A. R. SHEIKH, J.--Messrs Qamar Din Ahmad & Co., the appellant, entered into a contract with the Government of Pakistan in the Ministry of Defence, respondent No, 1, to construct a 100-bedded hospital at Wah, District Campbellpur, and one of the conditions of the contract (bearing No, F.A.C.-24/ 1958-59) was that disputes between the parties should be referred to a sole arbitrator to be nominated by the Ministry of Defence G. H. Q., Rawalpindi. The work was to be completed within eighteen months according to the time and progress chart attached to the contract. However, on the 4th of December 1959, the contract was rescinded on the ground of non-adherence to the time schedule and sub-letting the contract. The stores and material, etc., lying at the site and the security deposit and other assets belonging to the appellant were forfeited, which stores and articles were subsequently auctioned on various dates and a total recovery of Rs, 4,62,933.00 was made by respondent No,
1. The remaining work was got completed through another contractor for a sum of Rs, 5,50,000.00 at the risk and cost of the appellant, and accordingly after adjustment of the said amount of Rs, 4,62,933.00, a minus bill was issued to the appellant for a sum of Rs, 3,43,413.00. The appellant questioned the right of the Government to cancel the contract prematurely as the delay in execution of the work, according to it, was due to excessive rains and negligence of respondent No, l's own employees and that there was no sub-letting. It claimed a sum of Rs, 13,09,224.00 by way of damages, etc. The Ministry of Defence appointed. Mr. A. H. Qureshi, Chief Engineer (PAF), Peshawar, on the 1st of December 1960 as the sole arbitrator in terms of the arbitration clause. The arbitrator received the letter of appointment on the 9th of December 1960 and issued notices, on the 20th of January 1961, to the parties to submit their claims etc. The appellant filed its claim on the 14th of April 1961 while respondent No, 1 submitted its claim on the 16th of June 1961. Subsequently notices to the parties were issued for appearance before the arbitrator on the 29th of June 1961, and after recording evidence, hearing of parties and a few adjournments sought by the parties for production of their evidence etc., the arbitrator made and published his award, Exh. A/1, on the 24th of October 1961 rejecting the appellant's claim and allowing that of respondent No,
1. The award was filed before the trial Court and the appellant preferred objections seeking avoidance of the award on as many as 23 grounds but at trial the appellant confined itself to only four objections, namely, (i) filing of the award beyond limitation, (ii) the fact of perusal by the arbitrator of C. I. D. report about financial position of the appellant produced by Mr. Ehsan Ullah, Superintending Engineer, on behalf of respondent No 1, (iii) refusal of permission to produce evidence, both oral and documentary, and the adverse =effect, thereof, and
(iv) non-determination of the questions of incidence of the contract as to the time being of the essence of the contract and illegal cancellation thereof. After recording evidence of the parties, the learned trial Judge has, on the application of respondent No, 1, extended under section 28 of the Arbitration Act of 1940 the period of limitation spent beyond four months by the arbitrator in giving his award after entering on the reference on the ground that the delay in making the award has been due to the appellant itself in seeking adjournments from time to time and that, therefore, it is a fit case for condonation of delay. The trial Court has also held that the arbitrator has not been found to have withheld permission of producing any witnesses or documents desired by the appellant to be produced at the trial before him and that there has been no secret or private enquiry by the arbitrator in the form of inviting any C. I. D. report and that the mere perusal of the said document on the part of the arbitrator during the course of arguments has in no manner affected the mind of the arbitrator nor was it in the nature of a secret or private enquiry behind the back of the appellant or without disclosing its contents to the appellant. On the last objection as to absence of any finding on the legal questions raised by the appellant, the trial Court has come to the conclusion that the award does not suffer from any such defect.
2. In this appeal, the aforesaid four objections have been reiterated with vehemance and we propose to deal with them in this judgment in seriatim. Learned counsel for the appellant has referred to some authorities pertaining to the question of limitation and when can an arbitrator be said to enter upon a reference. The previous view 'that an arbitrator enters on a reference not when he accepts the office, or takes upon himself the functions of arbitrator by giving notice of his intention to proceed, but when he enters into the matter of the reference either with both parties before him; or under peremptory appointment enabling him to proceed ex parte Baker v.
Stephens, consistently followed in the British Indian Courts, is contended to have undergone a change on the basis of some observations appearing in Iossifoglu v. Coumantaros, cited with approval in Pakistan v. Gayer & Co., Karachi. It is maintained that the arbitrator should be deemed to have entered upon the reference on the 20th of January 1961 when after accepting his appointment he issued notice to the parties to put in their respective claims and not on any subsequent date. We are not called upon to express any considered opinion on this controversial issue because even if the period is considered to have started from the 20th of January 1961, in view of the conduct of the appellant in appearing before the arbitrator even after the time for making the award had expired without any objection and the fact that the arbitrator was constrained to give repeated adjournments, mainly at the instance of the appellant, the time spent beyond four months by the arbitrator has been justifiably extended under section 28 of the Arbitration Act. We, therefore, affirm the judicious discretion exercised by the trial Court in enlarging the time with retrospective effect, so as to validate the award. Knowles & Sons Limited v. Bolton Corporation refers.
3. Coming to the objection of the alleged declining of permission to the appellant to produce one Haji Din Muhammad as a witness, we have it from D. B. Ghadialy (A. W. 2) that the request to1 2 3 4 produce Haji Din Muhammad was made on behalf of the appellant on the last date, namely, the 28th of September 1961, during the course of arguments. Firstly, it was no stage for production of any evidence and, secondly, in view of the categorical statement by the arbitrator as A. W. 1 that he had not withheld permission with regard to production of evidence, whether documentary or oral, we do not feel persuaded to accept the oral testimony of A. Ws. that any such request was made.
As regards documentary evidence, it has been brought to our notice that the weather reports, which the appellant wanted to summon from the Meteorological Department, were placed and proved on the record by the appellant in the shape of reports of the Metallurgist Department of the Wah Factory. No prejudice has been established before us to have been caused in this respect. Be that as it may, there is no convincing evidence on the record of the arbitrator that any such request was made by the appellant and was refused. The objection appears to be an after-thought and is repelled.
4. Learned counsel for the appellant has cited a large number of authorities in support of the proposition that whenever an enquiry is made by the arbitrator in a secret manner or in the absence of the parties without notice to them and behind their back, the findings and the award stand vitiated. He strongly relies on Haigh v. Haigh wherein Turner, L. J. observed : "Again, it appears by the cross-examination of Mr. Clay that, in the absence of George Armitage Haigh, he received from the other parties explanations as to items in the accounts--a course of proceeding which this Court cannot possibly sanction. It is true that he states in his affidavit that he did not allow these explanations to influence him in his report upon the accounts, and I have no doubt he honestly intended this to be the case, but it is impossible to gauge the influence which such statements have upon the mind, and without meaning therefore to cast the least reflection upon Mr. Clay, I think this statement furnishes no justification for this course of proceedings. What, however, seems to me to be still more important, with reference to the proceedings of Mr. Clay, is this, that it appears by the evidence that it was by him the son of George Armitage Haigh was first excluded from attending upon the accounts, and I can find no explanation whatever of this assumption of authority on his part. It was plainly no part of his duty as accountant to determine who should be permitted to attend upon the reference. It may be said that the arbitrator after wards sanctioned this determination and indeed all the proceedings of Mr. Clay, but I am not prepared to hold that all Mr. Clay's proceedings were such as the arbitrator could be justified in sanctioning.
It is not, however, as I think, necessary to decide this point, for I am of opinion, upon the fifth objection, that the arbitrator was not justified in excluding George Armitage Haigh's son from the meetings The other decision referred to by learned counsel is Ganes Narain Singh and others v.
Malida Koer. This case also relates to private enquiries at the back of one of the parties. Learned counsel for the appellant has also cited certain cases from Indian jurisdiction and has attempted to draw support from some observations in Payyavula Vengamma v. Payyavula Kesanna and others. In that case in a dispute between the parties in a suit by a widow for maintenance, arrears of maintenance and residence, the arbitrator had been asked by the Court to decide the question when the plaint, the written statement and the other record were sent to him for decision and he had been directed to make an award after perusing the plaint and the written statement which were given to him by the Court along with the order, the arbitrator examined the defendant in the absence of the plaintiff and also perused the plaint without giving an opportunity to the plaintiff to have her say in the matter, the statement obtained from the defendant contained several statements of facts which did not find place in his written statement, and the learned Judges held that the course of proceedings adopted by the arbitrator was obviously contrary to the principles of natural justice. The next authority referred to Walker v. Frobisher wherefrom the following passage by Lord Chancellor is relied on :5 6 7 8 ". A Judge must not take upon himself to say, whether evidence improperly admitted had or had not an effect upon his mind. The Award may have done perfect justice; but upon general principles it cannot be supported."
The next case cited is Fuerst v. Stephenson mentioned at page 130 of Russel on Arbitration, Seventeenth Edition, as illustration '3' under the heading 'Commercial arbitration'. The original report is unfortunately not available to us. In this case, after the umpire had finished hearing the arbitrators, he approached one of them and asked him for further information, which was given ; it being left to that arbitrator to tell the other what was going on. On a motion by the other party to set the award aside, it was argued that it was the practice in the course of such an arbitration for the umpire to leave it to one arbitrator to keep the other informed. The Court set the award aside, holding that the alleged practice would not justify what was done, but remarking also as to the alleged practice, 'I doubt the validity of it as a matter of procedure'. In re : Gregson and Armstrong it was observed :- "Arbitrators are not merely valuers ; they have judicial functions to perform. Though intending no injustice they must observe the fundamental rules which govern judicial proceedings."
Basing his contention on these observations along with the observations in Royal Commission on Sugar Supply v. Trading Society Kwik-Hoo-Tong where while dealing with the case of arbitrators in a commercial dispute calling their own expert witness in the absence of the parties upon a question of the custom in the trade, the Divisional Court held the award bad inclining to the view that it was irrelevant whether the evidence improperly taken was material or not and saying that it could not inquire whether or not the minds of the arbitrators had been affected, learned counsel argues that the award should be set aside.
5. Learned counsel for the respondents does not join an issue on the proposition of law laid down in the authorities cited at the bar and says that if it is established as a fact in a particular case that the arbitrator has not acted fairly, or his decision is radically wrong or vicious and he has made any secret or private enquiries or has used information supplied by one party against the other without disclosing it to that other party, his award is bad. He, however, contends with reference to evidence of various A. Ws. that there is no such circum-stance established on the record of this case.
6. The leading authority on this point is that of Harvey v. Shelton wherein the Master of Rolls observed : "It is so ordinary a principle in the administration of justice, that no party to a cause can be allowed to use any means whatsoever to influence the mind of the Judge, which means are not known to and capable, of being met and resisted by the other party, that it is impossible, for a moment, not to see, that this was an extremely indiscreet mode of proceedings, to say the very least of it. It is contrary to every principle to allow of such a thing, and I wholly deny the difference which is alleged to exist between mercantile arbitrations and legal arbitrations. The first principles of justice must be equally applied in every case. Except in the few cases where exceptions are unavoidable, both sides must be heard, and each in the presence of the other. In every case in which matters are litigated, you must attend to the representation made on both sides, and you must not, in the administration of justice, in whatever form, whether in the regularly constituted Courts or in arbitrations, whether before lawyers of merchants, permit one side to use means of influencing the conduct and the decisions of the Judge, which means are not known to the other side."
It was also observed at page 509 of the report in Haigh v. Hhigh : an arbitrator being a Judge selected by the parties and chosen to decide without appeal, this Court has nothing to do with any mere error in judgment on his part. The parties have chosen him to be their Judge and have agreed to abide by his determination ; and by that determination, if fairly and properly made, they must be content to be bound ; but, on the other hand, arbitrators, like other Judges, are bound, where they are not expressly absolved from doing so, to observe in9 10 11 12 their proceedings the ordinary rules which are laid down for the administration of justice ; and this Court, when called upon to review their proceedings, is bound to see that those rules have been observed."
It is a well-established principle that it is the duty of the arbitrator to act fairly to both the parties, and in the proceedings throughout the reference, he must not favour one party more than another, or do anything for one party which he does not do or offer to do for the other and he must observe in this the ordinary well-understood rule for the administration of justice. It is also manifest from the citations above that in order to render the award bad, evidence whether material or not must have been improperly taken or admitted. We proceed to examine the evidence on the record to ascertain whether this positive part of the case is proved.
The arbitrator, when examined on behalf of the appellant as A. W. 1, stated : "I have seen the proof adduced by the parties. I do not remember whether or not the Department produced before me any police report. I had not asked for any information from the police. I have referred to a C. I. D. report at page 5 of my proceedings. I had not summoned this report. It was shown to me (this reply was given after looking up the file). Whatever papers the parties demanded from me I gave these to them or shown them. I did not give copies of the documents. I did not give a copy of the C. I. D. report to the plaintiff. Whatever was demanded was given."
As against this, D. B. Ghadialy (A. W. 2) has deposed : "Ch. Ehsan Ullah produced the C I. D. report before the arbitrator. This report was not shown to me, to our other partner or any other person of ours."
He further added : "The C. I. D. report was produced before the arbitrator during the proceedings in our presence and the arbitrator noticed something from it but we did not know what he noted. The report was not shown to us."
An improvement on this statement has been made by Riaz-ulHassan Burney (A. W. 3) : "The C. I. D. report was shown to the arbitrator in our presence. I said, 'show it to us', but it was not shown to us. This report was shown to the arbitrator in a secretive manner, i,e,, the portion of the paper to be read was diverted towards the arbitrator."
A. W. 3 has attempted to paint the picture of production of the C. I. D. report to bring it on a par with a secret or a private enquiry at the back of the party making grievance of the same.
Reading together the statements of the arbitrator (A. W. 1), D. B. Ghadialy (A. W. 2) and Riaz-ul- Hassan Burney (A. W. 3), we have the impression that the document was never summoned by the arbitrator, he never desired to make any secret or private enquiry, it was during the course of arguments on the last date of hearing that a document (described as C. I. D. report by the arbitrator in his proceedings of the said date) was produced by the representative of the Department in the presence of the other party and to be fair to the parties he (the arbitrator) did make a note of that in his proceedings at page 5. The said report has not been accepted in evidence, nor is it in any manner proved that it was ever asked to be perused by the appellant or its representative of the arbitrator refused to disclose its contents to the appellant. In the circumstances, the entire case-law cited on behalf of the appellant is distinguishable on this factual ground. We, therefore hold in agreement with learned counsel for the respondents that there has been no private or secret enquiry nor has any evidence been improperly taken or admitted and used by the arbitrator, nor did any question of disclosing such evidence to the appellant or the mind of the arbitrator being affected thereby arise.
7. Coming to the last and the main contention, namely, non-determination of the legal questions raised before the arbitrator as to the time being not essence of contract and cancellation of the contract prior to the date of completion of the contract, the argument of learned counsel appears to be that the appellant had specifically raised this point in its statement of claim before the arbitrator and this has also been controverted by the opposite-party and that even the summary of the case (Exh. A. W. 2/4) by respondent No, 1 mentioned the dispute about the contract and cancellation thereof and completion of the work at the risk and cost of the appellant, and despite this main issue before him and the arguments having been addressed at length, the arbitrator has proceeded to give his findings against the appellant and in favour of respondent No, 1 without mentioning that legal question in his award. It has been contended that the award being defective ex facie, there being an error apparent on its face, the same should be set aside on this ground alone. It has been argued that although an arbitrator is not required to give a detailed reasoned judgment as in a Court of law, he must at least state his conclusions on the point or points in dispute before him. Our attention has been drawn to the following observations at page 500 of the report in Balawal Khan v. Captain Muhammad Alam Khan and others :-- . . Although the arbitrators are not bound to state reasons for their conclusion they must at least state their conclusions on the point or points in dispute. The decree which they have passed shows that they had not decided the point in dispute at all, The above observations have not been supported by any case-law on the point. It has been suggested that the view of law in England and the observations in Kira Mischeff Ltd. v. Constant, Smith & Co.also point to the same direction. Naturally, if the decision of the dispute is dependent on a particular question or issue raised before the arbitrator, it is the duty of the arbitrator to adjudicate upon that particular issue and then to give a decision in the case but that does not mean that the arbitrators are bound to give a reasoned judgment on each and every issue and point raised in the controversy before them. Learned counsel for the respondents has brought to our notice observations in In re : Hopperwhich are to the following effect :- "We must not be ever ready to set aside awards where the parties have agreed to abide by the decision of a tribunal of their own selection, unless we see that there has been some-thing radically wrong and vicious in the proceedings."
He has also invited our attention to the following passage in Nanjappa v. Nanja Rao :. arbitrators are not bound to give 'a reasoned judicial decision' and are merely bound to give an intelligible decision which determines the rights of the parties in relation to the subject-matter of the reference. (Redman on Arbitration, IV Ed., page 163). They are not bound to give reasons at all, and there are cases, which we think it unnecessary to quote, which have held that they should not even be asked for the reason which have led to their decision (see Redman on Arbitration, page 140)............"
In Raminder Singh v. Mohinder Singh a strong Bench of the Lahore High Court, comprising Young, C. J. and Tek Chand, J., relying on Narpat Rai v. Devi Das and Nanjappa v. Nanja Rao remarked : It is hardly necessary to say that an ar bitrator is not bound by the technical rules of procedure which the Courts must follow, nor need he record separate findings on the various points on which the parties are at issue, or write a reasoned judicial decision. All that he is required to do is to give an intelligible decision which determines the rights of parties in relation to the subject-matter of the reference. . . Further, the arbitrator in this case is a near collateral of the contesting parties equally related to them, and it appears that he had been selected by reason of his special knowledge of their affairs to decide the dispute, which had been pending in Courts for a period of six years and of which the end was not in sight. Obviously, it was not the intention that he should record a formal judgment like an Appellate Court on the evidence which had been produced by the parties in the Court below. He took a broad view of the case and gave an award, which he conceived to be just and equitable in the circumstances Again, in Madan Lal v. Nabi Bakhsh Sir Abdur Rahman, J. (as he then was), dealing with the contention that the arbitrator had not decided the question of custom prevailing in the locality in which the property was situated, held it to be equally devoid of any force for the finding in regard to the existence of the custom was held to be13 14 15 16 17 18 19 inherent in the decree passed by the umpire in favour of the plaintiff and it was further observed that "there is no rule of law that an arbitrator must decide all the issues framed in the suit expressly as long as the whole suit is decided by him. He is not bound by any rules of procedure or those of evidence, and it is not open to the parties to pick holes in the decisions by a tribunal of their own choice on these grounds. The Court, which is called upon to register his decision, is not a Court of appeal and cannot scrutinise it in the same way as it could be done by an appellate Court". The weight of authority favours the contention raised on behalf of the respondents and it cannot be said with any stretch of imagination that there is an ex facie error and the award is defective.
Learned counsel made a feeble attempt to argue that the plea raised by learned counsel for the respondents that the arbitrator could not have decided the dispute without first coming to a finding that time was not of essence of the contract and that the contract had not been illegally cancelled, is inferential in character because the award is silent on this point. We have been taken through the contents of the award by learned counsel for the parties and we are of the confirmed view that the finding is not inferential as suggested. It is inherent in the decision itself because without that finding in respondent No, l's favour no award for the said respondent could have been made, otherwise the award would have been contradictory in character. Learned counsel attempted to argue that as the award is silent, one does not know what the decision of the arbitrator on this point was and the possibility could not be ruled out that although the arbitrator had decided the said issue against respondent No, 1, yet the claim of the appellant had been rejected under penal clauses contained in conditions Nos, 55, 53(a) and 50 of the Contract.
Learned counsel for the appellant has in this respect referred to a question put to the arbitrator as A. W. 1 which is to the following effect : "Question.--You have said that you considered item No, 1 before making the final award. Should I take it that you accepted the contractor's contention on item No, 1 ?"
This question was, however, not pressed on an objection being raised. The argument has rightly been met by learned counsel for the respondents by saying that no such plea of enforcement of penal clauses was raised or pressed by respondent No, 1 before the arbitrator nor was the case from that angle placed before him by the parties and, therefore, to attribute any likely alteration of stand on the part of respondent No, 1 before the arbitrator is not justified in the circumstances of the case, to provide basis for argument that there could have been a decision favourable to the appellant on the question of law and still the claim of the appellant could have been rejected by the arbitrator on another score.
8. The upshot of the discussion above is that the appeal fails and is dismissed with costs. (1867) 2 Q B 523 (1941) 1 K B 396 PLD 1964 Kar 3 (1900) 2 Q B 253 (1861) 5 L T 507 10 I C 450 AIR 1953 SC 21 1801 Ch. 6 Vesey 70 at p. 72 (1951) 1 Lloyd's Re. 429 (1894) 70 L T 106 (1922) 38 T L R 684 (1844) Ch. 7 Beay. 455 PLD 1956 Lah. 494 (1950) 1 A E R 8901 2 3 4 5 6 7 8 9 10 11 12 13 14