This appeal under section 39 of the Arbitration Act, 1940 calls in question order, dated 8-10-1997 of the learned Civil Judge, by which he rejected the objections, refused to set aside the award and made the same rule of the Court.
2. The respondent was awarded contract for the work "Construction of duel carriage way from Shahdara to Begumkot" through acceptance letter issued by the Executive Engineer, Highway Division, Mecleod Road, Lahore. A dispute arose between the parties, in regard to the contract which was referred to the arbitration. Mr. Fazal Elahi Qaisarani, retired Superintendent Engineer, Communication and Works Department and Mr. Muhammad Munir Chughtai, Superintendent Engineer, Highway Circle, Multan were appointed as arbitrators, who entered upon the reference and gave their award for a sum of Rs.24,78,403 on 29-1-1996. On notice of filing of award, the appellants filed objections to the award which were dismissed by the learned Civil Judge summarily vide order, dated 8-10-1997. In this appeal, the order refusing to set aside award, Exh.C.l has been brought under challenge.
3. Learned counsel for the appellants argued that the impugned order offended the principles of natural justice, as the learned trial Court did not frame issue, nor afforded opportunity of evidence to the appellants for substantiating the objections. It was contended that the contractor did not undertake the work awarded to him and abandoned it and, therefore, no payment could be claimed. Learned counsel submitted that the award was self-assumptive, based on imaginations and was whimsical. It was maintained that the evidence and law were completely overlooked by the arbitrator who rendered the award without any basis and awarded huge amount of Rs.24,78,403 to the respondent without any supporting evidence. In reply, learned counsel for the appellants argued that action under clause 3(c) of the contract was untenable, the appellants never asked for an opportunity to produce evidence, in the trial Court, the Civil Court could not deal with the award like a Court of appeal and that the learned Court below had considered the award and found no ground for interference. It was added that every possible effort should be made to uphold the decision of tribunal or the arbitrators appointed by the parties and in this case, the arbitrators were either ex-employee or working employee and, therefore, the appellants should accept their award with full grace. Relying on Lahore Development Authority v. Messrs Khalid Javed & Company 1983 SCM R 718 and Mst. Afrozi Jan and others v. Mst. Zoojan and others 1985 SCM R 587, it was argued that ordinarily the award should be made rule of the Court.
4. On perusal of record of the trial Court, it is observed that on 5-3-1997, the award was opened and copy thereof was supplied to the appellants for filing of objections. On 2-4-1997, objections were filed, when the Court fixed the case for arguments on objections. The order-sheet indicates that the words was subsequently inserted with a different pen and ink and without any initial of the Presiding Officer. On the next date i.e. 9-4-1997, request for adjournment for arguments was made when the case was adjourned for; the said purpose to 6-7-1997. Even in this order, the words were added with a different pen and ink without any initial of the Presiding Officer, which gives an impression that on 2-4-1997, the case was adjourned for arguments on the objections and on 9-4- 1997 when the case was adjourned for 6-5-1997, reply to the objections were presented and the words and were inserted in the two orders of 9-4-1997 and 2-4-1997 with different pen and ink. On the next date i.e. 6-5-1997, the case was again adjourned to 20-5-1997 for arguments. The arguments were not addressed on 20-5-1997 when the case was adjourned to 19-6-1997. On this date, arguments on behalf of respondent (petitioner in the trial Court) were heard and case was adjourned for arguments of the appellants to 9-7-1997. From this date, the case was adjourned to 28-7-1997 when arguments on objections were heard and case was adjourned to 10-9-1997 for announcement of order. The Presiding Officer was on leave on 10-9-1997 when the case was adjourned to 29-9-1997. No order was announced on 25-9--1997 and case was adjourned to 6-10- 1997. On this date, arguments were again heard and the case was adjourned to 7-10-1997 for orders. Although as per order-sheet order on objections was passed on 7-10-1997 yet the impugned order indicates that it was signed and announced on 8-10-1997. Strange enough, order- - sheet of interim orders gives an impression as if the order was started on 7-10--1997 and was completed on 8-10-1997. At the end of impugned order, by which objections were decided, learned Presiding Officer wrote with his own pen, date of announcement and signed it on 8-10-1997, while interim order contains two dates. The interim order reads as follows:-- Present counsel for the parties. Vide separate order in English of even date, application is allowed, award/Exh.C.1 is made rule of Court.
Decree is passed in favour of the petitioner in terms of award with cost. Respondent shall pay interest at the bank rate from this date of decree till realisation. File be consigned to record room after completion.
Announced. (Sd, )
8-10-1997 Civil Judge 1st Class, Lahore 8-10-1997."
From the interim order reproduced hereinabove, it is observed that the order in the beginning gives an impression that the award was made rule of Court on .7-10-1997 by rejecting the objections through order of even date but the concluding part of the order indicates, if the same was announced on 8-10-1997. Record does not explain this ambiguity. Amazingly, the decree-sheet also gives an impression as if the orders were passed on 8-10-1997, though this was not the date fixed in the main case. As per order-sheet the order was to be announced on 8-10-1997 but it is not clear from the file as to how the order containing factum of dismissing the application and making the award rule of the Court, was started on 7-10-1997 and concluded on 8-10-1997. This aspect of the matter, raises number of questions which need not be dealt with as the case is being decided on other legal points.
5. The order-sheet clearly reveals that the learned Civil Judge never framed issue on the objections nor allowed opportunity of producing evidence in support of objection petition. The arguments that the appellants did not ask for the evidence is not supported by the order-sheet which clearly shows that the learned Presiding Officer, after receiving objections, proceeded to fix the case for arguments without appreciating that the question of misconduct, could not be resolved without evidence. In their objections, the appellants had maintained that the impugned award against claim No. l was without any evidence, it was arbitrary and whimsical, biased and based on mere speculations. It was alleged that the contractor failed to start the work on the target date and stoppage of work was without any legal and factual justification. The allegation was that announcement of work was delayed by 3-1/2 months, the entire machinery was shifted for the purpose of doing work at another site and, therefore, the contractor could not ask for payment of damages. A reference was made to Exh.Al, letter, dated 11-3-1991 to point out that the contractor had abandoned the. Work and removed the machinery from site and, thus, obstructed execution of the work. Apart therefrom, the other technical objections were raised to point out that the arbitrator misconducted the proceedings, the conclusion drawn by them was whimsical and based on imaginations and that there was no evidence before the arbitrators to award the amount or to declare the action under clause 3(c) of the contract to be invalid. These objections could be decided after requisitioning the record of the arbitrators and allowing the appellants with opportunity of producing evidence. The misconduct of arbitrators being a mixed question of law and fact can be decided completely and effectively if the parties are permitted to produce their respective evidence. By failing to prove issue and denying opportunity of producing evidence to appellants, the learned Civil Judge fell in error and committed material irregularity.
6.The learned Civil Judge observed that the arbitrators gave opportunity of hearing, decided the matter against the appellants and that the appellants should accept the award. Mere fact that the award has been given against a party would not mean that the party would be deprived of his right to challenge the award, even if it was suffering from misconduct or error of law. A distinction has to be drawn between objections, which are frivolous and the objections, which are cogent and substantial and legally sustainable. This of course can be done if one undertakes exercise of looking into the award in the light of objections raised to find out if the arbitrators had misconducted the proceedings or the award suffered from error of law. Section 26(A) of the Arbitration Act was added to make it mandatory for the arbitrators to record reasons, so that the 8 Court shall be in a position to appreciate if the conclusions drawn were not suffering from any provision of law. It may be observed that under section 17 of the Arbitration Act, the Court after deciding objections or if objections have not been filed in time, after the time for objections expires, to examine the award with a view to satisfy that there was no cause to remit the award and that there was no matter which need be referred for consideration and also if the award was not liable to be set aside. The Court has to attend to this aspect of the matter, with conscious application of mind and looking into the award with reference to various questions attended therein. Mere fact that the award has been given by the arbitrators would not mean that the same has to be accepted without considering the legal pre-requisites. It is true that the Court does not act as a Court of appeal, the arbitrator is a final Judge to give decision and ordinarily efforts are to be made to give effect to the award but nevertheless, the Court is C not denuded its power to see the award to ensure that the same does not suffer from any error of law nr misconduct of the Arbitrators.
Unfortunately, in this case, the Court being oblivious of the scope of its jurisdiction under the provisions of sections 17, 30 and 33 of the Arbitration Act and also the rules laid by the superior Courts, proceeded to accept the award mechanically with the observation that the matter having been decided by the arbitrators, no interference could be made. The view so formed suffers from material illegality and jurisdictional error. It was ignored that a huge amount was awarded by the arbitrators and there were serious allegations of misconduct against them and it was the case of the appellants that there were no basis for giving the award. Since the objections have been rejected without considering the same in proper perspective and without recording evidence, therefore, the impugned order being bad in law, cannot be approved.
7. For the reasons above, this appeal is allowed, the impugned order is set D aside with the result that the objections to the award filed by the appellants shall be deemed to be pending which should be decided afresh by the learned Civil Judge, in accordance with law and on merits, after framing issues, recording evidence and hearing the parties. The objections shall be finally decided within four months, with intimation to the Deputy Registrar (Judicial) of this Court.
Parties shall appear before the trial Court on 8-2-1999.