' Respondent firm who had been granted a contract for the construction of Grid Station at Sadiqabad, Liaqatpur, D.I. Khan and Kot Addu, filed an application dated 11-1-1975 in the Civil Court at Lahore under section 8 of the Arbitration Act, 1940 against the appellant, for the appointment of its nominee Mian Maqbool.Ahmad, as the sole arbitrator, to decide the dispute regarding its claim for damages and interest amounting to Rs,53,32,919.75, allegedly suffered due to the lapses on the part of the appellant, during the course of execution of the aformentioned contract dated 20-4- 1967.
' This application was opposed by the appellant on the ground that there was no written agreement between the parties within the meaning of section 2(a) of the Act and the so-called agreement was not stamped and the same could not be acted upon.
' Learned Civil Judge vide order dated 12-4-1975 decided both the points in favour of the respondent and appointed Mian Maqbool Ahmad as the sole Arbitrator. This order was challegned by the appellant in Civil Revision No,390 of 1975 in this Court on 22-4-1975. The Arbitrator issued notice to the appellant dated 14-4-1975 which was served on 18-4-1975, for appearance before him for hearing of the case, on 20-4-1975. On this date learned counsel for the appellant appeared and requested for grant of copy of the claim filed by the respondent on that date so that appropriate reply could be prepared, submitted and the case de:ended. Arbitrator was also apprised of the intention of the appellant to seek remedy against the order of appointment of Arbitrator passed by the learned Civil Judge in a highter forum. According to appellant, the Arbitrator, however did not supply a copy of the claim filed by the respondent and adjourned the proceedings without fixing any further date. During the hearing of Civil Revision No,390/75 filed by the appellant, on 24-4-1975, the respondent appeared in the Court without a notice having been issued to him to appear at motion hearing and informed the Court that the award has already been rendered on 22-4-1975 i,e, just two days after the first date of hearing and within 10 days w,e,f, the date of appointment of Arbitrator. The Civil Revision was ultimately accepted by this Court vide order dated 19-11-1975 and it was held that the agreement in question being unstamped was not admissible in evidence and that the learned Civil Judge could not have appointed an Arbitrator without deciding the question as to whether one of the partners of the respondent firm could file an application for appointment of an Arbitrator which is not permissible as per provisions of Order 30, rule 1, C.P.C. This order was challenged by the respondent in the Hon'ble Supreme Court and the order passed by this Court has been set aside In re: Civil Appeal No,163/76 vide order dated 24-11-1987. It has been held that the order of the appointment of the Arbitrator could not have been challenged in revision and the only mode of challenging the appointment of the Arbitrator is by filing of objections while challenging the award in accordance with the provision of sections 30, 31, 32 and 33 of the Act and, therefore, this Court had no jurisdiction to set aside the order passed by the learned Civil Judge in revision. Resultantly, order passed by the High Court dated 19-11-1975 has been set aside and the order of appointment of the Arbitrator dated 12-4-1975 has been restored. The appellant filed objections to the award delivered by the Arbitrator on 22-7-1975. The objections were contested by the respondent. In support of the objections, the appellant produced only one witness namely Kashif H.Zaidi son of Sharif Hussain, Retired Director, WAPDA, as OW-1. This witness has denied the suggestion in his statement in cross-examination that he has accepted the documents produced by the respondent, before the Arbitrator as correct. Learned Civil Judge vide order dated 11-12-1992 dismissed the objections and made the award as a rule of the Court and passed a decree in accordance therewith vide judgment and decree dated 11-12-1981. The order of dismissal of the objections and decree passed have been challenged in this appeal.
2. Kh. Muhammad Habibullah, Senior Advocate, learned counsel for the appellant has argued that the Arbitrator was appointed in this case vide order dated 12-4-1975. The Arbitrator issued a notice to the appellant for appearing before him on 20-4-1975 which notice was issued on 14-4-1975 and was served on the appellant on 18-4-1975. On the date of hearing, learned counsel for the appellant asked for a copy of the claim which had been filed by the respondent before the Arbitrator same day so that proper reply could be submitted and the claim could be defended and further apprised the Arbitrator about the intention of the appellant to challenge the order of appointment of Arbitrator passed by the learned Civil Judge in a higher forum and, hence, requested for grant of time but the Arbitrator did neither supply a copy of the claim nor did allow the appellant reasonable and. Sufficient opportunity to reply and defend the claim and even to move the higher forum to challegne the order passed by the Civil Judge and adjourned the case without date and just two days thereafter rendered an ex parte award granting an amount of Rs,53,32,919.75 by way of damages without holding an enquiry and without lawfully determining the amount of damages/dues directed to be paid. Learned counsel further contends that in view of the above factual position, the Arbitrator has misconducted himself while delivering the award and as such on the face of it the award was liable to be set aside, but the learned lower Court has illegally rejected the objections raised by the appellant and has made the award as a rule of the Court.
Learned counsel has further contended that bare perusal of the award clearly damonstrates that the Arbitrator has not denied relations with the respondent and he has not only acted in an unreasonable haste but has also acted in a venomous manner merely because he was apprised about his relations with the respondent and intention of the appellant to challenge the order of his appointment as an Arbitrator in a higher forum. Learned counsel contends that it is an established principle of law which also applies to the proceedings before an Arbitrator that justice should not only be done but should also appear to have been done. In view of the claim of damages claimed by the respondent, amounting to more than half a crore of Rupees, it was the bounden duty of the Arbitrator to have at least supplied the copy of the claim to the appellant and to have given a reasonable opportunity to defend the claim raised by the respondent. It was also the duty of the Arbitrator to have recorded evidence and to have held proper enquiry into the claim raised by the respondent and then to have determined as to whether the claimant is entitled to the grant of damages at all and if so to what extent. In the case in hand Abritrator has not determined any issue. He has accepted the claim filed by the respondent in toto without holding any enquiry which could meet the minimum requirements of law. Consequently, it is clearly a case of misconduct on the part of the Arbitrator and in this case injustice has not only been done but also it appears to have not been done on the face of the record. Hence, according to the learned counsel lower Court has exercised jurisdiction illegally and with a material irregularity while dismissing the objections filed by the appellant and making the award as rule of the Court.
' Learned counsel has further contended that the Arbitrator has not denied his friendship and neighbourhood with the respondent and in view of this fact it was necessary for the Arbitrator not to have acted as an Arbitrator in the case and should have adjourned the proceedings so that the appellant could challenge the order of his appointment before the higher forum and if he could not have adopted any of the aforementioned lawful and just alternatives, he should have allowed reasonable opportunity to the appellant to reply the claim of the respondent and to defend the same keeping in view the fact that the appellant is a statutory department of public importance and an individual wanted to claim damages amounting to Rs,53,32,919.75 against a public body. In view of the above, according to the learned counsel this appeal is liable to be accepted and the impugned order is lible to be set aside.
3. As against the above arguments, addressed by the learned counsel for the appellant, Ch. Khurshid Ahmad, Senior Advocate, learned counsel for respondent, has contended that the order of the appointment of the Arbitrator has been upheld up to the level of the Hon'ble Supreme Court of Pakistan in re: "Civil Appeal decided on 24-11-1987 and, therefore, the appellant cannot challenge the appointment of the Arbitrator in this appeal as the question stands conclusively decided and determined by the Hon'ble Supreme Court in the aforementioned case. Learned counsel has further contended that the objections filed by the appellant had to be proved by evidence. In support of the objections, the appellant has produced only one witness and he is 0.W.1. This witness has not stated a word with regard to the allegations levelled by the appellant that a request was made to the Arbitrator to supply a copy of the claim and to grant time for replying the claim and defending the same, and the opportunity was denied by him, therefore, it is not established that the Arbitrator declined the request made by the appellant referred to above. It is argued that only stand taken before the Arbitrator was that the appellant wants to challenge his appointment before higher forum and resultantly the appellant has been adamant to co-operate and participate in the proceedings, and, 'therefore, the Arbitrator was left with no option but to proceed against the appellant ex parte. This course according to the learned counsel is permissible under the law and as such no interference is possible with the award on this score, hence, impugned order is lawful. Reliance is placed on cases of Hem Chandra Kunda and otheRs, v. Janendra Chandra Kundu and others (AIR 1926 Calcutta 116). The Grahams Trading Co. (India) Ltd. v.
Chandulal Parmanand.(AIR 1935 Sindh 228) and Khan Bahadar Allah Buksh Gabole v. Mst. Razia Begum (PLD 1960 (W.P.) Karachi 455).
4. Learned counsel has further argued that the Court which is to decide the objections cannot go beyond the award while determining the question of misconduct of the Arbitrator. There being absolutely no evidence about the commission of alleged misconduct by the Arbitrator, we have to fall back upon the award wherein it has clearly been written by the Arbitrator that it is the appellant who is to blame for not participating in the proceedings before the Arbitrator and the only plea which was raised before the Arbitrator was that the appellant wanted to challenge the order of appointment of the Arbitrator passed by the Civil Judge. This order having been upheld by the Supreme Court, no fault can be found with the award, therefore, the learned Civil Judge has rightly upheld the award and dismissed the objections filed by the appellant. Learned counsel in this behalf placed reliance on cases of Ashfaq Ali Qureshi. v. Municipal Corporation, Multan and another 1985 SCMR 597 F.J. Fambarts (Pakistan) Ltd. v. Pakistan Steel Mills Corporation 1987 CLC 2198 and M/s. National Construction Co. v. The West Pakistan Water and Power Development Authority through its Chairman PLD 1987 SC 461. According to the learned counsel, therefore, the impugned order is unexceptionable and hence no interference is called for in this appeal.
4-A. I have considered the arguments addressed by the learned counsel for the parties and have also gone through the record including the award and the proceedings before the Arbitrator.
Admittedly, the order of appointment of the Arbitrator is dated 12-4-1975. First notice issued to the appellant by the Arbitrator is dated 14-4-1975 which was served upon the appellant on 18-4-1975 for hearing on 20-4-1975. On the first date of hearing, learned counsel is stated to have asked for a supply of claim, filed by the respondent on that very day, so that it could be replied to and defended and factum of making this request is presumed to be correct in the natural course of events. Learned counsel further apprised the Arbitrator about the intention of the appellant to challenge the order of the appointment of the Arbitrator in a higher forum. There is nothing illegal or immoral in this information having been supplied to the Arbitrator. It is very strange that on 22- 4-1975 the award is delivered by the Arbitrator meaning thereby that without there being any reply from the appellant, recording of evidence and enquiry. The Arbitrator has come to the conclusion merely by holding proceedings on two dates, that the respondent suffered damages amounting to Rs,53,32,919.75 due to the fault on the part of the appellant. There is absolutely no material on the record of the case on the basis whereof it could be said that the appellant did suffer actual damages as alleged by him due to the lapses of the appellant except the document showing that the contract was granted to him and there was a correspondence between the appellant and the respondent. In order to succeed in a claim for damages, it was necessary for the respondent to have proved by cogent evidence that due to actions or lapses on the part of the appellant he suffered a loss which he had alleged to have suffered. Exact amount of damages suffered had also to be proved by evidence. In this case it amounts to decreeing the claim for damages, merely on the basis of averments in the claim, itself. It has been held in case of Shamroz Khan and others v.
Muhammad Amin and others PLD 1978 SC 89 that even if the defence of the defendant is struck off, the suit cannot be decreed merely for that reason as is clear from the -ratio at page 96 of the report which is reproduced as under:-- "Order IX, rule 6, in so far as it is relevant reads: (6). (1) Where the plaintiff appears and the defendant does not appear when the suit is called on for hearing then--
(a) if it is proved that the summons was duly served, the Court may proceed ex parte (and pass decree without recording evidence.)
' The words "and pass decree without recording evidence" were inserted by the Law Reforms Ordinance, 1972 and we would observe here that before this amendment the consistent practice of the Courts was to record evidence before decreeing a suit under this rule. This practice of recording evidence could lead to delay and as submitted by Mr. Inayat Elahi, the object of the amendment was to empower the Courts to decide a case without recording evidence. But does this mean that .a question was left to the discretion of the Courts or does it mean as submitted that it was incumbent on Courts to decree a suit without recording evidence? If Mr. Inayat Elahi's submission is correct, Courts would be compelled to decree patently time-barred suit or suits which were patently dishonest or which contained absurd and exaggerated claim. Shch an intention cannot lightly be attributed to the legislature, nor would we be justified in doing so because the amended rule now reads; The Court may proceed ex parte and pass decree without recording evidence.' This means that the Court may proceed ex parte and that it may pass a decree without recording evidence. The word "may" here imports discretion and means may, not shall, therefore, when a Court strikes off the defence of a defendant, it has further to decide, in the exercise of its discretion, whether it should decree the claim against the defendant after recording evidence or without recording evidence, and like any other discretion vested in the Court, this discretion must be exercised judidically. In the instant case, however, the suit was decreed against the said respondents merely because their' defence was struck off, therefore, on this ground also, the suit was illegally decreed against the said respondents."
' In this case there is absolutely no material on the record on the basis whereof it could have been said that the respondent had suffered loss due to the actions and lapses/faults on the part of the appellant. It is also clear that minimum requirement for administration of justice of allowing a reasonable opportunity to the appellant to defedd and disprove the claim has also not been given to the appellant. Consequently, on the face of it, it is clearly a case of misconduct on the part of the Arbitrator. Various portions of the award fully demonstrate that the Arbitrator has not acted as an impartial person. The wording of the award smacks venom in the mind of the Arbitrator. It appears that the Arbitrator was offended and was \angry for the reason as to why the learned counsel for the appellant has informed that the order of the appointment of Arbitrator is to be challenged before a higher forum. Working under the influence of this venom, it appears that the Arbitrator has throughout acted in an inimical manner to the appellant and the award has been rendered under the influence of that anger. Following portions of the award are clear pointers to 'the aforementioned conclusions:- ' Para. No,4. Mr. Javaid Hashmi, learned counsel for WAPDA produced before me an application alongwith his power of attorney. This application contained the following request in the prayer clause: "In view of the above submissions and keeping in view the fact that WAPDA wants to challenge the order of your appointment, it is respectfully submitted that the proceedings may kindly be adjourned for a week enabling WAPDA to seek its legal remedy before a competent Court of Law."
' In this application, the act of the Court, appointing me as Arbitrator, has been cirticized in strong terms. This application goes a step - further. It imputes upon me an allegation that I am an intimate friend and a neighbour to M/s. Combined Enterprises. The application, read as a whole, leaves an impression on the mind that from the very outset participation in the proceedings was not intended to be made. The scheme upon which this application was launched before me, is pointer to a clear indication that time was intended to be obtained so that the object of my appointment and sanctity behind the Court's order is undone. It is astonishing to notice in this application that there is embodied a threat of moving the Court in revision and with this end in veiw uncalled for criticism of my appointment as an Arbitrator and of the orders passed by the Court has been inflicted in the proceedings. I however, proceed uninfluenced by all this.
5. There is a duty cast on the Arbitrator under section 11 of the Arbitration Act to act promptly. I, therefore, lost no time in complying with the orders of the Court to act with all reasonable despatch. I consider that raising of these objections before me was uncalled for and it cannot improve upon the situation in which parties were relegated after the orders were passed by the Court. If it was offered to join the proceedings with a view to have a fair and impartial adjudication of the claim and some good and sound grounds were shown, for grant of further time, it could not have been resisted to at all. The application, however, ruffles a sad story and has the effect of disturbing solemnity that is attaching to the act of determining proceedings through Arbitration.
Learned counsel appearing on behalf of M/s. Combined Enterprises has placed before me certified copy of the proceedings held by the Court on 12-4-1975. The facts are clearly set out in this order and if one were to look to a complete answer for repelling contentions raised in this application, the Court's order and the proceedings taken on that date wholesomely serve the purpose. It is, therefore, not in consonance with the disposal of the proceedings under the Arbitration Act to allow the request of learned counsel for WAPDA for extension in time and much less on die grounds set out in the application. In the first place, the orders were passed in the presence of learned counsel for parties by the Court on 12-4-1975. I only carried forward the import of the order passed by the Court by clearly mentioning all attending circumstances and warning against a possible default by any party in my notice. If it was intended to deal with the matter fairly and diligently a request for further time could have been made on any date between the 14th of April 1975 to the 20th of April, 1975, when my notice all along remained unattached to in the office of WAPDA. In the application not a single ground has been set out making it a case for extension of time. I, therefore, consider that accepting of any request for extension of time in the present context would only. Mean permission to frustrate the object of the order passed by the Court. There was enough time at the disposal of the concerned staff of WAPDA to have taken suitable action within the time allowed. I have another reason for not granting extension in time. An examination of the order passed by the Court denotes that it was on failure of WAPDA to act in time to nominate any Arbitrator on their side and after expirty of statutory period of fifteen days which was not availed of, that the Court considered the appointment of the Arbitrator offered by M/s. Combined Enterprises to act in the reference. Consequential effect of this appointment should have arisen all time awakening by WAPDA. If the Court has declined to permit benefit of any negligence to WAPDA, it is not required of the Arbitrator to go behind the same. Law helps the vigilant and not the indolent.
6. I have questioned Mr. K.H. Zaidi, Director of WAPDA if he has anything to offer to rebut the claim as presented by M/s. Combined Enterprises. He admits all the letters that have either originated from WAPDA or were sent by M/s. Combined Enterprises to WAPDA but he says no objections are meant to be raised before me as I am not an acceptable Arbitrator. He says that the claim is untenable. I have asked him if he could indicate any error or exaggeration in the claim, he has declined to do so and wants that he should be given time for one week after which he will be able to decide whether any contest of this claim is meant to be done or not. Mr. Javid Hashmi, learned Advocate for WAPDA literally supports what Mr. K.H. Zaidi has mentioned above, The claim contains minute details and on each corner is supported by strong documentary evidence, of unimpreachable integrity. According to him no objections are meant to be raised at this stage on the ground of some legal infirmity in my appointment as an Arbitrator. Some serious effort was to be made which I am* surprised has not at all been made. I could not imagine that such a careless and negligent attitude on the part of WAPDA could inspire confidence of the Court much less of an Arbitrator.
Each time negligence has been occasioned to multiply. At some stages it has been made to grow worse.
7. Learned counsel for M/s. Combined Enterprieses has referred me to provisions contained under Order 8, rule 10, C.P.C. And of Order 17, Rule 3, C.P.C. It is urged that the defence in the case to contest the present proceedings should be deemed to have been lost by delay and negligence on the part of WAPDA. He has urged that as held in Allah Baksh v. Razia Begum (PLD 1960 Karachi 455) ex parte proceedings may be justified if a strong case of wilful delay is made out against the defendant." I faithfully follow the above verdict of their Lordships of the High Court and proceed ex parte against WAPDA. Learned counsel for M/s. Combined Enterprises has also drawn my attention to page 171 of the Arbitration Act, 1940, written by Sardar Muhammad Iqbal Khan Mokal, published in the year 1972. At page 171 the following passage may advantageously be reproduced for facility of reference:- "Subject to the limitation contained in instrument of his appoinment and to any statutory directions as to the manner in which he ought to discharge his duties, Arbitrator may conduct his proceedings in any manner he thinks fit so long as he acts in accordance with principle of justice, equity and good conscience. He is not fettered by the rules of practice which Courts of law adopt for general convenience. He is not bound for example to record statements or admissions of parties, to take deposition of witnesses, to mark and file documents and to behave in other respect as if he were a Judge of a Civil Court bound by the adjective law laid down in the Civil Procedure Code."
' These observations appear in the case of Muhammad Saghir v. Federation of Pakistan (PLD 1958 SC 221) and Gul Hassan Shah v. Sardali Shah (PLD 1960 Pesh. 14). I, therefore, gain sufficient encourgement by the above dictum of their Lordships of the Supreme Court and the Peshawar High Court and respectfully bow to the directions embodied therein.
8. M/s. Combined Enterprises moved a large number of files in the Committee Room before me alongwith their staff and other witnesses which they intended to examine in case WAPDA offered to contest the proceedings on merits. No offer was shown on the part of WAPDA to contest the proceedings. In order to elicit my satisfaction of the genuineness of the claim presented by M/s. Combined Enterprises, there is .a solemn affirmation and verification by M/s. Combined Enterprises on each item of the claim certifying the same to be true and correct. I do not consider it necessary to list details of these claims spearately in this award. Needless to add that I have carefully taken into consideration each item of the claim and havt also referred to the supporting document relied upon in this behalf. As no contest on merits has been made to the abovesaid claim and I could discover no further genuine effort to contest the genuineness of the claim before the Arbitrator, I have arrived at an irresistible conclusion that it is impossible for WAPDA to lay any challenge to any item of the claim. It has been earlier osberved that genuineness of all the documents forming supporting link to the claim presented by M/s Combined Enterprises has been accepted and admitted before me by Mr. K.H. Zaidi."
5. It is established, therefore, the award has not been rendered for the reasons that respondent has proved his case before him by evidence but for the reasons that the Arbitrator was angry and is of the view that the appellant should not have challenged his appointment as an Arbitrator and should have appeared before him and perhaps accepted the claim of the respondent instead of defending and disproving the same. It has been mentioned in the award that Kashif Hussain Zaidi admitted the document produced before him but the witness appearing as O.W.1 has denied this suggestion. Even extension of time whs refused on flimsy grounds. There is no cavil with the proposition of law that if a party is adamant, the Court or authority can proceed ex parte but in the case in hand conduct of the appellant could not be held to be unreasonable and adamant. Asking for a copy of the claim and time to reply and defend the same and giving information to the effect that a judicial order passed against a party is to be challenged in a higher forum is neither unreasonable nor immoral, rather it is quite natural conduct and refusal of the request is rather unnatural. This type of conduct did not authorise the Arbitrator to order ex parte proceedings against the appellant. Resultantly, argument of the learned counsel for the respondent on this score is repelled, and it is held that the Arbitrator either should have adjourned the case so that the appellant could have moved the higher forum against the appointment as an Arbitrator or at least should have given opportunity to the appellant to reply the claim filed by the respondent and to defend the same. If both the above alternatives were not available with the Arbitrator and he could not have waited for some time to render the award, he should have recorded proper evidence and after proper enquiry should have determined the extent of damages, if any, caused to the respondent before delivering the award in question. This was not done. Hence, learned Civil Judge has illegally rejected the objections on the score.
6. There is no cavil with this proposition that while deciding the objections and considering the legality and validity of the award, evey effort is to be made to uphold the award and to decide the dispute taking into consideration the proceedings held before the Arbitrator and the contents of the award. In this case, the proceedings as well as the contents of the award, the relevant portion whereof has been referred to above clearly demonstrate and prove beyond doubt that the Arbitrator has not acted in accordance with law and has rendered the award just to please the respondent in accordance with averments in the claim which had been accepted as correct in toto as submitted, to the extent of paisas. This award is without any lawful basis and justification.
The relations with the respondent have not even been denied by the Arbitrator and the tenor of the award clearly shows that the attitude of the Arbitrator was not Judgelike. It is like a party to lis; therefore, it cannot be said that the Arbitrator has conducted himself in accordance with law and fairplay. It is a case where injustice has not only been done, but also is patent on the face of record.
Although procedure for decision of the case by the Civil Court is not to be followed by the Arbitrator while conducting arbitration proceedings yet the basic norms for administration of justice which definitely include impartiality and providing of reasonable opportunity to prove and defend the claim and to produce evidence are to be following by every forum/authority who is to decide valuable rights of the parties. The Court/Authority/Tribunal/Arbitrator should not act with such a celerity that the person against whom an order is to be passed does not get a moment for reflection or action. Even the minimum requirements, referred to above, have not been observed by the Arbitrator while rendering the award. Learned Civil Judge has not attended to the above referred legal flaws in a lawful manner and has exercised jurisdiction illegally and with a material irregularity. Hence, the award as well as the impugned orders are not sustainable in law.
7. Resultantly, I accept this appeal, set aside the impugned order as well as the decree passed by the learned trial Court and setting aside the award remit the matter for fresh arbitration. Mian Maqbool Ahmad, the Arbitrator is removed on account of misconduct and Mr. Justice (Retd.)
Rustam S. Sidhwa, J. Of the Supreme Court of Pakistan, is appointed as an arbitrator to decide the dispute expeditiously. Appointment of the aforementioned Arbitrator has been made with consent of the parties. The fee of the learned Arbitrator is fixed as Rs,80,000 (eighty thousand only) which shall be paid equally by both the parties, who are directed to appear before the trial Court on 1-3- 1993. Learned trial Court shall get the proceedings finalised expeditiously. Parties are left to bear their own costs.