I intend to decide the following appeals by one consolidated judgment having similar facts and law:-- F.A.O. No,204 of 1994 and F.A.O. No,205 of 1994.
The brief, facts out of which the present appeals arise are that respondent participated in the auction proceedings held by the appellant for the collection of export tax. The bid of the respondent was highest which was accepted by the appellant for the year 1988-89. An agreement was also executed between the parties. The agreement contained the arbitration clause to the extent that in case of any dispute between the parties the matter would be referred to the Commissioner Lahore Division who would be the sole arbitrator and has decision would be final and binding upon the parties. Respondents submitted two applications to the Chairman Zila Council with the request that the appellant has not provided him the posts for collection of export tax and also claimed reduction of the contract amount due to the unprecedented flood in the year, 1988. Respondent No,3 also submitted third application to the Chairman District Council with the same request. The matter was placed before the house. The house unanimously decided against the respondent vide Resolution, dated 8-1-1989. The Chairman in derogation of the aforesaid decision of the house, referred the matter to the Commissioner, Lahore Division vide letter, dated 22-2-1989. The Commissioner Lahore Division, rejected the claim of the respondent vide order, dated 27-2-1989. The respondent filed an application under sections 8 and 20 of the Arbitration Act in the Court of Senior Civil Judge, Lahore for appointment of .the Arbitrator alleging therein that the Commissioner, Lahore Division the nominated arbitrator had refused to act as an arbitrator. The respondent also prayed that the appellant be directed to tile the agreement in the Court. The trial Court issued a notice to the appellant and ultimately on 22-7-1989 ex parte order was passed against the appellant. The learned trial Court appointed Ch. talib Hussain, the Secretary Auqaf Department as an Arbitrator vide order, dated 31-10-1989. Appellant filed an application under Order 9, rule 7 read with section 152, C.P.C. for recalling the order, dated 22-7-1989 and allowing the appellant to fire written reply to the application filed by the respondent/decree-holder under sections 8 and 20 of the Arbitration Act. The respondent submitted written reply of the application and he trial Court rejected the application of the appellant vide order, dated 25-1-1990. The Arbitrator announced the award on 17-1-1990 in absence of the parties which was submitted before the trial Court on 18-1-1990. The appellant filed, objection on the award before the trial Court. The learned trial Court vide order, dated 23-5-1990 remanded the same to the arbitrator on the ground that the same has not been signed and arbitrator did not afford opportunity to the appellant to comment upon the evidence recorded by the arbitrator; therefore, arbitrator was directed to file fresh award in accordance with the law after hearing the parties vide aforesaid order. The arbitrator resubmitted the award on 15-9-1990 by accepting the claim of the respondent. The appellant filed objection petition before the trial Court on 11-11-1990 on the ground that the award had not been submitted within time fixed by the Court. He further submits that no explicit notice was given to the appellant as the award was not announced in the presence of the parties. The arbitrator did not resubmit the award in terms of the remand order, dated 23-5-1989. The trial Court framed the following issue:--- Whether the' award is required to be set aside due to the misconduct etc. of the arbitrator?
The learned trial Court overruled the objection of the appellant vide order, dated 28-5-1994, hence the present appeal.
3. The learned counsel of the appellant submits that the learned trial Court was erred in law to substitute another arbitrator 'at the instance of the respondent which is not in accordance with section 20 of the Arbitration Act. He further submits that respondents are estopped to file application for nomination of another arbitrator which was agreed by the respondent in terms of the agreement executed between the appellant and the respondent that the matter be referred to the Commissioner, Lahore Division. He further submits that matter was referred to the Commissioner, Lahore Division, by the Chairman, District Council who rejected the claim of the respondent vide order, dated 27-2-1989 and the respondent failed to 'challenge the same before any higher authorities therefore, application filed by the respondent under sections 8 and 20 of the Arbitration Act before the trial Court is not maintainable. He further submits that trial Court passed the order, dated 24-5-1994 in violation of the Article 158 of the Limitation Act. He further submits that, trial Court failed to give findings on all issues. He further submits that provisions of C.P.C. are applicable which are not inconsistent with the provisions of the Arbitration Act, therefore, the trial Court was erred in law to decide the case without giving findings on all issues. He further submits that trial Court was erred in law not to allow the appellant to file written statement. He further submits that award does not contain any reasons, therefore, the same is liable to be set aside. He further submits that objection taken by the appellant through the objection petition was not considered by trial Court at time of deciding the objection petition. He further submits that the arbitrator namely in the agreement rejected the claim of the respondent which was not challenged by the respondent whereas another arbitrator was got appointed who delivered another award which was nullity in the eyes of law.
4. The learned counsel of the respondent submits that Commissioner decided the case ex parte vide order, dated 27-2-1989 on the request of the Chairman. District Council, therefore, the same is not award in the eyes of law. He further submits that appellant participated in the proceedings, therefore, appellant has no right to wriggle out from this situation and raised objection to take the cognizance of the matter on the well-known principle of estoppel and waiver. In support of his contentions, he relied upon the following judgments: Messrs Habib & Sons v. Messrs Virak Co. (PLD 1957 Karachi 245). and B.K. 'Dhar (Pvt.) Ltd. v. Union of India (AIR 1965 Calcutta 424).
He further submits that Court has to show all the possibilities to uphold the award. In support- of his contention, he relied upon the case of Zaka Ullah Khan v. Government of Pakistan (PLD 1998 Lahore 132). He further submits that Court has not to sit as a Court of appeal while hearing objection against the award submitted by the arbitrator. In support of his contention, he relied upon the case of Messrs Income Services v. Messrs Sui Gas Transmission (PLD 1993 Karachi 429).
He further submits that objection of the appellant that no notice was sent to the respondent,' has no force. In support of his contention, he relied upon the following judgments: Messrs. Shafi Corporation Ltd. v. Government of Pakistan (PLD 1981 Karachi 730); Muhammad Shafi and others v. Muhammad Sabir (PLD 1960 Lahore 591); Province of Punjab v. Mirza Muhammad Latif (1996 MLD 1115) and Ashfaq Ali Qureshi v. Municipal Corporation Multan (1985 SCMR 597).
5. The learned counsel of the appellant in rebuttal, submits that trial Court was erred in law to decide the case against the appellant without issuing notice to the parties under section 14 of the Arbitration Act. He further submits that order sheet of the trial Court reveals that some clerk entered appearance without any authority and without having any instructions from the competent Authority, therefore, the trial Court was erred in law to dismiss the objection petition of the appellant as time-barred. In support of his contention, he relied upon the case of Pakistan v. Ali Muzaffar (1986 CLC 2362). He further submits that it is the duty and obligation of the trial Court to frame the issues that the objection application filed by the appellant was time-barred but the trial Court did not frame the issue, therefore, the trial Court was erred in law to dismiss the same on the ground of limitation. In support of his contention he relied upon Chief Administrator Punjab v. Mst.
Nazir Fatima (1998 MLD 176). He further submits that heavy duty caste upon the Court at the time of making the award as a rule of the Court by virtue of section 17 of the Arbitration Act but the trial Court without applying its independent mind made the award as rule of the Court. In support of his contention, he relied upon Pakistan through General Manager Railways v. Messrs Q.M.R. Export Consultants (PLD 1990 SC 800). He further submits that arbitrator was erred in law to grant rebate to the respondent in violation of clause 9 of the Arbitration Act. In support of his contention he relied upon the case of Province of Punjab and three others v. Ch. Zia-ul-Islam (1993 SCMR 1180). He further submits that the trial Court was erred in law to substitute the arbitrator over and above the agreed by the parties in view of clause 14 of the agreement, therefore, the same is not sustainable in the eyes of law. In support of his contention, he relied upon the following judgments:-- Board of Intermediate and Secondary Education v. Fine Star & Company Engineers and Contractors (1993 SCMR 530) and Design Croup of Pakistan v. Clifton Cantonment Board. '(1990 MLD 2010).
He further submits that arbitrator granted the rebate to the respondent in violation of clause 10 of the Arbitration Act.
6. I have given my anxious consideration to the contention of the learned counsel of the parties and perused the record myself.
7. The Trial Court appointed Ch. Talib Hussain, Secretary Auqaf Department as an arbitrator vide order, dated 31-10-1989. The whole order sheet did not reveal at all whether the service of the appellant/defendant has been effected except that representative of the appellant entered appearance on various dates alongwith the Advocate of the appellant/defendant and requested adjournment to file objections. The original record did not reveal at all that the service of the appellant/defendant has been effected. The power of attorney filed on behalf of the appellant/defendant by Malik Ghulam Nabi, Advocate contained date of signing the power of attorney 3-12-1989. The file also did not reveal that representative of the appellant was authorized by the competent Authority to appear before the Court. In case all these facts are put in juxtaposition then it is crystal clear that the trial Court passed the order of appointment of an arbitrator namely Ch. Talib Hussain, Secretary Auqaf Department without notice to the appellant. It is settled principle of law that nobody should be penalized by the act of the Court as principle laid down by the superior Courts. In arriving to this conclusion, I am fortified by the following judgments:-- Mian Irshad Ali v. Government of Pakistan 13 others (PLD 1975 Lahore 7); Khan Shah .Muhammad Khan v. Allah Diwaya (PLD 1961 Lahore 743); Malik Hidayat Ullah v. Murad Ali Khan (PLD 1972 SC 69) and Malik Barkat Ali Dogar v. Muhammad Shafi (PLD 1990 SC 60).
It is pertinent to mention here that there is no notice on the file of the case which was issued to the appellant except notice, dated 29-3-1989 which contains the report of the Process Server which reveals that service was not effected as the office was closed, therefore, the appointment of Ch. Talib Hussain, Secretary Auqaf Department as an arbitrator is without lawful authority. It was incumbent upon the trial Court to serve a notice upon the appellant under the provisions of the Arbitration Act meaning thereby that the trial Court appointed the arbitrator in violation of the mandatory provisions of the Arbitration Act. The order, dated 31-10-1989 is not sustainable in the eyes of law as the same was passed in violation of the principle of natural justice. In arriving to this conclusion, I am fortified by the following judgment:-- Crescent Sugar Mills v. Central Board of Revenue. (PLD 1982 Lahore 1)
It is also settled principle of law that when the basic order is without lawful, the superstructure shall have to fall on the ground. In arriving to this conclusion, I am fortified by the following judgments:-- Yousaf Ali v. Muhammad Aslam Zia (PLD 1958 SC 104) and Crescent Sugar Mills v. Central Board of Revenue. (PLD 1982 Lahore 1).
Since the appointment of the arbitrator Ch. Talib Hussain, Secretary Auqaf Department is without lawful authority, therefore, all the subsequent orders and award are not sustainable in the eyes of law.
8. In view of what has been discussed above, these appeals are accepted meaning thereby that the application filed by the respondent before the trial Court for appointment of the. arbitrator shall be deemed to be pending adjudication. Parties are directed to appear before the trial Court on 15- 4-2002. Appellant is directed to file reply of the application or objection within 20 days before the trial Court in both cases. The judgments cited by the learned counsel of the parties are distinguished on facts and law. It is settled principle of law that each and every case is to be decided on its own peculiar circumstances and facts.