MUHANIMAD HALEEM, J.--This letters patent appeal is directed against the judgment of a learned Single June dated 6th September 1963, by which he passed the final decree in terms of the award with costs.
2. Deceased Haji Muhammad Sharif and the appellants, Khwaja Gulzar Ahmad and Khwaja Mukhtar Ahmad, instituted a suit in the year 1952 for dissolution of partnership and accounts. In that suit Haji Ata Muhammad, Dost Muhammad, Haji Amir Muhammad, Muhammad Farooq and Elahi Bux were the defendants. During the pendency of the suit Haji Muhammad Sharif died on 24th June 1957, whereupon his father, Haji Muhammad Saeed, was brought on record as his legal heir.
He died on 19th December 1957, upon which Kh. Haji Muhammad Siddiq, Kh. Abdul Rashid and Saleh Bibi were brought on record as his heirs. Haji Muhammad. Siddiq also died and his heirs, namely Saleh Begum, his widow, Muhammad Yaqub, Muhammad Nasir, Muhammad Jawed, Shahid Siddiq, and Shoib Siddiq, his sons, and Suraiya Jabin and Sitara Jabin, his daughters, were brought on record. During the pendency of the suit an application under section 21 of the Arbitration Act was filed by the parties to the suit except the appellants in this appeal and respondents 6, 10 and 11 for referring the dispute to arbitration which was rejected on 2nd February 1959. It may, however, be mentioned that the appellants did not contest the suit and were ex parte throughout and so were respondents 6, 10 and 11. By consent of the parties contesting the suit, a preliminary decree was passed on 28th September 1961 in terms of the application dated 30th May 1961, which directed the accounts to be taken from the date of the partnership. The Official Assignee was appointed as Commissioner to take all the accounts and submit his report by the end of November 1961. Vide a joint application dated 30th March 1962, the parties contesting the suit, except the appellants and respondents 6, 10 and 11, applied to the Court under section 21 of the Arbitration Act to refer the dispute set out in para. 2 of the application to the sole arbitration of Mian S. M. Abdullah. Para. 2 of the application reads :- "2. That the parties have now agreed to refer Ell the matters, accounts and differences, remaining as yet to be decided in the suit to the sole arbitration of Mian S. M. Abdullah of Messrs M. Abdullah Maula Bux, South Napier Road, Karachi."
This application was granted by a learned Single Judge of this Court on 31st March 1962, by which the proceedings before the Official Assignee were stayed and a reference was made to the sole arbitration of the designated arbitrator and he was further directed to make the award within 3 months from the date of receipt of the order of reference. The arbitrator did not inform the appellants and respondents 6, 10 and 11 of the proceedings before him and it is an admitted position that they did not take part in it. The award was made in their absence and filed in Court, upon which notice was ordered to issue to all the parties on 13th February 1963. Even then the appellants and respondents 6, 10 and 11 were not served with the notice to enable them to file objections to the award. However, objections were filed on behalf of the contesting plaintiffs in the suit to challenge the award upon the ground that the reference to arbitration was invalid and that the arbitrator had misconducted himself. The objections were rejected and the final decree was passed in terms of the award vide the impugned order dated 6th September 1963. It is against this order. that the letters patent appeal has been filed.
3. The learned Single Judge while dealing with the objection with regard to the invalidity of the reference in terms of section 21 of the Act that all the parties to the suit had not joined in the application for referring the dispute to the arbitration, held that this objection was neither bona fide nor had any substance in it as "they were not parties interested within the meaning of section 21 of the Arbitration Act for the purposes of the reference and in any case the plaintiffs are not competent to raise this objection on their behalf".
4. In reaching the above conclusion though the learned Single Judge observed that merely because a party has remained absent in the proceedings in Court he does not necessarily cease to be an interested party within the meaning of section 21 of the Arbitration Act, yet further observed :- "but from this it does not follow that every reference in which each and every party to the proceedings has not joined is bad regardless of the fact whether the said party was or was not interested in the dispute which was referred to arbitration. Whether a party is or is not so interested is a question of fact and must be decided upon the facts of each case and it is upon such a decision that the question must be considered whether the non-joinder in the reference does or does not vitiate the arbitration proceedings or the award which may be eventually made."
In the context of these observations the learned Single Judge held that Gulzar Ahmad and Mukhtar Ahmad acted throughout on the side of the plaintiffs and that the suit of Haji Muhammad Sharif, whose heirs are the present appellants and respondents 6, 10 and 11, was effectively represented by these plaintiffs as far as the suit and the arbitration proceedings were concerned. It was further expressed that appellants and respondents 6, 10 and 11 had nothing to do with the partnership business or accounts and they took no interest in the proceedings in Court and at any rate they "would have got an infinitesimal share". The above reasons upon which the contention was repelled have been challenged before us.
5. Before we deal with the respective contentions of the learned counsel for the parties, it would be necessary to refer to section 21 of the Arbitration Act and clauses (2) and (5) of para. 23 of the plaint relating to the relief in the suit :- "21. Where in any suit all the parties interested agree that any matter in difference between them in the suit shall be referred to arbitration, they may at any time before judgment Is pronounced apply in writing to the Court for an order of reference.
(2)--That a preliminary decree be passed that the accounts of the partnership commencing from 10th July 1948 till such time that this Honourable Court holds that the partnership was dissolved be taken and accounts settled.
(5)--Final decree may be passed for such amount as may be found due to the plaintiffs against the defendants 1 to 5."
In pursuance of the award, the share of the plaintiffs comes to Rs, 2,29,000 which is lying in Court plus a sum of Rs, 25,000 if and when recovered from Muhammad Ishaq, a debtor. The total amount thus due to the plaintiffs is Rs, 2,54,003, out of which the share of Haji Muhammad Sharif, the original plaintiff is Rs, 1,27,000. On his death 1/6th share, amounting to Rs, 21,C00 was due to his father, Haji Muhammad Saeed, and from whom after his death the three appellants are entitled to the share of Rs, 1050, 1130 and Rs, 567 and respondents 6, 10 and 11 are entitled to Rs, 1130 and Rs, 567 each respectively. In the context of the two clauses of the relief in the suit, the appellants' counsel vehemently urged that they were "parties interested" within the meaning of section 2 t of the Arbitration Act and as such they should have also joined in the application before the dispute could be referred to arbitration. The learned counsel emphasised the word 'all' prefixed before the words "the parties interested" and contended that the consent of the appellants was imperative before any reference could be made. In support of his contention he relied on the following cases :- (1)Chhabba La! v. Kallu Lal and others AIR 1946 P C 72.
(2)Ram Harakh Singh v. S. Mumtaz Husain and another A 1 R 1949 All. 679.
(3)Jhinno Singh and others v. Brah;ndat Singh and another AIR 1935 All. 34; and (4)Atta Muhammad Qureshi v. The Settlement Commissioner, Lahore PLD 1971 SC 61.
6. In the first case, the suit was for division of the pro-perty of a Hindu family governed by Mithakshara. Sohanlal, a defendant in the suit was appointed guardian ad 'item of the minor defendants, who were the sons of the adult defendant Kallu Lal and in that capacity had adopted the written statement of the adult defendants. Defendants Kallu Lal and Sewak Lal and the plaintiff applied to the Court stating that they had appointed a referee and that a reference be made to him accordingly, whereafter the dispute was referred to him for decision. The precise objection after the filing of the award was that the guardian of the minors did not purport to act as a guardian entering into the agreement for reference and that as no previous sanction of the Court had been obtained the agreement was not binding on the minors, The subordinate Judge rejected the objection and passed a decree in terms of the award. The High Court reversed the decree and remanded it for decision in accordance with law. Against this judgment an appeal was preferred to the Privy Council. Their Lordships while dismissing the appeal observed at page 75 of the report :-- "In their opinion all the powers conferred upon the Court in relation to an award on a reference made in a suit presuppose a valid reference on which an award has been made which may be open to question. If there is no valid reference, the purported award is a nullity, and can be "challenged in any appropriate proceeding."
The invalidity of the reference was upheld upon the language of Order XXXII, rule 7, C. P. C. which was not duly complied with inasmuch as there was no formal application by the guardian ad litem for the leave of the Court to his entering into the agreement for reference to arbitration, nor was any such leave formally given or expressly recorded in the proceedings. The weighty observations of their Lordships support the contention raised by the learned counsel for the appellant.
7. In the second case, proceedings were instituted for redemption of the mortgaged property under section 12 of the U. P. Agriculturists Relief Act. One of the heirs of the mortgagor who had died did not take part in the proceedings. The other heir of the mortgagor, who had also died and the mortgagee applied to refer the case to the decision of an Advocate as an arbitrator and the Court accordingly appointed him as an arbitrator. After the award was made the mortgagee objected to the award. Thereafter the heir of the mortgagor, who had not taken part in the proceedings, subsequently appeared and stated in Court that he had no objection either to the appointment of the arbitrator or to the award made by him. The objection was accordingly dismissed and a decree was passed in terms of the award. On appeal to the Civil Judge the decree was set aside and the case remanded for retrial from the stage at which the reference was made. In revision before the High Court the objection taken was that though the proceedings were ex parte against the heir of the mortgagor and he had not joined in the reference, yet his subsequent conduct cured the defect which could be fatal to the reference. It was held that where all the parties interested have not joined in the reference, any award that may be given is invalid even though the proceedings against the party, who had not joined in the reference was ex parte. Even the subsequent ratification would not validate the reference which was void at its inception since foundation of the Court's jurisdiction is the consent of all the parties.
8. In the third case, some of the judgment-debtor, who were jointly and severally liable for the sum due to the decree-holder, joined with him in the application for reference of the question as to the amount for which they were liable to arbitration. It was held that the remaining judgment-debtors were also interested in the suit to the same extent as the other judgment-debtors and that in their absence the reference was illegal.
9. In the last case, the controversy was around the question whether in terms of sub-clause (5) of section 20 of the Displaced Persons (Compensation and Rehabilitation) Act, 1958. an adverse order could be passed against a person without giving him opportunity to show cause against it. Sajjad Ahmad, J., who spoke for the Court, observed at page 71 of the report :- "If such an order is made without fulfilment of this prerequisite, it would certainly lack jurisdiction.
The argument that the appellant had an opportunity of being heard by the Settlement Commissioner, which is a sufficient redress for his grievance, may be well-founded when the grievance is made to rest on the principle of natural justice, viz. audi alteram partem (nobody is to be condemned unheard) but when as already stated above the absolute requirement of the statute has been defined, the order passed is nullity. It was held by "this Court in the case of Yousaf All v. Muhammad Aslam Zia PLD 1958 SC (Pak.) 104 as follows :-- If on the basis of void order, subsequent orders have been passed either by the same authority or by other authorities the whole series of such orders, together with superstructure of rights and liabilities built upon them, must, unless some statute or principle of law, recognising as legal the changed position of the parties, is in operation, fall to the ground, as such orders have as little legal foundation as the void order on which they are founded."
In the context of these weighty observations of their Lordships of the Supreme Court it was emphasised that the] requirement of section 21 could not be ignored upon the considerations relied on by the learned Single Judge to be away with the mandatory requirement. The first two cases were decided upon the principle of lack of jurisdiction and the third upon the language of section 21 of the Arbitration Act and the cases in support of that view. Mr. Khalid Ishaq, the learned counsel or respondents 1, 3 and 4, was unable to distinguish these decisions in their application to the instant case. We are accordingly in respectful agreement with the view expressed in them. The learned counsel for the appellant invited our attention to clauses (2) and (5) of para. 23 of the plaint and argued that having regard to the relief claimed in the suit they were the heirs of Haji Muhammad Sharif, the original plaintiff and had the same rights and liabilities to an extent as the deceased plaintiff himself and entitled to specific sums of money. Accordingly the learned Single Judge could not ignore their interest in the suit upon the basis that they had only "an infinitesmal share". This even, according to the learned counsel, would make them interested in the suit, Mr. Khalid Ishaq, the learned counsel for respondents 1, 3 and 4, was not able to dispute the figures given by Mr. Lari and in this context since the word 'interest' is not qualified, the argument of Mr. Lari has substance. Even if the objections were not filed by the appellants for setting aside the award yet the non-filing of the objections will not make the reference valid as was held by the learned Judge, as the jurisdiction to refer the dispute in terms of section 21 of the Arbitration Act can only be exercised if all the persons interested in the suit join in the application. The lack of jurisdiction cannot thus be cured upon this reasoning of the learned Single Judge. It is well-settled that unless conditions necessary for the exercise of jurisdiction are fulfilled it cannot be exercised in the absence of those conditions. It will also be convenient to dispose of one other ground upon which the interest of the appellants was held to be represented in the suit. Gulzar Ahmad and had no power of attorney from the appellants and accordingly they could not in law represent them. Even otherwise they may have joined along with Haji Muhammad Sharif in the suit as plaintiffs yet each of them was in terms of the relief in the suit entitled to account.At best, his interests could be said to be identical, still the other two plaintiffs did not represent him and merely because these two defendants were contesting the suit as plaintiffs they cannot be deemed to be representing his interest and that of his heirs within the meaning of the words "all the parties interested" in the suit.
10.The learned counsel for respondents 1, 3 and 4 referred us to a judgment in the case of Sugnomal Vasandmal v. Perumal and others and urged that the word "interested" in section 21 of the Arbitration Act has two connotations, viz., to the course of litigation and substantial interest in the subject-matter and according to him they should co-exist in this case, the main point was whether the reference was invalid since all the parties to the suit had not joined in the reference.
Here the suit was originally filed against three defendants and subsequently defendants 4 to 11 were added at the suggestion of these defendants. A question arose whether defendants 4, 5 and 11 were interested in the suit having regard to the allegations set out in para. 7-A of the amended plaint. The learned Judges who decided the case, observed that in coming to the conclusion whether these defendants were interested in the suit, the circumstances as a whole should be taken into consideration including their conduct up to the end of the proceedings. Upon the ground that the objection to set aside the award was not filed by defendants 4, 5 and 11, the learned Judges reached the conclusion that they were not interested in the subject-matter of the dispute, and decided the case solely from this angle though defendants 4 and 5 had in their written statements claimed interest as mortgagees of house owned by defendant No,
1. In the concluding part of the Judgment, the learned Judges also took notice of the fact that the learned Subordinate Judge had held that these defendants were merely formal defendants in the suit and accordingly they did not think it necessary that they should disagree with that question of fact even if defendants 4 and 5 had put in their written statements. We fail to see how conduct can be a guiding factor in determining the interest of a party in the subject-matter E of the suit if it cannot be spelt out from the language of section 21 of the Arbitration Act. The learned Single Judge had also taken exception to the fact that the objections to the award were not filed by the appellants but by the plaintiffs who had agreed to refer the dispute to arbitration and had taken support from this view which we consider to be untenable.
11.Mr. Khalid Ishaq next relied on the case reported as Madan Lal v. Nabi Bakhsh . In this case, it was held that where a person chooses to remain ex parte his conduct will not be decisive. This view does not support the earlier view taken in the Sind case. A perusal of the judgment clearly shows that the person, who had not joined in the reference, had virtually dropped out of the controversy and accordingly he was not held to be an interested person. Accordingly this case is of no help to his contention.
12.The third case upon which reliance is placed is Mahadev Narayan Nerkar v. Narayan Dattatrays Samant and others , wherein the question was whether a defendant who does not put in an appearance and does not contest the plaintiff's suit is a person interested within the meaning1 2 3 of the words "all the parties interested" in sub-para. (1), para. 1, Schedule II of the Code. The suit was for partnership accounts and one of the defendants had retired. He had not joined in the reference to arbitration. Upon a review of authorities Fawcett, J. observed at page 249 of the report:- "I do not think that any general rule can be laid down whether a defendant, who does not contest the suit, is or is not a party interested within the meaning of this paragraph; and each case must, I think, be decided upon its own `particular facts'."
On facts it was held that this defendant had retired and defendant No, 2 had notpressed his contention about this defendant's liability. Accordingly it was held that he was not a person interested in the subject-matter of the suit. This case is also distinguishable on facts and even though the question whether a party has an interest in the subject-matter of a suit is one of fact yet we do not find any principle in this authority by which conduct can be regarded as a determinative factor in coming to that conclusion.
13.Lastly Mr. Khalid Ishaq relied on the case reported as Achiran Bibi v. Babur Ali Sapuri but we have found nothing in it to support his contention. None of the autho-rities relied on by Mr. Khalid Ishaq lays down any principle upon which his contention can be supported. Accordingly the reasons upon which the objections were rejected by the learned Single Judge cannot the upheld on the view taken by him. The question was one of lack of jurisdiction and the conduct of the appellants in not participating in the proceedings could not have cured the defect.
14.Mr. Khalid Ishaq next urged that the objection with regard to the invalidity of the reference should have been raised by the appellants at the stage when the award was filed within the prescribed period and not in appeal, accordingly this objection was taken now to avoid the bar of limitation. He did not cite any law upon which this contention was based. Since the award has merged in the decree it is the validity of the decree that is challenged in appeal and no bar of limitation can apply. I Moreover, the appellants who were not parties to the reference were not bound by the award and were not even served with the notice of the filing of the award and accordingly they could not be expected to file their objections within 30 days under' Article 158 of the Limitation Act. On this view of the matter, it cannot be said that the bar of limitation would apply. This contention has also no substance. Mr. Wajeehuddin, the learned counsel for respondents 14, 15 and 16 adopted the contentions of the learned counsel for the appellants and also took stand that the reference was invalid.
15. In conclusion we are of the view that the appellants have succeeded in establishing that reference was invalid and accordingly all proceedings taken thereafter a nullity. We would set aside the Judgment dated 6th September 1963, by which the final decree was passed in terms of the award and remand the case to the learned Single Judge for proceeding from the stage at which the reference was made. Respondents 1, 3 and 4 to bear the costs of the appellants and respondents 14, 15 and 16 in this appeal. The other respondents have not contested the proceedings and are not entitled to costs. AIR 1930 Sind 256 AIR 1947 Lah. 177 AIR 1928 Bom. 248 AIR 1945 Cal. 156 revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.