SAYED NAJAM-UL-HASSAN KAZMI, J.- This judgment will decide FAO. No. 43/98.
2. Contract for execution of work "reclamation of Katchi Pumpwali Pond including earth work Pilot Project for upgradation contract No. 2, Gujranawala" for a sum of Rs. 1,22,94,878/- was awarded in favour of the respondent (M/s. ASCON Engineers (Pvt.) Limited) vide acceptance letter dated 27.10.1992. A dispute arose between the parties which was referred to two arbitrators, appointed vide order dated 20.10.1996 of the learned Civil Judge, in proceedings under Sections 8 and 20 of the Arbitration Act.
3. The arbitrators, announced their award on 15.6.1997, whereby a sum of Rs. 45,83,555.00/- was awarded in favour of the respondent against claims Nos. 1. 2, 3, 9 and 11.
4. The award was filed in Court, on which objections were filed by the appellants wherein they have requested' the Court to set aside the award of huge amount.
5. Learned Civil Judge vide order dated 10. 12.1997 rejected the objections on the plea of limitation and made the award a rule of the Court, In this appeal the ing to set aside the award has been called in question.
6. Learned counsel for the appellants vehemently contended that the award was not properly stamped, hence it was inadmissible and could not be made rule of the Court. He further submitted that no issue was framed on the objection nor any opportunity of evidence was granted. He also contended that even if objections were not found to be within time yet it did not absolve the Court of its duty to look into the award for satisfying itself as to whether it was liable to be remitted or suffered from any error of law which having not been done in this case, the impugned order cannot sustain.
7. Lastly, it was submitted that the award did not give any reason as required by Section 26-A of the Arbitration Act and that the securities were converted into profit bearing and thus interest was awarded which was not permissible in law.
8. Conversely, learned counsel for the respondent supported the impugned order and submitted that the award was a consent award which could not be challenged. -
9. The submissions made by the learned counsel for the appellants are well-founded.
10. In award, a sum of Rs. 45,83,555.(X) was awarded to the respondent. The award was drawn on a stamp paper of Rs. 50/- and it comprises of five stamp papers of Rs. 10/- each. On being asked, learned counsel for the appellants could not deny that the award was not properly stamped, according to the prevailing law and his only explanation was that provisions of Stamp Act requiring payment of stamp on the award, were under challenge. This was hardly a justification for drawing the award on insufficient stamp paper. Under Article 12 of First Schedule of the Stamp Act, the award is chargeable with the same stamp duty as on a bond covered by Article 15 of the Schedule, thus the stamp duty was payable on award at the rate of 3% of the amount awarded". Keeping in view the amount of award, award could be drawn on a stamp of Rs. 1,37,508/- which having not been drawn as such was inadmissible till such time deficiency was allowed to be made up in accordance with law, either by Court or by the competent authority. Alternatively, the award would enquire remission to the arbitrator for drawing up the same on a proper stamp paper before it could be entertained for further proceedings, in accordance with law.
11. Section 17 of the Arbitration Act provides that after disposing of the objections if filed, and on expiry of period prescribed for filing of objection, the Court shall, before pronouncing the judgment in terms of the award, see if no cause existed to remit the award or any matter for reconsideration or to set aside the award, In Pakistan through General Manager, Pakistan Railways v. M/$. Q.M.R.
Export Consultants (PLD 1990 SC 800). It was ruled, that Section 17 of the Act casts a duty on the Court to examine whether there was any reason to modify the award of set aside the same notwithstanding, the fact that effected party had failed to file objections to the award on account of expiry of period of limitation or parties to the arbitration may be in-collusion and because of that they may not file objections to the collusive award. In this regard, the learned Civil Judge, failed to perform its duties in terms of Section 17 of the Arbitration Act as it did not take notice of the fact that there was no proper award before the Court and that award being insufficiently stamped was inadmissible in law and also till such time, the deficiency was made upon, the Court could not proceed to pass decree in terms thereof. It is also observed that learned Civil Judge was influenced by the fact that objections were barred by time and therefore it was not deemed necessary to look into the award for examining, if the award was liable to be set aside or required remission or reconsideration of any matter by the arbitrator. The perusal of the award makes it obvious that interest had been awarded which possibly could not have been done as the arbitrator did not possess any jurisdiction to award interest, particularly when there was no agreement claimed to be in existence for payment of the interest nor it was claimed under any usage or by virtue of any provision of law. The rule laid down in Ghulam Abbas v. Trustees of the Port, Karachi (PLD 1987 SC 393) was also not kept in view by the learned trial Court.
12. In the matter of stamp duty it is ruled in M/s. Rashid and Company v. Punjab Government and another (1995 CLC 1914) that unless the award is properly stamped, the same could not be admitted in evidence.
13. The learned Civil Judge, also did not consider if the award disclosed any reason or did not suffer from any error of law on the face of it. Though objections were filed to the award yet the learned Civil Judge assumed, that contract engineer and project engineer had admitted the claim of the respondent. No such statement was even made before the learned trial Court and, therefore, there was no basis for raising this assumption as the alleged award which was under challenge.
14. Since, in this case, learned Civil Judge did not attend to the question of admissibility of award on account of having been drawn on insufficient stamp paper and also, as the learned Civil Judge, failed to perform its duty of examining the award to satisfy if the same was not liable to be set aside or required remission or - reconsideration by the arbitrator or otherwise not barred by law, therefore, the case will have to be remanded for fresh decision.
15. Accordingly, this appeal is allowed, the impugned order, refusing to set aside the award is set aside. The learned Civil Judge, will frame an issue as to the misconduct of the arbitrator and also the effect of non-payment of stamp duty on the award and after recording evidence will decide the matter, in accordance with law and on its on merits. No order as to costs.