JAWAD HASSAN, J.
"Arbitration is commonly chosen as a method of dispute resolution over traditional court proceedings because of the possibility of achieving a relatively economical final solution by specialist arbitrators through a quick and often less formal procedure."
To Sir LJ Earl Warren it is the spirit and not the form of law that keeps the justice alive. Generally in Pakistan, it is an evident fact that people think that going to Court should be a last resort, whether you are suing or are being sued because commercial, or for that matter , any litigation can be very expensive, stressful and time-consuming.
However , the most common and traditional form of judicial dispute resolution is arbitration. This judgment decides a contentious issue that whether there can be an oral agreement for referring matter to arbitration and whether , award passed in this regard can be made rule of Court?
2. This civil revision filed under 115 Civil Procedure Code, 1908 (the "CPC" ) involves a controversy regarding a focal point of dispute, firstly arose 35 years ago, between the parties which witnessed rounds of litigation in the Courts, passed from one generation of judicial officers to the other and survived decades only to remain unresolved till to-date on the issue whether there can be any oral arbitration agreement, for the appointment of an arbitrator between parties; if so, whether it could have been made the rule of the Court by the Civil Court under the Arbitration Act, 1940. This Court is now going to decide this civil revision, which remained pending from the last nine (9) years to meet this day. The Petitioners through this civil revision have assailed the order dated 15.12.1985 passed by the learned Civil Judge 1st Class, Haroonabad and judgment & decree dated 29.11.2012, passed by the learned Additional District Judge, Bahawalnagar , respectively .
I. BRIEF F ACTS1 2
3. Brief facts for the disposal of this revision petition are that the Petitioners filed an application on 28.09.1985, before the learned Civil Judge, Haroonabad to make the award of the Arbitrator dated 08.09.1985, regarding land measuring 200 kanal, bearing Khata No.45/43, Khatooni No.167 to 169, situated in Chak No.26/3R, Tehsil Haroonabad, District Bahawalnagar as "Rule of Court" under Section 14 of the Arbitration Act, 1940 (the "Act" ).
Subsequently on 29.09.1985, the vendor Muhammd Yousaf got recorded his statement to the effect that he had received Rs.6,00,000/- and has no objection for the acceptance of aforesaid Application. The learned trial Court, after hearing the arguments, dismissed the Application vide order dated 15.12.198 5, against which an appeal was filed. On 30.10.1986, learned counsel for the Parties got recorded their statements that they had got no objection if the appeal is accepted. Subsequently the appeal was accepted vide judgment dated 08.11.1986 whereby the order dated 15.12.1985 was set aside and the award dated 08.09.1985 was made as Rule of Court. On 04.01.2005, the Respondent No.12/Muhammad Shafi filed an Application under Section 12(2) CPC for setting aside the judgment and decree dated 08.11.1986 on the ground that the same was obtained through fraud and mis-representation, which was resisted and consequently after framing of issues and recording evidence of both the parties, the same was accepted by the learned Additional District Judge, Bahawalnagar vide order dated 04.12.2010 and the judgment and decree dated 08.11.1986 was set aside and appeal was restored with the direction to file amended memo of appeal by impleading Muha mmad Shafi and the legal heirs of deceased Muhammad Yousaf.
Consequently , the learned Appellate Court dismissed the appeal vide impugned judgment dated 29.11.2012.
Feeling aggrieved thereof, the Petitioners filed this civil revision.
II. MOOT POINTS
4. Keeping in view the facts of the case, following moot point was framed by this Court on 02.02.2021: Whether there can be an oral agreement for arbitration? If so, whether award made by such an Arbitrator can be made rule of court?
III. PETITIONERS' SUBMISSIONS
4. Raja Muhammad Sohail Iftikhar ASC submits, that vide the impugned judgment dated 29.11.2012, the learned Appellate Court has not properly conside red the earlier judgment dated 08.11.198 6. He adds that the Respondent No.12 has got the judgment and decree on the basis of a bogus agreement to sell to the extent of 50 Kanals; that the impugned judgment is result of mis-reading and non-reading of evidence. He further submits, that the judgment and decree dated 08.11.1986 has attained finality and still holds field. He further averred that in the light of the said judgment, the Petitioners being owners are cultivating the land in question. Hence, the Respondents have no concern whatsoever with the land in question and the impugned judgment and decree is liable to be set aside.
IV. RESPONDENTS' SUBMISSIONS
5. Mr. A. R. Aurangzeb, ASC submits that there is no oral agreement placed for enforcement of the alleged sale by the vendor for making the award Rule of Court. He adds that Muhammad Yousaf without issuance of any process of summons appeared in the Court and recorded his statement regarding receipt of cheque of alleged remaining sale price. He further states that there is nothing on record regarding consent of arbitration agreement and the exact date, time, place and purpose of oral sale. He maintains that the written agreement is mandatory for making the award as Rule of Court. In order to strengthen abovestated arguments, he relied on the judgments cited as "Sh. Muhammad Saleem Vesus Saadat Enterprises" (2009 CLC 291) and "Rana Khadim Hussain Versus Shahnaz Banoo and another" ( PLD 2010 Lahore 437 ).
6. Arguments heard. Record perused.
V. DETERMINA TION BY THE COURT
7. The controversy between the parties revolves around the alleged oral arbitration agreement. Before proceeding further it is appropriate to know about the definition of Arbitration Agreement. Section 2 (a) of Act deals with the definition of Arbitration Agreement which is reproduced as under: "Arbitration agreement" means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not;"
From the bare reading of above said section, it is crystal clear that law Only recognizes the Arbitration Agreement which is in Written form and in the instant case admittedly there was Oral Arbitration Agreement. The counsel of the Petitioners neither filed any written arbitration agreement nor relied on any written document to show that the parties have mutually agreed in writing to appoint an Arbitrator . When the Petitioner filed application under Section 14 of the Act to make the award as Rule of Court, both Courts dismissed on this point that there was no written agreement.
Pakistani Jurisprudence: Oral Arbitration Agreement
8. The Honourable Chief Justice HAMOODUR RAHMAN candidly observed at page no.529 & 531 that: "if the parties intended Maulvi Akhtar Ali to act as an arbitrator then there should be a formal agreement in writing to refer the dispute to him......It will be sufficient to mention that had I come to the conclusion that Maulvi Akhtar Ali had acted as an arbitrator and made an award then I would have had no hesitation in agreeing with the learned counsel for the appellant that the award would have been invalid by reason of the provisions of the Arbitration Act of 1940. There was no written submission to arbitration ......."
[Emphasis supplied by me]
9. In order to enunciate the principles of law on the oral arbitration agreement, this Court will follow the solid principles already settled by the Honorab le Supreme Court. After having gone through the entire case-law from Pakistani jurisdiction laid down in the cases of "Karachi Dock Labour Board Versus Messers Quality Builders Ltd" (PLD 2016 SC 121), "Dar Okaz Printing And Publishing Limited Liability Company Versus Printing Corporation Of Pakistan Private Limited" (PLD 2003 SC 808), "Sheikh Azizullah Versus Haji Qisma t Khan and another" (PLD 1996 SC 831), "Ch. Muhammad Saleem Versus Muhammad Akram" (PLD 1971 SC 516), "Messrs Tribal Friends Co Versus Province of Balochistan" (2002 SCMR 1903 ), "Chief Engineer , Building Department Versus Messrs Pakistan National Construction" (1988 SCMR 723), "Mst. Shamim Akhtar Versus Najma Baqai" ( 1977 SCMR 409 ) and "Muhammad Yousaf V ersus The State" (2003 PCr .LJ 347).
The judicial consensus seems to be as follows:- i. The condition for a valid arbitration agreement is that it should be in writing and as it is a contract between the parties it is essential that it must qualify the test of a valid contract in terms of the law of contract. ii. An Arbitration Agreement should be in writing and need not to be signed by both the parties. If the intention to refer the dispute to the Arbitration is manifest from the documents it amounts to an Arbitration Agreement. iii. Arbitration agreement means a written agreement to submit present or future differences to arbitration, whether arbitrator is named therein or not. iv. The essential requirements for a valid arbitration agreement under section 2(A) of the Arbitration Act are that an arbitration agreement must be in writing.
10. It is also settled principle of interpreta tion that where the intention of the legislature is clear and the object for which law has been enacted, Courts are not allowed to interpret such a law in a manner which could impede or defeat the object for which such law has been enacted. The Hon'ble Supreme Court of Pakistan in Haris Steel Industries Case observed that "in view of the fact that no interpretation was permissible which could have effect of defeating the clear intention and object of legislature and finally in view of, the, fact that what could not be achieved directly could not be allowed to be accomplished indirectly ."
UK Jurisprudence: Oral Arbitration Agreement
11. Although in English Law the concept of oral agreement to arbitrate, sometimes known as a parol submission, was deemed as valid but since enactment of Arbitration Act, 1996 the law in UK requires and recognizes only those arbitration agreements which are made in writing. Section 5 of Arbitration Act, 1996 is reproduced herein below for ready reference:
5. Agreements to be in writing.
(1)The provisions of this Part apply only where the arbitration agreement is in writing , and any other agreement between the parties as to any matter is effective for the purposes of this Part only if in writing.
The expressions "agreement", "agree" and "agreed" shall be construed accordingly .
(2)There is an agreement in writing-- (a)if the agreement is made in writing (whether or not it is signed by the parties), (b)if the agreement is made by exchange of communications in writing, or3 4 5 6 7 8 (c)if the agreement is evidenced in writing.
(3)Where parties agree otherwise than in writing by reference to terms which are in writing, they make an agreement in writing.
(4)An agreement is evidenced in writing if an agreement made otherwise than in writing is recorded by one of the parties, or by a third party , with the authority of the parties to the agreement.
(5)An exchange of written submissions in arbitral or legal proceedings in which the existence of an agreement otherwise than in writing is alleged by one party against another party and not denied by the other party in his response constitutes as between those parties an agreement in writing to the effect alleged.
(6)References in this Part to anything being written or in writing include its being recored by any means.
This point has also been lucidly dilated upon in Russell on Arbitration in the following manner: "An oral agreement to arbitrate, sometime s known as a parol submission, is valid as a matter of English Law but is not subject to the provisions of Pt I of the Arbitration Act 1996 which apply only where the arbitration agreement is in writing. However s. 5 of the Arbitration Act 1996 contains a broad definition of writing and some agreements which would have been oral agreements under earlier legislation are now treated as "in writing" for the purposes of the Act. The statute also makes it difficult to participate in arbitration proceedings arising out of an arbitration agreement which is alleged to be oral without it being construed as an agreement in writing. An oral agreement to arbitrate is unusual in most modern commercial contexts, and where one is asserted, there must be proof of the terms on which the agreement is said to have been made. Where the whole of the contract is oral, including the agreement to arbitrate, the existence and validity of the entire contract may also be in doubt. Clearly therefore oral agreements to arbitrate should be avoide d by reducing them to writing so that they will fall within the terms of the 1996 Act".
12. It is thus evident that under UK Law, the requirement for an arbitration agreement to be in writing under the Arbitration Act, 1996 was a mandatory condition although the requirement of signatures of the parties thereon could have been taken as flexible because the existence of agreement can be gathered from exchange of written communication between the parties in any form, in which the factum of arbitration agreement was admitted between them. This principle has also been discussed in Russel on Arbitration as follows:- To constitute an arbitration agreement to which the Arbitration Act 1996 applies, the agreement must be in writing.
The same requirement applies to other agreements between the parties. Howev er, the agreement need not be signed by the parties and the agreement can be found in an exchange of communications, which need not be signed.
Indian Jurisprudence: Oral Arbitration Agreement
13. The Arbitration Act, 1940, which is still a law on the topic in Pakistan, was applicable in India till it was repealed and substituted with The Arbitration and Conciliation Act, 1996. Section 2 (a) of the Arbitration Act, 1940 defines that an 'arbitration agreement means a written agreement' whereas Section 7 sub-section (3) of the Arbitration and Conciliation Act, 1996 provides that 'an arbitration agreement shall be in writing'. It is thus unequivocally clear that an arbitration agreement must in all cases be in written form. This view was also expressed in the treatise Arbitration Step by Step in following manner:- An arbitration agreement is required to be in writing. It can be said to be in writing if it is signed by the parties; or if there exists a record of exchange of letters, telex, telegrams or other means of telecommunication; or, if parties exchange statements of claims and defen ce in which the existence of the agreement is alleged by one party and not denied by the other .
14. After having gone through the entire case-law from Indian jurisdiction it is abundantly clear that it is mandatory requirement for an arbitration agreement that it must be reduced into writing. The judicial consensus seems to be as follows:- i. An arbitration agreement has to be in writing even though it may not be signed. It may be in the form of an arbitration clause in a contract or in the form of a separate agreement. ii. A contract can be entered into even orally . A contract can be spelt out from correspondence or conduct. But an arbitration agreement is different from a contract. An arbitration agreement can come into existence only in the9 10 11 12 13 manner contemplated under Section 7. If Section 7 says that an arbitration agreement should be in writing, it will not be sufficient for the petitioner in an application under Section 11 to show that there existed an oral contract between the parties as proof of arbitration agreement. iii. A suit for enforcement of an arbitration award made on an oral reference was not maintainable. iv. The Section 2(a) of the Arbitration Act, 1940 defined an arbitration agreement to be one made in writing to submit present or future differences to arbitration and, therefore, it was held that after the coming into force of the Act an award passed on an oral submiss ion or reference can neither be filed and made a rule of Court under the Act nor enforced apart from the provisions of the Act. This decision which is based on the principle that the Arbitrator is a creature of the contract between the parties and a reference to the Arbitrator could be only by means of an agreement in writing only indicates that such infirmity goes to the root of the very jurisdiction of the Arbitrator to enter into the reference and decide by passing an award.
15. It is pertinent to mention here an important aspect of this case whether any written agreement of sale of property existed inter-se the parties i.e. vendor and vendee for which arbitrator was appointed. Three essential ingredients/conditions required to be fulfilled for attracting the provisions of the Act are (i) there should be an agreement of arbitration, (ii) there should be dispute between the parties of the arbitration agreement, concerning the agreement and (iii) the matter was referred to the arbitrator . If there is no reference the purported award would be nullity in the eye of law. In the case in hand, there is neither any written agreement nor there is any document/agreement for the appointment of arbitrator . Section 2 of the Act provides that arbitration agreement means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named there or not. It evinces from the record that there is nothing on record to show that any transaction was made between the parties on what date, month or year and who were the witnesses of the agreement. In order to enforce a bilateral contract, the contract must be mutual, i.e. at the date of contract it must be enforceable by either party against the other . It is based on the principle of equity that the law will not permit a party to enforce a contract which the other party could not have against him. Section 14 of the Act provides that when an application is made, it has to be seen whether the award was made by a competent person. If so what purport to be an award, made by a person who has no authority to make it, then it is not an award and no decree in terms of it can be passed. Clause 2 of Section 20 of the Act provides that the application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interest or claiming to be interested as plaintif f or plaintif fs and the remainder as defendant or defendants or if the application has been presented by all the parties, or, if otherwise, between the applicant as plaintif f and other parties as defendants. Further Section 23 of the Act suggests where the parties have their dispute settled through arbitration, it is incumbent on the Court to pass an order referred the matter to the arbitration this omission to pass an order of reference vitiates the whole arbitration proceedings and there can be no legal award without such an order . The award become effective only on the date on which the parties are made aware of it. In view of above it is very much clear that reference can be made only in accordance with the provisions of the Act and the procedure lay down thereunder and the same should be followed in view of Section 17 and 13(9) of the Act barring appeals from decrees on award can be invoked.
16. There is no cavil to the preposition that whenever a suit or application or an appeal, as the case may be, filed contrary to the law provided, the jurisdiction of the Court ceased to exist from giving any verdict except to close the matter which is expressly to be opened. Court' s jurisdiction is based on the relief claimed and the Courts have powers to pass such orders as may be required for the satisfaction of decree unless any such order by express or by necessary implication is prohibited. In addition to above, it is also observed that no date, time, place and even name of witnesses are mentioned in whose presence agreement was made which is mandatory in view of principles laid down by Apex court of Pakistan in series of judgments to prove the agreement.
17. In view of above, the findings of both the learned Courts below are based on cogent reasons and no illegality , irregularity , misreading or non-reading of evidence has been found, which the Petitioners were bound to establish for the relief they intended to sought in revisional jurisdiction, which is defined, limited and corrective in nature.
Moreover , it is established principle of law that in revisional jurisdiction concurrent findings of fact recorded by the two Courts below cannot be upset unless there was mis-reading and non-reading of evidence. Reliance is placed14 15 16 on "Haji Wajdad Versus Provincial Government through Secretary Board of Revenue Government of Balochistan, Quetta and others" (2020 SCMR 2046 ) wherein the Hon'ble Supreme Court of Pakistan held that "There is no cavil to the principle that the revisional court, while exercising its jurisdiction under section 115 of the Civil Procedure Code, 1908 ("C.P .C."), as a rule is not to upset the concurrent findings of fact recorded by the two courts below . This principle is essentially premised on the touchstone that the appellate court is the last court of deciding disputed questions of facts. However , the above principle is not absolute, and there may be circumstances warranting exception to the above rule, as provided under section 115, C.P.C.: gross misreading or non-reading of evidence on the record; or when the courts below had acted in exercise of its jurisdiction illegally or with material irregularity ." The Petitioners failed to point out any illegality or grey area within the remit of law in the concurrent judgments of both the courts below necessary for interference by this Court in its revisional jurisdiction. Resultantly , this civil revision is hereby dismissed with no order as to costs. Mr. Justice Umar Ata Bandial (Judge Supreme Court of Pakistan), Limitations on Arbitrability of International Commercial Disputes under Pakistani Law , YUMP (Aug. 17, 2020, https://www .yumpu.com/en/document/read/38685724/mr-justice-umar-ata-bandial-supreme-court-of-pakistan) Justice Jawad Hassan (Judge of Lahore High Court), Role of Judiciary and Jurisprudence in Domestic and International Arbitration, (2018 CLD Journal 17) Ch. Muhammad Saleem Vs. Muhammad Akram ( PLD 1971 SC 516 ) Karachi Dock Labour Board Vs. Messers Quality Builders Ltd ( PLD 2016 SC 121 ) Messrs T ribal Friends Co Vs. Province Of Balochistan ( 2002 SCMR 1903 ) Sheikh Azizullah Vs. Haji Qismat Khan and another (PLD 1996 SC 831) & Dar Okaz Printing And Publishing Limited Liability Company Vs. Printing Corporation Of Pakistan Private Limited (PLD 2003 SC 808) Chief Engineer , Building Department Vs. Messrs Pakistan National Construction ( 1988 SCMR 723 ) Bank Of Punjab And Another v . Haris Steel Industries (Pvt.) Ltd. and others ( PLD 2010 SC 1 109) Russell on Arbitration, Twenty-fourth Edition, Chapter II, Page 31-32 Russell on Arbitration, Twenty-fourth Edition, Chapter II, Page 47 Arbitration Step by Step, P C Markand, Edition: 2012; Page 22 Travancore Devaswom Board Vs. Panchamy Pack (P) Ltd. [(2004) 13 SCC 510] Scon Contracts Vs. Neena Dhingra [2008 (2) RAJ 318 (Del)] Indowind Energy Ltd. Vs. Wescare (I) Ltd. (AIR 2010 SC 1793) & Cheran Properties Limited Vs. Kasturi and Sons Limited [(2018)16SCC413] Fuerst Day Lawson Ltd. and Ors. Vs. Jindal Exports Ltd. AIR 201 1 SC 2649 Kamal Pushp Enterprises Vs. D.R. Construction Company (AIR 2000 SC 2676)