' On 23-12-1990, the dispute pending between the parties was referred to the sole arbitrator by consent of the parties in Suit No,679 of 1990 with the following observations:--- "By consent of the learned counsel present the main application in the suit, namely, that under section 20 of the Arbitration Act is taken up and the Arbitration Agreement is directed to be filed.
Pursuant to this application, in terms of the contract between the parties, Mr. Justice (Retd.)
Zahoorul Haq is appointed as the sole arbitrator in the reference but his function, mutatis mutandis, would be the same as that of an umpire under the relevant contractual provisions. The learned sole Arbitrator would be provided with the necessary papers including relevant applications and affidavits as well as documents in this suit by both the parties within two weeks. Claims, counterclaims and replies shall likewise be filed. The requisite award, of course, would be rendered within the prescribed period of four months from the date of the entering upon the reference by the learned sole Arbitrator. The fees of the learned Arbitrator is, tentatively, fixed at Rs,50,000 to be shared 50% each by the plaintiff on the one side and the defendant No,1 on the other, the fees to be payable directly to the learned sole arbitrator. This disposes of the above suit in the foregoing terms."
2. Both the parties filed their claims and counterclaims before the learned Arbitrator and as a result of the same, some 10 issues were framed. On 3rd November, 1992 upon conclusion of the proceedings, the learned Arbitrator pronounced the following Award:--- "Since the plaintiff had not appeared for the complete cross-examination, therefore, that evidence has to be ignored. Consequently there is no evidence in support of the plaintiff's case and the defendant had not admitted any part of plaintiff's claim, therefore, the claim of the plaintiff is dismissed.
' Similarly the defendant has not proved any part of its counterclaim nor the same was admitted by the plaintiff and hence the counterclaim of the defendant is also dismissed. The arbitration is, thus, disposed of."
3. After filing of the Award before this Court, several notices were issued to the plaintiff but they have failed to appear. Consequently, this Court directed issuance of notice to the learned counsel Mr. Bilal Khawaja, who was representing the plaintiff before the Arbitrator. Today, he has appeared in Court and has stated that he does not know the whereabouts of the plaintiff and that he has not been engaged after the conclusion of the arbitration proceedings. In pursuance of this Court order several notices were issued as well as published in daily newspapers, namely, ' Dawn' on 18-12-1993 and 'Mashriq' on 22nd March, 1994. According to the postal endorsement plaintiffs have abandoned their office. All attempts to compel the plaintiff to appear before this Court have gone in vain and, therefore, this Court has no option but to proceed with the objections filed by Mr. Sajjad Ali Shah. It was contended by Mr. Sajjad Ali Shah that the Award is liable to be remanded back to the Arbitrator on the grounds, firstly, that during the proceedings before him, hundreds of documents were admitted and denied by the parties and, therefore, his finding that the parties have failed to adduce evidence is not sustainable in law; secondly, the Arbitrator was required to give notice of his intention to proceed ex parte and lastly, that he was required to issue notice to the parties, intimating the date and time for the purpose of pronouncing Award. He has also referred to the cases in support of his contentions, namely, (1) Juggilal Kamlapat v. The General Fibre Dealers Ltd. (1954 (59 CWN) 146) and Wood v. Leake (1806), 13 Chancery Division page 156). In the first case of Juggilal, it was held by a Division Bench of Calcutta High Court, that if a party to an arbitration agreement fails to appear on one of the sittings, the Arbitrator should not proceed ex parte against him, but if non-appearance of such party appears to the Arbitrator to be an act of delaying the proceedings then the Arbitrator is permitted to proceed ex parte. In other words, it was observed in that case that the Arbitrator before proceeding ex parte against any party should be satisfied about the conduct of the party. In the case of Wood v. Leake more or less same view was held that every arbitrator has the power to proceed ex pane against a party, who, though served failed to attend with a view to prevent justice and to defeat the object of the Reference. Reliance has also been placed on "Russell's on the Law Arbitration, 17th Edn. (Stevens & Sons Ltd., London), page 171, where it was observed that the proceedings in an arbitration ends as a general rule, with counsel's speeches and then the arbitrator informs the party that he will make his award in due course. It was further observed that an arbitrator should make his intention clear without any doubt that the proceedings have ended and that he now wants to proceed to make his award.
4. I have gone through the record of the arbitration proceedings, which was commenced on 12th February, 1991 by filing of claims and counterclaims by the parties. On 28th July, 1991 since the plaintiff failed to produce his witness, his side of evidence was closed, where after the matter was adjourned to 20th August, 1991 for the defendant's evidence. It was noted by the learned arbitrator that on 20th August, 1991 the defendants appeared alongwith his witness and filed his affidavit-in- evidence. However, on 19th September, 1991 the plaintiff's side was reopened in the interest of justice. Thereafter, matter continued and several opportunities were extended to the plaintiffs to conclude his side of evidence when finally on 17th May, 1992 the side of P.W.1 was closed and one more opportunity was extended to the plaintiff for producing his further evidence. The matter was adjourned to 3rd June, 1992 when finally it was stated on behalf of the plaintiff that plaintiff is not inclined to lead any further evidence and the matter was adjourned to 27-7-1992 when the following orders were passed:-- "27-7-1992. Mr. Nasir Mahmud, holding brief for Mr. Bilal Khawaja for the plaintiff, is present. None else is present. Mr. Nasir states that the plaintiff's counsel have not received any affidavit of any witness of the defendant which should have been supplied by 20-7-1992.
' Today the matter was fixed for cross-examination of the defendant's witnesses but no witness is present. Therefore, the case of the defendant is hereby closed as time fixed was 9-30 a.m. And now it is 9-58 a.m.
' Since the plaintiff had not appeared for the complete cross-examination therefore, that evidence has to be ignored. Consequently, there is no evidence in support of the plaintiff's case and the defendant had not admitted any part of plaintiff's claim, therefore, the claim of the plaintiff is dismissed.
' Similarly the defendant has not proved any part of its counterclaim nor the same was admitted by the plaintiff and hence the counterclaim of the defendant is also dismissed. The Arbitration is thus, disposed of.
' 27-7-1992. Mr. Sajjad Ali Shah turned up at 5 p.m. And made application for reopening the case of defendant. Notice to the other side for 4-8-1992."
5. Against the aforesaid order of the learned Arbitrator the defendant filed an application for recalling of the same, which was rightly dismissed by the learned Arbitrator on the ground, that after pronouncement of Award he has become functus officio. While arguing, it was contended by Mr. Sajjad Ali Shah that it is a case of clear hardship. So far as the defendant is concerned, not a single opportunity was awarded to him in comparison to the plaintiff, which fact was also noted by the learned Arbitrator in the following words:--- "At the very first outset I must say that I have felt sympathy for the defendant as their absence before me on 27-7-1992, at 9-30 a.m., was caused by an inadvertent mistake by the counsel in noting a wrong time. It was a good cause for re-opening of their case if the matter had not been concluded on that day. And further I have no hesitation in agreeing with the learned counsel for the defendant that considering the circumstances of the case and the opportunities which had been granted to the plaintiff it would have been at least more appropriate and probably a bit more equitable if I had not proceeded to conclude the whole matter on 27-7-1992, and at least had given one more opportunity to the defendants to prove their case.
' It is, therefore, clear that the defendant had obtained a long date for 27-7-1992, at 9-30 a.m. For its evidence but neither filed the affidavit of any witness ten days before hearing nor was present on 27-7-1992. The defendant very well knows the result of non-production of witnesses and the matter could be legally concluded against them. It may have been better if I had waited but I did not wait further nor adjourned the matter and while so acting I did, not commit any illegality or irregularity."
6. One of the grounds given in section 30 of the Arbitration Act, 1940 for setting aside an award is that where it appears to the Court that the same is "otherwise invalid". One more ground is, whether an arbitrator misconducted himself. In the instant case, it was rightly held by the learned Arbitrator that after pronouncement of the Award, he becomes functus officio. However, under such circumstances, a Court is competent to set aside an award and to remand the same where it appears that the parties were not afforded proper opportunity to produce their case. In the instant case, I am fully salified that due to one default of the defendant, even for which a plausible explanation was offered, he could not be non-suited when he has preferred his counterclaim before the same arbitrator.
7. The term misconduct as referred in section 13(a) of the Arbitration Act particularly in reference to ex parte proceedings was considered by an illustrious Judge of this Court, Waheeduddin Ahmed, J.
(as his Lordship then was) in Khan Bahadur Allah Bux Gabol v. Razia Begum (PLD 1960 (W.P.)
Karachi 455) where it was held that an arbitrator is permitted at hearing considerable latitude in the procedure to be followed by him and that it is his paramount duty to offer the parties a reasonable opportunity to know the case against them for defending it before him. It was further held, "If he makes an Award without complying with such elementary principles of natural justice, he does it 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 said Award was set aside by this Court under section 30 of the Arbitration Act. At the same time, learned Judge refused on oral motion for referring the matter back to the same sole arbitrator on the ground that it was not permissible in law as section 30 of the Arbitration Act contains no provision to refer back the matter to the arbitrator. A learned Division Bench of Azad Jammu and Kashmir High Court had also considered the question of misconduct while setting aside an Award. After considering several reported cases, some 12 instances of misconduct were suggested which included a situation where an Award is made without having heard all the evidence; where a party was not allowed reasonable opportunity of proving his case; or where the Award indicates gross negligence or recklessness on the face of record. (See Kh. Ghulam Rasool Lone v. Azad Jammu and Kashmir Government PLD 1971 Azad J & K 127). In the case of Brook Bond (Pakistan) Ltd. Conciliator and 6 others (PLD 1977 SC 237) misconduct of an arbitrator was considered in reference to the provisions of Industrial Relations Ordinance in the following words:--- "The term misconduct used in connection with arbitration does not necessarily imply anything in the nature of fraud or moral turpitude. In the judicial sense the misconduct of an Arbitrator means his failure to perform his essential duty, resulting in substantial miscarriage of justice between the parties. According to Atkin, J., in Williams v. Willis (83 LJKB 1296), the words 'misconducted proceedings' means such a mishandling of arbitration as is likely to cause some substantial miscarriage of justice. In the American Jurisprudence, Volume 3 on pages 964-965 it is observed that awards which are valid on their faces may be set aside in equity for misconduct on the part of the arbitrators, and the extrinsic evidence is admissible to prove such misconduct. Conduct inconsistent with the duties imposed upon those selected as the arbitrators, either at the hearing, or in reaching their conclusions will frequently constitute misconduct as will impeach an award."
8. Again, a Full Bench of the Hon'ble Supreme Court in the case of Ghulam Abbas v. Trustees of Port of Karachi (PLD 1987 SC 393) while interpreting section 30 of the Arbitration Act, held that the general rule is that an Award is final as to both fact and law but if an error of law is apparent on the face of the Award, it is good ground for setting it aside. It was further held that there is a rider to this rule, namely, that if the parties have specifically referred a question of law to arbitration then the general rule would apply and the award will be beyond reproach even if such a question is decided erroneously. It was further held that where there is intentional disregard of law, it would be deemed to be misconduct on the part of an arbitrator as would justify setting aside the award. Reference was made to Russel on Arbitration. In the instant case, one can say that the act of learned arbitrator does not fall within the term "misconduct" as defined in section 39(a) but, to my mind, it is an objection to the legality of the Award apparent on the face of it as defined under section 16(1)
(c) and, therefore, it appears justified to remit the Award to the same arbitrator for reconsideration.
In the entire scheme of the Arbitration Act, 1940, there is no statutory rule imposing a mandate on an arbitrator not to proceed ex parte against any defaulting party without first giving notice of his intention to proceed in that manner and that an Award in such a manner be set aside.
Nevertheless, issuance of a notice by an arbitrator expressing his intention to proceed ex parte is a rule of prudence and convenience. Even after issuance of such notice, a party, to whom proper opportunity of attending arbitration proceedings was extended, fails to appear, the arbitrator will be fully entitled to proceed ex parte and to pass any just order. This view finds favour from the observations made in the Halsbury's Laws of England, Fourth Edition, Volume 2, page 306 at para. 590 which reads as follows:--- "590. Times and places of meetings.---It is the duty of an arbitrator, when called upon to act pursuant to the agreement of reference, to appoint times and places of meeting and to give due notice thereof to the parties. ' Where the reference is to more than one arbitrator, they should all concur in appointing such times and places and in doing all other acts in the course of the reference, unless the agreement for arbitration provides that the decision of the majority is to be binding (Goodman v. Sayers (1820) 2 Jac and W 249 at 261).
' The arbitrator cannot hear one party in the absence of and without notice to the other parties (Oswa ld v. Earl Grey (1855) 24 LJQB 69); but where nothing was done at a meeting notice of which had not been given to the other side, the award was not thereby invalidated (Re Morphett (1845) 2 Dow and L 967).
' In fixing times and places of meeting it is usual for the arbitrator to consult the convenience of the parties and to comply, so far as possible, with their wishes; but it is within his discretion to fix such times and places as he may think proper (Re: Whitwham Trustees, etc. And Wrexham, Mold and Connah's Quay Rly. Co. (1895) 39 Sol Jo 692).
' Where the time and place of meeting appointed by the arbitrator are reasonable, and due notice has been given to the parties, but one of the parties refuses to attend, the arbitrator may proceed with the reference in his absence. Where the arbitrator proposes to proceed with the reference notwithstanding the absence of one of the parties, it is advisable that he should give that party distinct notice of his intention to do so (Waller v. King (1923) 9 Mod Rep 63; Fetherstone v. Cooper (1803) 9 Ves 67; Wod v Leake (1806) 12 Ves 412; Harcourt v. Ramsbottom (1820) I Jac and W 505 at 512; Scott v. Van Sandau (1844) 6 QB 237; Tryer v. Shaw (1858) 27 LJ Ex 320; Angus v. Smythies, Smythies v. Angus (1861) 2 F & F 381; Re: Hewitt and Portsmouth Waterworks Co. (1862) 10 WR 780).
If reasonable excuse for not attending the appointment can be shown, the Court will set aside an award made by an arbitrator who has proceeded ex pane (Gladwin v. Chilcote (1841) 9 Dowl 550)."
(Emphasis added).
10. A Division Bench of Punjab High Court in the case of Prem Nath L. Marsaran Dass and another v.
OM Parkash L. Ram Kishen Dass Aggarwal (AIR 1956 Punjab 187) held that law permits an arbitrator considerable latitude in the procedure adopted by him at the hearing and that he should afford the parties a reasonable opportunity of being heard and an award passed in violation of this essential requirement will be liable to be set aside. In the case of Messrs Lovely Benefit Chit Fund and Finance (Pvt.) Ltd. Purun Dutt Sood and others (AIR 1983 Delhi 413) a Single Judge of Delhi High Court followed the rule laid down by a .Division Bench of Calcutta High Court in Bhowanidas Ramgobind 'v. Harsukhdas Balkishandas (AIR 1924 Cal. 524), case of Premnath Harsaran Dass (supra), Udaichand Panna Lall v. Debibux Jewanram (AIR 1920 Calcutta 853), Pratapsingh v.
Kishnprasad & Co. Ltd. (AIR 1932 Bombay 68), and the rule of Juggilal Kamlapat (Supra = see also AIR 1955 Calcutta 354) and held that "from these authorities, it is apparent that an arbitrator ought not to proceed ex parte against a party if the has failed to appear at one of the sittings. The arbitrator should fix another date for hearing and give notice to defaulting party, of his intention to proceed ex parte on a specified date, time and place. Even after notice if the defaulting party does not take part in the proceedings, the arbitrator may proceed in his absence". (Emphasis added).
The cases of Bhowanidas, Juggilal and Udaichand (as noted earlier) were followed, in addition to the case of Dori Lal v. Lal Sheo (AIR 1954 Allahabad 244) by a Single Judge of Calcutta High Court, who very elaborately summarised five principles governing the arbitrator's right as follows:--- "....Broadly stated, the principles governing the arbitrator's right to proceed ex parte were: (i) If a party to an arbitration agreement had failed to appear at one of the sittings, the arbitrator could not or, at least ought not to, proceed ex parte against him at that sitting. (ii) Where non- appearance was accidental or casual, the arbitrator should ordinarily proceed in the ordinary way, fixing another date of hearing and awaiting the future behaviour of the defaulting party. (iii) If, on the other hand, it appears that the defaulting party had absented himself for defeating the object of the reference, the arbitrator should issue a notice that he intended at specified time and place to proceed with the reference and that if the party concerned did not attend he would proceed in his absence. (iv) But if after making such peremptory appointment issuing such a notice the arbitrator did not in fact proceed ex parte on the day fixed, but fixed another subsequent date, he could not proceed ex parte on such subsequent date, unless he issued a similar notice in respect of that date as well. (v) If he issued a similar notice and the party concerned did not appear, an award made ex parte would be in order. But, if he did not issue such notice on the second occasion but nevertheless proceeded ex parte, the award would be liable to be set aside in spite of a notice of peremptory hearing having been given in respect of the earlier date, subject, however, to the condition that prejudice was caused to the party against whom the ex parte order was made. But this duty to give notice of the intention to proceed ex parte was not an absolute one. Where a party by its conduct had made his position clear that he would not attend in any event then the formality need not be followed..."
' The abovementioned principles were endorsed by a. Division Bench of Calcutta High Court in Lohia Jute Press Ltd. v. The New India Assurance Co. (AIR 1988 Calcutta 174).
11. The upshot of the above discussion is that Award, dated 27th July, 1992 is set aside and is remanded back to the learned Arbitrator, who will proceed with the arbitration from the stage as of 27th July, 1992 after giving notice to the plaintiff. However, the defendant shall pay a further sum of Rs,25,000 to the learned Arbitrator as his fee.
12. The suit stands disposed of in the above terms.