' QAISER RASHID KHAN, J.---Through the instant appeal under section 39 of the Arbitration Act, 1940, the appellant namely; Syed Faqir Shah has called in question the judgment and decree dated 3- 12-2004 passed by the learned Senior Civil Judge, Mansehra vide which the application filed by respondents Nos.1 and 2 namely; Haji Inayatullah Khan and Syed Hussain Shah under section 17 of the Arbitration Act was accepted and the award dated 21-9-1998 determining a sum of Rs,20,45,661 as outstanding amount against the appellant was made as rule of the court.
2. Brief and essential facts leading to the instant appeal are that the appellant and the respondents Nos.1 and 2 started a joint venture of six projects pertaining to Forest Compartment Nos.7 and 8 situated at Balakot through various agreements executed between the parties spread over a period of four years commencing from 1989 to 1992 for which the appellant had allegedly received a sum of Rs,53,00,000 from respondents Nos. I and 2 but had paid in kind i,e, timber valuing Rs,27,58,000; that due to monetary dispute regarding settlement of accounts, the parties ' agreed to refer the matter to the council of two arbitrators and accordingly, a deed regarding the appointment of arbitrators and terms of reference was executed on 7-8-1998; that the arbitrators pronounced the award on 21-9-1998, as a result of which, a sum of Rs,20,45,661 was held payable by the appellant to the respondents Nos.1 and 2, hence an application under section 17 of the Arbitration Act was filed before the learned Senior Civil Judge, Mansehra with the prayer that the award be made rule of the court.
3. The appellant contested the award by raising objection and after recording evidence of the arbitrators, the learned trial judge made the award as rule of the court vide judgment and decree dated 21-9-2002.
4. Aggrieved of the judgment and decree dated 21-9-2002, the appellant filed appeal before this Court which was accepted on 18-2-2004, the impugned judgment and decree dated 21-9-2002 stemming out of the award was set aside and the case was remitted to the learned trial court for proceeding with the. Matter afresh albeit with the directions to determine certain points formulated therein and to decide the list after giving the parties due opportunity for adducing their evidence in support of their respective stances.
5. After remand of the case, the learned trial judge framed eight issues arising out of the pleadings of the parties. The parties produced their respective evidence as they wished to adduce and after hearing the arguments of learned counsel for the parties, the learned Senior Civil Judge. Mansehra vide impugned judgment and decree dated 3-12-2004 made the award dated 21-9-1998 as rule of the court, hence the instant appeal by the appellant.
7(sic) Learned counsel for the appellant vehemently argued that when the earlier Suit No,11 of 2001 instituted on 14-2-1996 by the respondents Nos.1 and 2 against the appellant had been dismissed for non-prosecution on 6-8-1996, they were debarred under the law to approach the learned trial court on the same subject matter afresh for making the alleged arbitration award as rule of the court; that when the same claim of respondents Nos.1 and 2 was earlier dismissed by a competent court of law though in default, it was a past and closed transaction which could not be reopened and thus the entire proceedings in this behalf are nullity in the eye of law; that no arbitration agreement was executed between the parties and the respondents Nos.2 and 3 were never appointed as arbitrators by him and, therefore, the so-called arbitration agreement was a non- existent dispute for arbitration and thus had, illegally been taken into consideration while basing the same for making the award in this context as rule of the court; that as per the so-called arbitration agreement dated 7-8-1998, no time date, place or venue for the alleged arbitration proceedings was fixed by the arbitrators and, therefore, the entire exercise in this behalf is ab initio illegal, null and void, based on fraud and in active connivance between the respondents; that the so-called arbitrators while appearing as AW-1 and AW-2 before the court have not stated that any notice for arbitration was served upon the appellant; that the so-called arbitrators have not recorded any statement of the appellant or of the respondents Nos.1 and 2 while conducting the arbitration proceedings and that no date, time and place is mentioned nor there is any mention of the appellant's participation therein; that the impugned award is one sided in which the appellant had been condemned unheard and the entire proceedings were carried out in a slipshod, cursory and perfunctory manner; that even the other 46 persons who were defendants in the earlier suit were not summoned; that the entire exercise carried out by the respondents is the result of fraud and, therefore, the learned trial Judge has committed patent illegality while passing the impugned judgment and decree by making the so-called arbitration award as rule of the court which is liable to be set at naught. In support of his contentions, the learned counsel for the appellant placed reliance on:--
(a) PLD 1985 SC 69, (b) 1987 SCMR 704, (c) 1987 SCMR 527, (d) PLD 1990 SC 800, (e) 1992 SCMR 65,
(f) 1995 SCMR 73, (g) PLD 1996 SC 831, (h) AIR 1932 Bombay 68, (i) AIR 1931 Lahore 65, (j) PLD 1965 Dacca 258, (k) PLD 1966 (AJ&K) 10, (1) PLD 1971 AJ&K 127, (m) 1990 CLC 1241, (n) PLD 1987 Lahore 574,
(o) 2001 MLD 890, (p) PLD 1970 Karachi 357, (q) 1990 MLD 261, (r) 1989 MLD 241, (s) 2003 YLR 1523, (t)
PLD 2003 Lahore 522, (u) PLD 1987 Quetta 33 and (v) 1988 CLC 267.
8. On the other hand, learned counsel for the respondents defended the impugned judgment and decree on almost the same grounds which prevailed with the learned trial judge. The learned counsel for the respondents placed reliance on:--
(a) 2002 'SCMR 1903, (b) 1990 MLD (Karachi) 1764, (c) 2003 YLR (Karachi) 2596, (d) 1982 CLC (Karachi) 767, (e) PLD 1993 Karachi 626, (t) 2001 MLD (Karachi) 99, (g) 2004 CLC (Karachi) 1977, (h)
PLD 1960 (W.P) Lahore 786, (i) 2004 YLR (Lahore) 274 and (j) 2003 CLC (Lahore) 1780.
9. Arguments heard and record perused.
10. Before dilating upon the facts and circumstances including the merits of the instant appeal, it would be worthwhile to mention that the proceedings before the arbitrators can be described as referring the matter in dispute by the parties to a judge of their own choice but it does not mean that the arbitrators may act according to their wishes ignoring the basic principles of natural justice of affording opportunity of being heard to someone or to act arbitrarily at the back of the parties, for the reason that the arbitration proceedings are to resolve the matter in dispute by an alternate forum within a system of justice and are not the substitution of a system of justice. If the arbitrators are allowed to act in any manner what they like, then it would be a punishment for the parties for referring their dispute to the arbitrators. The proceedings before the arbitrators are meant to dispense justice between the parties. It is the cardinal principle of equity that justice should not only be done but it must be seen to have been done.
11. In the above perspective, we have perused the record and the statements of the arbitrators. It appears that neither any written notice of the date, time and place of the arbitration proceedings had been given to the appellant nor after announcement of the award, the arbitrators had given any written notice to the parties for signing the same in terms of section 14(1) of the Arbitration Act.
It is also pertinent to mention that had the service of written notice not been necessary, and then the legislature in section 42 of the Act would not have given the mode of service of notice to be served otherwise than through court. We are in agreement with the argument of the learned counsel for the respondents that under the Arbitration Act, the civil court has only the supervisory jurisdiction and cannot act like the court of appeal for the reappraisal of evidence recorded by the arbitrators. It is also settled law that court is supposed to lean towards upholding the award, rather than vitiating it but at the same time, the court has got powers under the Act to order modification or correction of an award if the case falls under section 15 of the Act and the same can be set aside if it is covered by the provisions of section 30 of the Act ibid. For the sake of convenience, section 30 of the Arbitration Act, 1940 is reproduced below:- "Grounds for setting aside award---An award shall not be set aside except on one or more of the following grounds, namely:-
(a) that an arbitrator or umpire has misconducted himself or the proceedings;
(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35;
(c) that an award has been improperly procured or is otherwise invalid."
The word 'misconduct' has not been defined in the Arbitration Act, 1940 and it appears that the legislature has deliberately left the term undefined. However, when it comes to its dictionary meaning, it has been variously explained. To Webster's New World College Dictionary (third edition), 'misconduct' means, "(1) to manage badly or dishonestly (2) to conduct (oneself) improperly, unlawful, bad or dishonest management, malfeasance, willfully improper behaviour". Similarly, as per The Australian Concise Oxford Dictionary (third edition), 'misconduct' means, "improper or unprofessional behavior, bad management, misbehave, mismanage". Thus misconduct can be described as an act on the part of arbitrators which has prejudicially affected the basic rights of the party or is violation of any law or principles of natural justice and which it not interfered with may result in grave miscarriage of justice. From a plethora of case-law cited at the bar, the following inter alia, constitute misconduct on the part of the arbitrator:- "(1) Neglect of duties and responsibilities by the arbitrators,
(2) If the award is made without having heard all the evidence,
(3) If a party has not been, allowed reasonable opportunity of proving his case,
(4) If the evidence of witnesses is recorded behind the back of -a party, (5)If irregularities in proceedings are proved which amount to no proper hearing of the matter in dispute,
(6) If the arbitrator decides a disputed question without going into evidence as they would in such a case be said to have decided it blindly,
(7) If there is indication of gross negligence, dereliction of duty or recklessness on the face of the record. "
' In the case titled Ram Chand and another v. Buta Ram and others (AIR 1931 Lahore 65(1), it was held that:- "An arbitrator is guilty of misconduct when he examines no witnesses, even though the nature of dispute is such that it could not be settled without evidence."
' Similarly, in the case titled Pratapsingh v. Kishanprasad and Co. Ltd. (AIR 1932 Bombay 68), it was held that:- "(b) Arbitration---Rights of parties-party must be allowed reasonable opportunity of proving his case by evidence or arguments.. An inquiry before the arbitrator should be assimilated as near as possible to proceedings in a trial in a court of law, and therefore a party to the arbitration must not only have notice of the time and place of the meeting, but he should be allowed reasonable opportunity of proving his case either by evidence or by arguments or both, and of being fully heard. The notice must be sufficiently long in order to give the party that reasonable opportunity if he invents to be heard. If there is no sufficient notice, there cannot be a proper hearing nor a valid award, it being a well-recognized rule of natural justice that a man's legal rights cannot be determined without giving him an opportunity of being heard."
We have to consider that by not giving any notice of the date, time and place of the proceedings, the arbitrators have committed misconduct or not? No doubt that the arbitrators are not bound by any .Rules of procedure or even law of evidence, but even then such forum cannot proceed in disregard to the rules of natural justice or the law on the subject. The arbitrators while appearing as AW-1 and AW-2 before the court have not stated that any notice for arbitration was served upon the appellant. As DW-1, the appellant categorically stated that he was unaware of the entire arbitration proceedings as he was neither given any notice nor he had appointed respondents Nos.2 and 3 as arbitrators. We are of the view that the act of not giving any notice to the appellant or for that matter not providing him an opportunity of being heard in J support of his case and proceedings conducted at his back amounts to misconduct resulting in gross miscarriage of justice.
12. The plea of the appellant is that the previously dismissed suit of the respondent No,2 bars fresh litigation by filing the application impugned herein and that too, when the original cause of action is time bared as per the provisions of Order IX Rules 8 and 9 C.P.C. Perusal of the impugned judgment reveals that the learned trial court while giving its findings on issue No,1 did not appraise the evidence on record and dealt with the matter in a very cursory manner. The earlier suit of the respondent No,2 for recovery was dismissed in default on 6-8-1996 while the alleged arbitration agreement was arrived at between the parties on 7-8-1998. We have been unable to understand as to how on 6-8-1996, the proceedings of the earlier suit were corium-non-judice as held by the learned trial judge when there was no agreement for arbitration.
13. Perusal of the record reveals that the award was filed on 11-2-1999 and the objections were filed on 29-4-1999. It is the consistent stand of the appellant that he had not been served with any notice of the date, time and place of arbitration proceedings. The contention of the appellant finds support from the record and the statements of both the arbitrators as well. The point of limitation in such like cases where the arbitrators have misconducted themselves should not come in the way of justice and that too, when a party Alleges non-service of any notice. Thus we are of the firm view that the learned trial court has erred in making the award as rule of the court.
14. For the reasons mentioned above, we accept this appeal, set aside the impugned and decree dated 3-12-2004 of the learned Senior Civil Judge, Mansehra making the award dated 21-9-1998 as rule of the court and dismiss the application of respondents Nos.1 and 2 moved under section 17 of the Arbitration Act, 1940, leaving the parties to bear their own costs.