In pursuance to the provisions of section 14(2) of the Arbitration Act, 1940 ("Act 1940") and Rule 282 of the Sindh Chief Court Rules (O.S.) the sole arbitrator namely, Mr. S.A. Nizami, has forwarded an Award, dated 23-4-1994, in original, together with the case file for making the same as rule of the Court. The facts and grounds, which prevailed before the learned Arbitrator and which resulted in pronouncement of the Award are reproduced as follows:-- "The memo. of claim is accompanied with statement of default account and other documents which clearly establish the claim of the plaintiff. The undertaking and promissory notes and the agreements are all admitted documents and accepted by the respondents/defendant (Mr. Shahzad Farooq Czar). That being so, I need not dilate the evidence on record and as consented by both the parties should make an Award accordingly.'
I, therefore, Award a sum of Rs,20,11,586 (Rupees Twenty lac eleven thousand five hundred eight only) to the plaintiff payable by the defendants/respondents 1 to 4 as per their consent on record.
As to the profit and interest claimed by the plaintiff it may be noted that under the law as an Arbitrator, I am not competent to award the interest before the date of the Award and that item of claim was not pressed.
The respondents/defendants Nos.1 to 4 have given undertaking to make payments of the amount of Rs,20,11,508 to the plaintiff by 30th September, 1994 and the plaintiff have no objection to that.
I, therefore, make and announce the Award that the respondents/defendants Nos.1 to 4 namely Pak Travel Agency (Pvt.) Ltd., Mr. Shahzad Farooq Czar, Mrs. Nuzhat Farooq Czar and Mr. Shahid Farooq Zar shall be liable to pay and shall pay jointly and severally a sum of Rs,20,11,508 (Rupees twenty lac eleven thousand and five hundred eight) only to the plaintiff-Travel Agents Association of Pakistan by 30th September, 1994. However, if the aforesaid entire amount is not paid by the 30-9- 1994 the respondents/defendants shall also be liable to pay mark-up at the rate of 10% of the amount of claim per month or part thereof from 30-9-1994 till the entire awarded amount is paid to the plaintiff.
2. Mr. Zia Pervaiz, for the plaintiff, has supported this Award while Mr. Khalid Latif, who is representing defendants Nos.5 to 7 has objected only to the extent of the claim of Arbitrator's fee which, as claimed is Rs,50,000. Mr. Abdul Muneem Khan, has filed objections on behalf of defendants Nos.2 to 4 and has vehemently urged that the Award may be disallowed. His first objection is that the Arbitrator assumed the charge of sole arbitrator before expiry of fifteen (15) days, as provided in section 9 of the Act, 1940. Secondly, the defendants Nos.2 to 7 are not signatories to the arbitration agreement and, therefore, the same cannot be imposed upon them. It was further contended that the notices of appointing Arbitrator by the plaintiff was not served on the defendant No,1 namely, Messrs Pak Travel Agency (Pvt.) Limited ("said Company"); therefore, the entire proceedings before the Arbitrator suffer from illegality. Reliance was placed on the case of Messrs S.M. Fazail & Co. v.
Messrs Overseas Cotton PLD 1959 (W.P.) Kar. 739. In so far as the defendants Nos.3 and 4 are concerned, it was pleaded by Mr. Abdul Muneem Khan that they have not authorized defendant No,2 namely, Shahzad Farooq Zar to represent them before the Arbitrator and, therefore, the Award was obtained by means of fraud and misrepresentation.
3. The objections jointly filed by defendants Nos.1 and 2 is numbered as C.M.A. 50 of 1995, which is supported by an affidavit filed by defendant No,2 namely Shahzad Farooq Zar, who claims to be the Managing Director of defendant No,1 . He is the same person, who has appeared before the sole Arbitrator and who has also represented the defendants Nos.2 and 3 during arbitration proceedings by filing power of attorney on behalf of them. It is pertinent to note that this defendant, nowhere in his entire objections, had denied that he ever appeared before the Arbitrator and that the statement admitting the claim of plaintiff was not filed by him. His entire objection is that the arbitration proceedings were illegal against the defendants Nos.3 to 7; that these defendants were not party to the arbitration agreement and that no notice under section 9 of the Arbitration Act, 1940, was given by the plaintiffs to the defendants. The present Award is based on the documents filed with the statement of claim by the plaintiff. The other factor, which prevailed during the arbitration proceedings was the admission of this claim and general power of attorney submitted by the defendant No,2 on behalf of defendants Nos.3 and 4, which reads as follows:-- "We, the Directors of Pak Travel Agency (Pvt.) Ltd., namely Mrs. Nuzhat Faruqi, and Mr. Shahid Faruqi Czar, hereby entrust the General Power of Attorney to represent us before the arbitrator appointed by the Travel Agents Association of Pakistan, to convene upon all the legal matters arising thereof, to Dr. Shahzad Faruqi Czar.
(Sd.) Mrs. Nuzhat Faruqi (Sd.) Mr. Shahid Faruqi Czar."
I, Shahzad Farooq Czar representing myself, my mother Mrs. Nuzhat Farooq Czar and my brother Shahid Farooq Czar, holding power of attorney on their behalf and all Directors of Messrs Pak Travel Agency hereby make the statement that we the four respondents accept the claim of the Travel Agents Association against our company respondents No,1 and against us as filed by them on 7th February, 1994 before the Sole Arbitrator.
We undertake to pay a sum of Rs,20,11,508 to the Travel Agents Association on or before 30th September, 1994. This amount shall be paid to Travel Agents Association, jointly and severally by us and every one of us.
The Sole Arbitrator is requested to please make an Award accordingly as consented Award.
(Sd.) Shahzad Farooq Czar for self and as Attorney of Mrs. Nuzhat Farooq and Shahid Farooq Czr and Directors Messrs Pak Travel Agency."
4. Since the defendant No,2, who is also Managing Director of defendant No,1, has not denied the fact of making admission before the Arbitrator and thereby participation in the proceedings of the arbitration, he is estopped from raising such plea in the proceedings before this Court. On the point of estoppel, Mr. Zia Pervaiz has relied upon the case of Chief Engineer, Building Department, and Provincial P.W.D. Government of Sindh v. Messrs Pak National Construction Company PLD 1981 Kar.
553 where one of the grounds challenging award was that the appointment of sole arbitrator was invalid as the person appointed as arbitrator was not the Superintending Engineer of the Department. In proceedings before the said arbitrator, the appellant, namely the Government of Sindh never challenged the authority of such arbitrator. It was before a learned Single Judge of this Court when the matter came-up under section 14 of the Arbitration Act, 1940 that such plea was raised. It was held by a learned Division Bench of this Court that the principles of estoppel/acquiesence are attracted. The appeal was dismissed with the following observations:-- "It will be seen that the action of the Chief Engineer does not fall within any of the above-mentioned two clauses nor is hit by them. In fact this point was not urged before the learned Single Judge nor was these rules cited before him. Reference was made to Ghulamali v. Pakistan PLD 1962 Quetta 72 (sic). In this case the building contractor had resumed work on P.W.D. Executive Engineer's recommendation for higher rates of payment than those agreed upon in view of the increase in costs. But the recommendations were rejected by the Superior Officer after a lapse of one year, it was held that rule of estoppel was not applicable against the Department. This case is quite distinguishable on facts. Reliance was placed by Mr. Akhtar also on Abdul Wahid Khan v. The Custodian of Evacuee Property, West Pakistan, Karachi and others PLD 1962 Quetta 72. It was held therein that the principle of estoppel does not operates unless party acts on representation of other party and thereby changes its position. There cannot be any dispute with the proposition which this case lays down. But the facts that the appellant participated in the proceedings after having initially objected to the jurisdiction of the arbitrator without any protest, and subsequently consented to the application for extension of time for giving award made by the arbitrator, and took chance for a favourable decision so, in our view, attract the principles of acquiescence, waiver and estoppel.
We, therefore, find no merits in this appeal and dismiss it with costs."
5. In the present case the defendants Nos.1 and 2 have neither challenged appearance of defendant No,2 before the Arbitrator nor the stand taken by the Company and other Directors namely, defendants Nos.3 and 4, before the Arbitrator. Even in the objections, filed before this Court, these facts were not controverted by the defendants Nos.1 and 2. Therefore, they are estopped from challenging the so-called irregularities committed during the proceedings before the Arbitrator.
6. The next objection raised by Mr. Abdul Muneem Khan is that the defendants Nos.2 to 7 are not signatories of the arbitration agreement, dated 25-3-1990. However, defendant No,1 has not denied its execution. This agreement was executed by defendant No,2, who at the relevant time claim himself to be the Chairman of Pak Travel Agency (Pvt.) Ltd., (now defendant No,1). Through this agreement the defendant No,1 Company has availed facilities of credit after furnishing guarantee/surety. One of the clause of that agreement is that the bye-laws of TAAP Committee shall be binding and in the event of any default and any dispute, arising out of the action of the party of the first party, it shall be submitted for the decision of the two arbitrators, one to b appointed by each party and that thereafter provisions of Arbitration Act, 194 shall be strictly applicable. This agreement remained in force and has not bee denied by the other Directors.
Reference to the arbitration was based on this agreement. The defendants Nos.2 to 7, who are all admittedly Directors of defendant No,1 have not denied execution of this agreement but availed all the facilities provided through this agreement. Even in their objections, defendant Nos.1 to 4 have not disputed execution of this agreement by defendant No,2 as Chairman/Managing; Director of defendant No,1 They have also not pleaded any misrepresentation or fraud against the defendant- company. Mr. Zia Pervaiz has rightly referred to the case of Muhammad Azam Muhammad Fazil & Co., Karachi v. Messrs N.A. Industries, Karachi PLD 1977 Kar. 21, where a learned Single Judge of this Court, Zafar Hussain Mirza, J., (as his Lordship then was) held, inter alia, that the ratification of submission clause in respect of an arbitration can be proved by conduct. It was further, observed by the learned Judge that the suit was brought in the name of the firm and none of the other partners other than the submitting partner has appeared objecting to his authority and that such plea was not rose in original pleadings. It was held that "as submission to an arbitration by one partner can be ratified by co-partners so as to be binding on the firm" is well-established principle.
Reliance was placed on the cases Thomas v. Atherton (1878) 10 Chancery Division 185, Messrs Ahmad Bakhsh Abdul Rasheed v. Muhammad Aslam PLD 1954 Lah. 620, Hanuman Chamber of Commerce v. Jassa Ram AIR 1949 East Punjab 46, Messrs R.B. Thakur v. Messrs Thakur Das AIR 1958 All. 522, and lastly Parmeshwar Lal Co. v. Jay Narain AIR 1952 Pb. 373.
7. In the present case, the conduct of the defendants Nos.2 to 7 throughout was that they had never challenged, controverted or disputed execution of agreement, dated 25-3-1990, which was executed between the plaintiff and the defendant-company. Their only grievance is that they are not party to the said arbitration agreement. From their conduct they are estopped from pleading such objections, therefore, I hold that they are not entitled to raise this plea at this stage. The last objection of Mr. Abdul Muneem Khan on behalf of defendants Nos.2 to 4 is that they have not executed by authority in favour of defendant No,2 to admit the claim of plaintiff. If the power of attorney filed by the defendant No,2 before the Arbitrator, the contents of which are reproduced in the earlier part of this order, is to be accepted without going into the question of its legality, it will be seen that defendants Nos.3 and 4 have only authorized defendant No,2 to represent them before the Arbitrator. There is no specific authority conferred upon the defendant No,2 to admit claim on behalf of defendants Nos.3 and 4. It is pertinent to note that defendant No,3 namely, Mrs. Nuzhat Farooq Czar, in her objections (C.M.A. 48 of 1995) and defendant No,4 namely, Shahid Farooq Czar have raised an identical plea that the Award has been procured against them by the plaintiff in collusion with defendant No,2, who, as alleged, became instrumental in the hands of plaintiff and who both have jointly misappropriated the funds of defendants Nos.1 and 4. Mr. Zia Pervaiz was not able to show any other document or material to show that the defendant No,2 had acted within the four corners of the authority while admitting claim on behalf of defendants Nos.3 and 4 before the Arbitrator. In my considered view such act of defendant No,2 does not create any liability on the defendants Nos.3 and 4. The plaintiff has not filed any counter-affidavit to these objections, therefore, the allegations which are duly supported by two separate affidavits, filed by defendants Nos.3 and 4, that defendant No,2 acted in collusion with the plaintiff, have gone unrebutted. Without going into the question of legality or otherwise of the said power of attorney it is clear that the same was made for a limited purpose and, therefore, defendant No,2 was not competent to admit claim on behalf of defendants Nos.3 and 4. In Muhammad Afsar Khan and another v. Khadim Hussain and 3 others PLD 1978 Azad J&K 143 it was held that the power of attorney gives only such authority as it confers expressly or by necessary implication and it cannot empower beyond what it really conveyed. Yet in another case Fida Muhammad v. Pir Muhammad Khan (Deceased) through Legal Heirs and others PLD 1985 SC 341 it was held, inter alia, that it is wrong to assume that every "general" power of attorney on account of the said description means and includes the power to alienate/dispose of property of the principal. In order to achieve that object, it must contain a clear separate clause deviated to the said object. Extending these principles to the facts of the instant case, it was essential to include such authority in the aforesaid document to admit claim of the plaintiff. In my considered view, in the absence of any authority to admit claim of the plaintiff, such defendant has acted beyond the scope of power of attorney allegedly executed by defendants Nos.3 and 4. I am fortified by the two judgments of Honourable Supreme Court in Fida Muhammad v. Pir Muhammad Khan and others PLD 1985 SC 341 and Mst.
Feroz Bano and another v. Mst. Bilquis Jehan and others 1987 SCMR 1009. In these circumstances, the Award in question become defective to the extent of such defendants only, namely defendants Nos.3 and 4.
8. It was also argued by Mr. Abdul Muneemithan that the sole Arbitrator entered into arbitration prior to expiry of fifteen (15) days. I have gone through the case file of the Arbitrator. The first notice issued by the plaintiff, appointing Mr. S.A. Nizami, as their Arbitrator, was dated 2-11-1993, which was accepted by the said Arbitrator on the same day. However, the said Arbitrator was called upon to act as sole arbitrator on a letter of plaintiff, dated 18-11-1993, which, according to Mr. Abdul Muneem Khan is 16th November and was subsequently, manipulated. Even of the date of 16-11-1993 is accepted, as suggested by Mr. Abdul Muneem Khan, the learned Arbitrator started .acting as sole arbitrator one day prior to expiry of the period of fifteen (15) days, as provided under subsection (b) to section 9 of the Arbitration Act. I am afraid that this plea could not be considered at this stage when defendants had appeared before the Arbitration and had never challenged his authority to continue with the arbitration proceedings. It is now too late for them to challenge the same in these proceedings and at this stage.
9. As a result of above discussion, Award is made rule of the Court against defendants Nos.1 and 2.
Since I am of the view that the defendants Nos.3 and 4 were not properly represented before the Arbitrator, therefore, the award against them stands dismissed. It was pleaded by Mr. Zia Pervaiz, that the plaintiff's right to seek execution of the decree against the Company and its Directors as per provisions of the Companies Ordinance, 1984 may be kept open. No need arises for such observations at this stage. It would be open to seek execution of the decree being passed as a result of this order, in any manner, permisible under law.
10.Mr. Khalid Latif has objected on the fee of learned Arbitrator. Award was passed against Chief Executive of the defendant No,1 and the remaining two Directors namely, defendants Nos.2 and 3.
No award was passed against defendants Nos.5 to 7. Neither plaintiff nor defendants Nos.2 to 4 have objected on such act of the Arbitrator; therefore, the claim of plaintiff against defendants Nos.5 to 7 stands dismissed. In so far as the fee of Arbitrator is concerned, it appears to be on the higher side. There were only four dates of hearing during which the arbitration proceedings were concluded. No evidence was recorded as Award was passed on the admission made by the defendant No,2. In these circumstances, fee of Arbitrator is reduced from Rs,50,000 to Rs,22,000, the other conditions remaining the same.
11. Consequently, all the three C.M.As. stands disposed of.