1. ' On 19-12-1988 the sole Arbitrator made an Award in favour of the Plaintiffs in the sum of Rs,177,830.28. The Arbitrator applied to this Court for a decree in terms of the Award. The Defendants have filed their objections to the Award on numerous grounds while the Plaintiffs have also filed their reply to the objections enclosing the original agreement therewith. The grounds taken by the Defendants are that the notice of proceeding ex parte was not served on them; copy of Plaintiff's claim was not supplied. They have also challenged the Award on the ground that the Arbitrator has ignored to take into consideration the facts placed by the Defendants before the Arbitrator, which showed that the Defendants had a claim of Rs,2,00,000 against the Plaintiffs. It is also amongst the objections of the Defendants that the Arbitrator was himself a consultant employed by the Plaintiffs and, therefore, could not act impartially.
2. ' Copy of the agreement produced by the Arbitrator and the original produced by the Plaintiffs show that clause 7 of the agreement provided for appointment of sole arbitrator, namely, Mr. Hatim Yousuf Ali of Messrs Hatim Associates, Karachi, in case of dispute regarding the rate or any other matter between the owners and contractor This agreement pertained to the contract given by the Plaintiffs to the Defendants for construction work of ground plus four floors on Plot No,21/2R B.9 Aram Bagh, Jhamrai Street off Robson Road, Karachi known as the Memon Hospital and Dispensary Building.
3. ' By letter dated 21st September, 1988, the plaintiffs approached Messrs Hatim Associates to act as arbitrator in the matter in view of clause 7 of the agreement. There is nothing on the record to show if the copy of this letter was marked to the Defendants or was served on them. No other notice of reference was given by the Plaintiffs to the Defendants. The Arbitrator thereafter issued a notice to the Defendants fixing the date for arbitration on 4-10-1988. On 410-1988 the parties are shown to have appeared before the Arbitrator who adjourned the matter to 11-10-1988 asking the parties to supply the copies of claim to the other side. On 11-10-1988 the Plaintiffs' office-bearer appeared before the Arbitrator while no one is said to have appeared on behalf of the Defendants and the matter was then adjourned to 18-10-1988 from which date again the matter was adjourned to 19- 10-1988 and thereafter the matter was adjourned to 25-10-1988 for which a notice was sent to the Defendants also through T.C.S. Wherein it was stated that in case the Defendants do not appear the Arbitrator will proceed ex parte. On this date the Arbitrator proceeded ex parte and ultimately the Award was passed as above.
4. ' I have heard the learned counsel for the parties. Mr. Khalilur Rehman, learned counsel for the Defendants has referred to paragraph 7 of the agreement which clearly shows that it was agreed by the parties that "in case of dispute regarding the rate or any other matter between the owners and contractors the architect and engineer of the Project Mr. Hatim Yousuf Ali of Messrs Hatim Associates, Karachi shall be the sole arbitrator and final authority. " This, shows that as stipulated by the parties Mr. Hatim Yousuf Ali had to be the Arbitrator in his personal capacity and not on behalf of the Firm of Hatim Associates, whereas the letter, dated 21st September, 1988 written by the Plaintiffs seeking the arbitration is addressed to Messrs Hatim Associates and not to Mr. Hatim Yousuf Ali. The second last paragraph of the letter reads "we, therefore, seek your interference in the matter as per clause 7 of the contract which empowers you as a sole arbitrator." It is on the basis of this letter that the Arbitrator has initiated the arbitration proceedings. Not only this but again the Letter No,ReL HA/M-6(I)/52/88, dated September 24, 1988 addressed to the Defendants allegedly by the Arbitrator calling upon the Defendants to appear before him on 4-10-1988 at 3-00 p.m. Is also written on the letter heads of Hatim Associates and is signed on behalf of Hatim Associates.
5. These two letters are produced by the Arbitrator himself. From these letters it appears that the reference for arbitration is not made to the Arbitrator as agreed upon by the parties but to Messrs Hatim Associates, the Firm. On this score the reference itself is bad in law.
6. ' The second point urged by the learned counsel for defendants is that it is incumbent upon the Arbitrator to mention specifically in the notice where he intends to proceed ex parte against any of the parties to the arbitration. It is also argued by the learned counsel that in case such notice is given and the arbitrator does not proceed ex parte on the given date but adjourns the matter to some other date then for that adjourned date also he is required to give the notice of his intention to proceed ex parte. The learned counsel has submitted that in the present case no such notice was given by the Arbitrator. I am afraid that I cannot agree with the above-said contention of the learned counsel. A plain reading of the notices, specially the last notice given for the date of 25-10- 1988 very specifically mentions that "failing which we shall be obliged to proceed ex parte."
7. However, there is another aspect of the case. A perusal of the document produced by the Arbitrator shows that on 11-10-1988 the Defendants had written a letter to Messrs Hatim Associates, who had required the presence of the Defendants for arbitration, to the effect that the Defendants cannot accept them as Arbitrator for the reasons that they were under influence of the Plaintiffs and supporting one of the members of the construction committee; and that they were hostile in this letter the Defendants had also said that they had a claim of Rs,2,00,000 against the Plaintiffs.
8. The other documents which are produced by the Arbitrator show that on this date i,e. 18-10-1988 the arbitration proceedings were adjourned to 18-10-1988 but it is very surprising to note that proceedings written by the sole arbitrator are not signed by him. Not only this but the last line of the proceedings read "the Defendants are informed by letter dated 12-10-1988". This itself shows that these proceedings were not reduced in writing on 11-10-1988 as on the said date nothing could be said to have been done by a letter which was not even written by that time. The proceedings on 19- 10-1988 are written in hand which show that on this date the matter was adjourned to 24-10-1988 but there is an overwriting on the No,24, done with a different pen and different ink changing the date to 25-10-1988. This different ink and pen is very much similar to the ink and pen with which the proceedings of the subsequent date are written. Again the proceedings alleged to have taken place. On 25-10-1988-show the date at two places i,e. On top of the proceedings and in the first line of the contents. Even this date as shown at both places contains overwriting. It appears that first some other date was written here which could be 24 or 26 but thereafter by overwriting the attempt is made to change the date to 25-10-1988 to bring it in consonance with the previous proceedings.
9. These overwritings are not initiated by any one. Be that as it may, this conduct is unbecoming of an arbitrator, who is supposed to act impartially and neutrally. The inference, therefore, can be drawn that the proceedings were taken on 24-10-1988 or 26-10-1988 for which date no notice was issued to the Defendants, much less a notice for arbitrator's intention to proceed ex parte. These points were considered by my learned brother S. Haidar Ali Pirzada, J., in the suit of M/s. Shahzad Ali Usman Chohan v. Managing Director, S.C.I.C. (Suit No,547 of 1986) decided on 6-11-1988. In the above-decided suit reliance was placed on Halsbury Laws of England, 4th Edition Volumn II page 306 para. 590 wherein it has been stated:- "Notice of intention to proceed ex parte. In general, the arbitrator is not justified in proceeding ex parte without giving the party absenting himself due notice. It is advisable to give the notice in writing to each of the parties or their solicitors It should express the arbitrator's intention clearly, otherwise the award may be set aside. An ordinary appointment, for .a meeting with the addition of the word 'preemptory' marked on it is, however, sufficient.
10. ' If the arbitrator declines to proceed on the first failure to attend a preemptory appointment and gives another appointment he is not authorised to proceed ex parte at the second meeting unless the appointment of it was also marked 'pre-emptory' or contained a similar intimation of his intention."
11. ' Also in the case of Pratapsing v. Kishinprasad & Company Limited AIR 1932 Bom. 68 it has been observed that it is advisable for the arbitrator, though not compulsory, he should give the parties the notice of his intention to proceed ex parte on the date given by him. The reliance may also be made on the case of Khan Bahadur Allah Bakhsh Gabol v. Mst. Razia Begum. PLD 1960 Kar 455 wherein it has been observed that:- "Although an arbitrator is allowed considerable latitude in the procedure to be followed by him at the hearing, it is his paramount duty to afford the parties a reasonable opportunity to know the case against them for defending it before him. He cannot condemn a party without letting him know the case against him. If he makes an award without complying with such elementary principles of natural justice, he does so at the risk and peril of his award being set aside on grounds, of misconduct. In my opinion in order to justify an arbitration proceeding ex parte a very strong case must be made out of wilful delay of the party at fault and if a reasonable cause is shown it is the duty of the Court to set aside such an award. The defendants ' counsel's telegram dated 9-6-1959 shows anxiety on defendant's part to know the terms of reference. It also shows change of attitude and the possibility, that on knowing the plaintiff's claim, she might have chosen to participate in the arbitration cannot be ruled out. But the learned arbitrator did not appreciate the implication of the telegram and failed to give the defendant reasonable opportunity to defend the plaintiffs claim before him." In the same judgment it has been further observed "that the learned arbitrator did not communicate the disputes and claims of the plaintiff pending before him to the defendant, he proceeded in the matter in utter haste and bypassed the ordinary principles of natural justice which are inherent in all quasi-judicial proceedings it was his duty to wait till such time as the Defendant was apprised of the plaintiffs claim before proceeding ex parte."
12. ' The next point urged by the learned counsel for the Defendants is that copy of claim was not supplied to the Defendants. There is nothing on the record to show that the Plaintiff or Arbitrator had supplied the copy of the claim made by the Plaintiff to the Defendants. The arbitration proceedings were recorded on 4-10-1988 when it is said that both the parties had attended before the Arbitrator. Note duly signed by the Arbitrator is made at the foot which reads "N.B. The owners will furnish their objections and claim to us and copy to the contractor." The letter dated 12-10-1988 written by the Arbitrator to the Defendants makes a mention that the owners have filed their point of view and the copy of the same is also given to the Defendants. However, there is nothing in the entire arbitration proceedings which are submitted by the Arbitrator to show if any such copy of claim of the. Plaintiff was given to the Defendants to enable them to submit their reply thereon. In the case of Paracha Textile Mills Limited v. Ninakram Shamdas PLD 1977 Kar. 37 it has been observed by Zaffar Hussain Mirza, J. (as His Lordship then was) as under:- "There can be no cavil against the proposition of law that an arbitrator has to adhere to the principles of natural justice in spite of the latitude in the matter of procedure allowed to him at the hearing. The basic norms of fair adjudication contained in the rule of natural justice are inherent on the adjudication of a dispute by any domestic tribunal. Accordingly, if the Court finds that at no stage in the history of the dispute and its eventual adjudication by the arbitrator, the adverse party is informed about the claim of the party seeking decision of the dispute, the award must necessarily be struck down."
13. ' Also in the above-mentioned Suit No,547 of 1986 and Suit No,99 of 1987 Nayyar Pesh Imam v. M/s. Rajput & Co. Decided on 3-7-1980, my learned brother S. Haidar Ali Pirzada, J., has set aside the award on the ground that the arbitrator misconducted himself by his omission to communicate the claim of the Plaintiffs and pre-emptory notice of his intention to proceed ex parte against the Defendants, who have thus been prejudiced by the said omission.
14. Learned counsel appearing for the Plaintiffs has not been able to meet the contentions raised by the learned counsel for the Defendants. He has not. Been able to show from the record if any copy of claim of the Plaintiffs was given to the Defendants. The learned counsel for the Plaintiffs was also not able to justify as to how and in what circumstances the above-said overwritings were made with regard to arbitration proceedings. The learned counsel for the Plaintiffs has emphasised that lastly the arbitration proceedings were held on 25-10-1988 but as discussed above the overwriting on this date makes the case quite doubtful. Not only his but it appears that the same was done on some other date but by this overwriting the attempt has been made to show that the proceedings were held on 25-10-1988, there being no dates mentioned with signatures of four persons made thereon. The learned counsel for the Plaintiffs has cited number of decisions of the Hon'ble Supreme Court and the High Courts but in none of the said cases this situation was taken into consideration.
15. From the statement of law laid down in Halsbury's Law of England and the fact that failure of the arbitrator to give notice of the date on which he has factually proceeded ex parte and by not giving the copy of the claim of the Plaintiffs to the Defendants a serious prejudice has been caused to the Defendants. Thus after going through the record and proceedings before the Arbitrator, I am of the opinion that the Defendants have been prejudied by the above-said omission of the Arbitrator and this omission on the part of an Arbitrator is an irregularity in procedure adopted by the Arbitrator and amounts to misconduct as the Defendants have not been given proper.
16. Opportunity as required under the principles of natural justice and as such the Award is liable to be set aside.
17. ' In this view of the matter, I do not propose to deal with the other objections raised by the Defendants. I accordingly, set aside the Award dated 19th December, 1988. In the circumstances of the case the parties shall bear their own costs.