MUHAMMAD HALEEM, J.--This letters patent appeal is directed against the judgment dated 26th November 1964, of the learned Single Judge, by which he set aside the judgment of the Additional District Judge, Karachi, dated 10th May 1961, and made the award the rule of the Court with costs.
2. The relevant facts are these: Under an agreement dated 17th September 1958, the appellant agreed to purchase and accept 5000 maunds of cotton seeds at the rate of Rs, 19 per maund during the period, 1st October 195S to 31st October 1958. He took delivery of only 2000 maunds on 13th October 1958, after the promulgation of Martial Law on 8th October 1958. The respondent by notice dated 14th October 1958, called upon the appellant to take delivery of the balance of the quantity within 24 hours but the appellant did not do so and pleaded vide his reply dated 15th October 1958, that there was a deadlock in the market and no one was lifting the goods. The respondent on 20th October 1958 informed the appellant by telegram that he had sold the balance quantity of 3000 maunds at the rate of Rs, 13 per maund and demanded Rs, 18,000 as damages.
The contents of the telegram were also confirmed by letter dated 20th October 1958. The appellant did not admit its liability to pay the damages and indicated vide letter dated 20th October 1958, that it was an unjust and arbitrary action on the part of the respondent, vide notice dated 11th November 1958, the respondent informed the appellant that pursuant to the arbitration clause in the agreement it had appointed Ghulam Hussain Ismail Dossa as its arbitrator and called upon the appellant to appoint its arbitrator within 15 days, failing which the arbitrator so appointed will act as a sole arbitrator and that his decision will be binding on both the parties. The appellant vide its letter dated 24th November 1958, did not agree to the reference of the dispute to arbitration and thus failed to appoint its arbitrator. The respondent by letter dated 29th November 1958, intimated the appellant that in case it failed to appoint its arbitrator within 48 hours from the time of the receipt of this letter, its appointed arbitrator will proceed as sole arbitrator and decide the dispute.
The appellant again vide its letter dated 4th December 1958, disagreed with the reference of the dispute to arbitration and conveyed that the award will not be binding on it. Ultimately the respondent communicated to its arbitrator vide letter dated 8th December 1958, to act as a sole arbitrator and decide the dispute. Accordingly, the arbitrator sent a letter dated 11th December 1958, to the appellant intimating it to appear before him on 16th December 1958, at noon as he has been appointed sole arbitrator to decide the dispute. The appellant did not appear before him that day and on the 17th December 1958, the sole arbitrator gave his award in favour of the respondent for Rs, 18,012.53 with interest and costs which was filed in the Court of the District Judge on 16th January 1959, and upon the notice of the filing of award objections were filed by the appellant. The Additional District Judge vide judgment dated 10th May 1961, set aside the award on three grounds, namely :-
(1) Non-compliance of section 9 (b) of the Arbitration Act in appointing the sole arbitrator.
(ii)Damages calculated on a wrong principle of law, which amounted to legal misconduct, and (iii)the award was bad inasmuch as it was given by the sole arbitrator who is related to the respondent on the ground of bias.
3. On appeal this judgment was set aside by a learned Single Judge of this Court and the award was made a rule of the Court, hence this letters patent appeal.
4. Mrs. Rashida Patel, the learned counsel for the respondent took a preliminary objection on the maintainability of the letters patent appeal on the ground that in terms of section 39 (2) of the Arbitration Act no second appeal lies. The letters patent appeal, according to her, was in the nature of a second appeal. In support of the above contention she relied on the case of Indian jurisdiction reported as the Union of India v. The Mohindra Supply Company . In this case, the conflict of decisions of Indian Courts on the non-maintainability of the letters patent appeal was set at rest and it was held that no letters patent appeal lies on the language of section 39 (2) of the Arbitration Act as in the view of the Supreme Court the letters patent was by clause 37 subject to the legislative power of the Governor-General-in-Council and also of the Governor-in-Council under the Government of India Act, 1915 and liable to be amended or altered in exercise of legislative authority and accordingly subsection (2) of section 39 of the Arbitration Act, which is a Central Act, restricted the right of second appeal. Our own examination of clause 37 of the Letters Patent leads us to conclude that it could not be pressed into service to achieve the above result.
The letters patent constituting the High Court of Judicature at Lahore was enacted by the British Parliament, and the language of clause 37 shows that legislative power was delegated to the Governor-General in Legislative Council, Governor-General-in Council under section 71 of the Government of India Act, 1915 and Governor-General in cases of emergency under section 72 of the Act to amend or alter the provisions of the Letters Patent and not that its provisions could be subject to other enactments enacted by the Governor-General in the exercise of his legislative power. Moreover, a contrary view has been expressed in Division Bench judgment of the Lahore High Court and the then High Court of West Pakistan in cases reported as: (1)Syed Muzaffardin v. Mst. Allahwasai and others P L 1953 Lah. 284.
(2)Shaikh Mahboob Alam v. Shaikh Mumtaz Ahmed PLD 1960 Lah. 601.
(3)Mrs. Keays Byrne v. M. Obaidullah PLD 1961 Lah. 256.
In each of these cases the same objection was taken on the non-maintainability of the letters patent appeal in the light of the bar under section 39 (2) of the Arbitration Act. The consistent view taken is that a letters patent appeal is not really an appeal in the strict sense but an internal arrangement of the Court of reviewing its decision given in the first instance by one member of the1 Court and accordingly the first as well as view second decision remains a decision of the Court.
Since section 39 (2) of the Arbitration Act speaks of second appeal, it only refers to an appeal of an ordinary kind and not to an inter-Court appeal. We are in respectful agreement with the view expressed in these decisions and would accordingly follow it. In conclusion we would repel the objection.
5. The learned counsel for the appellant took exception to the appointment of the sole arbitrator and thus contended that there was a non-compliance of section 9 (b) of the Arbitration Act which vitiated the award. According to him, it was only if the appellant had failed to appoint its arbitrator for 15 clear days after notice in writing to make the appointment that the sole arbitrator could be appointed. In the instant case, it was urged that in the notice dated 11th November 1958, calling upon the appellant to appoint its arbitrator, the respondent had also indicated that its arbitrator would act as sole arbitrator in case the appellant failed to appoint its arbitrator. There was thus no fresh appointment of the sole arbitrator in terms of section 9 (b) of the Act. Since this contention turns on the contents of the notice, its relevant portion is reproduced as under :- "Our clients are prepared to go in for arbitration in their dispute with you and have appointed Mr. Ghulam Husain Esmail Dossa of Messrs Kasamali Esmail Karachi, as their arbitrator. Our clients have further instructed us to give you 15 days notice to appoint your arbitrator under the advice to them, failing which our clients' arbitrator will be sole arbitrator in the dispute and his award will be binding on both the parties, which please note."
In support of his contention he cited the following cases : (1)Drummond v. Hamer (1942) 1 K B 352.
(2)Messrs S. M. Fazail & Co. v. Messrs Overseas Cotton PLD 1959 Kar. 739.
(3)Harichand v. Lachmandas AIR 1948 E Pb. 11.
(4)Abdul Khalik v. Province of East Pakistan and another PLD 1964 Dacca 166.
(5)J. Echholz German Merchant v. Messrs Amarnath Sriram AIR 1935 Lah. 76.
The contention of the learned counsel for the appellant does get support from these cases and if it had been merely the consideration of the notice dated 11th November 1958, alone we would have accepted his contention. We have, however, served that the respondent had again given a notice on 29th November 1958, in which it had called upon the appellant to appoint its arbitrator within 48 hours, failing which its arbitrator would be asked to proceed as sole arbitrator. This notice was given after the appellant had failed to appoint its arbitrator within 15 clear days after notice.
Thereafter the respondent vide its letter dated 8th December 1958, informed its arbitrator to act as a sole arbitrator and the sole arbitrator in turn intimated the appellant vide his letter dated 11th December 1958, about his appointment as the sole arbitrator and directed him to appear before him on 16th December 1958. These documents amount to substantial compliance of section 9 (b) of the Arbitration Act and in this view of the matter the cases cited are distinguishable on facts. We would accordingly repeal this contention. Moreover, the attention of the learned Additional District Judge was not drawn to these documents which were filed by the counsel for the appellant and even before the learned Single Judge no reference was made to them. This contention was repelled on appeal upon the ground that the objection with regard to the defective appointment of the sole arbitrator should have been taken after the appointment was made so that the error could have been rectified and in not doing so the appellant had waived this objection and it cannot be allowed to be raised after the filing of the award. This conclusion was based on the judgment of the Privy Council in the case of Donald Campbell & Co. v. Jeshraj Girdhari Lal . The learned counsel, however, attempted to distinguish this case upon the ground that in it the party had appeared before the arbitrator but had not raised the objection and in the instant case the appellant did not participate in the proceedings and accordingly the question of waiver did not arise. We have disposed of the contention of non-compliance of section 9 (b) of the Act on a different ground and2 accordingly it is not necessary to dilate on the merits of this plea.
6. The second contention relates to legal misconduct. It was urged that while awarding damages the market price on the date of breach viz., 16th October 1958, was not taken into consideration but the price which the goods fetched on resale formed the basis of the difference in calculating the damges. This, it was emphasised, amounted to an error apparent on the face of the award and offended against the settled law relating to the determination of quantum of damages vide the case of A. K. A. S. Jamal v. Mulla Dawood Sons & Co. . He also cited the case reported as Bijoy Singh v. Bilas Roy & Co. . We may point out that in a subsequent case of the same High Court reported as Fatehchand Murlidhar. v. Juggilal Kamlapat , a contrary view was taken in a case where damages were not awarded by the arbitrator on the basis of difference between the contract and the market price and it was held as follows:-- "In the second place, the principle that for a breach of contract a party is entitled by way of damages to the difference between the contract price and the market price, is not an absolute and inviolable principle.
As has been said in the text books, it is only a presumptive test and therefore from the mere fact that the amount of the damages awarded is not the amount of the difference between the contract price and the market price, it does not necessarily follow that the arbitrators have not applied the law of the land and have misguided themselves and been guilty of misconduct. I do not, therefore, think that Mr. Kar can support the order of the learned Judge on the ground which the learned Judge himself rejected."
There is thus a conflict of decisions even on the technical point raised by the learned counsel for the appellant. He was unable to show that the view expressed in the subsequent case suffered 'from any defect. Moreover, even a technical defect was not considered to be sufficient to vitiate the award by their Lordships of the Privy Council in the case of Mohindra Singh v. Ramindar E.
Dossa Singh and another. At page 84 of the report their Lordships & Sons observed as under:- "true the decision he gave was not one that a Court may Haleem, J have given, nor was it one that perhaps would have been given by an arbitrator who was also a lawyer. But for better or worse they chose to submit their disputes to a relative whom they trusted and who was not a lawyer, and he has given just the sort of award that might be expected from a lay arbitrator in the circumstances. In their Lordships' opinion there is no ground for impugning the validity of this award and they will humbly' advise His Majesty that this appeal should be dismissed with costs."
In this view of the matter even if the arbitrator had not awarded damages upon the settled principle still the award cannot be challenged on the ground of legal misconduct. This contention also fails.
7. The last submission is in regard to the bias of the arbitrator who is related to the respondent. We asked the learned counsel for the appellant as to the particulars of the bias, but he was unable to point out any fact from which we could conclude it. We may point out that in terms of the clause of the agreement for reference to arbitration, each party had to appoint its own arbitrator. It usually happens that the party appoints a person, in whom he has trust and more often a relative. This by Itself cannot suggest bias, for the appellant had refused to participate in the proceedings and in the circumstances the sole arbitrator, who was the appointed arbitrator, of the respondent, had only one side of the picture and for that the appellant was alone to be blamed. The learned counsel for the appellant did not cite any law by which a relative was debarred from acting as a sole arbitrator in the circumstances of the case. Moreover, the relationship was known to the appellant and it is also not the case here that the award was surreptitiously given by concealing the relationship. This contention also has no force.
8. We have observed from the award that the sole Arbitrator has awarded interest on damages at the rate of 6 % per annum from 20th October 1958, till 16th December 1958 in the absence of an3 4 5 6 express or implied contract or usage of trade. On the authority of the decision of the Supreme Court in the case reported as A. Z. Co. v. S. Moulabux Muhammad Bashir we would modify the award by striking only that portion which relates to the payment of interest on damages. In all other respects the award stands. We E would accordingly subject to this modification maintain the judgment of the learned Single Judge and dismiss the appeal with proportionate costs. AIR 1962 SC 256 AIR 1920 P C 123 AIR 1915 P C 48 AIR 1952 Cal. 440 AIR 1955 Cal. 465 AIR. 1944 P C 83 PLD 1965 SC 505