JUDGMENT KARAMAT NAZIR BHANDARI. J - Respondent on 16th December, 1982 filed an application under Section 20 of the Arbitration Act, 1940, (hereinafter-referred to as the Act) seeking a direction for filing of the arbitration agreement-in Court and for initiating the arbitration proceedings. The application was contested by filing reply. Arising out of the pleadings, the Court framed as many as seven issues. Learned counsel for both the parties made a statement that the issues can be decided without recording of evidence, the same being legal. Thereafter the case remained pending for consideration of the application for amendment, which was ultimately allowed on, 13.3.1985. The Court directed filing of amended application/plaint, which was done. However, learned counsel tor the appellant made a statement that there was no need to file an amended reply. On 21.12.1985 tyvo Arbitrators were nominated to give the award which was filed in Court on 27.10.1989. The award was in favour The expression thereafter in sub-section 15) confirms that once the steps mentioned in sub-section
(4) have been taken, thereafter the arbitration shall proceed in accordance with and shall be governed by, the other provision of the Act, so far as they can be made applicable. The view I have taken is fortified; bv the decisions reported as University of the Punjab'v. Perfect Electric Concern (PLD 1980 Lah. 305) Union of India v. Muhammad Usman and (AIR 196 Allahabad 269).
6. In this appeal, unfortunately, the Trial Court has fell into error in proceeding to appoint the Arbitrator without directing the filing of agreement, In other words without even deciding the application under Section 20. It was only when the agreement had been filed that the Court could have ascertained whether the dispute between the parties is covered by the arbitration clause or not. On such a finding the Court could .Have proceeded to direct reference to arbitration in accordance with the terms of arbitration agreement. As it is,, the Court straightaway proceeded to appoint arbitrators and directed them to file the' award, In my judgment, such a procedure is illegaf and vitiates all the proceeding notwithstanding the failure of the learned counsel appearing for the parties to point out the exact procedure or failure of the learned counsel for the appellant to object to the manner in which the Court proceeded. Similarly, participation of the appellants in proceedings before the arbitrators without protest does not disentitle the appellants to urge this point. The reason is that neither the Court nor the parties themselves can circumvent the mandatory provision of Section 20(4) and (5). Such an agreement will be void being opposed to public policy, under Section 23 of the Contract Act, 1872.
7. No other- point has been urged. For the reasons noted above, this appeal is allowed. The impugned decree/award is set aside and the case is remitted to the Trial Court for fresh decision in accordance with law. The Trial Court will proceed to decide the question of filing an arbitration agreement in the first instant before making reference to Arbitrators. No order as to costs.
Munammad Ramzan V. ARah Ditta C.C. 301 #tbs I Voi.XXi #to '(Abdul Shakoor Peracha, J.l