' C.A. RAHMAN, J.--This judgment will dispose of the present first appeal (F.A.O. No,75 of 1980) and F.A.O. Nos.204 of 1976, 213 of 1973, 24 of 1982, 222 of 1975, 184 of 1971, 186 of 1971 and 114 of 1981 which have been heard together as a common legal question has arisen in these appeals.
2. The Arbitration Act, 1940 (Act No,X of 1940) (hereinafter to be referred as "the Act") was amended in 1981 by the Arbitration (Amendment) Ordinance, 1981 (Ordinance XV of 1981) (hereinafter to be referred as "the Ordinance") which came into force on the 11th May, 1981. The relevant provisions of the Ordinance as contained in sections 2 and 3 are reproduced as under:- "Section 2.--Insertion of new section 26-A, Act X of 1940. --In the Arbitration Act, 1940 (X of 1940), after section 26, the following new section shall be inserted, namely:- '26-A. Award to set out reasons--(1) The 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 arbitrators 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."
Section 3.--Power of Court to remit casess pending at commencement of Ordinance.--(1) If, in any case in which proceedings in relation to an award which has been filed in Court are pending in any Court immediately before the commencement of the Ordinance, the Court finds that' the award does not, or does not in sufficient detail, state the reasons for the award, the Court may remit the award to the arbitrators or umpire with a direction to state the reasons for the award in sufficient detail.
(2) Where an award is remitted under subsection (1) the Court shall fix the time within which the arbitrator or umpire shall submit to the Court an award stating the reasons therefor in sufficient detail: Provided that any time so fixed may be extended by subsequent order of the Court.
(3) An award remitted under subsection (1) shall become void on the failure of the arbitrator or umpire to submit it in accordance with the direction of the Court."
4. It is evident from the aforementioned provisions that section 26-A applies to cases which would come up before Courts after coming into force of the Ordinance, while section 3 of the Ordinance takes care of the cases in which proceedings in relation to an award which has been filed in Court are pending in any Court immediately before the coming into force of the Ordinance. A question has arisen whether the provisions of section 3 of the Ordinance would also apply to a case where the award was made a rule of the Court but an appeal challengin the order making the award as rule of the Court was pending at the time of commencement of the Ordinance. According to the learned counsel for the appellants section 3 of the Ordinance is applicable in such a case and the appellate Court is competent to remit the award to the arbitrators or umpire with a direction to state the reasons for the award in sufficient detail where it finds that the award does not, or does not in sufficient detail, state the reason for the award. Learned counsel for the respondent, on the other hand, has argued that when an appeal is filed against the order making the award a rule of the Court, the award itself is not before the appellate Court and as such the provisions of section 3 of the Ordinance which empower the Court to remit the award to the arbitrators or umpire are not attracted. It has been further contended that the legislature had no intention to take away the legal right which had accrued by the passing of a decree in terms of the award in favour of the respondent before the commencement of the Ordinance.
5. Before we consider the scope of section 3 of the Ordinance it is necessary to examine the legal position with regard to the contention of the learned counsel for the respondent that after the award is made a rule of the Court it merges into the decree which is passed in terms of the award and as such when the matter comes up before the appellate Court the award as such is not before it. In other words, the contention of the learned counsel for the respondent is that the appellate Court has no power to remit the award to the arbitrators or umpire as such power is only available to the Court in which the award is filed and it can be exercised before the award is made rule of the Court. Support has also been sought from the definition of the word 'Court' as give in section 2(c) of the Act in advancing the plea that section 16 of the Act confers power to remit award on the Court which does not include appellate Court. The definition of the term 'Court' in section 2(c.) o the Act is as under:- "Court means a civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under section 21, include a Small Cause Court.".
' It is contended that the aforementioned definition does not include the appellate Court as was held by the Calcutta High Court in Abani Bhusan Chakravarty v. Hem Chandra Chakravarty AIR 1947 Cal.
93. In that case the question for determination before the Court was whether the appellate Court had jurisdiction to refer to arbitration matters in dispute between the parties. It was held that section 21 of the Act conferred jurisdiction only on the Court of first instance to refer to arbitration matter in difference between the parties in the suit. The above view was however not shared by the Patna High Court in Thakur Prasad v. Baleshwar Ahir and others AIR 1954 Pat. 106 and in Moradhwaj v. Bhudar Das AIR 1955 All. 353 by a Full Bench of the Allahabad High Court. The definition of the term 'Court' as given in section 2(c) of the Act also came up for consideration by the DOca High Court while interpreting the provisions of section 28 of the Act which empower the Court to enlarge time for making award in M/s. M.M. Ispahani Ltd. v. M/s. Pakistan Trading Company PLD 1966 Dacca 54. Relying on the following observations made by the Patna High Court in Thakur Prasad v.
Baleshwar Ahir and others, it was held that the term 'Court' used in section 28 includes appellate Court.
"Section 21, Arbitration Act speaks of parties to a suit and matters in difference between them in the suit. It enables such parties to apply in writing to the Court, before judgment is pronounced, for an order of reference. Examining the definition of the term "Court" as given in S.2(c), Arbitration Act, quoted above, there seems no valid ground for holding that it excludes an appellate Court. Just as a Court of first instance has "jurisdiction to decide the questions forming the subject-matter of the reference, if the same had been the subject-matter of a suit", so also an appellate Court has the same "jurisdiction to decide the questions forming the subject-matter of the reference, if the same had been the subject-matter of a suit". This is the function of an appellate Court as well."
' The Supreme Court of India has finally resolved the controversy regarding the jurisdiction of the appellate Court to refer to arbitration disputes between the parties under section 21 of the Act in Nachiappa Chettiar and others v. Ct. A. Ct. Subramaniam Chettiar AIR 1960 SC 307. While examining the scope of section 21 of the Arbitration Act it has been observed:- "Does the "Court" in the context mean the trial Court? This construction cannot be easily reconciled with one of the conditions prescribed by the section. After a decree is drawn up in the trial Court and an appeal is presented against it, proceedings in appeal are a continuation of the suit; and speaking generally, as prescribed, by section 107 of the Code of Civil Procedure the appellate Court has all the powers of the trial Court and can perform as nearly as may be the same duties as are conferred and imposed on the trial Court. If that be so, during the pendency of the appeal, can it not be said that matters in difference between the parties in suit continue to be matters in dispute in appeal? The decision of the appeal can materially affect the nature and effect of the decree under appeal; and there is no doubt that all the points raised for the decision of the appellate Court can be and often are points in difference between them in the suit; and, in that sense, despite the decision of the trial Court the same points of difference in suit continue between the parties before the appellate Court. If during the pendency of such an appeal parties interested agree that any matter in difference between them in the appeal should be referred to arbitration the first two conditions of the section are satisfied. When section 21 was enacted did legislature intend that during the pendency of the appeal no reference should be made even if the parties satisfied the first two conditions prescribed by the section?"
' Taking notice of the practice prevalent in the Courts before enactment of the Act and keeping in view the words used in section 21 being substantially the same as were used in Schedule II paragraph 1 of the Code of Civil Procedure, 1908 (which was replaced by the Act), it was held that-- "In our opinion, "Court" in section 21 includes the appellate Court proceedings before which are generally recognised as continuation of the suit; and the word "suit" will include such appellate proceedings. We may add that whereas section 41 of the Act is consistent with this view no other section militates against it."
' In Wajid Ali v. Sajid Ali 1985 SC MR 401 the Supreme Court of Pakistan following the decision of the Supreme Court of India in the case noticed above has held- "That the appellate Court being possessed of all the powers enjoyed by the Courts from which an appeal is received or in which the proceedings were initiated, the High Court would as well enjoy in appeal the powers of making a reference to arbitration."
6. The definition of the term 'Court' in section 2(c) of the Act does not exclude the appellate Court as has been held by the Patna High Court in Thakur Prasad's case and the Dacca High Court in Messrs M.M. Ispahani Limited's case. The same reasoning on which the power to make reference to arbitration under section 21 of the Act is found to be available to an appellate Court holds good in the case of power to remit award under section 16 and the appellate Court has power to remit the award to the arbitrators or the umpire for reconsideration. This power can be exercised by the appellate Court even by virtue of section 107(2), C.P.C. Read with section 41(a) of the Act. Although the question of jurisdiction of the appellate Court to remit award to the arbitrator or umpire under section 16 was not directly in issue in Bapuji Dhanaji Thakare and another v. Ganpatrao Anyaji Gawande AIR 1961 Bom. 123, the Court upheld the order of the appellate Court remitting the award to the arbitrator under section 16 of the Act and observed that the appellate Court had properly exercised its discretion. The fact that the award stands merged in the decree which follows the order making the award as rule of the Court does not take away the power of the appellate Court to remit the award to the arbitration or the umpire for reconsideration under section 16 of the Act. It is difficult to subscribe to the view of the learned counsel for the respondent that after an award is made a rule of the Court it cannot be looked into by the appellate Court when the matter comes before it in appeal, because while deciding the question whether the decree passed in "terms of the award after the application to set aside has been refused, is in excess of the award or is not in accordance with the award, it is necessary for the appellate Court to examine the award.
7. It may be noticed that the term 'Court' used in section 3 of the Ordinance has to be interpreted independently of the definition of the term 'Court' as given in section 2(c) of the Act because section 3 does not form part of the Act. It is, therefore, not possible to accept the argument that the term 'Court' used in section 3 of the Ordinance does not include the appellate Court.
8. In order to determine the scope of section 3 of the Ordinance it is necessary to construe the meanings of the expression "in which proceedings in relation to an award which has been filed in Court are pending in any Court". According to the learned counsel for the respondent proceedings in relation to an award do not include appeal against the order making the award rule of the Court because appeal cannot be considered as proceedings in relation to an award filed in Court. We, however, do not agree with the learned counsel for two reasons. Firstly, the appeal against an order making the award a rule of the Court is a proceeding in relation to that award and secondly, the appeal itself is a process of continuation of proceedings before the Court of first instance. In F.A.
Khan v. Government of Pakistan PLD 1964 SC 520 one of the proposition which was considered as established in respect of the nature of an appeal was that the original and appellate proceedings were steps in one proceedings. Reference in this case was made to the decision of the Supreme Court of India in Garikapati Veeraya v. N. Subbiah Choudhry PLD 1957 S, C (Ind.) 448 where it was held-- "The legal pursuit of a remedy, suit, appeal and second appeal, are really but steps in a series of judicial proceedings' all connected by an intrinsic unity and are to be regarded as one legal proceedings."
' It was observed in the aforementioned F.A. Khan's case-- "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 an 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."
9. Learned counsel for the parties have cited before us some cases where the provisions of the Ordinance came up for consideration. The first case is M/s. Ghandhara Industriestd. v. Government of Pakistan PLD 1982 Kar.
260. In this case, which was dealt with by the High Court in the exercise of its original civil jurisdiction, the award was made by the arbitrator on 30-4-1975. After the filing of the award in Court, application to set aside the award was made by one of the parties. At the time of hearing it was pointed out that the arbitrator had not stated in the award reasons for the award in sufficient detail and as such it was liable to be remitted to the arbitrator. Reference was made to the provisions of sections 2 and 3 of the Ordinance. The Court upholding the objection expressed the view that provisions of section 3 of the Ordinance were applicable to the case. The award was accordingly remitted to the arbitrator with the direction to re-submit the award after stating the reasons therefore, in sufficient detail.
10. Messrs Pak Malik Constructors Ltd. v. Government of Pakistan PLD 1982 Lah. 57 was disposed of by the High Court in exercise of its appellate jurisdiction. In that case award dated 24-9-1977 was set aside by the Court of first instance. Appeal was filed in the High Court on 17-11-1979 against the above order. The Ordinance had come into force by the time the appeal was heard. It was contended on behalf of the appellant at the time of hearing of the appeal that in view of the provisions of section 3 of the Ordinance the award was liable to be remitted to the arbitrator as it did not contain reasons in its support. The Court accepted the contention and remitted the award to the arbitrator with a direction to refile the award after stating reasons in support thereof.
11.' Province of Sind v. Haji Khan PLD 1983 Kar. 621 came up before the High Court in the exercise of its appellate jurisdiction. In that case the award was made on 8-5-1980 and it was filed in Court on 11-11-1980. Objections were filed against the award which were rejected by the Court and the award was made rule of the Court on 15-12-1981. In appeal one of the contentions of the appellant was that the award was liable to be remitted to the arbitrator as it did not contain reasons in its support. It was held by the High Court that since the objections filed against the award were pending when the Ordinance came into force, the Court of first instance should have remitted the award to the arbitrators for stating reasons in support thereof. The appeal was accordingly accepted and the award was remitted to the arbitrator for stating the reasons for the award.
12. Karachi Metropolitan Corporation v. Associated Constructors Ltd. 1984 CLC 1077 was an Intra- Court appeal. While examining the question of applicability of the provision of section 3 of the Ordinance to the appeal it was held that the word proceedings used in section 3(1) of the Ordinance (not section 26-A (3) of the Act as inadvertently mentioned in the judgment) included the proceedings in appeal. In interpreting the word 'proceedings' reliance was placed on F.A. Khan's case and M/s. Rah-e-Manzil Transport and others v. Muhammad Ameen PLD 1963 (W.P.) Kar.
182. The appeal was accepted and the award was remitted to the arbitrator for stating reasons in support of the award.
13. With the insertion of section 26-A in the Act a radical change has been brought about in the law of arbitration inasmuch as the old concept that the arbitrators or the umpire were not bound to follow technical rules of procedure in proceedings before them because they were not expected under the law to record reasons in support of the conclusion arrived at by them while adjudicating the dispute between the parties has been done away with. For reasons, which it is not necessary to state here, it has been considered expedient that the arbitrators or the umpire should 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. Section 26-A has accordingly been inserted in the Act. The provisions of this section, however, are applicable to the awards to be made after the coming into force of the Ordinance and since these provisions are not applicable in cases where the award had been made before coming into force of the Ordinance, provision has been made in the Ordinance in the form of section 3 which deals with cases in which proceedings in relations to an award, which had been filed in Court were pending in any Court immediately before the commencement of the Ordinance. While in the case of award to be made by the arbitrators or umpire after the commencement of the Ordinance it has been made obligatory for the arbitrators or the umpire to state in the award the reasons for the award in sufficient detail and in the event of their failure to do so it has been provided that the award shall be remitted to the arbitrators or the umpire with a direction to state the reasons in support of the award and resubmit it in Court within the prescribed time vide section 26-A, in the cases pending in the Court at the time of commencement of the Ordinance it has been left to the discretion of the Court to remit the award to the arbitrators or umpire requiring them to state the reasons for the award where the Court finds that the award does not in sufficient detail state the reasons for the award vide section 3 of the Ordinance. The discretion, of course, has to be exercised by the Court judiciously.
14. We have noticed above that the power conferred on the Court in respect of cases under section 3 of the Ordinance is not restricted to cases where the proceedings are pending in the Court and the award has not been made rule of the Court but the power to remit the award to the arbitrator or the umpire can be exercised by the Court even after the award has been made a rule of the Court and the matter has come up in appeal before the appellate Court. We are fortified in this behalf by the view expressed by the Division Bench of the High Court of Sind in Karachi Metropolitan Corporation v. Associated Constructors Limited noted above. Keeping in view the distinction maintained by section 26-A of the Act and section 3 of the Ordinance we now proceed to examine each case to find out whether on the basis of the facts the award submitted by the arbitrators or the umpire requires to be remitted to the arbitrators or the umpire under section 3 of the Ordinance. The basic consideration in each case shall be whether the award submitted in Court is equitable, fair and just, and as such can be implemented notwithstanding the fact it does not, or does not in sufficient detail, state the reasons in support of the award.
F.A.O. No,75 of 1980
15. Messrs Industrial Machine Pool, Government Contractors respondents filed an application under sections 9 and 20 of the Act on 30-6-1985 requiring the appellant to file agreement under which the respondents were entrusted the work of Rural Water Supply Scheme at Jia Bagga, District Lahore, after the tender submitted by the respondents was accepted vide letter No,460/G, dated 31-1-1975 of the Superintending Engineer, Public Health Engineering Circle, Lahore, as communicated to the respondents vide Memo. No,W-97/110/M, dated 3-2-1975. The estimated cost of the work was Rs,3,70,000 and it was required to be completed in six months. According to the respondents the work was carried out according to the specification and the drawing supplied on behalf of the appellants, which, however, were incorrect and defective as the tube-well installed by the respondents according to the above specification and the drawing did not function.
Respondents' payment for the work done was withheld by the appellant on account of failure of the tube-well. The respondents invoked the arbitration clause of the agreement and nominated their arbitrator on the panel, while the appellants did not nominate any person as arbitrator on their behalf. On 28-4-1976 the Court appointed Mr. Muhammad Rashid Ahmad, Advocate, as the sole arbitrator, who vide his award, dated 16-7-1978 found that the respondents were entitled to a sum of Rs,2,98,000 which included Rs,4,000 as costs. The appellants challenged the award by filing objection petition under section 30/33 of the Act. One of the objections raised by the appellant was that the arbitrator had failed to apply his mind while making the award. The objection petition was, however, rejected by the Court on the ground that the arbitrator was not required to give reasons for the award and reliance in that behalf was placed on Muhammad Saghir Bhatti & Sons v.
Federation of Pakistan PLD 1958 SC 221. The award was made rule of the Court on 12-9-1979. The appellants challenged the above order by filing appeal under section 39 of the Act. In the grounds of appeal also it is contended that the arbitrator did not properly appreciate the facts of the case and gave the award arbitrarily.
16. On going through the award, dated 16-7-1978 we have noticed that the respondents' claim for the work done was Rs,3,16,691 but the arbitrator reduced it to Rs,2,94,000 without giving any reason fo such reduction. The appellants' contention that the arbitrator gave the award without considering the facts and evidence placed before him could be ignored under the Act prior to its amendment by the Ordinance but now under the provisions of section 3 of the Ordinance the Court can intervene and remit the award to the arbitrator. In our view it would not be fair and just to implement the award in question as it does not contain any reason in its support.
F.A.O. No,204/76
19. The appellant Messrs Jalal Din and Sons entered into a contract with the respondent to construct a number of quarters for the Survey and Construction Branch of Pakistan Western Railways on 4-11-1961. The construction work was completed by the appellant on 3-9-1962 and the final payment was made on 15-8-1963. The above payment, however, did not include the payment on account of the lead of water, which according to the appellant, was an unscheduled work but in respect of which assurance had been given that payment would be made alongwith the payment for the scheduled work. On the refusal of the respondent to accede to the appellant's demand of payment for the unscheduled work, the appellant invoked condition No,46 of the contract for making reference to arbitration for the settlement of the dispute. Application under section 20 of the Act was accordingly filed by the appellant on 14-6-1966 in the Court of Senior Civil Judge. On 29-4-1972 Mr. Faroogh Ahmad, Deputy Chief Engineer, Pakistan Western Railways was appointed as the sole arbitrator by the Court. He made the award on 10-2-1973 and filed it in Court on the same day. The appellant filed objections under section 33 of the Act against the award contending inter alia that the arbitrator had not taken an intelligent decision as he had not indicated in the award on what basis he had allowed appellant's claim to the extent of Rs,5,500 as against the total claim of Rs,1,40,000. The Court, after recording the evidence and hearing the parties' counsel, rejected the appellant's objection and made the award rule of the Court vide order, dated 23-4-1976. The appellant filed the instant appeal under section 39 of the Act challenging the order and decree of the Court.
18. A perusal of the award, dated 10-2-1973 shows that the arbitrator has given no reason for accepting the appellant's claim to the extent of Rs,5,500 out of total claim of Rs,1,40,000. The sole ground on which the respondents had rejected the appellant's claim was that unscheduled work was undertaken by the appellant without prior sanction in writing of the competent authority. The award in question makes no reference to the above contention. In other words the decision of the arbitrator awarding Rs,5,500 to the appellant appears to be without any basis. It would not be just and proper to implement such award.
F.A.O. No,213/73
19. This appeal was filed by the Lahore Improvement Trust challenging order and decree, dated 22- 9-1973 passed by Civil Judge Ist Class, Lahore, whereby the appellant's objections petition under section 30 of the Act for setting aside award, dated 8-6-1972 made by the arbitration committee was dismissed and the award was made a rule of the Court.
20. In pursuance of agreement, dated 12-7-1969 Abdul Razzaq respondent undertook to construct 50,000 Gallons Overhead Reservoir in Fruit and Vegetable Market Badami Bagh, Lahore. Before completion of the work a dispute arose between the parties as to the payment for the use of M.S. Bars by the respondent. The parties agreed to constitute an arbitration committee consisting of two nominees of the parties and Mr. S.M. Nazim, Advocate, as its Chairman for resolving the dispute in terms of clause 30 of the agreement. On 8-6-1972 the arbitration committee gave its award which was filed in COurt on 28-7-1972 in pursuance of a notice issued by the Court on an application submitted by the respondent on 1-7-1972 under section 14 of the Act. The appellant filed objections petition under section 30/33 of the Act challenging the award on a number of grounds.
After recording the evidence and considering the submissions made by the parties' counsel, the learned trial Court dismissed the objection petition on 22-9-1973 and made the award rule of the Court.
21. According to the award the claim of the respondent has been allowed to the extent of Rs,54,390.43 in addition to his claim for refund of security and earnest money amounting to Rs,13,458. It is stated in the award that the contention of the appellant that the respondent had failed to get the reservoir tested and as such was not entitled to any payment is without substance.
The award, however, is silent as to how the above contention is without substance. The arbitration committee, after considering the claims preferred by the respondent against the appellant has rejected the claim for payment of Rs,120 and has allowed I the claim for refund of security and earnest money, in full. The remaining four claims have been partially allowed by the committee. No reason has been stated in the award either for rejecting the claim or allowing the claims partially.
The implementation of the award in its present form does not appear to be fair and just.
F.A.O. No,114 of 1981
22. Sufi Muhammad Yousaf and Company respondent entered into an agreement with the appellants for construction of Disposal Works Building in connection with the Urban Sewerage Scheme Daska, District Sialkot after the respondent's tender was accepted by the Executive Engineer, Public Health Division, Sialkot. A dispute having arisen under the contract clause 25-A of the contract providing settlement of dispute through arbitration was invoked by the respondent.
The two arbitrators appointed by the parties in pursuance of the aforementioned clause of the contract gave award on 11-10-1980 which was filed in Court on 14-1-1981 by the arbitrators on an application submitted by the respondent under section 14 of the Act. The appellants filed objections against the award on 31-1-1981 which, however, were summarily rejected by the learned trial Court on the ground that the objections were not covered by section 30 of the Act.
Consequently, award dated 11-10-1980 was made rule of the Court and a 'decree in terms thereof was passed on 16-3-1981 which has been challenged in the instant appeal by the appellants.
23. Examination of the award, dated 11-10-1980 reveals that out of 13 claims preferred by the respondent six claims have been rejected or disallowed by the arbitrators. A sum of Rs,5,48,739.91 has been awarded to the respondent which includes Rs,10,800 as litigation charges. No reasons have been stated by the arbitrators for rejecting or disallowing the respondent's claims. The award also does not indicate why the remaining claims of the respondent have been allowed. In the absence of reasons given by the arbitrators in the award, it does not appear proper to implement it.
F.A.O. No,222 of 1975
24. The appellants in this appeal under section 39 of the Act have challenged order, dated 15-9- 1975 passed by Civil Judge 1st Class, Lahore, whereby award, dated 18-3-1974 was made rule of the Court and the impugned decree in terms thereof was passed.
25. The appellants awarded the work known as "Construction of Land Custom and Central Excise Training School at Walton Lahore--Residential accommodation" to the respondent in pursuance of a contract entered into between the parties on 24-2-1973. The respondent on 24-2-1973 submitted an application under section 20 of the Act, for filing the agreement relating to the aforementioned construction work in Court and appointment of arbitrator to adjudicate upon the dispute arising between the parties under the said agreement. On 9-7-1973, the Court appointed Muhammad Sharif Bhatti, Superintending Engineer (Retd.) as arbitrator who gave the award on 18-3-1974 and filed it in the Court on the same day. The appellants filed objections against the award on 17-4-1974 but the same were rejected by the Court on 29-9-1975. The appellants have filed the instant appeal against the order making the award rule of the Court and the passing of decree in terms thereof.
26. On going through award, dated 18-3-1974 we have noticed that out of 24 claims preferred by the respondent against the appellants ten claims have been rejected, while twelve claims have been allowed which include six claims in full. The arbitrator has, however, given no reasons in support of his aforementioned decision. In the absence of reasons it is not proper and fair to implement the award.
F.A.O. No,24 of 1982
27. The respondent firm was awarded work of repairing damages caused by flood and rain of 1976 and improving the slope from 2:1 to 3:1 in Reach R.D.260 to 262400 L/B.R.B. D.Link, on 3-1-1977. A dispute arose between the parties about the payment of bills which led the respondent firm to move the Court under sections 8 and 20 of the Act for filing of the agreement in Court and appointment of arbitrator in accordance with the terms of the agreement for settlement of the dispute. On 19-10-1978, the Court appointed the Superindenting Engineer a Link Canal Circle, Lahore, as arbitrator, who, however, died before making the award. On 5-11-1980 the Court appointed Mr. Ghulam Sarwar Raees (Retd.) Superintending Engineer, Irrigation Department as arbitrator. He gave the award on 5-2-1981 and filed it in the Court on the same day. The appellant filed objection petition under section 30 of the Act against the award but it was dismissed vide order, dated 26- 10-1981 and the award was made rule of the Court. The above order and the decree passed in terms of the award have been challenged under section 39 of the Act through the instant appeal.
28. Award dated 5-2-1981 which has been made rule of the Court contains no reasons in support of the acceptance of the respondent's claim. Since proceedings in relation to the above award were pending in the Court when the Ordinance was promulgated, it was a fit case where the Court should have exercised its discretion under section 3 of the Ordinance in remitting the award to the arbitrator for recording reasons in support of his decision.
F.A.O. Nos.184 and 186 of 1971
29. The appellants have challenged order, dated 22-4-1971 whereby awards, dated 22-4-1970 in respect of respondent firm's claims for payment on account of execution of non-scheduled items of work under agreement No,1 of 1965-66 and agreement No,2 of 1965-66 were made rule of the Court and decrees in terms of the awards were passed in favour of the respondent and against the appellants.
30. The respondent firm was given the work of construction of Government Central Model High School- for Boys at Samanabad after its tender was accepted by the Superintending Engineer II, Lahore Provincial Circle, Lahore, vide letter No,G-171/2704.G, dated 19-7-1965 as intimated by the Executive Engineer, IV Provincial Division, Lahore vide letter No,W-70/969/M/C, dated 21-7-1965.
Agreement No,1 of 1965-66 was executed in respect of the aforementioned work. The respondent firm completed the work on 1-8-1965 and received the final payment on 29-11-1966.
31. The respondent firm was also given the work of construction of a new hostel for two hundred post-graduate girls students in Lahore College for Women, Lahore, after its tender was accepted by the Superintending Engineer, III Provincial Circle, Lahore, vide letter No,G-205/2705/G, dated 19- 7-1965 as communicated to the respondent by the Executive Engineer, V. Provincial Building Division, Lahore vide letter No,W-65/972/M.C., dated 21-7-1965. Agreement No,2 of 1965-66 was executed in respect of this work. The respondent firm completed the work on 7-8-1966 and received payment of the final bill on 5-2-1967.
32. During the execution of the aforementioned works the respondent firm was required to execute some non-scheduled items of work for which- separate bills were submitted by the respondent firm. As the respondent's claim for the aforementioned non-scheduled items of work was not accepted in full, the respondent invoked arbitration clause 25-A of the contract and submitted two petitions under section 8/20 of the Act in the Court of Senior Civil Judge, Lahore, on 19-7-1969 for filing of the agreements in Court and appointment of arbitrators for settlement of the disputes. On 15-12-1969 the Court appointed Mr. Muhammad Ashraf Khan, Superintending Engineer, Sargodha Provincial Buildings Circle, Sargodha, as the arbitrator in both the cases. He gave separate awards on 22-4-1970 which he filed in Court on the same date. The appellants challenged the above awards by filing. Objection petitions on 27-5-1970 which, however, were dismissed by the Court on the ground that the same had not been filed within the prescribed period of limitation.
33. On going through the award pertaining to the construction of Government Central Model High School for Boys at Samanabad, Lahore, it has been noticed that all the three claims preferred by the respondent have been accepted by the arbitrator though no reasons have been given for accepting these claims. In the case of award pertaining to the other work it has been found that out of seven claims preferred by the respondent, two claims were rejected and five claims were accepted. No reasons have, however, been given by the arbitrator for accepting or rejecting the aforementioned claims. In the absence of reasons for allowing the respondent's claims it would not be fair and just to implement the awards given in favour of the respondent firm in view of the legal change brought about by the Ordinance.
The upshot of the above discussion is that we accept the appeals, set aside the impugned orders and decrees and remit the awards in question to the arbitrators and to the arbitration committee in F.A.O. No,213/73 with a direction to state in the award reasons for the award and resubmit the same in the Court of Senior Civil Judge, Lahore, within six months from the date of this judgment. As the appeals hay not been disposed of on merits the parties are left to bear their own costs.