This revision petition under section 115 of the Code of Civil Procedure is directed against an order made on the 31st of October 1970 by Mr. Khizar Hayat Khan, Administrative Civil Judge at Rawalpindi, whereby he has enlarged by four months the time allowed to the arbitrator for settling a dispute between the parties on the basis of an arbitration agreement dated the 25th of November 1969. The dispute had arisen out of an agreement arrived at between the parties in the year 1968 under which the petitioner-company, namely The Pakistan Cement Industries Limited, had appointed the respondent-firm, functioning under the name and style of Teekayef Trading Company, as its agent to negotiate a deal for the supply of cement to Tarbela Joint Venture. By the arbitration agreement dated the 25th of November 1969, the parties agreed to refer their disputes to Mr. B. Z. Kaikaus, a retired Judge of the Supreme Court of Pakistan, as the sole-arbitrator. The arbitration proceedings commenced on the 28th of December 1969 and continued until the 19th of December 1970. On that date the parties agreed to extend the time by four months up to the 27th of August 1970. The arbitrator was, however, not able to finalise the proceedings by the extended date, although he had finished recording the respondent's evidence and had partly examined a witness produced by the petitioner-company. The last date of hearing before the arbitrator was the 26th of August 1970.
2. As the parties fail; d to mutually agree to a further extension of time, the respondent-company moved an application under section 28 of the Arbitration Act before the administrative Civil Judge, Rawalpindi, praying for extension of time. It was submitted on behalf of the respondent that it had done everything in its power to expedite the arbitration proceedings but the petitioner-company had delayed the same by adopting various tactics, and that as most of the evidence had been recorded it was expedient and proper that the arbitrator should be allowed to complete the proceedings and finalise the award.
3. This application was resisted by the present petitioner on several grounds. It was contended, in the first place, that as the arbitration agreement dated the 25th of November 1969 was not stamped in accordance with section 3 of the Stamp Act read with Article 5(c) of the Schedule to that Act, it could not be acted upon in view of the provisions contained in section 35 of the Stamp Act, and, therefore, the arbitration proceedings were without legal validity. In the next place, it was argued that section 28 of the Arbitration Act was not applicable ; and that in any case, the applicant before the learned Administrative Civil Judge was in arrears to the tune of several thousands of rupees in the matter of the payment of remuneration to the learned arbitrator and was, therefore, not entitled to any indulgence by way of extension of time.
4. The learned Administrative Civil Judge has held, in the order under revision, that in his opinion the objection as to the validity of the arbitration agreement should not be decided at this stage, as the respondent had been participating in the arbitration proceedings and they would get an opportunity of agitating the same point after the award has been made. As regards the justification for the enlargment of time, the learned Administrative Civil Judge has observed that considerable time and expense has already gone into the arbitration proceedings, and, therefore, it is only just and proper that time should be extended so as to enable the arbitrator to finalise his award.
5. It is contended on behalf of the petitioner that the learned Civil Judge was clearly in error in thinking that it was not necessary to decide at this stage the objection as to the validity of the arbitration agreement. It is submitted that while the necessity and justification for continuing the arbitration proceedings is not disputed, it is necessary to ensure that the proceedings should be based on a valid agreement of arbitration as otherwise even the future labour and expense incurred on these proceedings would be wasted. It is argued that in view of the prohibition contained in section 35 of the Stamp Act the learned arbitrator could not act on the unstamped document put before him by the parties, and that the subsequent affixation of the requisite stamp on the 12th of October 1970, during the proceedings before the learned Administrative Civil Judge, could not validate the arbitration proceedings with retrospective effect.
6. It is clear that no valid arbitration proceedings can be taken unless there is in existence a valid arbitration agreement. It is precisely for this reason that section 33 of the Arbitration Act, among other things, permits a party to an arbitration agreement to challenge the existence or validity of such an agreement. That this challenge can be made during the course of the arbitration proceedings is not disputed. It seems to me, therefore, that the learned Administrative Civil Judge was not right in thinking that the objection to the validity of the arbitration agreement should not be gone into before the conclusion of the arbitration proceedings. There is merit in the submission made on behalf of the petitioner that the parties should not be put to further labour and expense in pursuing proceedings which may ultimately be declared to be invalid owing to the arbitration agreement not having been properly stamped. It is no answer to this objection to say that the question can be agitated before the learned arbitrator himself. An application having been made to the Civil Court for enlargement of time under section 28 of the Arbitration Act, a duty was clearly cast upon the Court to determine the question of the validity of agreement once the same had been raised as a ground for resisting the application.
7. Coming now to the question of the validity of the agreement, it is common ground that under section 3 of the Stamp Act read with Article 5(c) of the First Schedule to the Act it was necessary to affix a four-rupee stamp on the arbitration agreement, but this was not done, and the arbitration proceedings were started on the basis of an unstamped document. It is stated that three copies of the arbitration agreement were drawn up at the time of its execution on the 25th of November and each of them was signed by the parties as well as by the with the result that each could be regarded as being the original. On the 12th of October 1970 only one of these three copies was stamped after payment of penalty at the rate of ten times the Stamp duty. This is the copy which was produced before the learned Administrative Civil Judge, and the copy with the arbitrator still remains unstamped. Article 25 of the Schedule to the Stamp Act prescribes that in such a case the counterpart or duplicate of any instrument chargeable with duty should also bear a four-rupee stamp.
8. Section 35 of the Stamp Act provides that "no instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped." There are five provisos to this section, four dealing with the question of admission in evidence of unstamped documents and the fifth on dealing with an agreement which is effected by correspondence consisting of two or more letters. None of these provisos is, therefore, directly relevant in the present context as they do not deal with the question of "acting upon" an unstamped document. Nor do the provisos deal with the question of registration or authentication of such a document.
9. It will be seen, therefore, that on a plain reading of section 35 of the Stamp Act the unstamped arbitration agreement could not have been acted upon by the arbitrator in this case. The question is whether the position is in any manner affected by the provisions contained in section 36 of the Stamp Act which provides "where an instrument has been admitted in evidence, such admission shall not, except as provided in section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped." It is submitted by Mr. Aftab Hussain, the learned counsel for the respondent, that as the arbitrator admitted the document in evidence before acting upon it, it is not now open to the petitioner to challenge this admission in view of the provisions contained in section 26 of the Act. The learned counsel submits that the arbitrator not being bound by the provisions of the Evidence Act or the Code of Civil Procedure, there was no necessity for him to formally exhibit the agreement as a proved document. In support of this submission the learned counsel has referred to a decision reported as Rung Lal Kalooram v. Kedar Nath Kesriwal , in which it was held that although an award has been made by arbitrators on the basis of an unstamped agreement to submit to arbitration, the award cannot be questioned on that ground for the reason that the submission was first admitted in evidence by the arbitrators, and having been admitted in evidence it was not open to either of the parties to call such document in question in the arbitration proceedings in view of the provisions contained in section 36 of the Stamp Act.
10. The view advocated by Mr. Aftab Hussain on the authority of the case just cited, did not find favour with Dalip Singh, J. in the case reported as Dilbagh Rai and others v. Mt. Teka Devi , in which a distinction was drawn between admission into evidence and 'acting upon'. The same question was later examined more fully by a Full Bench in Gopi Mal v. Vidya Wanti etc. . In that case the question had arisen with regard to the execution of an unstamped partition decree and it was held as under :- "Where the Court has drawn up a partition decree without the proper stamp whether after a considered decision or whether only by inadvertence, there is no lack of inherent jurisdiction, though there might be an irregularity or illegality in the exercise of jurisdiction and therefore it cannot be said that there is no decree in existence at all. There is a decree but not a decree that can be acted upon until proper stamp is supplied, but the decree can be validated by the addition of the proper stamp and therefore it cannot be said that there is no decree at all in the sense that decree is merely a piece of waste paper which cannot be validated by the addition of the stamp unless the Presiding Officer re-signs the decree after it is stamped :1 2 3 Once the proper stamp is supplied, the validity of the decree would date back to the date of the decree and therefore the execution application instead of being struck off might proceed as from that date. But this would not validate the proceedings that had taken place before the proper stamp was supplied. Those proceedings would still be without jurisdiction in the sense that the Court was barred by statute from proceeding in the way it did without a proper stamp and therefore the proceedings were without any legal justification.
Section 35 (of the Stamp Act) is in terms wider than section 36, for while section 35, refers both to admission in evidence and to acting upon and to registration and to authentication, section 36, only refers to admission into evidence. There is obviously a distinction in admitting into evidence and acting upon. The whole of execution of a decree cannot be considered to be a mere matter of procedure. The acting upon is not a question of procedure.
The words "acted upon" as used in section 35, do not find a place in section 36, and cannot be read into that section.
Where the executing Court executes an unstamped parti-tion decree it acts upon the decree within the meaning of section 35. In such a case there can be no question of admitting the decree in evidence under section 36 and inasmuch as section 36 does not contain the words "acted upon" "a subsequent objection on the ground that the decree could not be acted upon is not barred".
11.This dictum of the Full Bench was referred to with approval by B. Z, Kaikaus, J. in Mst. Sahib-un- Nissa and others v. Mst. Mahmooda Begum . It seems to me that this dictum fully covers the case before me. In the matter of entering upon a reference to arbitration, the arbitrator does not admit D the arbitration agreement in evidence, but acts upon it. Speaking with great respect, the view taken by the learned Judges of the Calcutta High Court in the case of Rung Lal Kalooram clearly omits to take note of the different phraseology employed by the Legislature in sections 35 and 36 of the Stamp Act. I must, therefore, hold that there was no valid arbitration agreement before the arbitrator when he entered upon the reference on the 28th of December 1969.
12.It was submitted by Mr. Aftab Hussain that the peti-tioner, being a party to the unstamped arbitration agreement and having participated in the proceedings before the arbitrator, was precluded from raising the objection at this stage. Apart from the general principle that there is no estoppel in respect of a question of law, it was held in this very context in Guranditta Mal v. Firm Gurdasmal-Ramchand and others that E the acquiescence of a party to a procedure in contravention of section 35 of the Stamp Act was of no consequence, as this section contained an absolute bar to an unstamped document being acted upon.
13.For the foregoing reasons, it is clear that the proceedings taken by the arbitrator before the 12th of October 1970, on which date one copy of the arbitration agreement was stamped after the payment of penalty, are of no legal validity. There being no valid arbitration agreement before the arbitrator, the question of enlargement of time in terms of section 28, of the Arbitration Act did not, therefore, arise. The revision petition is accordingly accepted, and the order passed by the learned Administrative Civil Judge under section 28 of the Arbitration Act on the 30th October 1970 is hereby set aside. In view of the legal questions involved, the parties are left to bear their own costs.
14.Now that there is a stamped arbitration agreement in the field, it would be competent for the arbitrator to recommence his proceedings on the basis thereof. It is not for this Court to decide, or even to indicate, as to what use can be made of the evidence which has already been recorded by the learned arbitrator. At this stage this is a matter entirely between the arbitrator and the parties to the arbitration agreement. AIR 1921 Cal. 613 AIR 1932 Lah. 249 AIR 1942 Lah. 2604 5 1 2 3