1. MUHAMMAD AKRAM, J.-This judgment will dispose of the above appeal from the order dated 16th November 1973 passed by a learned Judge of the Lahore High Court at Lahore, whereby he accepted the First Appeal from Order No. 19 of 1972 filed by the respondents herein, in reversal of the order passed by the trial Court is dismissing their objections under section 33 of the Arbitration Act, 1940 and made the award between the parties a rule of the Court.
2. The dispute in this case relates to a part of the estate left by Lt. Col. M. A. Baqai predecessor of the parties, who died on 27-1-1969. The appellant is the daughter, respondent No. 1 widow, respondent No. 2 sister and respondents Nos. 3 and 4 are the brothers of the deceased. Respond--ent No. 1 is the step-mother of the appellant They appear to be at logger-heads with each other and were not able to pull on amicably after the death of their predecessor.
3. But on the 16th of April 1971, the respondents herein moved an application under section 33 of the Arbitration Act, 1940 in the Civil Court at Lahore, objecting to the validity of the arbitration agreement, the proceed--ings taken before the arbitrators and the umpire and the award thus made by him. In their main objection raised in the application they submitted that there was no legal and validly stamped agreement referring the dispute between the parties to the arbitration and as such the proceedings before the arbitrators as well as the umpire and the impugned award made by him were wholly without jurisdiction and coram non judice. It was also vaguely alleged that the umpire had misconducted the proceedings before him. The respondents, therefore, prayed for a declaration to the effect that the arbitration agreement, reference to arbitration and the award made by the umpire did not bind them and were of no legal effect.
4. The appellant in her reply to the application controverted these allegations and also raised the plea that the reference to arbitration between the parties was brought about under the order passed by the Martial Law authorities. The award made by the umpire was also approved by them and they had even directed the parties to act upon the same. It was, therefore alleged that in these circumstances the objections raised by the respondents against their orders were not tenable in civil Court. Moreover, according to the appellant, respondents Nos.2 to 4. Having already accepted the award and received the amount awarded to them, they were estoppel from challenging the validity of the award.
5. Almost simultaneously, on the application of one of the parties, the umpire filed his award in the civil Court at Lahore on the 20th of April 1971. On this the respondents herein filed their objections against the award in Court almost on the same grounds raised in their above application under section 33 of the Arbitration Act The appellant controvert d the allegations and submitted that the award was liable to be made a rule of the Court.
6. Both these matters were heard together by tile learned Civil Judge, Lahore who allowed tile opportunity to the parties to file their affidavits in support -of their pleas.
7. On the 8th of December 1971, the learned Civil Judge, Lahore, repelled the objections raised by the respondents against the reference to the arbitration and the award. Thereby he also dismissed their application filed under section 33 of the Arbitration Act and made the award a rule of the Court. He was of the opinion that the reference to arbitration between the parties was made under the orders of the Martial Law Authorities. It was at their behest that the parties were called upon to nominate their respective arbitrators and on the difference of opinion between the two arbitrators, they had referred the case to the umpire appointed by the arbitrators. After the award was made by the umpire, the Martial Law authorities informed the parties about it and called upon them to comply with the same. In these circumstances, in the opinion of the learned Civil Judge, the jurisdiction of the civil Court to entertain the dispute was barred under section 3 (1) of the Jurisdiction of Courts (Removal of Doubts) Order, 1969. Moreover, respondents Nos. 2 to 4 having accepted a sum of Rs. 7,500 front the appellant under the award, they were estopped by their conduct from challenging its validity. In respect of the main objection raised against the legality of the arbitration agreement, the Court observed that under the order of the Martial Law authorities it was got stamped and the deficiency of Rs. 4 in the stamp duty due on the agreement alongwith a penalty of Rs. 10 was deposited in the Treasury and a certificate to that effect was also issued by them. In the circumstances, in the opinion of the trial Court the arbitration agreement having been stamped under the order of the Martial Lave- authorities, it should be treated as a duly stamped document with retrospective effect. The Court justifiably observed that the umpire occupied one of the top most judicial position in the country as a retired Judge of the Supreme Court. And is possessed of legal knowledge and integrity. As such there was no question of his having misconducted the proceedings before him and there was no evidence whatso--ever to support this contention which was rejected by the Court.In conclusion the trial Court dismissed the application of the respondents, rejected their objections against the award and made it a rule of the Court, on 8-12-1971.
8. The respondents then filed the appeal (F. A. O. No. 19 of 1973) against the order in the High Court. As already stated above on the 16th of November 1973, a learned Judge of the Lahore High Court at Lahore accepted the appeal of the respondents and set aside the order passed by the trial Court.
9. He observed from the record that in fact neither the two arbitrators nor the umpire were appointed by the Martial Law Authorities and that the arbitration was undertaken with the consent of the parties and only after they had nominated the arbitrators of their own choice. The Court further observed that although in this connection some correspondence had passed between the Martial Law authorities and the arbitrators as well as the umpire but thereby it did not cease to be a reference to a private arbitra--petition between the parties with their consent. No order was at ail passed by, nor any proceedings or action taken by the Martial Lal authorities in appointing the arbitrators or the umpire between the parties. Therefore, in the opinion of the High Court section 3 of the Jurisdiction of Courts (Removal of Doubts) Order III of 1969 had no application to the facts and circumstances of the case, and consequently the trial Court acted illegally in holding that the award made by the umpire could not be challenged in the civil Court. On the merits the High Court observed that the arbitration agreement in question was not duly stamped and therefore, it could not be acted upon as laid down in section 35 of the Stamp Act. In coming to this conclusion the High Court relied on the pronouncement in Pakistan Cement Industries Ltd., Rawalpindi v. Teekayef Trading Co. (PLD 1971 Lah. 522), Dibagh Kai and another v. Mst. Teka Devi (AIR 1942 Lah. 249), Gopi Mal v. Vidya Wanti etc. (AIR 1942 Lah. 260), Mst. Sahib-un-Nisa and others v. Mst. Mahmooda Begum (PLD 1959 Lah. 511) in holding that the unstamped arbitration agreement in question could not be acted upon under section 35 of the Stamp Act and that the arbitration proceedings taken and the award made in pursuance thereof were altogether illegal and without jurisdiction. The fact that the deficiency in the stamp duty on the agreement was made up afterwards did not retrospectively validate the arbitration proceedings or the award made by the umpire on the basis of unstamped agreement. In this connection the Court further relied on Gurenditta Mal v. Fiem Gurdas Mal and others (AIR 1925 Lah. 562) for holding that even the acquiescence of a party to a procedure in contravention of section 35 of the Stamp Act was of no consequ--ence and therefore, respondents Nos. 2 to 4 were not estopped from challenging the validity of the award even after having accepted the sum awarded to them.
10. Before us at the hearing the learned counsel for the appellant was able to produce copies of the correspondence that had passed between the patties and the Martial Law authorities in this connection. In order to fully appreciate the controversy it is necessary here to examine this correspondence in greater detail.
11. "Therefore, we' had suggested the name of Mr. Yaqoob Shah to whom we have explained the whole case and told him our view point as well. We are ready to pay the fees of our arbitrator."
12. Similarly on the 4th of November 1970 the appellant separately wrote to the Deputy Sub-Martial Law Administrator as under:- "I nominate Capt. Shafiq Ahmad Khan P. C. S. (Rtd.) to act as arbitrator on my behalf for the purpose of division of the properties of my deceased father late Lt.-Col. M. A. Baqai, amongst the legal/ collateral heirs, according to the Muslim Law of inheritance."
13. She at the same time requested that a retired Judge of the High Court/ Supreme Court may be appointed to act as the Chairman/umpire of the panel of arbitrators of the two nominees.
14. "------------------------.We are ready to accept Mr. Yaqoob Shah as a nominee for arbitration of the property."
(a) To decide and divide the immovable property of the deceased among his heirs, to include:
(i) 74 Arif Jan Road, Lahore.
(ii) S-37-R-113-C, Bawa Mansion Beaden, Road, Lahore.
(b) Subsequently dower case, if Mrs. Baqai withdraws her case from the High Court.
(c) To divide movable property of the deceased subsequently, if agreed to arbitration.
15. Accordingly the two arbitrators entered upon the reference to arbitration. In due course on 31st of December 1971 the arbitrators appointed Mr. B.Kaikaus, retired Judge of the Supreme Court of Pakistan, Lahore, as the umpire in the event of any difference between them. As it happened the two arbitrators did not agree to the mode of partition of the properties between parties.
(a) Mst. Najma BaqaiRs. 2,500.
(b) Muazzam-ud-Din Baqai.Rs. 3,000.
(c) Mazhar-ud-Din Baqai.Rs. 3,000.
(d) Mst. Manawar Zamani Begum Baqai Rs. 1,500.
16. On the 2nd of April 1971, the Private Secretary to the learned umpire wrote to the Martial Law Administrator Zone (C), Lahore, enclosing therewith a copy of the award dated 31st of March 1971 made by him. On this on the 6th of April 1971, the Martial Lal Administrator Zone (C), Lahore wrote a letter addressed to all parties intimating them about the award made by the umpire for their information and compliance.
17. The above sequence of events and the correspondence that had thus -passed-was not denied before us by any of the parties. None of the parties had raised any objection against the validity of the reference to the arbitrators and the appointment of the umpire at any stage during the course of the proceedings before them. They seem to have fully participated in the proceedings before them without having raised any such objection. It was only after the award-dated 31st March 1971 had been made by the umpire, that the objections were raised by the respondents for the first time in the trial Court to the effect that in the absence of any duly stamped arbitration agreement this reference to arbitration and consequently the award made in pursuance thereof were altogether void and illegal, and could not be acted upon.
18. The Privy Council case in Umed Singh v. Seth Sobhaq Mal Dhadha(I L R 43 Cal. 290) arose under a corresponding provision in clause of tire Second Schedule to the Code of Civil Procedure, 1908 to the effect that where the parties to a suit had agreed that the matters in difference shall be referred to arbitration they may apply in writing to the Court for an order of reference. In that connection their Lordships of the Privy Council held that it did not require that the writing should of necessity be signed by the parties.
19. "The plain acceptance of a document containing all the terms is sufficient. All that is required is that both parties accept a written document as containing the agreed terms; it might be in the form of a signed document by both parties containing all the terms, or a signed document by one party containing the terms and a plain acceptance, either signed or orally accepted, by the other party, or, in the third case, an unsigned document containing the terms of the submission to arbitration agreed to orally by both parties."
20. These observations are almost of classic importance and have been relied upon with approval by the different Courts ever since.
21. "The result of these decisions is, I think, that if the submission is in writing and is binding on both parties as their agreement or as the' equivalent in law to an agreement between them the statute is satisfied, and as Bankes L. J. Pointed out following the decision in Banker's case (1892) 1 Q B 144.
22. It is not necessary that both parties should have signed the written agreement: if a person has accepted a written agreement and acted: upon it, he is bound for this purpose, although he may not have set his hand to the document."
23. Under the Indian jurisdiction in Jugal Kishore Rameshwardas v. Mrs. Gaolbai Hormusji (AIR1955SC812) the Supreme Court of India has finally held that it was settled law that to constitute an arbitration agreement in writing it is not necessary that it should be signed by the parties, and it was sufficient if the terms are reduced to writing and the agreement of the parties thereto is established. The dictum was armed by the Supreme Court of India in another reported case of Banarsi Das v. Cane Commissioner, Uttar Pradesh and another (A R1963SC1417).
24. Russet on Arbitration (17th Edition) at pages 24 to 28 has summed up the position of the law in England. According to the learned author the term "arbitration agreement" means a `written agreement" to submit present or future differences to arbitration, whether an arbitrator is named therein or not. In order to constitute a "written agreement" there must be an agree--ment-that is to say, the parties must be ad idem and that agreement must be in writing. The weight of the authorities supported the view that the arbitration agreement need not be signed by the party charged, unless the contract itself is one which the law requires to be so signed.
25. PLD 1966 Kar. 197) it was observed that the words "written agreement" in section 2(a) of the Arbitration Act, 1940 mean any writing whether it be by correspondence directly embodying the agreement to refer difference' s to arbitration or an application for the membership of an organization necessarily implying such an agreement. Any writing or writings attributable to the parties which unmistakably prove their intention to refer their disputes to arbitration are satisfactory in terms of the provision of law.
26. However, the main question that remains to be answered is as to whether these letters either singly or together constituted an agreement liable to stamp duty under any of the provisions of the Stamp Act 1899. Section 3(a) of the Stamp Act, inter alias lays down that every `Instrument" mentioned in the Schedule "executed" in Pakistan shall be chargeable with duty of the amount indicated therein. In this connection the learned counsel for the respondents submitted that under the residuary Article 5(e) of Schedule 1 to the Stamp Act the arbitration agreement is liable to stamp duty of Rs. 4 only as an agreement or the memorandum of agreement not otherwise provided for section 2(14) of the Act defines an "instrument" to include every document by which any right or liability is, or purports to be, created, transferred, limited, extended, distinguished or recorded and in section 2(12) the term "executed" used with reference to instruments, means "signed". It is, therefore, evident that only an instrument executed or signed between the parties is liable to stamp duty under any of the relevant provisions of the Schedule to the Stamp Act. In this connection Hawkins, J. In Carlill v. Carbolic Smoke Ball Co. (L R(1892) 2 Q B D 490) in his classic observations on the subject remarks: "No document requires an agreement stamp unless it amounts to an agreement or memorandum of agreement. The mere fact that a document may assist in proving a contract does not render it charge--able with stamp duty; it is only so chargeable when the document amounts to an agreement of itself or to a. Memorandum of an agree--ment already made. A mere proposal or an offer until accepted amounts to nothing. If accepted in writing, the offer and acceptance together amount to an agreement; but if accepted by para, such acceptance does not convert the offer into an agreement, unless, indeed, after the acceptance something is said or done by the parties to indicate that in future it is to be so considered."
27. Similarly Baron Park in enunciating the general rule in Beeching v. Westbrock (8 M & W. 411) observed that "a stamp is not imposed by the Act upon every document which refers to and so furnishes evidence to prove a contract; it is required only on documents in which parties put down the terms by which they intend to be bound." Similarly in Mareshall v. Powell (1846 Q B 779) it was held that a writing which is merely evidence of a fact from which a previous agreement can be inferred did not require stamp.
28. It trust beremembered that what the Stamp Act deals with is not the bargain which arises out of the consent of the parties, but tile precise instru--ment which records the bargain. The stamp duty is on the "instrument" as such and not on the transaction. -Minister of Stamp v. Townend (175 E R 340). In Hakins v. Clutterbuck (1909 A C 635) Baron Ralf said, "if the party so acted as not to be hit by the Stamp Act, he had a right to do so". In my opinion the liability to stamp duty arises only on the execution; i.e., signing of an .Instrument.
29. One of the earliest reported case in Ganga Ram Kashaba Rangole v. Narayyan Babaji, Rangole (I L R 19 Bom. 32) is directly in point. In that case the plaintiff and the defendant agreed to refer their differences to certain arbitrators, and they did so by two separate letters which were addressed to the sauce arbitrators, and which, were exacty in the same terms. Except that one was signed by the plain, and the other was signed , by the defendant: The arbitrators made their award, and the plaintiff applied to the Court to have it filed. The Subordinate judge declined to file the award, holding that the letters of submission require to be stamped as an agreement, and that not being so stamped, the arbitrators had no authority to act. In the circumstances the Court held that the letters written by arbitrator between them did not require to be stamped although these letters of authority by the parties to t1w arbitrator were themselves client to support the arbitration and therefore, the award. This case was cited with approval by Suhrawardy, in Kali Charan Benik v. Moni Mahan Saba Benik (AIR 1924 Cal. 794). Also in this connection Russel on Arbitration (17th Edition) at page 206, has observed that the appointment of an arbitrator or of arbitrators or an' umpire, need not be in any particular form (unless formalities are prescribed by the arbitration agreement and "if it is not by deed, requires no stamp".
30. As a result of the above discussion I find that in the instant case there; was no appointment of the arbitrators made by a deed, or an instrument as such executed between the parties requiring stamp. The letters sent by the respective parties to the arbitration addressed to the Martial Law authorities did not constitute an agreement or a memorandum of agreement liable to stamp duty under section 3 read with Article 5(c) of the Stamp Act. This is despite the fact that they go to form the "arbitration agreement"' within the meanings and for the purposes of section 2(a) of the arbitration Act to uphold the reference made to the arbitrators in this case. But the distinction was not brought to the notice of the High Court. In the impugned judgment of the High Court it was merely assumed without any discussion that the arbitration agreement thus spelt out between the parties was required by law to be stamped.
31. On this view formed by me the further question as to the application of sections 35 and 36 of the Stamp Act to the facts and circumstances of this case does not arise. Section 35 lays down that no instrument chargeable with duty shall be admitted in evidence for any person having authority to receive evidence or shall be acted upon, registered or authenticated, unless such instrument is duly stamped. However, in this connection section 36 further lays down that where an instrument has been admitted in evidence, such admission shall not, except as provided in section 61, be called in question) at any stage of the same and similar proceedings on the ground that the; instrument has not been duly stamped. There is considerable divergence of opinion on the interpretation and scopes of these two sections. In this case the High Court relied on the Full Bench decision in Gopi Mal v. Vidya Santi and others (AIR 1942 Lah. 260), Mst. Sahib-un-Nisa and others v.
32. Mst. Mahmooda Begum (PLD 1959 Lab. 51) and Pakistan Cement Industries Ltd. v. Teekoyef Trading Co. (PLD 1971 Lah. 582), holding that the alleged unstamped arbitration agreement in question could not be received in evidence or acted upon by the arbitrators or the umpire and the award made on its basis was barred by virtue of the application or section 35 of the Stamp Act and could not have been validated respectively by the payment of the deficiency in the stamp duty and the fine. But these, two sections are applicable and come into play only if the document in question is required by law to be stamped and is not duly stamped in accordance with the law. However, these provisions are not at all attracted in case the document, as already held above in this case, does not require any stamp. It is, therefore, wholly unnecessary for us to go into this aspect of the case and express any opinion in the matter.
33. It was not denied before us that in this case on 8-4-1971 respondents Nos. 2, 3 and 4 have already received Rs. 7,500 from the appellant due to them under the award. Consequently, in the opinion of the trial Court they were estopped by their conduct to challenge the validity of the award.
34. But on appeal, High Court, in relying on Guranditta Mal v. Firm Gurdas Mal and others (A R 1925 Lab.
35. 562) reversed the finding with the observation that the acquiescence of a party to a procedure in contravention of section 35 of the Stamp Act, was of no consequence in as much as this section contains an absolute bar and lays down that an unstamped document cannot be acted upon. But in this connection as already held above the judgment of the High Court proceeds on an altogether erroneous assumption, and section 35 of Stamp Act is not at all attracted to the facts and circumstances of this case. I have therefore, no hesitation in holding with the trial Court that for this reason Respondents Nos. 2. 3 and 4 were estopped by their conduct from challenging the validity of the award made by the umpire.
36. The trial Court was of the opinion the this reference to arbitration between the parties was entered upon under the order of the Martial Law authorities. Tile parties had approached them for the settlement of the dispute and after having taken some preliminary proceedings, the authorities decided to refer the matter to arbitration. Both the parties accepted their decision and they asked them to nominate their respective arbitrators. The parties not only accepted the appointment of the arbitrators, but also agreed to the appointment of the umpire. The Martial Law Authorities informed the parties as well as the umpire about the terms of the award and they also called upon the parties to comply with the award. On these consider--nations the trial Court held that the reference and the action thus taken by the Martial Law authorities could not be challenged in any civil Court under section 3(1) of the Jurisdiction of Courts (Removal of Doubts) Order, 1969. But the High Court reversed tile finding and was of the opinion that thereby the Jurisdiction of the civil Courts was not ousted under section 3(1) of the Order. According to the High Court the predecessor of the parties was a high ranking military officer and therefore, the Martial Law authorities got interested in the dispute after they were approached by the parties to help them to resolve it.
37. Neither the arbitrators nor the umpire were nominated by the Martial Law authorities. The parties appointed their, respective arbitrators with their free consent and in turn they appointed their own umpire in the dispute. In this manner neither the arbitrators nor the umpire in entering upon the reference were exercising powers or jurisdic--petition derived from the Martial Law authorities within the meanings of sec--petition 3(1)(a) of the Order. In my opinion, therefore, the High Court was justified in holding that the jurisdiction of the civil Court was not barred in entertaining this dispute arising out of a purely private reference made to arbitration outside Court.
38. For the foregoing reasons, the impugned order passed by the High Court cannot be allowed to stand. We, therefore, accept this appeal, set aside the impugned order passed by the High Court and restore that of the trial Court dated 8th of December 1971 making the award filed by the umpire a rule of the Court. But there shall be no order as to costs between the parties in the circumstances of the case.
39. QAISAR KHAN, J.-I agree.
40. MUHAMMAD HALEEM, J.-I agree.