' The award dated 13th January, 1981, has been made and filed by the arbitration Court pursuant to an agreement dated 9th January, 1980 made between the parties which inter alia provided vide clause 9 for settle- ment of disputes between them by referring the same to arbitration in the following terms :- "That any dispute arising out of this agreement shall be referred to the arbitration of Mr. Abbas M. N.
Rajkotwala and Mr. S. M Zakaria of Muslim Rolling Mills Limited. And their decision will be final and binding on the both the parties."
2. The arbitrators made their award on 13th January, 1981, whereby they awarded Rs, 8,17,790 as the amount payable by the defendants to the plaintiff.
2. (i) The arbitrators filed petition accompanying the award. In the Court. Under section 14 (2) of the Arbitration Act and rule 282 (1) of Sind Chief Court Rules (O. S.). The said application has been registered as Suit No, 41/8.
3. Another application under sections 5. 11 and 12 of the Arbitration Act, 1940 has been separately moved on behalf of the defendants on 19th May, 1981, wherein it is prayed that the Court may revoke the authority of the arbitrators under the agreement, suspend the arbitration clause or in the alternative replace and/or substitute the arbitrators. This application has been registered as J.
M. 25/81.
4. On 12th November, 1981, Mr. Muhammad Sharif, Advocate for defendants informed, when Suit No, 41/81. Had come up for hearing, that the above application (J. M. 25/81) had already been filed and requested that both the above mentioned cases be heard together, which request was granted.
' However, today the above-named learned counsel stated that it would be advisable that Suit No, 41/81, may be tried separately from the other case namely J. M. 25/81 as the question of remitting the award is being considered by the Courts on the limited question namely that the reasons had not been recorded by arbitrators for making the award as required under section 3 of Ordinance No XV of 1981. Mr. Sharif then stated that J. M. 25/81, is to be decided when the question of setting aside the award or its being made rule of the Court is taken up.
' I accordingly take up the hearing of Suit No, 41/81, separately and proceed to examine the same in the light of section 3 of Ordinance No, XV of 1981.
5. It is agreed by both the learned counsel that the award does not state any reason for making the award. The question, therefore, raises is, whether the award should be remitted under subsection
(1) of section 3 of the said Ordinance. Mr. Sharif learned counsel, submitted that power to remit award is a matter of discretion of the Court and that this should not remit the award, to the arbitrators for the reasons that the arbitrators are likely to fabricate the record and cover the lacunas as presently existing namely there is no evidence on the record sent to this Court by the arbitrators showing that any reference was made to the arbitrators apart from the letter of 20th December, 1981 under the signature of Mr. Rajkotwala or that the arbitrators consulted each other or decided to enter upon the reference. The learned counsel further submitted that arbitrators never agreed amongst themselves for starting the arbitration proceedings or decided the place of meeting.
6. I am afraid that these objections of the learned counsel cannot be accepted for the reasons (1) that the arbitrators are not required by law to submit entire record to the Court alongwith the award, (ii) that the above objections are based upon mere assumptions. In any case these objections have nothing to do with the obligation imposed upon arbitrators under section 3 of the Ordinance No, XV of 1981 to state reasons for making the award ' Mr. Nasim Farooqui learned counsel for the plaintiff invited my attention to the case of Malik Constructors Ltd. v. Government of Pakistan. The brief facts of the case are that the award was filed in the Courts to which objections were filed to the effect that the arbitrator had misconducted himself as well as the proceedings while giving the award and accordingly prayed for setting aside the same. The learned Civil Judge vide his order dated 17th November, 1969 set aside the award.
The matter thereafter came up before the learned High Court of Lahore where it was urged that the award in spite of the fact that no reasons had been stated therein as required under section 3 (1) of the Ordinance, 1981 may not be remitted as the power vesting in the Court under section 3 of the Ordinance is not mandatory but directory and that having regard to the circumstances of the case the Court in exercise of its discretion may refuse to remit the award as it has already been set aside by the trial- Court and omission to state the reasons has not resulted in failure of justice.
Repelling the contention raised by the learned counsel as stated above the learned High Court observed :- "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."
' The learned High Court further proceeded to observe :- "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 large1 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 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 intention 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."
' I am in respectful agreement with the principle . Laid down as above. There may be exceptional cases such as when there is no written agreement to refer disputes to the arbitrator that the Court may exercise discretion in refusing to remit the award to the arbitrator to state reasons for the award under the law as amended. In the present case I however, find no such reasons to refuse to remit the award. To a pointed question, Mr. Sharif the learned counsel admitted that objections raised by him during his argument, had not been raised earlier in the objections/application filed by his clients. The allegation made that the arbitrators would fabricate evidence are of very serious nature involving penal consequences, cannot be allowed to be raised in the absence of any plea whatsoever on the record
7. I, therefore, find that no valid reason has been made out by the defendants to refuse to follow the procedure laid down by section 3 of the Ordinance, 1981 whereby the Court is required to remit the award to the arbitrators with the directions to state the reasons for the award.
' The defendants objections taken in their application by the defendants filed in opposition to the award being made rule of the Court, are left open to be raised (if advised to do so) after the award is sent by the arbitrators to the Court after stating reasons for the award as required by section 3 of the Ordinance.
8. Mr. Sharif the learned counsel for the defendants lastly stated that at this stage when order remitting the award is being passed under section 3 of the Ordinance XV of 1981, the application (J.
M. 25/81) made under sections 5, 11 and 12 of the Arbitration Act may not be decided and the same be kept pending.
9. I accordingly direct that the award be remitted to the arbitrators to state reasons in detail for the award as required under section 3 of the Ordinance within a period of 2 months of this order.
10. The hearing of J. M. 25 of 1981 is adjourned to be fixed after the award is received from the arbitrators. It would however be open to the defendants to make an application for hearing of their above case earlier which application if moved would be considered by the Court on its own merits.
' A copy of this order be placed on record on J. M. 25/81. PLD 1982 Lah. 57