' This judgment will dispose of C.R. No,636-D and C.R. 637-D of 1990 as both of these arise out of consolidated judgment and decree of affirmance passed by the learned appellate Court dated 6- 2-1990.
2. The facts necessary for the decision of these petitions may be, at the outset, shortly stated. That on 23-5-1988 Muhammad Ashraf (herein petitioner) instituted a suit for recovery of possession of suit property (completely described in the plaint). It was alleged therein that he was owner of suit property; that Abdul Rahman was inducted into suit property as a licensee that about 2-1/2 years before the institution of suit, he had left the property in dispute locking it and had declined to deliver its possession to the petitioner. The suit was not only contested by the respondent but he also brought a suit for declaration that he was owner in possession of the property in dispute. On 17-5-1989, the parties agreed to get the suits decided on the statement of Tassadaq Hussain Baluch, Advocate, Sargodha under section 20 of the Evidence Act/Article 33 of the Qanun-e- Shahadat Order, 1984. The learned trial Judge recorded the statements of the parties and proceeded to appoint Mr. Tassadaq Hussain Baluch, Advocate as a referee. On 5-7-1989, the aforesaid referee submitted his decision in black and white, on the basis of which the learned trial Judge decreed the suits. Feeling dissatisfied with the above decisions, the petitioner preferred two separate appeals which were dismissed by the learned appellate Court on 6-2-1990. This is how these two revision petitions have come to this Court.
3. Learned counsel for the petitioner, in support of this petition, strenuously contended that Mr. Tassadaq Hussain Baluch, Advocate had inspected the spot, examined number of witnesses, perused the Settlement Record and on the basis of above exercise had rendered decision by which he divided the property in dispute into two halves with their separate approaches. On the strength of these circumstances, it was stressed that Mr. Tassadaq Hussain Baluch, Advocate had not acted as a referee but had proceeded as an arbitrator. According to the learned counsel, this was not permissible under the law. Reliance was placed on Muhammad Hanif Khan and another v. Ghulam Farid Khan and others (PLD 1988 Lahore 250), Ghulam Farid Khan v. Muhammad Hanif Khan and others (1990 SCMR 763) and Muhammad Salim v. Muhammad Akram (PLD 1971 SC 516).
4. On the contrary, learned counsel for the respondent vigorously supported the impugned decision. In this exercise, he maintained that Tassadaq Hussain Baluch, Advocate had, no doubt, inspected the spot, made inquiries from the persons who were present at the spot and had consulted settlement record in order to augment his belief regarding the disputes between the parties. According to the learned counsel, this was entirely within the authority of the referee under section 20 of the Evidence Act/Article 33 of the Qanun-e-Shahadat. Learned counsel placed reliance upon Sher Zaman Khan v. Noor Zaman. Khan and another (PLD 1977 Lahore 672).
5. I have heard the learned counsel for the parties at a considerable length and perused the record with their capable assistance. As already stated, the only point calling for determination is "whether Tassadaq Hussain Baluch, Advocate acted as a referee or as an arbitrator". This question has never been free from difficulty and has come into consideration before the superior judiciary on number of occasions. The leading case on this subject is Akbari Begum v. Rehmat Hussain and others (AIR 1933 Allahabad 861). In this case the property in dispute was owned by one Ahmad Hussain who died leaving behind two daughters namely Mst. Akbari Begum and Mst. Sughran and three sons namely, Rehmat Hussain, Shafqat Hussain and Azmat Hussain. The daughters commenced an action for the recovery of their shares against their brothers who contested the suit on the basis of two registered deeds of gift and two oral gifts. On 16th of May, a joint application signed by husband of one plaintiff and by two defendants was submitted for getting the matter to be decided on the statement of Munshi Rehmat Hussain. Rehmat Hussain, who was present in the Court room went into witness-box and made statement on oath against the plaintiffs and in favour of defendants. On this, the Court decided the suit in accordance with the statement of Rehmat Hussain. When the matter came before the High Court, there was' difference of opinion between Niamatullah and Bennet, JJ. And the matter was referred to opinion of Suleman, C.J. The learned Chief Justice observed:-- "Now there is an overwhelming authority in favour of the view that a decree passed on the basis of such an agreement when carried out by the statement of the referee is binding upon the parties.
The only difference of opinion that seems to have arisen is as to whether the binding character of the decree should be based on the supposition that such a reference amounts to a reference to arbitration or an adjustment of the claim, or is an admission of the parties of an offer amounting to an estoppel.
' The trend of the authorities in this Court appears to be more in favour of the view that such an agreement is in substance a compromise or adjustment of the suit, and neither a mere admission capable of being rebutted nor strictly speaking a reference to arbitration."
' After considering a large number of cases. Cited before him, the learned Chief Justice concluded, and this, in our opinion, is the ratio of his decision: "In concurrence with the opinions of the learned Judges who have made this reference, I hold that an agreement to abide by 'the statement of a particular witness is in substance not a reference to arbitration. The essence of arbitration is that the arbitrator decides the case and his award is in the nature of a judgment which is later on incorporated into a decree of the Court. The arbitrator can either proceed on the basis of his own knowledge or make enquiries and take evidence and then give his decision on such evidence. But where parties agree to abide by the statement of a third person or a referee the referee merely makes a statement according to his knowledge or belief and the Court then decides the case and pronounces its judgment on the basis of such a statement and passes a decree thereon. The referee is not authorised to make enquiries and take evidence and then announce his decision on the basis of such evidence. He is called upon to make a statement according to his knowledge or belief. In the case of an arbitration, as the arbitrator's award is an expression of an opinion and his procedure resembles that of Court, a party is entitled to file objections and challenge the validity of the award. The making of a statement by a referee or a third person has no resemblance to a proceeding conducted by him as if, he were a Court of law, and accordingly there can be no procedure for filing objections as to its validity. It is for the Court, in pronouncing judgment, to consider its effect. But under section 20 of the Indian Evidence Act statements made by persons to whom a party to the suit has expressly referred for information in reference to a matter in dispute are deemed to be admissions of the party himself. If the parties have agreed to abide by the statement of a third person to be made in Court, he may well be a person to whom the parties have expressly referred for information in reference to the matter in dispute."
6. The view taken in Akbari Begum's case (supra) was followed in Ali Hussain v. Rafiquddin and 9 others (PLD 1977 Lah. 418), Sher Zaman Khan v. Noor Zaman Khan and another (PLD 1977 Lah. 672), Muhammad Hanif Khan and another v. Ghulam Farid Khan and others (PLD 1988 Lah. 250) and was approved by Supreme Court in Ghulam Farid Khan v. Muhammad Hanif Khan and others (1990 SCMR 763').
7. The ratio deducible from the above precedents is that all that referee is required to do is to make a statement according to his knowledge or belief; that if he makes a statement that statement is admission of both the parties and is binding upon them and as soon as the statement is made, it partakes the form of adjustment by a lawful agreement or compromise within the ambit of Order XXII, Rule 3 of the Code of Civil Procedure while the arbitrator is required to decide the case after making inquiry. The main line of distinction between the two is that referee is not empowered to make inquiry but has to make a statement on the basis of his knowledge and belief while the arbitrator is to undertake the inquiry, record the evidence of the parties and determine the controversy in judicial manner. No doubt, the referee can inspect the site and inquire from the persons about his own knowledge/belief yet this does not empower to make roving inquiries to render decision.
8. Applying this principle to the facts and circumstances of this case, it is crystal clear that Mr. Tassadaq Hussain Baluch not only inspected the site, but he examined the witnesses who were present over there, called for settlement record and examined it to reach his conclusion. On the basis of this inquiry, he decided the title of the parties, divided the house into two portions with separate accesses. This was not permissible under the law. This being the legal position, the decision submitted by. Mr. Tassadaq Hussain Baluch, Advocate in the Court could not be treated by the Court as a statement within the meaning of section 20 of the Evidence Act. In view of this conclusion, I have no hesitation in coming to the conclusion that the learned two Courts below have acted with material illegality while decreeing the suit on the basis of decision of Mr. Tassadaq Hussain Baluch, Advocate.
8-A. In the light of foregoing discussion, these revision petitions succeed. The judgment and decree passed by the learned Additional District Judge, Sargodha dated 6-2-1990 and the judgment and decree of learned Civil Judge, Sargodha dated 5-7-1989 are hereby set aside. The cases are remanded to the learned trial Court who is directed to decide the suits filed by the parties after affording the opportunity of hearing to them and in accordance with law. As the petition has succeeded on the question of law, I am not inclined to burden any body with costs.