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Petitioner: MUHAMMAD UNIS ELAHI SETHI and anothers VS Respondent: FEDERATION OF PAKISTAN, JUDGMENT
Court Name: Sindh High Court Judge(s): Syed Deedar Hussain Shah Title:MUHAMMAD UNIS ELAHI SETHI and anothers vs FEDERATION OF PAKISTAN,
JUDGMENT
Reported As: 1996 CLC 1226 Result: Case remanded Judgment JUDGMENT ' I intend to dispose of J.M. Nos.52 and 53 of 1995 by a common judgment as the facts and case- law, pertaining to both are common and same. 2. Brief facts of the case are that petitioners Muhammad Unis Ellahi Sethi and Sarhad Chambers of Commerce and Industry have challenged the Award dated 29-11-1991 passed by the Arbitration Tribunal of the Federation of Pakistan Chambers of Commerce and Industries, constituted under section 12 of Trade Organizations Ordinance, 1961 and under sections 30, 31 and 33 of the Arbitration Act, 1940. That petitioner No,1 is a member of petitioner No,2, which is a Trade Organisation licensed by Government of Pakistan under section 3 of the Trade Organisations Ordinance, 1961 and registered under the Companies Ordinance, 1984. The respondent is the apex Trade Organisation of Pakistan duly licensed by the Government of Pakistan under section 3 of the Trade Organizations Ordinance, 1961 and is registered under the Companies Ordinance, 1984. It functions and is governed by its Memorandum and Articles of Association. That membership of the respondent is in terms of its Articles 4, 5 and 6. The General Body of the respondent is composed of the representatives from each of its Member Bodies in terms of Article 13. Its Managing Committee and its composition is provided in Article 14. Article 15 provides the manner of composition of the Managing Committee while Article 16 fixed its terms of office. That the respondent vide its Letter No,FPCCl/EL/4/1995/1957 circulated to its Member Bodies, the programme of election to elect, Managing Committee, Office-Bearers and Zonal Committees for the terms 1996-1997. That by its circulars circulated to its Member Bodies, the respondent invited nominations to the General Body and its Managing Committee for the two years term. That the Executive Committee of the
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petitioner No,2 by its resolution dated 21-8-1995 authorised its President to nominate its member on the General Body and the Managing Committee of the respondent. The President nominated the petitioner on the General Body and the reserved seat of the Managing Committee of the respondent for the years 1996-97. That the respondent by its Letter No,FPCCl/EL/4/1995/9750 dated 11-11-1995 informed the petitioner No,1 that the Scrutiny Committee appointed by its Managing Committee in its meeting held on 31-10-1995 had decided not to approve his nomination for the reserved seat of the Managing Committee of the respondent for the two years' term beginning from 1-1-1996. That petitioner No,1 objected to the respondent to the non-inclusion of his name in preliminary list of voters prepared by the respondent and the respondent by its letter dated 23-11- 1995 informed the petitioner No,1 that in view of the decision of the Scrutiny Committee already conveyed to him his name was not included in the final list of the candidates for the Managing Committee. That petitioner No,1 vide his letter dated 28-11-1995 called upon the respondent to place his petition before the Arbitration Tribunal under section 12 of the Trade Organisations Ordinance, 1961. That the respondent constituted an Arbitration Tribunal under section 12 of the Trade Organisations Ordinance, which met on 29-11-1995 and upheld the decision of Scrutiny Committee. In this background this J.M. Is filed. 3. Mr. Khalid Latif, learned counsel for petitioners, has contended that the rejection of the petitioner's No,1 nomination purports to be grounded on Article 16(IV) of the Articles of Association of the respondent and this is totally untenable in view of the admitted position that petitioner No,1 was Member of the Managing Committee of the respondent for the following two-year terms as is evident by the letter dated 7-8-1995; that the reasoning of the Arbitration Tribunal is fallacious. If the bar under Article 16(IV) was really attracted why was it not applied to petitioner No,1 for the term 1994-95; that initially nomination of the petitioner No,1 for the term 1994-95 was rejected but subsequently the Scrutiny Committee withdrew the rejection and accepted the nomination, similarly was the stand for the term 1992-93; that besides, the very concept of nomination against a reserved seat would be rendered absurd if election and nomination against reserved seat were to be treated at par; that the decision of the Scrutiny Committee and of the Arbitration Tribunal also runs counter to the consistent practice of the respondent in so far as ever since its inception many members of the Managing Committee have acted as such members continuously for many more than the two continuous terms now sought for the first time in the history of the respondent to be applied as a bar to the petitioner No,1; that the rejection of the nomination of petitioner No,1 has disenfranchised both the petitioners which is entirely unwarranted by the Articles of Association of the respondent; that the Award is invalid as it is violative of Article 3 read with Rule 4 of the Election Rules of the respondent; that the Award is invalid as it has been improperly procured; and that the Award is invalid in terms of .Section 26-A of the Arbitration Act, 1940 because no reasons have been given in the Award. 4. At the time of arguments, Mr. Khalid Latif, learned counsel for the petitioners, has contendeL that the Award is invalid as the petitioner was not given opportunity of being heard, which is against the principles of natural justice, embodied in the maxim "audi alteram partem" i,e, no man shall be condemned unheard. 5. Mr. Aitzaz Ahsan, learned counsel for the respondent, has contended that no allegation of misconduct, bias or malice against the Arbitrators has been made anywhere in the petition, the miscellaneous application or even the rejoinder; that no allegation of denial of hearing to the petitioner has similarly been made in any petition, application, affidavit or even the rejoinder; that only one point of law sought to be reviewed namely that clause 16(4) of the Articles of Association of FPCCI did not apply to nominated members and, therefore, such a member could seek a third consecutive term; that the petition is neither a civil suit nor an appeal from the award, nor even a writ petition. It is only a petition under the Arbitration Act and, therefore, confined to the parameters
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of such a challenge; that the Arbitrators had not committed any misconduct; that due process had been observed and both sides had obtained their right to be heard; that only a point of law had been referred to the Arbitrators; that on 26-12-1995 the learned counsel for the petitioner, for the first time, attempted to raise a third point namely that the petitioner had allegedly not been given a hearing by the learned Arbitration Tribunal; that out of abundant caution and even though the petitioner had not asserted the allegation denying a hearing by means of any affidavit, the respondent Federation filed an affidavit of the Registrar of the Arbitration Tribunal asserting that the petitioner was given a hearing by the Tribunal. 6. Mr. Khalid Latif, learned counsel for petitioners, has pointed out that the affidavit in rejoinder of Faisal Yusuf Zia has been filed on 16-1-1996, in which it is stated that respondent has acted in violation of the principles of natural justice and, therefore, the Award given is a nullity in the eyes of law. Mr. Khalid Latif has cited following case-law:-- (1) PLD 1985 SC 69 (M/s. Aslam Saeed & Co. v. M/s. Trading Corporation of Pakistan): ' The rule laid down in this authority by the Hon'ble Supreme Court is as follows:--- "The words 'otherwise invalid' are not ejusdem generis with the other cases mentioned in section 30. The same are meant to include all cases of invalidity on grounds other than those mentioned. According to the learned counsel the appellants were mulcted with damages by the Arbitrator in disregard of the fact that a bulk sale of huge quantity of 1,20,000 tons of rice had been made by the respondents whereas the actual unlifted quantity of rice by the appellants was only 14,853.17 tons. Needless to say that in the case of bulk sale the price offered by the purchasers may not be the same as in respect of any smallerquantity. Thus, it was asserted by the learned counsel, that the appellants have suffered on account of such method of sale and a definite prejudice was caused to them in awarding the damages on account of difference in the contracted and the resale price." (2) PLD 1983 Karachi, 621 (Province of Sindh v. Haji Khan): ' His lordship Mr. Naimuddin, C.J. (as then he was), has held in this authority as under:-- "Since at the time when the Ordinance was promulgated the proceedings were pending and objections were not disposed of the provisions of section 26-A of the Ordinance are, therefore, clearly attracted. However, the question is whether there are any valid reasons for not remitting the award for stating the reasons and I find none. On the contrary, I find that in the objections the appellants have stated that the arbitrator has given the award without detailing the basis on which it is made. In view of the objections which have not been dealt with by the learned Senior Civil Judge in the judgment impugned in this appeal, I find it at all more necessary to remit the award to the sole arbitrator to state the reasons. Accordingly, I remit the award to him for stating the reasons for the Award." (3) PLD 1982 Karachi, 260 (Messrs Ghandhara Industries Ltd., Karachi v. Government of Pakistan): In this authority the learned Judge has observed as under:- "3. Power of Court to remit cases pending at commencement of Ordinance. --(1) If in any case in which proceedings in relation to any award which has been filed in Court are pending in any Court immediately before the commencement of ,this Ordinance, the Court finds that the award does not, or does not in sufficient detail, state the reasons for the award, the Court may remit the award to the arbitrator or umpire with a direction to state the reasons for the award in sufficient detail. (2) Where an award is remitted under subsection (1) the Court shall fix the time within which the arbitrator or umpire shall submit to the Court an award stating the reasons thereafter in sufficient detail: ' Provided that any time so fixed may be extended by subsequent order of the Court. (3) Any award remitted under subsection (1) shall become void on the failure of the arbitrator or umpire to submit it in accordance with the direction of the Court.
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' This amendment in the Arbitration Act was made on 11th May, 1981 The newly-added section 26-A to the Arbitration Act, 1940 provides that the reasons for the award should be stated in sufficient detail in the award to enable the Court to consider any question of law arising out of the award. This provision is mandatory and in case of non-compliance the Court shall remit the award. However, on this ground the award cannot be straightaway set aside. The arbitrators or umpire are now under a legal obligation to give reasons for the award in sufficient detail. Merely giving reasons in sketchy or summary manner will not amount to compliance with this provision of law. The arbitrators or umpire are bound to give reasons in sufficient detail and such reasons should be made in the award itself. There had been practice that the awards were made in non-speaking terms and sometimes the reasons were stated separately which did not form part of the award itself. Now it is compulsory that the reasons should be contained in the award itself. The manner in which the reasons has to be given is also specified. It should be in "sufficient detail" so that the Court may be in a position to consider any question of law arising out of the award. The law now contemplates a speaking award." (4) 1988 SCMR 789 (Messrs Asian Associated Agencies v. Pakistan through Secretary, Ministry of Industries, Government of Pakistan): The Hon'ble Supreme Court, in this authority, was pleased to grant leave to appeal to consider as follows:-- "Whether the award suffered from an error on face of record because a buyer, entitled to reject the goods, could not be compelled to return the goods to place of delivery at his own cost; interpretation of provisions of sections 42 and 43, Sale of Goods Act, 1930; number of decisions of English Courts on question as to what constitutes an error of law on the face of award." (5) 1981 CLC 339-Messrs Badruddin H. Mavani v. Government of Pakistan, Ministry of Food): ' The learned D.B. Of this Court in this authority has held as under:- "Award cannot be set aside unless Arbitrator shown to have misconducted himself or award improperly procured or otherwise invalid and findings of Arbitrator wrongly accepted by lower Court to be correct." (6) 1981 SCMR 243 (Province of Punjab through Collector, Bahawalpur v. Sufi Habib Ullah): ' The learned D.B. In this authority has observed as follows:-- "2. The submission made before us is based upon the Award itself. The High Court, after an elaborate judgment, has held that 'the Award being laconic and totally silent as to the basis or reasons thereof, could not have been, in the circumstances, legally given effect to'. It has been stated before us that the Arbitrator was under no obligation to have given reasons for the Award that he had made. We find that in paragraph 3 of the petition the operative part of the Award has been reproduced by the petitioner. The mere fact that this is an operative part shows there must be another part of the Award in which reasons must have been given. If the Arbitrator was not to give reasons the observation of the High Court would probably not have been correct. But since reasons have been given they have to be based upon the evidence produced before him and the law applicable to it and if the Arbitrator has not done so, the Award is certainly liable to be set aside and that is what the High Court has done." (7) 1984 CLC 1077 (K.M.C. v. Associated Constructors): The learned D.B. In this authority has observed as under:- "Arbitrator neither stating any reason for awarding two substantial amounts to respondent nor stating how he had arrived at these figures by mentioning separately various amounts awarded by him under various heads claimed by respondent. Award remitted to arbitrator for stating reasons in sufficient details." (8) 1986 MLD 501 (Province of the Punjab v. Messrs Industrial Machines Tools Government Contractors):
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' The dictum of this authority is as follows:-- "Award, not stating reasons in sufficient detail, could not be sent back by Court to arbitrator or umpire to submit same with reasons within specified time." (9) PLD 1960 (W.P.) Karachi 455 (Allah Buksh Gabole v. Razia Begum): His lordship Mr. Justice Wahiduddin Ahmed has held as under:-- "Although an arbitrator is allowed considerable latitude in the procedure to be followed by him at the hearing, it is his paramount duty to afford the parties a reasonable opportunity to know the case against them. He cannot condemn a party without letting him know the case. If he makes an award without complying with this elementary principles of natural justice, he does so to the risk and peril of his award being set aside on grounds of misconduct." (10) PLD 1959 SC 45 (Chief Commissioner, Karachi v. Mrs. Dina Sohrab Katrak): ' In this authority the Hon'ble Supreme Court has referred the case of The Queen v. The Archbishop of Canterbury where Lord Campbell, C.J., has observed as under:-- "It is one of the first principles of justice, that no man should be condemned without being heard." ' In view of the above observations, the Hon'ble Supreme Court of Pakistan, has held as under:-- "The rule of justice embodied in the maxim: audi alteram partem: "No man shall be condemned unheard" is not confined to proceedings before Courts but extends to all proceedings, by whomsoever held, which may affect the person or property or other right of the parties concerned in the dispute. As a just decision in such controversies is possible only if the parties are given the opportunity of being heard, there can be as regards the right of hearing, no difference between proceedings which are strictly judicial and those which are in the nature of a judicial proceeding though administrative in form." (ii) PLD 1970 Karachi 357 (Tayab and 2 others v. Eastern Textile Mills): ' The learned D.B. Of this Court consisting of Mr. Justice Noorul Arfin and Mr. Justice Muhammad Hayat Junejo, has observed as under:-- "Although the arbitrator is allowed considerable latitude in the procedure to be followed by him at the hearing, it is his paramount duty to afford the parties a reasonable opportunity to know the case against them. He cannot condemn a party without letting him know the case. If he makes an award without complying with this elementary principle of natural justice, he does so at the risk and peril of award being set aside on grounds of misconduct. It has been repeatedly held that unless the terms of reference dispense with holding an enquiry, the right of hearing is to be presumed. In any case, the arbitrator cannot hold secret enquiries behind the back of the parties and if he does so the award will be vitiated." 7. Mr. Aitzaz Ahsan, learned counsel for the respondent has referred the following case-law:- (1) PLD 1965 Karachi 460 (Messrs Balagamwalla Cotton Ginners and Pressing Factory v. Messrs Akbar Oil Mills): ' In this authority it has been held as under:-- "Validity cannot be challenged by relying on facts stated in affidavit neither forming part of award nor accompanying same." ' According to Mr. Aitzaz Ahsan it has been consistently held that when only a point of law is referred to arbitration (and even if the decision of the arbitrator is erroneous, which is not so in this case) the Court will not interfere. Reliance in this behalf is placed upon:-- (2) PLD 1987 SC 393 (Ghulam Abbas v. Trustees of the Port of Karachi): Learned D.B. Of this Court has observed as follows:-- "Now the general rule of law is that an award is final as to both fact and law but there is a rule that an error of law, if it appears on the face of the award, is a ground for setting it aside which is an exception to the general rule as stated. There is a further, rider to this rule, namely, that if the parties
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have specifically referred a question of law to arbitration then the general rule would apply and the award will be beyond reproach even if such a question is decided erroneously." (3) PLD 1968 Lahore 629 (Siraj Din v. Iqbal Begum): Learned D.B. In this authority had held as under:- "The question to be decided is: Does the error of law appear on the face of the award? In the present case the matter relating to the application of section 19 of the Punjab Colonization of Goverrunent Lands Act, the effectiveness of the previous Tamliknama and the subsequent oral gift alleged to have been made after payment of entire Malikana and passing of possession to the donees were before the arbitrators, which questions they have proceeded to decide on evidence produced before them. They do not appear to have erred in law in this regard and even if it be assumed that their decision on the aforesaid particular question of law is erroneous, since the question had been specifically referred to them, it is not for this Court to interfere, in view of the well-settled proposition of law stated above." (4) AIR 1960 SC 588 (M/s. Alopi Parshad and Sons Ltd v. Union, of India): ' In this Authority the Supreme Court has held as under:-- "The award of an arbitrator may be set aside on the ground of an error on the face thereof only when in the award or in any document incorporated with it, as for instance, a note appended by the arbitrators, stating the reasons for his decision. There is found some legal proposition which is the basis of the award and which is erroneous." (5) PLD 1974 SC 204 (Gulzar Khan v. Shahzad Bibi): It is held in this authority as under:-- "While it is undoubtedly correct that an inference drawn from evidence amounts to a finding of fact, yet it is well settled that the question of the proper construction of a document is a question of law and not of fact." (6) 1992 SCMR 786 (Jam Pari v. Muhammad Abdullah): ' D.B. Of the Hon'ble Supreme Court in this authority had held as under:-- "Waiver is an intentional relinquishment of known right and unless there is cogent evidence reflecting the person's conduct clearly indicative of abandonment of his right he cannot be said to have deliberately foregone his such right." 7. PLD 1960 (W.P.) Karachi 78 (Suleman Haji Muhammad & Co v. State Bank of Pakistan): ' The learned Judge has observed as under:- "The the award is otherwise valid, the Court of law cannot interfere and review it on merits and say whether it is good, bad or indifferent." (8) AIR 1970 Madras (63-A. Mohambaram v. Jayavelu): D.B. In this authority has decided as under:- - "Government had appointed a person as public prosecutor not nominated by the Collector--Order of appointment quashed." (9) PLD 1979 SC 32 (Shahnaz Maqbool v. Province of Sindh): In this authority it is held as under:- "A mere gratuitous indulgence cannot operate to establish a rule or estoppel/waiver." (10) PLD 1986 Quetta. 321 (Province of Balochistan through Secretary, Irrigation and Power Department, Government of Balochistan, Quetta v. Messrs Tribal Friends Company, Loralai through its General Manager): ' In this authority the Hon'ble Judge has held as under:-- "Proceedings to settle differences by way of arbitration to be outcome of arrangement mutually arrived at by parties voluntary agreeing to accept decision of arbitrator to be binding on them." (11) PLD 1994 Karachi 480 (Messrs Nizamuddin Faridul Haq v. The Collector of Customs): ' Learned D.B. Of this Court in this authority has observed as under:-- ' "It is not unreasonable to assume that 'past practice', unless having the sanction of letter of law, is no substitute for law, still, when practice is based on conscious implementations, enunciations, precedents or rulings of an administrative' or quasi-judicial authority, such as the Collectorate of
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Customs or the Board of Revenue,. Fixed with duties to administer and implement the law covering a specialised field and at that a taxing statute, a deviation from such practice should not be arbitrary, capricious or fanciful. Above all, if there be change in practice that has. Always to be consistent with law." 8. Advisely I refrain myself to dilate upon the authorities referred to hereinabove by the learned counsel for the parties, particularly seeking interpretation or judgment on the bar under Article 16(4) of the Memorandum and Articles of Association of the Federation of Pakistan Chambers of Commerce and Industry and whether nomination of a member for more than two consecutive terms was allowed by the. Respondent or whether the past practice for allowing its member for nomination/election beyond, more than after availing, two consecutive terms. 9. I would also refrain myself to dilate upon the arguments of the learned counsel for the parties that whether the Award is invalid on account of insufficiency of reasons or whether the reasons so mentioned are sufficient or not. For the sake of convenience I would like to reproduce clause 12 of the Rules and Regulation of the Arbitration Tribunal (set up under section 12 of Trade Organisations Ordinance, 1961), as under:-- "Clause xii: The party or parties shall be entitled to appear by counsel, attorney, advocate or an authorised adviser or personally." 10. No doubt in the petition itself the ground of not affording an opportunity of personal hearing is not agitated but while placing arguments Mr. Khalid Latif has raised this point. As it is purely a legal point, therefore, he was allowed by the Court to raise this point. He placed submissions and cited relevant case-law. Counter-affidavit of Abdul Subhan son of Abdul Alim, Registrar, Arbitration Tribunal of Federation of Pakistan Chamber of Commerce and Industry, Karachi, has been filed, para.. 3 of the same "is reproduced as under:-- "That the petitioner did appear before the Tribunal and was fully heard." ' Affidavit in rejoinder of Faisal Yusuf Zia son of Muhamad Yusuf Zia, who is petitioner in J. M. No, 53/95, has been filed by Mr. Khalid Latif, learned counsel for the petitioner, relevant paragraphs of the same are reproduced as follows:-- ' That I am the petitioner in the concerned J.M. No,53 of 1995 and as such am fully conversant with the facts of the case. I have been orally asked and authorised by the…
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