' By this revision petition, the Province of the Punjab (the petitioner) has called in question the propriety of the order dated 9-10-1977 whereby the learned Senior Civil Judge, Lahore, rejected the petitioner's application filed under section 5 of the Arbitration Act (X of 1940) for revoking the authority of the sole arbitrator.
2. The facts as disclosed are that the Public Health Engineering Circle, Lahore under the Rural Supply Scheme. Required a tube-well to be installed at Jia Bagga in District Lahore. The respondent's tender was consequently accepted by the Superintending Engineer on item rate basis under which the work with an estimated cost of Rs, 3,70,000 was to be completed in six months. It is alleged that notwithstanding some patent defects in the specifications and the drawings supplied to him, the respondent (the sole proprietor of Messrs Industrial Machine Pool) was constrained to carry out work accordingly, to the result that the tube-well failed and the Department refused to release the payment to the respondent. As in the main agreement there was a special clause to refer the matter, in case of a dispute, to two arbitrators, one to be appointed by each party, the respondent approached the Court with an application under sections 9 and 20 of the Arbitration Act asking the petitioner to appoint an arbitrator and file in Court the arbitration agreement for proceeding with the reference.
3. It is contended that on notice to the petitioner, Mr. Barkat Ullah Saleemi, Additional Government Pleader appeared and submitted a reply on 4-9-1975 denying the applicability of the arbitration clause of the agreement to the respondent and the necessity of appointing an arbitrator. It was instead, controverted that the respondent could not complete the work in accordance with the agreement to the result that the tube-well did not yield water and, therefore, the payment was rightly not released. In view of the pleadings of the parties issues were framed on 25.10-1975 and the parties were directed to produce their evidence, but suddenly on 28-4-1976 the learned counsel for the respondent as well as the learned Additional Government Pleader agreed that sufficient grounds existed for filing of the agreement and passing an order of reference. They, therefore, by a joint statement signed by both of them also reached an understanding that Mr. Muhammad Rashid Ahmad, Advocate be appointed a sole arbitrator instead of the two contemplated in the original agreement.
4. It is not disputed that the arbitrator started with the proceedings, but the petitioner on 14-2-1977 moved an application under section 5 of the Act for revocation of the authority of the arbitrator. It was stated that the appointment of the arbitrator was the result of fraud and misrepresentation of one Muhammad Ishaq Alvi, an employee of the Department on the Additional Government Pleader to agree to the appointment of the sole arbitrator, whereas the said employee had no authority to direct the counsel to do so. It was further pointed out that the same arbitrator was got appointed in various other cases by similar tactics, and that the said arbitrator had given exorbitant awards even for more than the amounts claimed by the contractors and was thus guilty of gross misconduct. This application was vehemently contested by the respondent, and the trial Court, after hearing both the parties, rejected the application on the ground that the petitioner regularly participated in the arbitration proceedings, therefore, an objection to the fraudulent appointment of the arbitrator could not be raised especially when the case was nearing completion. Hence this revision petition.
5. Clause 25-A of the agreement relates to how and in what circumstances would a reference be made to the arbitrators for a decision arising out of the dispute between the parties. It is a lengthy provision, but the relevant portion is embodied in sub-clause (c) which reads as under ' ..... In case of claim preferred for an amount up to Rs, 1 lac only, the decision of the sole Arbitrator in such cases shall be final and binding on the parties concerned.
In case the amount of the claim preferred is over Rs, 1 lac the dispute shall be referred to the two Superintending Engineers of the Department other than the Superintending Engineer incharge of the work, one to be nominated by the Chief Engineer of the Region concerned, and the other by the contractor. In case of the said two Arbitrators not agreeing, the case shall be referred to the award of an Umpire who shall be an officer of the Department not below the rank of the Chief Engineer to be appointed by Government in the Administrative Department. The decision of the two Arbitrators/Umpire, as the case may be, shall be final and binding on the parties concerned. Where the matter involved claim for the payment or recovery or reduction of money, only the amount. If any, awarded in arbitration shall be recoverable in respect of the matter so referred."
6. As stated, the respondent nominated one Mr. Zaheer Ahmad Parvez, Director, Office of the Chief Engineer, Punjab Public Health Engineering Department, Lahore as his arbitrator and requested the Court to direct the petitioner to appoint its nominee so that the arbitration proceedings be commenced and the award be filed in Court. It happened that the learned counsel of the parties, by mutual consent, deviated from the relevant requirements of sub-clause (c) referred to above and agreed to the decision of one arbitrator, namely Mr. Muhammad Rashid Ahmad, Advocate. It appears that there were a few other disputes of different contractors requiring reference and the same arbitrator was appointed in all the cases, although on different dates. None of the parties raised a little finger against the said appointment either in the Court or before the arbitrator and it is not disputed that the petitioner was represented in the arbitration proceedings by the Executive Engineer, an S. D.
0. And their staff. It was not only that various documents were placed before the arbitrator, but the petitioner also produced about four witnesses in support of its case. A hint is available from the petitioner's application filed under section 5 of the Act that the petitioner was prompted to dispute the very appointment of the arbitrator only when some of the awards in different cases were found to be beyond the expectations of the Government. The learned counsel referred to the different A paragraphs of the arbitration clause and contended that there was wisdom in the appointment of two arbitrators and in their selection from among the persons of the technical skill not below the rank of the Superintending Engineers because a colossal amount was involved. It was argued that this well-considered stipulation could not be brushed aside by the will of the Government Pleader who had no authority to act on behalf of the petitioner. The learned counsel contended that the Government Pleader was persuaded by one Muhammad Ishaq Alvi who was but an Assistant in the Department and had no authority in writing to direct the counsel to come to an altogether different arrangement. He further argued that the newly appointed arbitrator was a mere practising lawyer and had no experience of resolving technical disputes. I cannot contribute to this view for the reason that arbitration proceedings are not suits restrictive of procedural formalities. A well-settled rule of construction of the award is that the award should be construed liberally and in accordance with common sense, and it should be so read that it can be given effect to, and not so that it would nullify the efforts of the arbitrators appointed by the parties. It is laid down in Ch. Abdul Rauf and another v. Muhammad Saeed Akhtar and others (1) that in determining awards the Court cannot lose sight of the fact that arbitrators as a rule are laymen, not conversant with the procedure of Courts of law. That is why there is, no restriction on the parties to select any person as their Judge and get their dispute resolved.
(1) PLD 1958 Kar. 145 ' If the parties choose an unfit person that is their own affair. Nobody, therefore, can dispute who has been appointed as an arbitrator. The main object of this law is perhaps to give expeditious relief to parties unhampered by rules of procedure laid down in the Civil Procedure Code and Evidence Act and is consequently not to be interpreted as to prolong proceedings before arbitrators. However, contract to refer the dispute to arbitration as is defined by section 2(a) of the Act means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not. To constitute an arbitration agreement which will bring a reference within the Act, there must, therefore, be an agreement. It is a common point between the parties that there was originally a written contract containing an arbitration clause 25-A. It is however, not correct to say that the so-called agreement dated 28-4-1976 appointing the sole arbitrator instead of two technical persons in disregard of the original agreement, being not reduced to writing did not amount to an arbitration agreement within the definition contained in section 2(a) of the Act. Though the Act requires the agreement to be in writing, it does not require that it should be contained in a formal document. It may be in any form attributable to the parties whereby their intention to refer their dispute to arbitration is manifestly proved in accordance with law. It may be by correspondence between the parties, or by a statement made by their counsel and recorded by the Court. As held in Muhammad Yakub Khan v. Sirajul Haq and others (1) a statement recorded on a Court rebar signed by the parties in the presence of the Court is a valid reference to arbitration. All what can be said is that there was a substitution of a new agreement.
Since an agreement to submit an existing or prospective dispute to arbitration rests on the consent of the parties, it may be amended, modified, rescinded or revoked by mutual consent or by acts or conduct of the parties. As laid down in Raja Muhammad Sarwar Khan v. The Federation of Pakistan
(2) the arbitration clause can be treated as separate and severable from the main contract.
' Therefore, a mere repudiation of a term in the contract relating to calculation of payment cannot affect the clause providing for reference to arbitration.
' This view is based on the principle that an arbitration clause does not die with the main contract where it is embodied in. The essence of the arbitration clause in the contract is that the parties agreed to nominate a Judge of their own choice to settle their dispute if and when it arises. That is why a new agreement to refer the differences to an arbitrator can conveniently be substituted but with the consent and concurrence of the parties. However, one agreement or the other subsisted in the instant case, as according to Kartar Singh v. Mehr Singh (3) and Union of India v. Kishorilal Gupta & Bros. (4) it may have been superseded by altogether a new agreement which has the effect of extinguishing the existing agreement. It shall not be out of place to mention here that the law of arbitration is nothing but a law of compromise within the framework of the agreement of the parties if not opposed to public policy, that is why in Octavious Steel Co. Of Pakistan Ltd. v. Province of East Pakistan (5) no difference was found between arbitration and conciliation and it is open to parties to settle their differences through arbitration and they have a prerogative to enter into as many arbitrators as they deem fit.
7. The contention has no force that the fresh agreement dated 28-4-19761 nominating the sole arbitrator instead of the two was entered into by the G
(1) AIR 1949 All. 771 (2) PLD 1958 Kar. 224
(3) AIR 1957 Pb. 40 (4) AIR 1953 Cal. 642
(5) PLD 1967 Dacca 50 ' learned Additional Government Pleader without authority. Referring to rule 4 of Order III, C. P. C. It was contended that on record there was no document in writing signed by the petitioner showing that Mr. Barkat Ullah Saleemi, the Additional Government Pleader was appointed to act or enter into an arbitration agreement on behalf of the petitioner. It is unfortunate that this objection is taken for the first time during arguments of this case. There is no specific objection found in the application made under section 5 of the Arbitration Act. All what was stated in the application was that one Muhammad Ishaq Alvi an employee of the Department appeared in Court on 28-4-1976 and misrepresented the Department and the Government Pleader by saying that the Department had no objection to the case going into arbitration and the appointment of Mr. Muhammad Rashid Ahmad, Advocate as an arbitrator. It was pointed out that the appointment of Mr. Muhammad Rashid Ahmad was obtained by misstating the facts and by fraudulent means. There is no indication of the slightest nature that the appointment of the said arbitrator was without authority.
8. It is not denied that the name of Mr. Barkat Ullah Saleemi existed on the panel of the Government Pleaders and in view of rule 2 of Order XXVII, C. P. C. Persons being ex officio or otherwise authorised to act for the Government in respect of any judicial proceeding shall be deemed to be the recognized agents by whom appearances, acts and applications under the Code may be made or done on behalf of the Government. It means that in a suit against the Government, a Government Pleader need only intimate to the Court that he is representing the Government in the proceedings before the Court and no stamped power of attorney or Vakalatnama is required to be filed. It has not been disputed that Mr. Barkat Ullah Saleemi, Advocate an Additional Government Pleader was required by the Government to appear and represent it in the case. The counsel is to conduct the case of his client to the utmost of his skill and understanding. He must, in the interest of his client, be in the position always to plead and act. He must make final, and sometimes immediate, decision whether evidence on any question of fact is given or not. He should decide in himself which point is given up that another may prevail. This exercise of discrimination in itself almost amounts to exercise of powers of compromise. In the same way it is his duty to decide whether in the course of a case he shall accept an offer made to him, or on his part shall make an offer on behalf of his client to receive or pay something less than the full claim or the full liability. Such decisions are usually made at once. That is why it is said that a counsel has an implied power to settle a suit in which he has received a brief. Such power includes the power to compromise a dispute or reach an arbitration agreement. On the basis of Sourendra Nath Mitra and others v.
Tarubala Dasi (1) their Lordships of the Supreme Court have held in Dr. Ansar Hassan Rizvi v. Syed Mazahir Hussain Zaidi (2) that unless there is a specific authority to the contrary, and in the absence of a written authority such as a Vakalatnama, an Advocate has implied authority of his client to settle the suit. It was observed in that case that it had not been contended that the learned Advocate concerned held any Vakalatnama which expressly or impliedly debarred him from entertaining into a compromise. Nor anything had been produced to show that the _ learned Advocate's implied authority was countermanded by the express direction of his client. It is, therefore, abundantly clear that the new arrangement to refer the dispute to Mr. Muhammad Rashid Ahmad, Advocate (1) AIR 1930 P C 158 (2) 1971 SCM R 634 instead of the two arbitrators named in the former arbitration clause was not without lawful authority.
9. The matter does not end here. It is an admitted fact, as stated earlier, that the officers and the staff of the Department concerned joined the arbitration proceedings with the authority of the petitioner but never raised any objection that the appointment of the arbitrator was without authority or in disregard of the arbitration clause. On the point whether a new appointment could not be made in the presence of an earlier arbitrator, it is held in Muhammad Saghir Bhatti & Sons v.
Federation of Pakistan (1) that the appellant did not raise this objection at the time the third arbitrator started holding the enquiry. In the circumstances the appellant must be deemed to have agreed to the appointment of that arbitrator. The general principle where a Court has inherent lack of jurisdiction, mere consent of parties cannot confer jurisdiction, has no application to arbitration proceedings where the arbitrator is a person appointed by agreement between the parties. The principle of estoppel will generally apply where a party having consented to arbitration by a person and participated in the proceedings before him subsequently attempted to challenge th jurisdiction of the arbitration. Thus where a party having once submitted to the jurisdiction of the arbitrator consequently challenges his jurisdiction on the ground that he did not possess the qualification required by the arbitration clause, it must be held that there was estoppel by conduct and that it was not open to the party to contend that the arbitrator was not qualified under the terms of the arbitration agreement, or that he was not validly appointed by that party. In Messrs Development Construction Corporation Ltd., Karachi v. West Pakistan P. W. D. And others (2) the petitioner originally entered into a contract for construction with "A", but subsequently consented to do the contract job according to the terms of the contract with "B". The terms of the agreement authorised "A" to appoint an arbitrator to settle disputes arising out of the contract. The petitioner on previous occasion had approached "B" to appoint an arbitrator and had accepted the award given by the arbitrator. Appointment of an arbitrator on a subsequent occasion was, however, challenged by the petitioner on the plea that according to the terms of the agreement the right to appoint an arbitrator vested only in "A" and as such "B" could not appoint the arbitrator. The respondent's contention was that the conduct of the petitioner in the past indicated a novation of the contract and that parties by consent had agreed to the substitution of "B" for "A". It was held that in spite of the fact that agreement to refer the dispute to arbitration was necessarily to be in writing, it was only the substantive part of the agreement namely to refer disputes to arbitration, that was required to be in writing. It was further held that the party having submitted to, and availed of, arbitration of arbitrator appointed in a particular manner, cannot raise objection to the manner of appointment of the arbitrator for the reason that such party, having even participated in arbitration proceedings on a subsequent occasion, was deemed to have waived the objection, if any, to jurisdiction of the arbitrator and any irregularity in his appointment was thus cured by acquiescence of such party and his submission to the arbitrator's jurisdiction. The same view appears in a recent case, West Pakistan through Executive Engineer, Rawalpindi v. Messrs Azhar Brothers (3). In the circumstances the objection of the petitioner to the appointment of the arbitrator has no force.
(1) PLD 1958 SC (Pak.) 221
(3) PLD 1977 Lab. 1013 ' It shall not be out of place to mention here that this question is raised during arguments, whereas it has never been the case as set up in the application out of which this revision has arisen. The only contention, as stated earlier, was that the appointment was the result of misrepresentation of an official of the Department. In the light of what had been urged in the application, the question of raising such a plea did not arise at all.
10. Reverting to the main application, it requires to be seen whether the grounds mentioned therein were capable of attracting the provisions of section 5 of the Arbitration Act. The authority of an appointed arbitrator or umpire shall not be revokable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement. The Court has power to remove the arbitrator or umpire under section 11 of the Act only on two grounds, namely where he fails to use all reasonable dispatch in entering on and proceeding with the reference and making an award, and where he has misconducted himself or the proceedings. It is thus no ground that the appointment of the arbitrator was the result of fraud or misrepresentation. It is, however, not a case of the petitioner that the arbitrator was unnecessarily delaying the proceedings or had refused to perform his duties. The question, whether he had misconducted himself or the proceedings, is not evident from the very application filed under section 5 for revoking his authority. Allegation of fraud or misrepresentation must be specifically raised and while doing so, its particulars should be furnished with precision, which is lacking in the instant case. All what has been said is that one Muhammad Ishaq Alvi, an employee of the department appeared in Court on 28-4-1976 and misrepresented the department and the Government Pleader by saying that the department had no objection to the case going to arbitration of Mr. Muhammad Rashid Ahmad, Advocate, and that the said arbitrator was got appointed as an arbitrator in numerous other cases by similar tactics who had given exhorbitant awards in some cases even for more than the amounts claimed by the contractors.
11. In so far as the plea of fraud, no action can be taken by the Court under section 5 or 11 of the Act, as it is not a ground on which the authority of the arbitrator can be revoked. The learned counsel for the petitioner has cited the main principles discussed above and contended that a great miscarriage of justice has taken place on account of the arbitrator having passed awards in a few other cases beyond the amount claimed by the contractors. Power of the Court to revoke the authority of the arbitrator is discretionary and such discretion should be exercised sparingly. The Court should not lightly release the parties from their bargain that follows from the sanctity the Court attaches to contracts, and before doing so, the Court should be well satisfied that a substantial miscarriage of justice will take place in the event of its refusal to grant the leave. But in no circumstances the Court shall be induced to revoke the authority of the N arbitration because of a mere apprehension that the arbitrator may commit a mistake. I do not find that the arbitrator has, in the instant case, misconducted himself and the proceedings. A reference to some awards in a few other cases has no bearing on the present case, for the reason that each case has its own merits. Even otherwise, as laid down in Raja Muhammad Sarwar Khan v. The Federation of Pakistan
(1) that the terms of the arbitration clause were very wide so as to include every dispute between the parties relating to the contract. The arbitrator, therefore, awarding a higher rate (1) P L 1958 Kar.
224 of payment to contractor than the rate set down in the contract, did not act beyond his jurisdiction. The learned lower Court, while deciding the application, was, therefore, justified in holding that the objections to the appointment of the arbitrator were misconceived. It is vehemently urged by the learned counsel for the respondent that the application was aimed at holding up the arbitration proceedings so that the payment of the amount which may fall due from the Government could be delayed. I am, therefore, of the firm view that there would be no miscarriage of justice if the arbitration is allowed to proceed; and that, while dismissing the application for revocation of the authority, the lower Court has not acted in its jurisdiction illegally or with material irregularity.
12. For the aforementioned reasons I find no force in the revision petition and the same is, therefore, dismissed with costs.