-1986 whereby the earlier order dated 8-9-1983 was held to have been obtained by fraud and misrepresentation and thus it was declared invalid and the parties were directed to contest the Award dated 9-4-1978 afresh.
Accordingly the decree dated 13-9-1983 was also held to have no force in law.
11. The said order dated 26-5-1986 was challenged by the plaintiff/appellant Ch. Fazal Muhammad before this Court through Revision Application No,254 of 1986 and vide order dated 30-9-1986 the proceedings of the Suit No,299 of 1977 were stayed and then the R&Ps of Suit No,299 of 1977 were also called for vide order dated 15-2-1989. It appears that lastly on 20-11-1996 the applicant/ appellant Ch. Fazal Muhammad did not press his Revision Application saying that a fresh Award has been filed before this Court for making it rule of the Court. Accordingly the said Revision Application was dismissed as withdrawn, vide order dated 20-11-1996. Thereafter the R&Ps of the Suit were returned to the 1st Senior Civil Judge, Hyderabad with copy of the said order dated 20-11- 1996. It appears that no further order was passed for disposal or otherwise of Suit No,299 of 1977 nor the plaintiff approached such Court for further proceedings or disposal of such suit which was lying pending since 26-5-1986 when the Application under section 12(2), C.P.C. Was allowed and the order dated 8-9-1983 and Decree dated 13-9-1983 passed in Suit No,299 of 1977 were set aside with direction to the parties to contest the Award dated 9-4-1978 afresh.
12. It is evident from above that first Award dated 2-7-1969 which was a report of Enquiry Committee, was not made rule of the Court as per order dated 8-5-1973 passed by this Court, second Award dated 9-2-1976 of the Panel of 3 Arbitrators was set aside on 4-4-1982 by Senior Civil Judge, who also set aside the order dated 8-9-1983 and Decree dated 13-9-1983 whereby third Award dated 9-4-1978 was made rule of the Court. It further appears that during pendency of the said Suit and Revision, an Office Memorandum dated 17-5-1995 was issued by Chief Engineer (South) Pak. PWD Karachi whereby Mr. S.A. Nizami was appointed as sole Arbitrator to adjudicate upon the dispute. This document reads as follows:--- "In pursuance of orders as contained in Works Division's Letter No,F,.10(35)/69/94-WI/EIII(pt) dated 17-4-95, Mr. S.A. Nizami, Additional Secretary (Law) (Retd.), Government of Pakistan, is hereby appointed as Sole Arbitrator to adjudicate upon the dispute existing between Ch. Fazal Mohammad and Civil Aviation Authority by virtue of the fact that the approaching road from Latifabad to Airport, Hyderabad is presently under the Administrative Control of Civil Aviation Authority.
' The parties are hereby advised to submit their claims and counter claims before the Sole Arbitrator for adjudication."
' Copy of the said Office Memorandum was sent to the concerned officers including the XEN, with the following endorsement:- "The Executive Engineer, Central Division, Pak. PWD, Hyderabad. He is hereby directed to appear before the Sole Arbitrator and furnish the required documents in the capacity of silent observer and also assist the Civil Aviation Authority in the matter."
13. The sole Arbitrator after entering into the reference conducted proceedings and then he gave his Award dated 30-8-1995, the perusal of which shows that he, at page 25 of his Award, reproduced the same assessm ent and estimation that was given by AME (Army) Hyderabad in his enquiry report dated 24-11-1975. He also observed in his Award that the Arbitrators nominated earlier to adjudicate this matter were unanimous in awarding the same amount of compensation i,e, Rs,8,60,406/-. Thus, he multiplied the same to four times and found that its total amount i,e, Rs,34,41,620/- is the most moderate and reasonable compensation, which he allowed to the plaintiff/appellant with markup at 10% per year on the said amount of Rs,34,41,620/- from 1965 till full payment. He lastly held in his award that such awarded amount shall be payable in the first instance by the defendant No,1 Ministry of Defence in the Military Estates Office, Hyderabad which amount shall then be recoverable from the other defendants No,2 and 3 i,e, XEN Pak. PWD and Civil Aviation Authority respectively.
14. It is surprising that this sole Arbitrator also adopted the same figure with same particulars as was worked out by the AME(A) Hyd, whose report dated 24-11-1975 in respect of the same amount was not only followed in earlier Award dated 4-2-1976 which was then set aside but was also adopted in another Award dated 9-4-1978, on which the decree passed earlier, has also been set aside. Even otherwise, the AME had also mentioned in his report that the claim of plaintiff is purely based on his own record. However, this last Award dated 30-8-1995 was then filed by the sole Arbitrator in this Court on 7-9-1996 with petition under section 14(2) of the Arbitration Act, 1940 which was registered before this Court as Suit No,896 of 1996. But subsequently, by way of impugned judgment dated 14-10-2012, the learned single Judge set aside the said Award dated 30-8-1995 of Mr. S.A. Nizami, the sole Arbitrator and dismissed the Suit No,896 of 1996 as well as the application under section 17 of Arbitration Act, (C.M.A. No,4524 of 1998) with no order as to cost. The concluding paras of such judgment are as under:- "34. Mr. S.A. Nizami the learned sole Arbitrator has passed the Award which on the face of it is void, passed without jurisdiction, the learned Arbitrator travelled beyond the mandate given in the office memorandum dated 17-5-1995, the claim of the plaintiff had already become infructuous as the plaintiff has already received the amount claimed by him from the defendants Nos.5 and 6 in compliance of the order dated 8-5-1973 in Suit No,422 of 1972.
35. In view of the aforementioned facts, circumstances and legal position, I set aside the Award dated 30-8-1995 passed by Mr. S.A. Nizami the learned sole Arbitrator. I also dismiss the application bearing C.M.A. No,4524 of 1998 filed by the claimant/plaintiff and the present suit with no order as to costs."
15. Learned counsel for appellant argued that the impugned judgment is not sustainable as the sole Arbitrator gave his Award after considering all material facts out of the history of this oldest matter and such Award was liable to be made rule of the Court but the same has been set aside on technical grounds causing miscarriage of justice. He further submitted that the dispute on payment of compensation was between the departments of the respondents who shifted the burden upon each other to avoid due payment of the awarded amount to the appellant and therefore the appellant could not be deprived of his established claim of compensation in any way.
16. On the other hand, the contention of learned counsel for the respective respondents is almost the same that neither the sole Arbitrator had jurisdiction to enter into alleged reference which was not issued with consultation of the respondents who were not party to such reference therefore the Award is not binding upon the respondents. They also submitted that the sole Arbitrator misconducted himself while initiating proceedings of the arbitration and exceeding the limits of alleged reference and thus his Award is void and invalid, specially when there is no arbitration agreement between the parties. They further contended that even otherwise the compensation of Rs,1,23,872/- was duly paid to the appellant as full and final settlement in compliance of the judgment of this Court dated 8-5-1973 against the total amount of Rs,1,29,569/ as was claimed by the appellant through his application and legal notice, therefore after receiving such amount without any protest, he could not seek further amount through the Military authorities. They also placed reliance on the cases of Chhabba Lal v. Kallu Lal (AIR (33) 1946 Privy Council 72) and Deep Narain Singh v. Dhanesh Wari (AIR 1960 Patna 201) in support of their contentions.
17. In rebuttal the learned counsel for the appellant relying upon the case of Mst. Shamim Akhtar v.
Najma Baqai (PLD 1977 SC 644) contended that since the respondents had full knowledge about the arbitration proceedings and they also participated the same and thereby submitted to the jurisdiction of the Sole Arbitrator therefore, they can not question the arbitration proceedings after the Award came against them.
18. From 'the perusal of the judgment in Mst. Shamim Akhtar's case reported in PLD 1977 SC 644, it appears that both the parties by their consent had agreed to refer their dispute to arbitration and each of them had nominated their respective Arbitrator, who were intimated about the terms of the reference for arbitration and thereafter the parties had fully participated in the proceedings and on account of difference of opinion between the two Arbitrators, the parties also appeared before the Umpire who was also appointed by their consent. Thus, none of the parties in such reported case raised any objection against the validity of the reference to the Arbitrators and appointment of the Umpire. But, in the instant case, the sole Arbitrator was not appointed with consultation or consent of the respondents and the term of reference was in respect of the dispute between the appellant and Civil Aviation Authority who was not party in the proceedings relating to the earlier Award dated 9-4-1978 regarding which the suit was lying pending before the learned Senior Civil Judge Hyderabad and the same is not yet disposed of, therefore, during pendency of appellant's earlier Suit as well as a Revision Application before the competent Courts in respect of the earlier Award dated 9-4-1978 passed on the same subject-matter, no further reference could be made for arbitration specially, without the consent of the respondents. Accordingly the facts of reported case are quite distinguishable to the facts of the present case as the main question in the reported case was that the arbitration agreement should necessarily be signed and duly stamped or not.
19. Admittedly, there was no arbitration clause in the very Contract of lease dated 18-3-1963 and there was also no any written agreement of arbitration between the parties. In the earlier judgment of this Court passed on 8-5-1973 in relation to the same subject-matter, it was observed by Mr. Fakhruddin G. Ibrahim, J (as he then was) that "in any event in absence of an agreement to refer to the arbitration, there is no question of either treating this letter dated 2-7-1969 as an award or to make it a rule of the Court." So still the position is same in absence of any agreement to refer the dispute for arbitration. Moreover, the reference for arbitration was also not made with the consultation or consent of the respondents. The actual dispute was between the appellant and the contractors of Pak. PWD who were not sued in any way though they were specifically alleged to have had taken away the quarried material of the appellant and caused the alleged loss to him.
However, since the reference was not made with consent of the parties therefore, the same by itself is invalid and on the basis of such reference the Arbitrator could not assume the jurisdiction. In the case of Chhabba Lal v. KaIlu Lal (AIR (33) 1946 Privy Council 72) the Privy Council observed that if there is no valid reference, the purported Award is nullity and could be challenged in any appropriate proceedings. In the case of Deep Narain Singh v. Dhanesh Wari (AIR 1960 Patna 201) the observations of the Court were as under:--- "The result is that all the persons interested in the matter of dispute were not parties to the arbitration agreement and it is manifest that when an agreement is not consented to by all, such an agreement is invalid and cannot give the arbitrator jurisdiction to decide the dispute, and the award given on the strength of such void reference is void. The award passed upon such invalid reference does not bind even the consenting parties. It is void altogether. This does not require a detailed investigation. It has been laid down by their lordships of the Privy Council in Chhabba Lal v.
Kailu Lal, AIR 1946 P.C. 72 that if there is no valid reference, the purported award is a nullity. As, in the present case, there was no unanimous reference to arbitration the entire award based upon such invalid reference must be held to be a nullity, and on this ground alone the award is liable to be set aside and the plaintiffs unsuited."
20. Thus, it appears that the Chief Engineer Pak PWD was even not competent nor he was authorized by the respondents to appoint sole Arbitrator or refer the matter to Arbitration without consent of both parties, therefore the office memorandum dated 17-5-1995 could not give jurisdiction to the sole Arbitrator and as such the Award passed by him on an invalid reference, by itself is void and the same could not become valid mere by reason of the knowledge of or appearance in, the arbitration proceedings. It appears that in addition to the Civil Aviation Authority, the other departments were subsequently joined to the arbitration proceedings before the sole Arbitrator but the same was also without their consent or the reference against them and therefore, the alleged reference made against CAA was not binding on them. Since the sole Arbitrator had no jurisdiction in the matter of invalid reference therefore subsequent proceedings resulting in the Award, are of no legal effect and thus the very Award itself, is void having been passed without jurisdiction.
21. In the circumstances, the Award in question could not be sustained in law and accordingly, the learned single Judge rightly set aside the same while dismissing the suit together with the listed application. Such impugned judgment as well as decree call for no interference through this appeal which has no merit and is liable to be dismissed. Consequently, we dismiss this appeal, however, with no order as to the cost.