This revision petition is directed against order dated 28-4-1988 passed by learned District Judge, Sialkot disposing of the appeal of the petitioner according to the statement made by referee appointed by the parties, which was directed against order of the learned trial Court dated 19-5- 1985 by which the application made by the respondent Muhammad Abdullah for making the award rule of the Court was accepted after rejecting the objections raised against the award by the petitioner.
2. The facts of the case in brief are that in pursuance to an agreement of arbitration executed between the parties an award was made on 3-3-1981. An application was made by respondent before the trial Court that the said award attached with the said application may be made the rule of the Court. Notice was issued to the present petitioner who filed a reply to the said application in which he specifically pleaded that the arbitrator had mis-conducted therefore, the award was liable to be set aside therefore, it was prayed that the said application be dismissed. The learned trial Court on the pleadings of the parties framed the following issues:--
(1) Whether the petition is not competent? OPR.
(2) Whether the award should be made rule of the Court? OPA.
(3) Relief.
After recording evidence of the parties, the learned trial Court held that the objections raised by the present petitioner on the award had no force; therefore, issue No. 2 was decided in favour of the respondent. As a consequence of this Finding the award dated 3-3-1981 was declared as rule of the Court. The present petitioner feeling aggrieved from the said order tiled an appeal before this Court as R.FA. No.119 of 1985 which was admitted but subsequently with the enhancement of pecuniary jurisdiction of learned District Judge, the appeal was transmitted to his Court for disposal. During the hearing of the appeal, the parties agreed that for the final decision of the entire dispute between the parties. Mr. Sami' Ullah Butt son of Shakar Ullah Butt, case Kashmiri, resident of Mohalla Hajipura, Sialkot City be appointed as referee and whatever statement he would make in Court in respect of dispute between the parties the parties shall be bound by it. A joint statement of learned counsel for both the parties and the parties themselves was recorded by the learned District Judge, on 4-4-1988. Consequently through order of the same date said Mr. Sami Ullah Butt, way appointed as referee. It was observed in the said order that the parties shall remain bound by whatever statement with regard to the dispute he will make in the Court as referee. The learned District Judge, fixed 25-4-1988 as the date for recording statement of the said referee who was directed to be informed for However, it appears that the said referee appeared which date the petitioner made an application that appointment of Mr. Sami Ullah Butt as referee may be cancelled and some other referee. Learned District Judge proceeded to record the statement of referee through impugned order dated 28-4-1988. He disposed of the appeal accordance with the statement of the referee and through the same order dismissed the application of the petitioner for revocation of the authority of the referee. This order has been challenged in this revision petition.
3. Learned counsel for the petitioner argued that since the statement made by the referee was not based on his own knowledge but was made after examining the parties and the accounts as also the spot inspection as such he acquired the legal status of an arbitrator and his statement should have been treated as an award, on supersession of the previous award made as rule of the Court therefore the petitioner was entitled to file objections to the award aide by referee which opportunity having not been given to him, the impugned order is without jurisdiction. Ire also argued that the application of the petitioner for revocation of the appointment of arbitrator should have been considered and disposed of prior to the recording of statement of the referee and since the petitioner had expressed lack of confidence in the referee, the appeal should not have been decided on the statement of the referee or at least the said application and the averments made therein should have been judicially considered and discretion exercised in a judicial manner which having not been done the Court failed to exercise jurisdiction vested in it under the law as the learned District Judge in his discretion was fully competent to decline to hold the petitioner by the said agreement.
4. Learned counsel for the respondent raised a preliminary objection that the court-fee of requisite value has not been affixed on the revision petition therefore unless the petitioner is called upon to make deficiency in the court-fee the revision petition cannot be heard. According to him, the learned District Judge held that the petitioner was liable to pay Rs. 49,000 according to statement of referee as against an amount of Rs. 59,881 which was found due from the petitioner by the arbitrator therefore, court-fee was to be affixed on the amount of Rs. 49,000. He maintained, that in all respects this revision petition is against decree of an amount Rs. 49,000 made by the learned District Judge as such the court-fee was to be paid on this amount. Reliance has been placed on judgments reported as Gauri Shankar v. Anant Ram AIR 1926 Lah. 4113 and Firm Agha Sher Muhammad Khan Zamarud Din v. Mian Haji Fazal Ilahi Gurwara AIR 1936 Pesh. 232.
5. On merits, learned counsel for the respondent argued that once having agreed that the case be decided on the statement of referee appointed by the Court, the petitioner could not resile from the same and the application moved by the petitioner for revocation of his authority was rightly dismissed by the learned District Judge and the disposal of the appeal on the basis of statement of referee does not suffer from any legal infirmity or want of jurisdiction.
6. Before entering upon discussion on the merits of the case, I will first proceed to dispose of the objections of the learned counsel for the respondent regarding court-fee. From the facts as mentioned above, it is clear that in response to application moved by the respondent for making the award rule of the Court, the petitioner raised objection that since the arbitrator mis-conducted therefore the award was liable to be set aside as such the application of the petitioner for making the same as rule of the Court be dismissed. The reply filed by the petitioner containing these objections against the award and praying for setting it inside can safely be constructed to be objections against the award. The learned trial Court through order dated 19-5-1985 under issue No. 2 rejected the said objections of the petitioner against the award and thereafter proceeded to make the award rule of the, Court. Under section 17 of the: Arbitration Act, it is provided that the award could be made rule of the Court only after the expiry of limitation for making an application to set aside the award or such application having been made, after refusing it. No form has been prescribed in the Arbitration Act for such an application for setting aside the award. In judgment reported as Ramaswa mi Servai and others v. Muthiralayee and others AIR 1954 Madras 560 the view has been expressed that if objections against the award have been raised in reply to an application that would be construed to be objections against the award praying for setting it aside.
In this view of the matter, the order passed by learned trial Court on 19-5-1985 was a composite order i.e.:--
(i) Rejection of the objections of the petitioner against the award and his prayer for setting it aside; and
(ii) making the award rule of the Court after rejecting the objections against the award.
Under section 39 of the Arbitration Act an appeal has been provided against an order setting aside or refusing to set aside award. Viewing from this angle the appeal before the learned District Judge, filed by the petitioner was against rejection of his objections against the award and refusal of his prayer for setting aside the award therefore it was an appeal against an order. If the legal effect of acceptance of prayer of the petitioner for setting aside the award after upholding his objections the decree passed by the Court on making the award rule of the Court is also to stand nullified and prayer to that effect was also made in the appeal as consequential relief, the appeal could not be treated to be an appeal in strict sense against the decree. The matter has been put beyond doubt by the legislature itself which provided in section 17 that no appeal shall lie from decree which has been passed on the judgment pronounced on award except on the ground that it is in excess of or not otherwise in accordance with the award. After having held that the appeal before the learned District Judge was against an order therefore, the court-fee on the same was not to be affixed according to the amount granted to the respondent in the award which was made rule of the Court. The said decree was not appealed from on the ground that it was in excess of or otherwise not in accordance with the award. What was prayed for in the appeal was that the award be set aside because arbitrator mis-conducted and as a consequence of setting it aside the decree should also be nullified. This finding I have recorded because it was necessary to determine the scope and nature of the appeal before the learned lower appellate Court in order to decide as to what would be the requisite court-fee stamp to be fixed on this revision petition. The effect of statement of referee and order of the Court reducing the amount granted in the award from Rs. 59,881 to Rs. 49,000 amounted to modification of the award as agreed by the parties and making the said modified award as rule of the Court and passing of modified decree accordingly.
It also amounted to an agreement for withdrawal of objections by the petitioner against the award.
Under Section 39(1)(iii) of the Arbitration Act, an order of the Court modifying or correcting an award has been made appealable. I am therefore, of the view that the petitioner could challenge the order of the learned District Judge being an order modifying the award by filing an appeal before this Court as an appeal from an order. There is no bar against treating a revision petition as an appeal and vice versa according to the firmly settled rule by the Supreme Court therefore, I hereby treat this revision petition as an appeal under section 39(1)(iii) of the Arbitration Act and proceed to dispose of the same as such. Since this is an appeal against an order modifying the award therefore, the court-fee stamp is not to be affixed on the amount in modified award which shall be deemed to have been made the rule of the Court and followed by the decree. The petitioner has raised objection to the disposal of the appeal on the basis of statement of referee and modification of award and not directly against the decree passed in: pursuance to this modified award being in excess of or not otherwise in accordance with the award. The reported judgments relied upon by the learned counsel for the respondent in view of these findings recorded by me cannot be applied to the facts of this case.
7. Faced with this situation, learned counsel for the respondent argued that since there was no application made by the petitioner for setting aside the award raising objections against the award, therefore there was no question of refusal by the Court to set aside award and as such appeal before the learned lower appellate Court was not competent. Reliance has been placed on judgment reported as Nilkantha Sidramrappa Ningashetti v. Kashinath Somanna Ningashetti and others AIR 1962 S.C. 666. On a close scrutiny of this judgment and fact involved in that case, I find that the argument has no force. In the reported case also in response to a notice issued to the defendant the defendant/respondent filed written-statement with regard to the suit as also the award questioning the validity of the award and praying that it be declared null and void and the suit be heard on merits. It was held that the said defendant was served with a notice on 7-9-1948 on which date he got adjournment and the case was adjourned to 7--10-1948 on which date also another adjournment was sought by the said defendant and the case was adjourned to 9-9-1948 on which date the said written---statements were filed. It was held that the time for filing objections to the award started running from 7-9-1948 therefore the written-statement filed on 9- 9-1948 praying for setting aside the award was barred by time as the limitation for seeking setting aside of the award was one month from the date of notice which in that case was held to have been served on 7-9-1948. It was in these circumstances the Court held that there being no objections against the award within limitation, as such there was no question of the Court having passed an order for refusal to set aside the award. It is not the case of the respondent here in this case that the reply filed by the petitioner to the application of the respondent for making the award rule of the Court in which he prayed for setting aside the award was filed after expiry of period of limitation of 30 days from the date of service of notice on the petitioner regarding filing of the award. The rule laid down in the said reported judgment therefore does not apply to the facts of present case, rather it supports the case of the respondent that objections to the award with prayer for setting it aside could be made in the reply to the application filed by the respondent provided it was within limitation. The argument is therefore repelled.
8. The question for determination is what was the position of the referee in this case. The case of the petitioner is that since the referee did not make statement on the basis of his personal knowledge but made the statement on the basis of examination of accounts books, the parties and the spot inspection which is manifest from his statement therefore, he in all respect acted as an-arbitrator therefore, the petitioner should have been called upon to file objections against his statement which in the circumstances was an award made by the arbitrator. The argument has not impressed me. The position of the referee is not to be determined with reference to the statement he made rather it is the agreement of the parties which primarily is to determine his position. It is clear from the statement made by the parties and their learned counsel before the learned District Judge that Mr. Sami Ullah Butt was appointed as referee simpliciter as it is manifest from their statements that the parties agreed that they would be F bound by what the referee would state and the entire dispute may be decided accordingly. It was not intended by them to constitute him as arbitrator as he was not given authority to decide the dispute and the petitioner cannot now turn around that the referee should have been treated as an arbitrator merely because he made statement on the basis of some material having been examined by him.
Through whatever source the referee acquired knowledge for making statement, that could not affect his legal status as referee.
9. The next question for determination is whether the petitioner could retract from the agreement that the dispute may be decided in accordance with the statement of the referee. The learned District Judge in the impugned order has held:- "The law relating to the appointment and verdict of decision of the referee is different from the law of arbitration and once the parties agree to the appointment to abide by his decision, they cannot wriggle out of it nor they can object to his verdict or decision. This being so, the application of the appellant requesting for the cancellation of the appointment, referee is rejected and his above statement, will have to be given effect.--- According to the view held by the learned District Judge neither the petitioner could retract from the said agreement nor the Court could allow him to do so and that the court was bound to pass an order accordingly. This in my opinion is not the correct view of law taken by the learned District Judge as such he failed to exercise jurisdiction vested in him under the law. The application for revocation of appointment of referee was made by the petitioner before his statement was recorded. It is also clear from the order passed by learned District Judge dated 28-4-1988 in which he noted that such an application had been made and he after noting this fact held that the statement of referee was to be recorded first. The petitioner expressed lack of confidence in the referee. The agreement between the parties in a case pending before a Court for decision of the disputes on the basis of statement of third person as referee is a contract between the parties simpliciter and not adjustment of suit wholly or partly by any agreement or compromise within the meaning of provisions of rule 3 of Order XXIII, C.P.C. As held in reported judgment Muhammad Akbar and another v. Muhammad Aslam and another PLD 1970 SC 241 as such the learned District Judge had jurisdiction and could in his discretion decline to hold the petitioner by it. No doubt the discretion in the matter, according to fairly established rules is to be exercised keeping in view facts and circumstances of each case after applying judicial mind. In this view of the matter, the findings of the learned District Judge on the erroneous assumption that the petitioner could not retract from agreement for appointment of Sami Ullah Butt as referee and to be bound by his statement and the Court was bound to pass order according to statement of referee clearly amount to failure to exercise jurisdiction vested in the Court.
10. For the foregoing reasons, this appeal is accepted, the impugned order dated 28-4-1988 passed by learned District Judge, Sialkot is set aside and the case remanded to learned District Judge, Sialkot for disposal on merits the application of the petitioner for revocation of appointment of Mr. Sami Ullah Butt, as referee first and thereafter, to dispose of the appeal in accordance with law. The parties are left to bear their own costs.