' NAIMUDDIN, J.-This intra-Court appeal and Intra-Court Appeal No, 83 of 1981, are between the same parties and against the common judgment, dated 20th April, 1981, delivered by a learned Single Judge of this Court in Suits Nos. 907 of 1980 and 908 of 1980, whereby he dismissed the objections to the awards and made the awards rule of the Court.
2. We propose to dispose of both these appeals by this common judgment as the relevant facts and points raised before us are common in both the appeals.
3. In disputes arising between the parties to these appeals on two building contracts, Mr. Shaikh Muhammad Islam, Superintending Engineer, K. D. A. Was finally appointed as sole arbitrator to separately adjudicate upon the disputes. He gave two separate awards which were filed in this Court on its original side.
4. The objections to the awards were filed.
5. As already stated the objections were dismissed by the impugned judgments. While dismissing the objections the learned Single Judge held that since the awards were non-speaking awards he could not go into the merits of the awards. We may here quote the relevant observations of the learned Single Judge.
"14. The two awards in these suits are non-speaking awards and in this connection I may refer to the order of the Supreme Court of Pakistan in the case of Mushtaq Ahmed v. Hajra Bi reported in 1980 SCMR 394. In that case a non-speaking award was set aside by the Civil Judge on an application under section 30 of the Arbitration Act, 1940 and an appeal against the judgment of the Civil Judge was dismissed by an Additional District Judge but the two judgments were set aside in Revision by the High Court. A petition for Special Leave to Appeal was filed against the judgment of the High Court but the same was dismissed by the aforesaid reported order of the Supreme Court.
On the status of the nonspeaking award, Supreme Court had this to say :- ' The arbitrator has not given any reasons whatsoever for the payments ordered by him. As his silence about the reasons for his decision are like that of the sphinx, could any Court have read an error in the award much less an error on the face of the award ? The question is of the meaning of the words "an error apparent on the face of the award" and we cannot do better than reproduce the classic observations of Lord Dunedin in Champsey Bhara & Co. v. Jivraj Balloo Spinning & Weaving Company Ltd. AIR 1925 P C 66 (at page 69) :- ' In error in the law on the face of the award means in their Lordships view, that you can find in the award or a document, actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for this judgment, some legal proposition which is the basis of the award and which you can then say in erroneous. It does not mean that if in narrative reference is made to a contention of one party that opens the door to seeing first what that contention is, and then going to the contract on which the parties' rights depend to see if that contention is sound.
' We are in respectful agreement with observations which were approved by this High Court in Messrs A. Z. Co. v. Messrs S. Maula Bux Muhammad Bashir PLD 1965 SC 505. Therefore, the petitioner can succeed only by showing that the award itself or a note attached to it contained some legal propositions which were erroneous. But, as the arbitrator has not given any reasons whatever for his findings it follows that this sphinx like award could not possibly be set aside on the ground of an error apparent and the view taken by the lower Courts was in flagrant disregard of the settled principles of law and the view taken by the High Court was the only possible view."
6. The learned Single Judge in paragraphs 5 and 6 of the judgment also stated that two awards impugned before him were non-speaking award. He indeed refused to look into the record as stated by him in paragraph 8 the impugned judgment, which we may quote here for ready reference :- "8. The second contentions of learned counsel for the K. M. C. Was that there was hardly any evidence to support the awards given by the Sole Arbitrator. On a specific question asked by the Court, Mr. S. M. Muslim Naqvi very frankly stated that there was some evidence and that it was not a case of `no evidence". If it had been a case of 'no evidence', the Court might have looked into the evidence on record to satisfy itself whether in fact it was a case of no evidence. However, as it has been admitted by learned counsel for the K. M. C. That there is some evidence, the present awards being non-speaking awards, the Court will not look into the record and evidence. Insufficiency of evidence is no ground for setting aside a non-speaking award."
7. Aggrieved by the judgments as stated earlier the Karachi Municipal Corporation has filed these two appeals separately.
8. We have heard Mr. S. M. M. Naqvi, learned counsel for the appellant and Mr. M. A. Rafiq Khan, learned counsel for the respondent.
9. It is submitted by Mr. Naqvi that since the awards do not give reasons in sufficient detail they are liable to be remanded to the sole arbitrator for stating the reasons therefor. In support of the submission the learned counsel relies on the provisions of section 26-A of the Arbitration Act, 1940, which was inserted in the Act by Ordinance No, XV of 1981, published in the Gazette of Pakistan, Extraordinary, Part I, dated 11th May, 1981.
10. It may be convenient for future reference, if we quote the provisions of section 26-A here. These are "26-A. Award to set out reasons.-(1) Arbitrators or umpire shall state in the award the reasons for the award in sufficient detail to enable the Court to consider any question of law arising out of the award.
(2) Where the award does not state the reasons in sufficient detail, the Court shall remit the award to the arbitrators or umpire and fix the time within which the arbitrator or umpire shall submit the award together with the reasons in sufficient detail : Provided that any time so fixed may be extended by subsequent order of the Court.
(3) An award remitted under subsection (2) shall become void on the failure of the arbitrators or umpire to submit it in accordance with the direction of the Court."
11. It will be seen from the above-quoted provisions that they clearly require the arbitrators or umpire to state in the award the reasons for the award in sufficient detail to enable the Court to consider any question of law arising out of the award, and it is further provided that where the award does not state the reasons in sufficient detail, the Court shall remit the award to the arbitrators or umpire and fix the time within which the arbitrators or umpire shall submit the award together with the reasons in sufficient detail.
12. However, it is submitted by Mr. M. A. Rafiq Khan, learned counsel for the respondent that firstly, the awards state the reasons, secondly, the provisions of section 26-A will apply only to the proceedings pending in the suit at the relevant time and not to the proceedings pending in appeal, and lastly, the Court has discretion to remit the awards for stating the reasons in sufficient detail or not to remit it for the word used is "may" and not "shall".
13. Now, taking up the first part of the submission it may be stated that the arbitrator in the awards has first stated the history, then the plaintiff's claim under Phase-I, followed by data of project of Phase-I and then has stated the details of the proceedings under the heading hearing and then has stated his award. It will be convenient if we only reproduce hereinbelow that part of the award which is entitled as "Award", and which reads as follows :- "I have gone through the documents and the evidence. The counsel argued at length. I have eventually reached to a payment of Rs, 1,60,647 (Rupees one lac sixty thousand six hundred and forty-seven) and (Rs, 7,23,300 awarded in Suit No, 908 of 1981) including escalation due to losses suffered by them on account of the delay caused by the respondents.
' Other smaller claims and dues of the plaintiff indicated under sections 5 and 6 (page 3) have been mutually agreed and settled between the two parties."
14. We have already quoted the material part of the award and from its perusal, it is quite clear that except stating that he has reached the conclusion that the plaintiff (respondent) is entitled to a payment of Rs, 1,60,647 (Rs, 7,23,300 in the award in Suit No, 908 of 1981), which include escalation due to losses suffered by the respondent on account of delay caused by the appellant. He has however, neither stated any reason for awarding such substantial amounts nor has he stated how he has arrived at these figures by mentioning separately the various amounts awarded by him under various heads claimed by the respondent. Indeed in the absence of the reasons it was not possible for the appellant and A for that matter for this Court, to know what amount has been awarded by the arbitrator under each head.
15. We have already stated that the learned Single Judge himself has observed that the awards are non-speaking awards. Indeed he refused to look into the record for that reason. For all these reasons we find no substance in the first part of the submission. .
16. Now, taking up the second part of the submission that the provisions of section 26-A will apply to the proceedings in suit and not to the proceedings in appeal, it may be stated that it is well- settled that the appeal is continuation of the proceedings and that the original suit and appeal are step in one proceedings. However, if any authorities are needed reference may be had to F. A. Khan v. The Government of Pakistan (1), The Province of East Pakistan v. Muhammad Hussain Mia (2), Roshin Din v. S. M. Badruddin (3), Alaf Din v. Mst. Parveen Akhtar (4), Messrs Standard Printing Press v. Sind Employees' Social Security Institution (5) and Mizaffar Ali v. Muhammad Shaft (6).
17. We may however, specifically here refer to the decision of the Supreme Court in F. A. Khan v. The Government of Pakistan, wherein Kaikaus, J. While delivering the opinion of the Court at page 529 of the report observed as follows :- "None of these matters is res Integra and in fact decided cases show that in respect of the nature of an appeal the following propositions may be regarded as established-
(i) when an appeal is filed the matter sub judice and is reheard by the appellate Court which does not act merely as a Court of error ;
(ii) after there has been an appeal even though an appellate Court simply affirms the order of the original Court the only decree or order in existence is the order of the Appellate Court ;
(iii) the original and appellate proceedings are steps in one proceedings."
18. Elaborating his reasoning and after referring to various authorities on the first two propositions, the learned Judge proceeds to deal at 532 of the report with the third proposition as follows :- "The third proposition should really follow from the first two, but reference may be made in this connection to the judgment of the Supreme Court of India in Carikapati Verraya v. Subbiah Choudhury PLD 1957 SC (Ind.) 448, where after an exhaustive review of
(1) PLD 1964 SC 520 (2) PLD 1965 SC 1
(3) PLD 1969 Kar. 546 (4) PLD 1970 SC 25
(5) P L ti 8 Kar. 945 (6) PLD 1981 SC 94 . ' cases it was held that 'the legal pursuit or a remedy, suit, appeal and second appeal, are really but steps in a series or judicial proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding'. We are not at all unfamiliar with cases where an appeal is said to be a continuation of a suit or is included within the word suit. The Legislature, when it provides a hierarchy of tribunals for the determination of a dispute is really providing one complete procedure for such determination, proceedings before different tribunals being only steps in this procedure."
19. It was observed by Wahiduddin Ahmed, J. In Messrs Rah-e Manzil Transport and others v.
Muhammad Ameen (1) at p. 203 of the report as follows :- "A suit is a judicial proceeding and the word 'proceedings' must be taken to include all the proceedings in the suit from the date of its institution to its final disposal, and, therefore, to include proceedings in appeal."
We are, therefore, of the opinion, that the word 'proceedings' used in section 26-A(3) of the Arbitration Act, includes the proceedings to appeal.
20. Indeed two cases, one of this Court and the other of the Lahore High Court namely, Messrs Pak.
Malik Constructors Ltd., Rawalpindi v. Government of Pakistan and another (2) and Province of Sind and another v. Haji Khan (3) have been brought to our notice by Mr. Naqvi in which awards were remitted for stating the reasons in sufficient detail in view of the promulgation of the Ordinance XV of 1981, during the pendency of the appeals.
' We, therefore, find no merits in the second part of the submission too of Mr. Khan.
21. Now, remains the last part of the submission that we have discretion in the matter and, therefore, in the exercise of the same we must not remit the awards to the arbitrator for stating the reasons. By the two impugned awards substantial amounts of Rs, 1,60,647 and Rs, 7,23,300 have been awarded without stating the reasons. The object of amendment in the Arbitration Act, 1940 by insertion of section 26-A seems to be that if the award is based on irrelevant or extraneous considerations or matters or erroneous view of law or material facts or D evidence and other relevant matters have not been considered, it could be known to the parties so that any of them aggrieved by the award could challenge it and also to enable the Court to consider any question of law arising out of the award.
Now, firstly the argument is based on misreading of the provisions for the word used is not 'may' but 'shall'. Secondly, we do not think that the word 'shall' has been used in the provisions in directory sense E for otherwise it would defeat the stated object. In any case, even if we have discretion we find no valid reasons not to remit the awards for stating the reasons in sufficient detail as it settled that discretion must be exercised reasonably and not arbitrarily or capriciously.
(1) PLD 1963 (W. P.) Kar. 182 (2) PLD 1982 Lab. 57
22. We accordingly, remit the awards to the arbitrator for stating the reasons therefor in sufficient detail. The arbitrator shall submit the award to the Court stating the reasons therefor in sufficient detail within two months from the date of the receipt of the record and proceedings.
' However, in the circumstances the parties are left to bear their own costs.