ENT MUHAMMAD ISLAM BHATTI, J. -- Pakistan Agricultural Storage and Services Corporation, a public limited company, brought a suit against Sh. Muhammad Latif and its Proprietor for the recovery of a sum of Rs. 12,86,847.40 alleging in the plaint that in response to a tender notice by the plaintiff, the defendants submitted the tender dated 26.3.1988 which finally resulted in an agreement between the parties on 6.4.1988 whereby the defendants undertook to supply 1137.5 M.T. Of Dal Chana to the plaintiff at Peshawar @ Rs. 7050/- per Metric Ton. The agreement was operative for the period from 1.4.1988 to 30.8.1988 and a delivery schedule was given therein but the defendants failed to comply therewith and as a result the plaintiff was obliged to purchase Dal Chana from the open market at the risk and cost of the defendant whereby it had to make the payment of a sum of Rs. 16,86,847.40 in excess of the amount mentioned in the agreement and after the adjustment of the security amount of Rs.
4,00,000/-,. a sum of Rs. 12,86,847.40 was yet payable by the defendants, which they failed to pay in spite of repeated requests and demands. It was added by the plaintiff in the plaint that a plea for arbitration was also raised and although the Managing Director of the plaintiff-Corporation could act as the sole arbitrator, no such proceeding could he possible on account of the non-co- operation and complete silence of the defendants.
2. After the service was complete, the defendants instead of filing written statement preferred to move an application u/Ss. 21 and 34 of the Arbitration. Act, 1940 on 13.7.1991 praying therein that in view of the clause 6 of the agreement dated 6.4.1988, the matter be referred to the sole arbitrator i.e. The Managing Director of Passco. A written reply of this application was submitted by the plaintiff-respondent on 14.9.1991 in which it was submitted that the application he accepted, the matter in controversy be referred to the Managing Director and the proceedings in the suit be stayed. The matter was accordingly referred to the nominated arbitrator who tiled the award on 23.12.1993.
3. The plaintiff raised objections to this award in writing on 17.1.1994. The defendants submitted a written reply whereafter the parties were put to the following issues:-
(1) Whether the award is invalid on its own because the arbitrator having ceased to be the Managing Director of Passco on 22.12.1995 when the award was given? OPP.
(2) Whether the authority of the arbitrator (was) ended on 15.8.1993 and he has acted without jurisdiction after 15.8.1993? OPP.
(3) Whether the award has been made long after the expiry of four months, as contemplated under Paragraph 3 of the First Schedule to the Arbitration Act? OPP.
(4) Whether the award is partly upon a matter not referred to arbitration? OPP.
(5) Whether the arbitrator misconducted the proceedings inasmuch no evidence as such was taken in the case? OPP.
(6) Whether the award is violative of Section 26-A of the Arbitration Act as no reasons have been given in support of the award? OPP.
(7) Relief.
4. The plaintiff was then called upon to produce evidence on these issues but it failed to do so, as a result of which the plaintiff's evidence was closed on 5.7.1994. After hearing the arguments, learned Civil Judge then seized of the matter, proceeded to give his findings on the said issues. He took up issues Nos. 1 and 2 together and came to the conclusion that since the plaintiff had failed to produce any evidence or to challenge the order dated 5.7.1994 whereby its evidence was closed, both the issues could not but be answered in the negative and the same were accordingly answered. He took up issue No. 3 and after a lengthy discussion thereon, he came to the conclusion that the limitation in submission of the award had rightly been condoned by the Court as well as by the implied consent of the parties. He accordingly answered this issue also against the plaintiff. The remaining issues were also taken up one by one but there being no evidence nor any convincing argument having been addressed, were answered against the plaintiff. Consequently, the award dated 22.12.1993 was made "Rule of the Court" but the parties were left to bear their own costs, by means of judgment dated 9.2.1995.
5. Feeling aggrieved, the plaintiff/Passco filed this F.A.O. Which was admitted to regular hearing in order to consider the contention of the learned counsel for the appellant, if the Managing Director Passco (Maj. Gen. Mukhtar Hussain Shah) who had been appointed as an arbitrator by designation, could deliver the award after he ceased to hold the said office.
6. I have heard the learned counsel for the parties at a considerable length. The learned counsel for the appellant has reiterated what the appellant had alleged in the grounds of appeal and submitted that since Maj. Gen. Mukhtar Hussain Shah ceased to hold office on 15.8.1993, he could not act as arbitrator thereafter, in accord with the arbitration agreement and his successor should have been nominated as such, in order to take his place. According to him, the arbitrator took cognizance of the matter only once i.e. On 22.12.1993 when the award came about and the award thus suffered from inherent want of jurisdiction. He has also added that the learned Civil Judge was in error in holding that the appellant had waived his right, if any, by not pointing out that the period of four months contemplated within the meaning of paragraph 3 of the First Schedule to the Arbitration Act had expired. He is thus of the view that the proceedings conducted by the arbitrator were arbitrary and violative of Section 26-A of the Arbitration Act.
7. The learned counsel for the respondents has, on the other hand, urged that all these points were duly taken up and discussed by the learned Civil Judge and the appellant is just trying to avoid the consequences of the award having been made the 'rule of the Court'.
8. After carefully going through the award, I find that the arbitrator had himself mentioned therein that he relinquished the charge as Managing Director Passco w.e.f. 15.8.1993 and he remained under the impression that he ceased to act as arbitrator and that it was under the direction of the Court that he submitted the award on 23.12.1993. The arbitrator also mentioned therein that the proceedings had been completed by him durng his tenure as Managing Director and it was only the writing which was done by him, after his retirement, under the orders of the Court.
9. The learned Civil Judge has taken a note of the fact that the parties took active part in the proceedings before the Court and there was nothing on record to show or suggest that anyone of the parties raised any objection to the proceedings so conducted by the arbitrator and as such, the parties had impliedly consented that the arbitrator who had already completed the proceedings he called upon to submit the award. The plaintiff/appellant should have raised an objection with regard to Maj. Gen. (R) Mukhtar Hussain Shah's having ceased to be the Managing Director during the period the Court was adjourning the case, awaiting the award but this fact was never agitated and it was only after the plaintiff came to know that the award was against it that such an objection was raised. In fact it was the plaintiff-appellant who wanted that the matter be referred to the sole arbitrator, as per the terms of the agreement. That was why the plaintiff made a mention of the fact, right in the plaint that although the Managing Director of the plaintiff- Corporation could act as the sole arbitrator yet no such proceedings could be possible on account of the noncooperation and complete silence of the defendants. The defendants instead of filing written statement for raising any objection to the allegations made in the plaint moved an application for the matter being referred to the arbitrator and the plaintiff also accepted this move, in its written reply. I am not at all impressed by the assertion of the learned counsel for the appellant that the sole arbitrator ceased to function as such on the date of his retirement. Had it been so and had the plaintiff been sure of it, it could have immediately moved an appiication before the Court requesting therein that his successor in office be nominated as the fresh sole arbitrator. I am fortified in arriving at this conclusion by what has been laid down in M/s. Qamar- ud-Din Ahmad & Co. Vs. Government of Pakistan (1985 SCM R 1775). Conduct of the appellant in awaiting the award without raising any objection before the Court that he has ceased to he the sole arbitrator would justify the extension of time spent beyond tiny months by the arbitrator u/S. 28 of the Arbitration Act. This view gets further support from Wapda and another Vs. M/s. Khanzada- Muhammad Abdul Hague Khan Khattak and Company (PLD 1990 S.C. 359) wherein it was held that the parties are free to enlarge the time for making the award. It was also held therein that "where the party had all along submitted to the proceedings of the arbitrator without any protest, he cannot turn round and object or insist that the award was made out of statutory period. I have had the privilege of carefully going through what has been laid down in M/s. Oil & Gas Development Corporation Vs. M/s. Karachi Builders (1978 SCM R 278), referred to by the learned counsel for the appellant and I am afraid, it has no bearing on the facts of the case in hand. Similar is the position with M/s. Ghulam Qadir & Co., Sialkot Cantt. Vs. Government of Pakistan (PLD 1962 (W.P.) Lahore 948).
10. There can be no cavil with the principle laid down in M/s. Awan Industries Ltd. Vs. The Executive Engineer, Lined Channel Division and another (1992 SCM R 65). It is definitely the duty of the Court that there was no cause to remit award or any of the matters referred to arbitration for re- consideration or to set aside the award and the Court could exercise such powers suo motu. Apart from the application which a party could make for either remission of the award or its reversal. But it must he shown that the award was a nullity because of the invalidity of the arbitration agreement Or, for any other reason or such award was prima facie illegal and not fit to be maintained. The learned counsel for the appellant has badly failed to show that these observations of the Hon'ble Supreme Court are attracted to the facts of the case in hand. I have carefully gone through the contents of the award and I find that the sole arbitrator had arrived at the conclusions after taking into consideration the respective stands of the parties and formulating the findings and then giving the details of the award. It is off the point that the sole arbitrator did not record any evidence. M. Aslam Amin Vs. Muhammad A.I Khan and another (1995 CLC 1795 Lahore) is, therefore, also of no avail to the appellant because in the said case, a bare reading of the award showed that the Umpire did not take into consideration any material on the basis of which award in question could be sustained. It was in the peculiar circumstances of the said case that the award was set aside as also the impugned order of the Trial Court, by which the award was made rule of the Court.
11. For all these reasons, I do not find any force in this appeal. The same is, therefore, liable to be dismissed and it is accordingly dismissed. Parties are, however, left to bear their own costs throughout regard being had to the circumstances of the case.