' AMIR ALAM KHAN, J.---This first appeal is directed against the composite judgment and decree dated 11-7-1995 passed by the learned Civil Judge, Lahore, whereby the suit of the respondent for the recovery of Rs,8,05,494 was decreed to the extent of Rs,4,47,716 on the basis of statement made by the alleged Referee and the application of the appellants seeking to revoke the reference was dismissed.
2. The relevant facts are that the respondent came to occupy shop No,7 along with inter-floor measuring 490 sq.Ft. Situate Main Boulevard (Commercial Area) Cavalry Ground Extension Scheme, Lahore as a tenant under the appellants at a monthly rental of Rs,7,500. According to the averments contained in the plaint in the suit filed by the respondent he paid Rs,2,10,000 as security to the appellants with the clear understanding that the same shall be refunded at the time of termination of tenancy. It was held out to the respondent that the shop was all fit to commence a business but was found to be a shambles as the same was not fitted with electricity or even the essential amenities required to commence any decent business. The respondent incurred huge expenses in making it serviceable shop for business purpose as according to him he had to instal a door, renovate the bath-room, do paneling, carpeting and also internal wiring with connection from the main pole thereby incurring expenditure and since this had to be done over a period of months, therefore, right from the day of inception of tenancy dated 1-1-1991 till 30-6-1991 the respondent could not house or commence his business in the said shop although he had employed four persons for the efficient running of the same. The main grouse of the respondent, as it appears from the averments contained in the plaint, is to the effect that in spite of the abovesaid acts of husbandry, the appellants filed an ejectment application against the respondent thereby alleging that he had defaulted in payment of rent and sought eviction of the respondent from the shop aforenoted. In the circumstances noted above, the respondent proceeded to file a suit for recovery of Rs,8,05,494 i,e, the accumulated amount of expenditure incurred by the respondent as also the amount of security on the ground that he was never allowed to carry on his business in the said shop and that since the appellants are out to evict the respondent from the shop in dispute, therefore, he is entitled to the expenditure incurred by him as also compensation for the loss of goodwill in the business. It was submitted that after the receipt of notice from the Court of Additional Rent Controller, Lahore Cantt., the respondent approached the appellants several times with the request to pay the suit amount and obtained possession of the shop but they have failed to pay any heed thereto. Hence the suit.
3. The suit was resisted by the appellants who inter alia maintained that the possession of the shop was handed over to the respondent a week before the commencement of tenancy and that the same was in a decent serviceable condition. As far the plea that the respondent was entitled to refund of security, it was submitted that as per lease agreement executed between the parties the amount of security could only be refunded at the time of termination of tenancy. The claim as to renovation, furnishing and wiring as also the matters connected therewith was denied in toto and it was submitted that the amount mentioned in the plaint are fictitious and imaginary, therefore, the defendant/plaintiff is not entitled to recover the same. It was asserted that the respondent having defaulted in the payment of rent, the appellants had no alternative but to file the ejectment application against him and the plea that the appellants were unnecessarily interrupted in the smooth running of his business was also denied.
4. It appears from the record that the case proceeded in a slipshod manner inasmuch as the appellants being defendants in the case instead of filing their written statement proceeded to file an application under Order VII, Rule 11, C.P.C. Thereby seeking rejection of the plaint. This application was dismissed and the appellants having filed written statement in the case, the plaintiff/respondent filed an application thereby seeking a direction that the appellants be asked to deposit the amount of Rs,2,10,000 in Court as according to him he was prepared to surrender the possession of the shop in dispute. The said application was contested between the parties and was ultimately decided vide order dated 14-6-1993 whereby the appellants were directed to deposit the amount of security in the Court. It was thereafter that as many as ten issues were framed in the case but since the appellants had been asked to deposit the security amount the case was not posted for recording the evidence of the parties. The appellants, on the other hand, filed review application thereby seeking to recall the order of deposit of security amount, the proceedings in regard to the said application lingered for quite some time and ultimately the said application was also dismissed and the appellants were called upon to comply with the original direction of deposit of security amount. The appellants, as it appears from the record, successfully avoided to deposit the said amount in Court by filing miscellaneous applications till 2-6-1994 when the said applications were also dismissed. It was thereafter, that another application was filed by the appellants with the request that instead of depositing the amount of security in Court the appellants be allowed to furnish a security for the said amount. The proceedings on the said application also lingered for quite a while whereafter on 18-12-1994 the learned trial Court passed an order that hearing of the parties was essential in order to settle the amount of security. It was in pursuance of this order that the parties appeared before the Court on 3-1-1995 when it was agreed that the dispute between the parties be got decided through a Referee. The parties sought an adjournment for proposing the name of the Referee as also for the purpose of making statement in regard thereto, therefore, the case was adjourned to 18-1-1995. It was on the last-mentioned date that the respondent stated that he has already talked to Justice (Retd.) Asadullah to act as Referee and that he has agreed to the proposal. The appellants also agreed with the result that a letter was issued to Justice (Retd.) Asadullah thereby soliciting his consent. The proposed Referee having consented to act as such, the matter was adjourned to 1-2-1995 for recording the statement of the parties as also for the determination of terms of the reference. The matter was adjourned to 1-2- 1995 and thereafter to 7-2-1995 and 20-2-1995 when the written terms of reference were filed and it was on 26-2-1995 that the matter was referred to the Referee with the following direction:-- "So Mr. Justice (Retd.) Sh. Muhammad Asadullah is appointed as the Referee to give his report on all the controversial points arising out of the pleadings of the parties and finally, he shall report as to how much amount, the plaintiff is entitled to recover from the defendants. The Referee will hear both the parties, will visit the spot and will inspect the shop in dispute keeping in view the assertions of the plaintiff made in the plaint and written statement of the defendants. The Referee may also examine any other document produced by the parties. Fee of the Referee fixed as Rs,15,000 which will be paid by both the parties on equal basis."
5. It so happened that the proposed Referee addressed a letter to the Court thereby requesting that he should be sent the copies of the pleadings and miscellaneous applications. The same was done accordingly.
6. The Referee, as it appears from the record of proceedings maintained by him, started proceeding with the reference on and from 26-3-1995 and the hearing before him was concluded on 26-4-1995 while the report was submitted by the said Referee on 27-4-1995 and that too in the absence of both the parties. It was on the last-mentioned date that the appellants' application seeking to revoke the reference was taken up. This application was also proceeded with and was ultimately decided alongwith the main suit whereby a decree for recovery of Rs,4,47,716 was passed in favour of the respondent and against the appellants while the application of the appellants seeking to withdraw from the reference was dismissed.
7. The abovesaid composite judgment and decree passed in the case has been assailed in the present appeal.
8. Mian Nisar Ahmad learned counsel for the appellants opened the debate with reference to Article 33 of the Qanun-e-Shahadat and maintained that the words used thefein are indicative of the fact that the Referee could be a person having knowledge about the controversy between the parties and if called upon to make a statement in regard thereto, the same would partake the character of admission between the parties with the result that the lis could be disposed of in the terms of statement made by the said Referee. Additionally it was maintained that the knowledge of the Referee must be preceding his appointment as such and not subsequent thereto. Referring to the terms of reference settled between the parties and superadded with the Court's order, it was submitted that the word "terms of reference and Faisala" as used in the reference itself are enough to conclude that Sh. Muhammad Asadullah was neither intended to be appointed as Referee nor can be termed as such in view of the said reference as according to him a bare reference to the terms of reference settled on 26-2-1995 it could be safely gathered that the parties intended to appoint an Arbitrator; the Court understood it as such with the result that the dispute was referred to said Sh. Muhammad Asadullah to decide the same in terms of reference and though he was described as Referee Yet he was meant to be an Arbitrator and in reality he acted as such.
Reliance was placed on Chhabba Lal v. Kallu Lal and others (AIR (33) 1946 Privy Council 72), Ghulam Farid Khan v. Muhammad Hanif Khan and others (1990 SCMR 763), Muhammad Khalid and others v.
A.T.M. Corporation and others (1988 CLC 2359), Muhammad Hanif Khan and another v. Ghulam Farid Khan and others (PLD 1988 Lahore 250), Muhammad Ashraf v. Abdur Rehman (1993 CLC 1875) and Muhammad Akbar and another v. Muhammad Aslam and another (PLD 1970 SC 24). The learned counsel for the appellants also referred to the report of Sh. Muhammad Asadullah to submit that the way the proceedings were taken by the alleged Referee and the manner in which the matter referred to him was decided was indicative of the fact that he had no previous knowledge of the dispute between the parties and that he in fact resolved the same by receiving evidence and making enquiries which was not at all allowable in the case of a Referee and that at best it could be termed as an award by an Arbitrator. Much stress was led on the meanings of the words "dispute" and "decision" (Faisala). Reliance was placed on Mian Zahid Sarfraz v. Raja Nadir Pervaiz Khan and others (1987 SCMR 1107) and Amanullah Khan and 3 others v. Mst. Akhtar Begum (1993 SCMR 504).
9. The learned counsel for the appellant summed up his arguments with the submission that the appointment of Sh. Muhammad Asadullah was not as a Referee but as an Arbitrator, therefore, the judgment and decree passed on his report treating it as that of a Referee is not sustainable.
10. Ch. Khurshid Ahmad learned counsel for the respondent, on the other hand ingenously argued that in order to see as to whether a particular person has been appointed or acted as Referee or Arbitrator, the intention of the parties is the predominant feature as according to him the same would ultimately determine the scope of reference. As a corollary it was submitted that the intention of the parties can be gathered from the statement made by the parties; the proceedings taken by the Court; the way the parties participated therein as also the attending circumstances. It was also submitted that it is not at all essential that a person to be a Referee must have personal knowledge and that too preceding the appointment as according to him knowledge is gained through experience consisting of seeing, hearing, probing as also understanding and knowing an aspect, a thing or a dispute and the same could be said to have been gained or gathered before the appointment and even thereafter by looking into the various aspects of the dispute referred to him, therefore, it could not be insisted upon that the knowledge of the Referee must always be preceding the dispute. Reliance was placed on Rehmat and others v. Residents of Deh and others (1988 CLC 1922), Faiz-ul-Haq and another v. Abdus Salam and 3 others (1990 MLD 106) and certain observations made in para. 13 of the judgment Muhammad Hanif Khan and another v. Ghulam Farid Khan and others (PLD 1988 Lahore 250) and Muhammad Ashraf v. Abdur Rehman (1993 CLC 1875). In amplification of argument referred to above, it was submitted that once the Court comes to the conclusion that the intention of the parties was to appoint a Referee then it must be given effect and the matter should be taken to its logical end keeping in view the said intention of the parties. The judgments relied by the learned counsel for the appellants were sought to be distinguished on the basis of arguments raised above. While referring to the proceedings of the Court as also that of the Referee it was submitted that a bare perusal of an order dated 3-1-1995 and various other orders subsequent thereto what the parties intend and meant was to appoint a Referee and having agreed thereto, the name of the Referee was proposed by one and accepted by the other which ultimately culminated in the appointment of Sh. Muhammad Asadullah as a Referee. It was then submitted that whatever was stated in the report was opinion of the Referee which had been reached by enquiring and probing into the matter by spot inspection, recording of evidence and collecting of material otherwise. The report of Sh. Muhammad Asadullah was also referred to maintain that he started his proceedings having obtained the copies of the pleadings and since the parties continued to participate therein, therefore subsequent application of the appellants thereby seeking to revoke the reference was mala fide and illegal. The learned counsel also referred to the various provisions of the Oaths Act and Order XXIII, Rule 1 and 3, C.P.C. To maintain that the proceedings taken thereunder are similar in nature, the common denominater being the agreement between the parties and it was submitted that the proceedings taken under the Oaths Act as also under Order XXIII, Rules 1 and 3, C.P.C. Are not allowed to be revoked because the parties having reached an agreement by whatever mode, they could not be allowed to resile therefrom. Reliance was placed on Partap Talkies Padrauna v. Narain Talkies Distributors and another (AIR (38) 1951 Punjab 416), Syed Muhammad Ramzan v. Muslim Zaidi and others (PLD 1986 Lahore 66) and Saleem Ahmad v. Khushi Muhammad (1974 SCMR 224).
11. The pith and substance of the argument of the learned counsel for the respondent was that the appointment of a Referee being the result of an agreement between the parties the same cannot be avoided by giving a different connotation to the intention of the parties i,e, by treating the opinion/report of the Referee as an award of Arbitrator.
12. In the instant case it was on 3-1-1995 that the parties agreed that the dispute between them be got decided through a "Faisala" of a Referee. It was, thereafter that the parties sought an adjournment for the purpose of proposing the name of the Referee and this was done on 18-1-1995 when the plaintiff/respondent submitted to the Court that he has talked to Mr. Justice (Retired) Sh.
Muhammad Asadullah and that he has agreed to become the Referee. The proceedings thereafter are indicative of the fact that written consent was sought from Mr. Justice (Retired) Sh. Muhammad Asadullah and then the term of reference was settled which ultimately culminated into the order dated 26-2-1995 containing the term of reference. The matter did not stop here. The alleged Referee in turn asked for pleadings of the parties and proceeded to determine the dispute between the parties by receiving evidence, collecting material as also by spot inspection. The question is, did he act as a Referee within the meaning of the word as used in Article 33 of the Qanun-e- Shahadat and the answer is not very difficult to find. Article 33 of Qanun-e-Shahadat reads as under:-- "33. Admission by persons expressly referred to by party to suit.---Statements made by persons to whom a party to the suit has expressly referred for information in reference to matter in dispute are admissions.
Illustrations ' The question is, whether a horse sold by A to B is sound ' A says to B: "Go and ask C. C knows all about it. "C's statement is an admission."
There being enough authority for the proposition that the illustrations attached to a section of any Act are deemed to be a part of the Act itself, therefore, reference to the illustrations attached to Article 33 of the Qanun-e-Shahadat would help in understanding the true import/meanings of the words used in the said Article as also the scope thereof. A bare perusal of the illustration attached to Article 33 of the Qanun-e-Shahadat would show that the Referee is required to furnish information to the Court according to his personal knowledge and that knowledge must be preceding his appointment and not subsequent thereto. The word "Go and ask C. C knows all about it" are quite definite in their meaning that the knowledge of the Referee must be preceding the reference and not thereafter. Again the information so furnished by the Referee partakes the character of admission between the parties with the result that the lis is decided on the basis thereof and rightly so because the admission, the moment it is made, relieves the parties from making proof of the fact so admitted and debars them from disputing it any further. On the contrary a Faisala or resolution of a dispute can only be made by receiving evidence, hearing arguments and applying mind to the facts as proved on the record. The word "decision" fell for interpretation in many cases and lately in the cases of Amanullah Khan and 3 others as also that of Mian Zahid Sarfraz noted supra and was interpreted to mean, settlement, conclusion, form a judgment, making up one's mind which implies exercise of a judicial determination as final and definite result of examining a question. Obviously the person who is called upon to decide a dispute after receiving evidence and hearing arguments as also collecting material etc. Cannot be termed to be a Referee because the mark difference between the two is too obvious as in the case of Referee he is required only to furnish information to the Court according to his knowledge and belief while in the other case one is required to resolve the dispute by receiving evidence and hearing arguments etc. The argument that the intention of the parties is predominant feature and that if parties had agreed that the matter be decided by receiving evidence, collecting material and spot inspection and that the person nominated to decide the same could also be treated as Referee suffers from an in-built fallacy inasmuch as the intention of the parties cannot be given preference over the intention of law. The law having defined the scope and domain of a Referee the parties cannot agree to enlarge and limit the scope thereof so as to insist upon that even though the law has commanded otherwise the person so nominated be called as a Referee. The learned counsel for the respondent relied on Muhammad Ashraf v. Abdur Rehman (1993 CLC 1875) and some observation made in para. 13 of the judgment rendered in the case of Muhammad Hanif Khan to canvass the proposition that even the Referee could also inspect the site and inquire from the persons for his own knowledge/belief. The contention raised by the learned counsel for the respondent is not based on the correct reading of Muhammad Hanif Khan's case. It is nowhere ruled in the said judgment that the Referee could inspect the site or make inquiries from the persons for his own knowledge. As for the observation made in the case of Muhammad Ashraf noted supra we are unable to subscribe to the view taken by the learned Single Judge. Needless to mention here that the observation referred to by the learned counsel for the respondent seems to be in the nature of an obiter because ultimately it has been held in the said judgment also that the Referee having proceeded to inspect the site; examine witnesses; call for Settlement record to reach his conclusion manifestly decided a dispute between the parties, therefore, the decision submitted by the Referee could not be treated by the Court as a statement within the meaning of Article 33 of the Qanun-e-Shahadat 1984. In a situation of the nature, one has to look into various aspects of the reference and decide as to the appointment made was one of a Referee or that of an Arbitrator. A bare perusal of the term of reference settled in this case would show that even the parties meant to appoint the Arbitrator so as to resolve the dispute between them and the role assigned by the parties to Sh. Muhammad Asadullah squarely fits in with the role of an Arbitrator. It is not denied that even though the parties had approached the Court of law for the resolution of their dispute, they can agree to refer the matter to an Arbitrator and in such eventuality the proceedings before the Court are stayed, matter is referred to the Arbitrator and the same is resolved in accordance with the award of the Arbitrator but after deciding the objections if any. The other argument of the learned counsel for the respondent that the knowledge is gained through seeing, observing and probing thereby knowing various aspects of a thing or a matter or controversy, therefore, it is not correct to insist that this knowledge must precede the appointment and not thereafter is also not well founded inasmuch as the law has provided two different situations for such eventualities, one is by a reference to a Referee who has already gained that knowledge and is called upon to furnish information to the Court on the basis thereof while the other is by way of Arbitration whereby the Arbitrator resolves or decides the dispute between the parties by receiving evidence and making enquiries of his own subsequent to his appointment as such. Previously the Arbitrator was not required to give reasons for his decision but it has now been made obligatory for him to give reasons therefor meaning thereby that Arbitrator is required to give his award by adopting procedure set out for judicial determination.
13. Coming to the last arguments of the learned counsel for the respondent that a decision of a dispute based on an information furnished by a referee is similar in nature as that of adjustment of suit under Order XXIII, Rule 3, C.P.C. And that of one based on oath as decision reached in all these cases proceeds and based on a common denominator i,e, agreement between the parties. The precise submission of the learned counsel for the respondent was to the effect that in all the cases noted above the parties having evinced their intention to the resolution of the dispute between them by one of the modes referred to above do reach an agreement and the intention forming basis of the agreement between the parties cannot be foiled by giving a different connotation to the nomenclature of a person named by the parties. As a corollary to the abovesaid argument it was submitted that the parties having reached an agreement, the same could not be rescinded at the option of one party nor one of them could be allowed to resile therefrom. As for the first part of the argument is concerned suffice it to say that we have already held that the appointment of Mr. Justice (Retd.) Sh. Muhammad Asadullah was in the capacity of an Arbitrator and not as a Referee.
The plea that the parties having chosen to name and treat him as a Referee could not be accepted in the face of terms of reference settled between the parties as also in view of the conduct of Mr. Justice (Retd.) Sh. Muhammad Asadullah whereby he proceeded to receive evidence, make inquiries and inspect the property in dispute. The features referred to above are indicative of the fact that not only that the parties intended that Sh. Muhammad Asadullah should act as an Arbitrator but also he acted as such. The reliance of the learned counsel for the respondent on the judgment reported as Partap Talkies Padrauna v. Narain Talkies Distributors and another (AIR (38) 1951 Punjab 416) is not very apt. In the said case while relying on an earlier judgment of Allahabad High Court reported es Himan Chal v. Jawar (AIR 1924 Allahabad 570) it was held that "the parties could agree that the decree of the Court be passed in accordance with the statement made by the nominee and there was nothing to prevent the parties from compromising the suit and agreeing to a decree being passed in terms to be stated by a person named. Such an agreement was in the nature of adjustment of the suit and no party could be allowed to resile from it "(Underlining is ours). The plea that the nominee acted as an Arbitrator was repelled on the ground that since the parties scrupulously avoided the word Arbitrator in the reference, therefore, the nominee of the parties could not be treated as an Arbitrator. The rule of law laid down in Himan Chal's case, it appears, was not approved in a subsequent case reported as Mst. Akhtari Begum v.
Rehmat Hussain and others (AIR 1933 Allahabad 861) and many other cases from our own High Courts and the Supreme Court of Pakistan, therefore, we are not inclined to follow the dicta of the judgment relied by the learned counsel for the respondent. The Division Bench judgment of this Court reported as Muhammad Hanif Khan and another v. Ghulam Farid Khan and others (PLD 1988 Lahore 250) which in turn was approved by the Supreme Court and is reported as Ghulam Farid Khan v. Muhammad Hanif Khan and another (1993 SCMR 763) are complete answer to the argument raised by the learned counsel for the respondent.
14. It would be noted that the appointment of Mr. Justice (Retd.) Sh. Muhammad Asadullah was obviously in the capacity of an Arbitrator, therefore, the application seeking revocation of the reference was also not all that misplaced as the same is provided under section 5 of the Arbitration Act, 1940. It is of course for the person applying for revocation of the arbitration agreement to show that there do exist grounds for the revocation of the reference as contemplated by law and if he is able to establish them, the reference could also be revoked. The reliance of the learned counsel for the respondent on the judgment reported as Syed Muhammad Ramzan v. Muslim Zaidi and 4 others (PLD 1986 Lahore 66) and Saleem Ahmad v. Khushi Muhammad (1974 SCMR 224) is absolutely misplaced inasmuch as the said case pertains to the Oaths Act where it has been held that the person having agreed to abide by the oath of another party could not be allowed to resile therefrom while the present case is that of revocation of the authority of an Arbitrator as provided under section 5 of the Arbitration Act. Additionally, the report of Mr. Justice (Retd.) Sh. Muhammad Asadullah being in the nature of an award of an Arbitrator the same could not be accepted as such unless objections thereto had been called upon by the Court as prescribed by law and until such time the same had been decided, therefore, it has been rightly argued by the learned counsel for the appellants that the judgment based on the report of Mr. Justice (Retired) Sh. Muhammad Asadullah is vitiated because of non-compliance with the provisions of law applicable to the facts and circumstances of the case.
For the reasons stated above this appeal is allowed and the judgment and decree dated 11-7-1995 is set aside with the result that the case is remanded to the learned trial Court to proceed therewith and decide the same in accordance with law as also in terms of the order referred to above. Since a complicated question of law was involved in this appeal therefore, there shall be no order as to costs.