' SHAHNAWAZ TARIQ, J.---Through the captioned revision application, applicants Abdul Hussain Darugar and Abid Hassain Ali Darugar have impugned the judgment dated 26-10-2009, passed by the learned VII Additional Sessions Judge, Karachi South, whereby Civil Appeal No,150 of 2007 filed by the respondent No,1, Gul Muhammad was allowed.
2. Relevant facts narrated in instant revision application are that there was an agreement between Mst. Niamat Bai, the predecessor of the applicants and respondent No,1, Gul Muhammad in respect of business transaction and such agreement contained arbitration clause for settlement of the dispute between the parties. It is further averred that some disputes had arisen between the parties. Therefore, they referred their dispute with regard to the share in the properties No,28, FT-2, Frere Town Quarters, Karachi, and M/S Blessing Builders, Plot No,97, CF-1-5, Clifton Quarters, Karachi, their investments and mutual money transaction, to the Arbitrators, respondents Nos.2, 3 and 4, for decision. The Arbitrators conducted essential arbitration proceedings and the parties produced their documents in support of their claims. After consecutive hearings of both parties and going through their documents, the Arbitrators passed the award and announced it orally on 13-2-2000, but they did not give mandatory notice in writing to the parties for making and signing the award.
3. It is also averred that due to non-issuance of copy of award, the party No,1, Gul Muhammad sent a notice dated 24-8-2001, through his counsel to the Arbitrators to supply the copy of the award and further requested for filing of the award in the Court. Accordingly, the Arbitrators sent the signed photostat copies of the oral award dated 13-2-2000, to the counsel of the respondent No,1 and the applicant No,
1. Thereafter on 6-10-2001, the Arbitrators filed award dated 13-2-2000, along with documents vide Civil Miscellaneous Application No,2 of 2001, before the Court of learned Sessions Judge, Karachi South, which was transferred to the Court of learned 1st Additional Sessions Judge, Karachi South, for its disposal according to the law. However, after hearing the parties, the learned trial Court framed two preliminary legal objections regarding to the pecuniary jurisdiction as well as original jurisdiction of the Court to adjudicate the application filed under section 14 of the Arbitration Act, 1940. Ultimately, the learned Court vide order dated 28-1-2006, returned the award along with its annexures to the Arbitrators, for presentation before the Court having proper territorial jurisdiction in the matter.
4. The Arbitrators, respondents Nos.2 to 4 filed the same application under section 14 of the Arbitration Act, 1940, before the Court of learned VII Senior Civil Judge, Karachi South, on 21-3-2007, which was registered as suit No,285/2007. After service of summons, the applicant No,1 filed an application under Order VII Rule 11, C.P.C. Read with Article 178 of the Limitation Act, 1908, which allowed and the learned trial Court rejected the plaint of the suit No,285/2007 vide order dated 18- 9-2007. The respondent No,1 preferred Civil Appeal No,150/2007 on 11-10-2007, before the Court of learned District Judge, Karachi South, which was transferred to the Court of learned VII Additional District Judge, Karachi South. After hearing the parties, the learned appellate Court vide judgment dated 26-10-2009, set aside the order dated 18-9-2007, and remanded the matter to the learned trial Court with the directions to decide the same on merits.
5. Learned counsel for applicants contended that Suit No, 285 of 2007, was filed by the Arbitrators themselves and after rejection of the plaint by the Civil Court, the respondent No,1, Gul Mohammad has no locus standi to file civil appeal before the Court of District Judge. The order passed by the learned trial Court on 18-9-2007 for rejection of the plaint was according to law and in the purview of Limitation Act. He submitted that the alleged award was passed orally on 13-2-2000, but copy of the award was not supplied to the parties, and the respondent No,1 through his counsel after 181 months, approached the Arbitrators to file the award in the Court and such delay was within the knowledge of respondent No,1, but he deliberately failed to make such request to the Arbitrators within the reasonable time.
6. Learned counsel for applicants vehemently contended that Mst. Niamat Bai never appointed the Arbitrators to conduct the arbitration proceedings and pass any award, as she was confined to bed at the relevant time and taking last breaths, hence, the appointment of the Arbitrators, commencement of the arbitration proceedings and participation in the arbitration proceedings in such position was not possible for her. He also submitted that the oral announcement of the award is not permitted under the law and said facts was admitted by the respondent No,1 in his notice dated 24-8-2001. He vehemently contended that Mst. Niamat Bai never appeared before the Arbitrators at the time of making and singing the award nor signed the diaries of the arbitration proceedings. The provisions of section 14(1) of the Arbitration Act, 1940, could only be complied with when the Arbitrators give the notice to the parties in writing for making and signing the award in their presence and obtaining their signatures on their diaries. He further contended that from the material available on record it is proved that from 13-2-2000 till 24-8-2001, no award was made in black and white by the Arbitrators and for that reason the learned counsel for respondent No,1 sent a notice to the Arbitrators to supply the written copy of the oral award. He also submitted that in between the oral award dated 13-2-2000 and alleged written award dated 29-8-2001, Mst. Niamat Bai died on 24-8-2000, and till 29-8-2001, there was no award in writing, as such the Arbitrators had not complied with the mandatory provisions of section 14(1) of the Arbitration Act, 1940. He submitted that the impugned order is liable to be set aside being time barred as the learned appellate Court has not passed a speaking order discussing the merits for setting aside the order for the rejection of the plaint passed by the learned trial Court.
7. Learned counsel for the respondent No,1 contended that there was an agreement between Mst.
Niamat Bai, the predecessor of the applicants and the respondent No,1, Gul Muhammad in respect of business transaction between them, which contained an arbitration clause for the settlement of the dispute between them. There were some disputes between the parties, so matter was referred to the Arbitrators. After necessary arbitration proceedings, the Arbitrators passed an oral award dated 13-2-2000, but they did not give the mandatory notice in writing to the parties for making and signing the award. Therefore, the respondent No,1, being one of the contesting parties to the award, sent a notice dated 24-8-2001, to the Arbitrators requesting them to supply copy of the award and also to file the award in the Court. Consequently, the Arbitrators filed the said award under section 14(2) of Arbitration Act, 1940, in the Court of District Judge, Karachi South, but the Court of learned 1st Additional Sessions Judge, Karachi South, returned the said application to the Arbitrators with directions to file the same before the competent Court. He further contended that the Arbitrators filed the same application before the learned VII Senior Civil Judge, Karachi South, which was registered as civil Suit No,285 of 2007, but the learned trial Court rejected the plaint. The respondent No,1 preferred Civil Appeal No,150/2007 against the impugned order, which was allowed by the appellate Court and case was remanded for re-trial to the trial Court.
8. Learned counsel for the respondent No,1 further submitted that application under section 14 of the Arbitration Act, 1940, was filed by the Arbitrators. Therefore, there is no time limitation for the Arbitrators to file the award in Court as such the provisions of Article 178 of the Limitation Act would not apply. The revision application is based upon misrepresentation of the facts and misconstrued grounds, hence, liable to be dismissed.
9. Perusal of the record and consideration of the arguments advanced by the parties supported with case law, reflect that the applicant No,1, his wife late Mst. Niamat Bai, and the respondent No,1 entered into an agreement in respect of business transaction and such agreement contained arbitration clause for the settlement of the dispute between the parties. Thereafter, some disputes had arisen between the parties, and allegedly they referred their disputes to de Arbitrators, respondents Nos.2 to 4, for decision. The Arbitrators conducted essential arbitration proceedings and after consecutive hearings of the parties, they passed the award and announced it orally on 13-2-2000, but they neither gave mandatory notice in writing to the parties for making and signing the award nor supplied the copy of the award promptly.
10. Prior to the exploring the merits of the controversy, I would like to refer the relevant case law as follows:--
(i) In the case of O.P. Verma, v. Lala Gehrilal and another AIR 1962 Rajasthan 231 (V 49 C 53), it was held as follows:-- "We should also like to emphasize, even at the risk of some repetition, that we find it extremely difficult to hold in this connection that though it may be correct that an oral award may not be capable of enforcement having regard to the scheme of ' Arbitration Act, such an award is illegal and therefore, it cannot possibly serve as a good foundation for promissory-note or like instrument."
(ii) In case of Noor Nabuwwat v. Muhammad Noor All Khan, 1999 CLC 1685, it was observed that where arbitration agreement was void for ambiguity, award did not furnish reasons for the decision made therein, and interested person was not made party to the arbitration proceedings and the same was not registered under Registration Act, 1908, such, an award could not be made rule of the Court. It was further held that where terms of arbitration agreement were not certain, like all other agreements, such agreement would also be void under section 29 of Contract Act, 1872.
Arbitrator has to give reasons for award in sufficient details to enable the Court to consider any question of law arising out of such award.
(iii) In case of Messrs Shahnawaz Limited v. Govt. Of N. W.F.P. PLD 1991 Peshawar 136, it was held that no notice as required by law was served on petitioner for entering into arbitration. Petitioner was also never served as a party in arbitration proceedings, petitioner, thus, could not be deemed to be a party to a dispute referred to arbitration. Award given on such reference was not binding on petitioner and he was not liable to pay the amount in pursuance of such award.
(iv) In case of Messrs Dawood Builders v. Mrs. P. Hameedullah 1984 M LD 1175, it was observed as under:- "Arbitration proceedings being quasi-judicial involving the valuable rights of the parties, proper notice of hearing and full knowledge of adversary's claim is necessary. Parties to have full opportunity to present their case for appraisement. Basic requirements not having been fulfilled, order setting aside the award affirmed in revision."
(v) In case of Messrs Mechanised Contractors of Pakistan Limited v. Airport Development Authority, Karachi, 2000 CLC 1239, it was observed that Arbitrator filing award after delay of two and half months without any explanation for the delay, award, in the circumstances, would be treated to be void and could not to be made rule of the Court.
11. Adverting to the merits of the case, it is essential to mention that during the period of oral award dated 13-2-2000, and supply of its written copy vide letter dated 1-9-2001, one of the contesting party namely Mst. Niamat Bai died on 24-8-2000. Admittedly, the applicant No,1, Abdul Hussain Darugar and late Mst. Niamat Bai were co-sharers in the disputed properties, but there is no documentary proof that late Mst. Niamat Bai had ever appeared before the Arbitrators or signed any document pertaining to the arbitration proceedings till her death.
12. The Arbitrators have filed photocopies of letter dated 20-11-1999, sent by the respondent No,1 to Muhammad Munir Boriwala to act as his Arbitrator and reply dated 24-11-1999, sent by Muhammad Munir Boriwala to the respondent No,1, whereby he agreed to act as his Arbitrator, and letter dated 4-12-1999, addressed by the respondent No,1 to all the Arbitrators mentioning the list of points of dispute. However, the Arbitrators and respondent No,1, Gul Muhammad have failed to produce any written substance that the applicant No,1 and late Mst. Niamat Bai had appointed any of the Arbitrators to conduct the arbitration proceedings pertaining to the dispute arisen between the parties and acceptance by the Arbitrators to do so. Likewise, no letter was issued by the applicant No,1 or late Mst. Niamat Bai mentioning the details of the dispute to be decided by the Arbitrators.
13. It is also significant to mention that the Arbitrators have failed ' to maintain the diaries of proceedings or minutes of the meetings allegedly convened and convoked by them during the process of the arbitration nor any written material was produced showing the details of the dates that when and where such arbitration proceedings were conducted.
14. For the appropriate adjudication, the notice sent by the learned counsel for the respondent No,1 to the Arbitrators for issuance of copy of Award is reproduced as under:-- "Date:24-8-2001
1. Shaikh Yousuf Khan Sahib
2. Mr. Ashiq Hussain Mithaiwala
3. Mr. Muhammad Munir Booriwala ' Dear Sirs, ' Under instructions from our client Mr. Gul Muhammad s/o ' Abdullah r/o Karachi, we have to address you as follows:--
1. That our client and Abdul Hussain Darugar along with his wife Mst. Niamat Bai referred their dispute regarding the properties No 28, FT-2, Frere Town Quarters Karachi and Blessing Builders Plot No,97 CF-1-5 Clifton Quarters Karachi and investment/claims of money, to you for decision as the Arbitrators. Accordingly you conducted the Arbitration proceedings wherein our client and Abdul Hussain for self and also on behalf of his said wife participated and they produced accounts and documents before you.
2. That finally you called our client and Mr. Abdul Hussain at the office of the Co-Arbitrator Mr. Ashifq Hussain at Bath Island Hills Feroz Nana Road Karachi, on 13-2-2000 and orally announced the Award to them that Mst. Niamat Bai has been directed to transfer her recorded 10% share in Plot No,28, FT-2, Frere Town Quarters Karachi, and her 8.65% share in Blessing Builders Plot No,97, CF-1-5 Clifton Quarters Karachi, in favour of our client against amount of Rs,3,50,000 to be paid by our client to her in full and final settlement. But no details of the Award were given by you. However, you promised to supply the copy of the Award later on, which has not been delivered to our client so far in spite of his occasional request for the same nor legally required notice has been given to him.
' In view of these circumstances you are requested to file the Award in the competent Court of law with its copy to our client without further delay, failing which our client shall seek his legal remedy.
Yours Faithfully (K.B.Bhutto & Co.)
Advocate."
15. The Arbitrators replied to the above notice through a letter which is reproduced as under:-- "Karachi: Dated 29th August,2001 ' Messrs K.B. Bhutto & Co. (Advocates), ' 301, Lawyers Chamber, Opp. Light House Centre, M.A. Jinnah Road, Karachi.
' We received your letter dated 24th August, 2001, sent on behalf of your client Mr. Gul Muhammad son of Abdullah, resident of Karachi.
' We jointly announced the AWARD to both the parties Mr. Gul Muhammad and Mr. Abdul Hussain Darugar for himself and on behalf of his wife Mst. Niamat Bai orally. We wanted to give photocopies of the AWARD to them and for which we asked both the parties to come together afterward on the same day. But your client Mr. Gul Muhammad and the other party Mr. Abdul Hussain Darugar failed to come together. Therefore, photocopies of the AWARD could not be given to them. Photocopy of the AWARD for your client is sent herewith.
' We the arbitrators do not know the procedure of filing the AWARD in the Court or which Court. Now you have asked us the procedure for filing the AWARD in the Court. We, therefore, request you to please inform us as to which Court the AWARD is to be filed and any other legal procedure of it.
(1) Arbitrator Shaikh Yousuf Khan son of Muhammad All Messrs Al-Muhammad Shop No,92, Bohra Bazar, Saddar, Karachi.
(2) Arbitrator Ashiq Hussain Mithaiwala, Ground Floor, BC-14,Block-5, Kehkashan, Clifton, Karachi.
(3) Arbitrator Muhammad Munir Booriwala son of Muhammad Siddique R/o A202, Sand View Homes, F.T.3/9, Frere Town, Karachi."
16. Arbitrator namely Ashiq Hussain Mithaiwala also sent another letter to the counsel of the applicant No,1 which is reproduced as under:- "Karachi: Dated 1st September,2001 ' Mr. Abdul Hussain Darugar, son of late Hussain Ali Darugar, R/o 402-B, Mehran Heights, Main Clifton Road, Karachi.
' We have received notice dated 24th August 2001 from the advocate of Mr. Gul Muhammad son of Abdullah, for filing the Award in the Court which I along with other two co-arbitrators Messrs Shaikh Yousuf Khan Sahib and Muhammad Munir Booriwala had announced orally to you and Mr. Gul Muhammad on 13th February 2000, photocopy of the award have been sent to the advocate of Mr. Gul Muhammad and the other photocopy of the award is being forwarded to you herewith.
' As I along with two other co-arbitrators have been asked by Mr. Gul Muhammad through his advocate for filing the AWARD in the Court and we are going to do the same.
Arbitrator Ashiq Hussain Mithaiwala son of (Late) Abdul Rasool Ground Floor, BC-14, Block-5, Kehkashan, Clifton, Karachi."
17. It is also essential to mention that in arbitration proceedings, the issuance of the notice as required under section 14(1) of Arbitration Act, 1940, is mandatory in nature and its non-compliance by the Arbitrators is fatal to the making and signing the award, as the arbitration proceedings are quasi-judicial in nature 'and in absence of the service of notice the award would not be binding on the parties because the object of the section 14(1) of Arbitration Act, 1940, is to inform the parties of the making and completion of award by the Arbitrators or Umpires and to enable them to approach the Court instantly to proceed further for making the Rule of the Court, therefore, the award must be announced in presence of the contesting parties or their authorized agents. For convenience, section 14(1) of the Arbitration Act, 1940, is reproduced as follows:-- "14. Award to be signed and filed:---(1) When the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award."
18. Admittedly, in the case in hand, the Arbitrators had not issued mandatory notice in writing, when award was made and signed, to the parties of the making and signing thereof. Consequently, the Arbitrators had committed gross illegality and utter violation of the section 14(1) of the Arbitration Act, 1940, as its compliance is mandatory in its nature. Undeniably, the Arbitrators orally announced award on 13-2-2000, and they promised to supply the copy of the award to the parties later on but they failed to do so. Therefore, the learned counsel for the respondent No,1 addressed a letter dated 24-8-2001, to the Arbitrators by denoting that oral award was announced on 13-2-2000, but details of the award were not given, and the Arbitrators promised to supply the copy later on, but they had not supplied despite the repeated requests. However, the Arbitrators sent copies of the award to the respondent No,1 on 29-8-2001 and to the applicant No,1 on 1-9-2001 respectively through the registered post, with the delay of 18 months and after the death of one of the contesting party namely Mst. Niamat Bai, as such the authenticity of the award has become highly doubtful, therefore, the subject award was not passed under the scheme and wisdom of the mandatory provisions of the Arbitration Act, 1940.
19. Considering the facts and circumstances referred supra, it has established that certain essential requirements were not fulfilled when arbitration proceedings were commenced. There is nothing on record to establish that the applicant No,1 and Mst. Niamat Bai had appointed the Arbitrators and conferred upon them the authority to conduct the arbitration proceedings to resolve their dispute with the respondent No,1 nor they referred and assigned any particular and specific issue to the Arbitrators for decision. The Arbitrators had not given the mandatory notice to the parties as required under section 14(1) of Arbitration Act, 1940. Even there was no production of any written evidence to show that the applicant No,1 and Mst. Niamat Bai had ever appeared before the Arbitrators during the arbitration proceedings. It is well settled law that the arbitration proceedings are quasi-judicial proceedings under the statutory law, hence, the oral announcement of the award without giving the required notice and non-issuance of the copies of award by the Arbitrators to the parties, particularly when one of the contesting party namely Mst.
Niamat Bai had already expired on 24-8-2000, would not G constitute a valid and legal award.
Perusal of the record also reflects that Mr. K.B. Bhutto, the counsel for the respondent No, 1, for the first time after 18 months, approached the Arbitrators vide his notice dated 24-8-2001, avowing therein that award was announced orally on 13-2-2000, but no details of the award were given by the Arbitrators despite their promise to supply the copy of the award later on, but the same was not delivered to the respondent No,1, in spite of the requests nor legally required notice was given to him. Consequently, the award passed under the Arbitration Act 1940 become void and it could not be made the Rule of the Court, because the factum of delay in issuance of the copy of the award is without any plausible explanation.
20. Law does not recognize an award which is oral. Oral award is not capable of enforcement as it lacks reasons which need to be furnished by the Arbitrators while making award in order to avoid ambiguity. Such Courts to consider any question of law arising out of such award. Oral reasons not only need to be in sufficient details but they also enable award can also not be registered under the Registration Act, 1908. Resultantly, I have no hesitation to conclude that the oral award dated 13-2-2000, was null, void and ultra wires and it cannot be made Rule of the Court.
21. As the sequel of the discussion of the above facts and circumstances, I am of the considered view that the learned appellate Court while passing the impugned judgment has failed to consider the relevant facts and circumstances of the case referred supra. Consequently, the impugned judgment dated 26-10-2009, passed by the Court of learned VII Additional District Judge, Karachi South, is set aside. Resultantly, instant revision application stands allowed.