This F. A. O. Has been directed against the judgment dated 17-11-1979 of the learned Civil Judge, 1st Class, Rawalpindi, whereby he set aside the award dated 24-9-1977 given by the Arbitrator, Col. Malik Muhammad Aslam.
2. Briefly, the facts giving rise to the present litigation are that the appellant is a limited company dealing in construction work. In 1968, the appellant entered into a contract with the M. E. S. For the construction of residential and miscellaneous building at Gujranwala, Grade-2, vide a con--tract agreement No. C.E. A.-27 of 1969 executed between the appellant and the Director of Works and the Chief Engineer, M. E. S., Rawalpindi. Subsequently, a dispute arose between the parties and respondent No. 2 was appointed as an Arbitrator who gave his award on 24-9-1977 according to which the appellant was awarded an amount of Rs. 1,04,985 in full and final settlement of the dispute vide para. 3 of the award. Vide clause (5) of the award, it was further directed the final bill relating to the contract agreement is payable in addition to the award. Thereafter, the appellant moved an application on 8-7-1978 under sections 16 and 17 of the Arbitration Act, 1940 for pronouncing the judgment on the award and for making it rule of the Court in the Court of Administrative/Senior Civil Judge, Rawalpindi. The award was, however, )remitted to the Arbitrator by the learned Civil Judge by his order dated 7-2-1!978 for determination of the amount payable to the appellant under clause (5) of the aforesaid award, inasmuch as, no determina--tion was made of final bill relating to the contract of agreement. The learned Civil Judge also directed the Arbitrator to file an amended award. Later, another application was filed by the appellant for a direction to the Arbitrator to file the amended award in pursuance of the aforesaid order of the Civil Court. Respondent No. 1 put in appearance and filed objections to the award to the effect that the Arbitrator had misconducted himself as well as the proceedings while giving the amended award and accordingly prayed for setting aside the award. From the pleadings of the parties, the following issues were framed :-
(1) Whether the award is liable to be set aside ?
(2) Whether the award is time barred ?
(3) Whether the objector is estopped by his conduct to file this objection petition ?
(4) Relief ?
3. The learned Civil Judge vide his order dated 17-11-1979 found issue No. 1 in favour of the objector- respondent and Issue No. 2 against the objector. Issue No. 3 was found against the appellant and in consequence of his findings on the aforesaid issues; the objection petition was accepted and the award was, accordingly, set aside.
4. The learned counsel for the appellant made three-fold submissions Firstly ; that in terms of section 3 of the Arbitration (Amendment) Ordinance, 1981, the award is liable. To be remitted to the Arbitrator, inasmuch as, the award does not give reasons whatsoever in its support. Secondly, that there was neither any, legal misconduct nor misconduct of proceedings and, therefore, the award could not have been set aside in law. Thirdly, that the finding of the learned Civil Judge on Issue No. 3 was erroneous, inasmuch as, the objector had himself made an application under section 14 of the Act before the Civil Judge at Gujranwala praying therein that the award be made rule of the Court and, therefore, the objector was estopped by his conduct to raise objections against the award on any ground whatsoever.
5. Be that as it may, the learned counsel for the parties have merely confined their submissions on contention No. 1 for the time being. This being so, this order shall therefore, dispose of the aforesaid contention alone.
6. Section 3 of the Arbitration (Amendment) Ordinance, 1981 (herein--after called the Ordinance) deals with the Courts' power to remit cases pending at the commencement of the Ordinance, that is to say, the 11th of May, 1981. The provisions of section 3 of the Ordinance are, therefore, admittedly, applicable to the present appeal, in which proceedings in relation to an award which had been filed in the trial Court, are now pending in this Court and were pending immediately before the commencement of the Ordinance. The power of the Court under section 3(I) of the Ordinance has been restricted where the Court finds that the award does not state reasons or does not also in sufficient detail, state the reasons for the award, the Court may remit the award to the arbitrators or umpire, as the case may be, with a direction to state the reasons for the award in sufficient detail. In the instant case, not to talk of sufficient detail, no reason whatsoever has been stated for the award and, therefore, it is a fit case for remitting the award to the arbitrator to state the reasons for the award in sufficient detail. The learned counsel for the respondent argued that the power vesting in the Court under section 3 of the Ordinance are not mandatory but director and that having regard to the circumstances of this case, this Court, in exer--cise of its discretion, may refuse to remit the award as it has already bee set aside by the learned trial Court and the omission to state reasons ha not resulted in failure of justice. The learned counsel for the respondent further submitted that the power vesting in the Court under section 3 of the Ordinance should be sparingly exercised. I do not agree with the submissions of the learned counsel for the respondent that merely because the award was set aside, the award could not be remitted under section 3 of the Ordinance. The powers of the Court are not circumscribed by any such condition. In any case, I find that a prejudice has been caused to the appellant on account of failure to give reasons for the award and if the award is remitted to the arbitrator, it will not result in failure of justice to either parties but would enable the Court to consider any question of law arising out of the award.
7. The rationale behind the Ordinance is that the Arbitrator should give a reasoned award so that it could be properly scrutinised by the Court and justice is done to the parties. It may be pointed out that an arbitrator under the Arbitration Act No. X of 1940 was not required to give reasons for the award and there were decisions of the superior Courts in which it was held that notwithstanding the fact that no reasons were stated for the award, it was not to be set aside as the law did not make it incumbent on the Arbitrator that his award should be a reasoned document. This gave rise to many irregularities with the result that the arbitration clause was done away with in a large number of contracts. Reference may be made to Capital Development Authority (Amendment of Arbitration Proceedings) Act (XXVII of 1975). The Legislature realised that arbitration was a modern way of deciding issues but they did not want the arbitrators to give arbitrary and capricious decisions. The intention behind the Ordinance was that the arbitrator should state reasons in sufficient details for his award. This inten--tion is manifest from the bare perusal of section 26-A of the newly amended section of Arbitration Act No. X of 1940 and section 3 of the Ordinance.
8. In view of the above, the award is remitted under section 3(1) of the Ordinance with a direction to respondent No. 2 (the arbitrator) to state the reasons for the award in sufficient details within four months from the announcement of this order. The reasoned award be submitted to the Court within the aforesaid period. Copy of this order be forwarded to respondent No. 2 for compliance.