' This suit is based on an Award, dated 5-6-1988, submitted in Court on 16-6-1988, by Brigadier Hydayatullah Khan Niazi, President Clifton Cantonment Board/Arbitrator in the reference. The Award operates to disallow the claim as well as the counter-claim in the arbitration proceedings.
Only the plaintiffs have lodged objections to the award while none have been submitted by the defendants.
2. Briefly, the facts giving rise to the Award are that plaintiffs, who are a firm of consulting Engineers, concluded an agreement, dated 29-7-1985 with the defendants for providing consultancy services for planning and designing the water supply, sewerage and drainage systems for phases I to V, V Extension, Sea View Apartments, Zam7ama and part of phase VI of Defence Housing Society, Clifton Cantonment, such contract providing an Arbitration clause for reference of all or any disputes to the President, Clifton Cantonment Board. Disputes having arisen between the-.Parties and no reference having been made plaintiffs submitted an application under section 20 of the Arbitration Act, 1940 in this Court (registered as Suit No,396 of 1987), on 3-5-1987, as a result whereof my learned brother Haider All Pir7ada, J., vide an order dated 4-11-1987, directed that the arbitration agreement be filed in Court and the disputes be referred to the President, Clifton Cantonment Board as per terms thereof. Subsequently, the plaintiffs submitted an application under section 8(2) of the Arbitration Act, 1940, (CMA 3413 of 1988), on 11-6-1988 for substitution of the Sole Arbitrator on grounds mentioned in such application. As seen above, the Award itself was filed in Court on 16-6-1988. On 18-9-1988 when C.M.A. No,3413 of 1988 was placed for orders in Suit No,396 of 1987, I directed that such CMA may be placed and heard with Suit No,557 of 1988 wherein the referred Award was, to come up for consideration. Following upon the submission of the Award in Court the plaintiffs, as adverted to above, submitted objections to the same on 17-8-1988 which proceed, more' or less, on the same lines as the grounds disclosed in the above CMA, seeking substitution of the Sole Arbitrator, in Suit No,396/87.
3. The facts on which the said CMA bearing No,3413 of 1988 and the Objections to the Award are based may be summarized by stating that pursuant to reference made by this Court, per Order dated 4-11-1977, plaintiffs through their Advocate vide a letter, dated 9-12-1987 had called upon the Sole Arbitrator to enter into the reference which had, allegedly, already been delayed. No response having been elicited a reminder dated 2-1-1988 was addressed. On 8-1-1988, plaintiffs and their Advocate received letter, dated 3-1-1988 from the Cantonment Executive Officer, Clifton Cantonment Board, to make appearance before the Sole Arbitrator at 11-00 a.m. On 17-1-1988. No proceedings are alleged to have taken place' on 17-1-1988 as the Sole Arbitrator was said to be unavailable. Through notice, dated 23-1-1988 the Cantonment Executive Officer informed of the next date of hearing as at 10-30 a.m. On 6-2-1988 and, allegedly, in a tell-tale manner referred to his earlier letter as dated 7-1-1988 and not 3-1-1988, implying, according to the plaintiffs, back dating of such letter. Be that as it may, on 6-2-1988 due to disturbances in Karachi the plaintiffs reached the office of the Sole Arbitrator at 11-15 a.m. Instead of 10-30 a.m. And filed their statement of claim and supplied a copy of the same to the defendants. Plaintiffs, however, later received a letter, dated 7-2-1988 from the Cantonment Executive Officer saying that no one attended on 6-2- 1988. Plaintiffs replied back through letter, dated 17-2-1988 from their Advocate in which they put the record straight. But there the matters rested for quite some-time till 9-4-1988 when plaintiffs were constrained to address another letter, dated 9-4-1988 complaining of inordinate delay and serious prejudice to them. This drew no response and drove the plaintiffs to address yet another letter, dated 23-4-1988 wherein it was stipulated that if nothing was heard from the Sole Arbitrator within a period of 7 days, it would be assumed that he was unwilling to act whereupon further necessary steps would be taken. The last mentioned letter also having remained unattended, plaintiffs served notice dated 21-5-1988 under section 8(1) of the Arbitration Act seeking agreement to the appointment of one of the three retired Judges of the Superior Courts, named in such letter, as Sole Arbitrator for resolution of the disputes. This occasioned letter, dated 23-5-1988, once again from the Executive Officer of the defendants, even though plaintiffs, time and again, had comprehensively objected to his addressing any communication on behalf of the Sole Arbitrator, he being a party to the dispute. At any event, the letter, dated 23-5-1988 fixed the date of hearing as 29-5-1988 at 11-00 a.m. Before the Sole Arbitrator. Objection through plaintiffs' letter, dated 28-5- 1988, was lodged. On 1-6-1988 the Sole Arbitrator, for the first time, himself addressed, a letter to the plaintiffs, fixing the date of hearing at 11-00 a.m. On 5-6-1988. Plaintiffs, through their Advocate's letter, dated 4-6-1988, received at the office of the Sole Arbitrator on 5-6-1988, pointed out that 4 months' time for making the Award had already expired and that the Sole Arbitrator, having refused/neglected to act and the defendants having been called upon to agree to a fresh appointment under section 8(1) of the Arbitration Act, the Sole Arbitrator could not proceed with the matter. As seen above, the Sole Arbitrator rendered his Award on 5-6-1988.
4. It is contended on behalf of the plaintiffs that the Sole Arbitrator has misconducted himself and the proceedings, that the Award made by him is beyond time and that the Award also, clearly, indicating strong and discernible bias, should be set aside. That being done, another Sole Arbitrator be appointed in the reference. Plaintiffs have cited a number of instances to support their, case of misconduct on the part of the Arbitrator, including use of the agency of the Executive Officer of the defendants, for addressing all the correspondence, except one letter on behalf of the Sole Arbitrator, and deliberately delaying the matter and placing the plaintiffs precariously in the pursuit of their claim. While such matters do arise in the context of misconduct and, perhaps, could also have been dealt with here, I do not propose to express any opinion regarding the same, as these would necessarily arise in disposing of plaintiffs above application under section 8(2) of the Arbitration Act, which application for substitution of the Sole Arbitrator I cannot decide in these proceedings and leave it to be decided on proper issuance of notice, in accordance with the applicable rules before a learned Judge sitting on the Original Side or before the learned Judge who made the initial appointment in Suit No,3% of 1987, as after the hearing in these matters was concluded and orders reserved I am neither sitting on the Original Side having been assigned appellate work, nor I made the initial appointment.
5. There is also another reason why this cannot be done at this stage. Once an Award is made and filed, proceedings under sections 8, 11 and 12 of the Arbitration Act, if pending and undisposed of, must lie dormant for the same do not enure for the purposes of section 30 of Arbitration Act. If and when, however, the Award is set aside such an application may re-surface and revive and can be taken up again. Similar view in relation to sections 11 and 12 of the Arbitration Act was expressed by the Delhi High Court in Murari Lal v. Gopalchand AIR 1973 Delhi 251 and, to my mind quite correctly. If, however, while an application under section 11 of the Act is pending, an Award is given and not filed in Court, the Arbitrator becomes functus officio and the same can even be dismissed, as infructuous, as happened in Fazal Muhammad v. West Pakistan (1975 SCM R 312). Even, on setting aside of the Award, extreme caution in substituting the Arbitration forum is to be exercised and without due application. Wahiduddin Ahmed, J., as he then was, in the case of K.B. Allah Bux Gabole v. Razia Begum PLD 1960 Kar. 455 declined an order of substitution, following upon recall of Award, on ground of legal misconduct, even though the matter was not referred back to the same Arbitrator. CMA No,3413 of 1988, therefore, shall await to be fixed for consideration according to rules and practice of the Court.
6. Having restricted myself to consideration of the Award only I would now proceed to examine the same.
7. An arbitration forum is one of exclusive jurisdiction based on a choice of parties and an Award rendered in such proceedings is not to be lightly interfered with. The grounds for interference are also limited. Out of such grounds an error of law, apparent on the face of the Award and misconduct on the part of the arbitrator or in the proceedings, which does not necessarily involve moral turpitude but where legal misconduct is enough, are now well-settled and universally recognized.
8. On the face of the Award I can see no apparent bias, as the Sole Arbitrator has not only rejected the claim of the plaintiffs but has ago dismissed the defendants' counter-claim. This, of course, is neither an exclusive test of bias nor, in any way, conclusive on that question. It may bear medallion here that when a functionary of a party is, by contract, nominated and conferred the high authority of resolving the disputes inter parties, such a named arbitrator, who is usually a responsible functionary, is expected to show not only signal but model impartiality in the resolution of disputes, as and when referred to him. That is a necessary consequence of the unusual degree of trust vested in him, in spite of the fact that he holds another office in the scheme of one of the contestants, any notions or leanings arising out of which office he must completely divest himself of, in order to qualify to he an appropriate repository of trust vested in him. Slightest of deviations on the part of such a named arbitrator can give rise to ready inferences which may not necessarily be the case where the arbitrator does not have the disadvantage of such a connection. Care and caution must, therefore, be the hallmark for the conduct of stich 'incumbents.
9. On the question of misconduct, which I have already said, need not involve moral turpitude and misconduct may be spelled out even though it is purely legal in nature, two aspects of the matter cannot be ignored. In the first instance, the claims and the counter-claims having been filed it was the duty of the Sole Arbitrator to invite the parties to submit evidence in support. On the contrary, per notice dated 1-6-1988 fixing the hearing for 5-6-1988, the Sole Arbitrator required the plaintiffs to make appearance and advance arguments thereby by-passing all evidence in the case. This, obviously, he could not do. It is true that an Arbitration Forum is not bound by rules of procedure or even of the law of evidence, still, even such a Forum cannot proceed in disregard of all evidence. In that the Sole Arbitrator proceeded without evidence or even without calling upon the parties to lead evidence, he misconducted the proceedings, thereby vitiating the Award. However, since the defendants, for reasons better known to them have not objected to the Award, the foregoing observations would be of no help to them and for them the Award would be valid and unexceptionable.
10. The other reason why the plaintiffs must succeed, lies in another context namely, an error of law apparent on the face of the Award and the proceedings. Such Award was given on 5-6-1988, beyond the prescribed period of 4 months, from the date the Arbitrator entered upon the reference, such date being 17-1-1988. On this score, as well, the Award must be set aside. It has been contended by the learned counsel for the defendants that this Court under section 28 of the Arbitration Act has power to condone the delay in making of the Award even ex post facto, that is to say, even subsequent to the making of the Award, when it comes up for confirmation. As an abstract proposition of law it cannot be denied that such a power does vest in the Court. However, the power can be exercised only in advancement of justice and in consonance with well- recognized principles of law. From the record, I find that the plaintiffs had objected to the Sole Arbitrator giving the award beyond the prescribed time as would be evident inter alia, from plaintiffs' letter, dated 4-6-1988, which is alleged to have been served in the office of the Sole Arbitrator on 5-6-1988 i.e, the date of the Award. This factual aspect has not been denied. Would it then not have been proper for the Arbitrator to hold off his hands, till time was sought to be extended from this Court and actually extended? Plainly, it would have been so. The Sole Arbitrator, in spite of being cautioned, did not desist in making the Award. Besides, the power to condone must, necessarily, be exercised, ex post facto, to validate an Award, only where it is either wholly lawful or at least partially so, in relation to severable parts thereof. Since the Award in question does not even fulfil this requirement, it does not seem to warrant condonation as to time, which is disallowed.
11. I would, therefore, set aside the Award, with reservations as above, as to the counter-claim of the defendants. However, in consonance with the principles laid down in the cited case law, I would refrain from superseding the Sole Arbitrator and appointing a substitute, which question shall engage the attention of this Court in manner and form indicated above. The factors which have weighed in the setting aside of the Award may, also, come up for consideration, if need be, in relation to such application. Suit No,557 of 1988 stands disposed of accordingly.