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Petitioner: Sh. SALEEM ALI VS Respondent: Sh. AKHTAR ALI and 7 others
Court Name: Lahore High Court Judge(s): Muhammad Ghani, Syed Jamshed Ali Title: Sh. SALEEM ALI vs Sh. AKHTAR ALI and 7 others Case No.: I.C.A. No,2-C of 1997 in C.O.No, 2-C of 1986 Date of Judgment:2004-03-08 Reported As: PLD 2004 Lahore 404 Result: Case remanded
JUDGMENT
JUDGMENT MUHAMMAD GHANI, J.---This appeal filed by Sh. Saleem Ali is directed against the decision, dated the 15th of January, 1997 rendered by a learned Single Judge of this Court whereby an application registered as C.O. No,2 of 1986 filed on the 20th of November, 1985 by Sh. Akhtar Ali, respondent No,1 seeking direction as envisaged by subsection (2) of section 14 of the Arbitration Act 1940 against Chief Justice (Retired) Khan Bashiruddin Ahmad and Maulvi Mushtaq Hussain to file in Court an Award pronounced by them on the 11th of November, 1985, for being made a rule of the Court, and another application filed on the 7th of December, 1985 under sections 17 and 18 of the Arbitration Act by Sh. Shuakat Ali, a former Judge of this Court, respondent No,5 (now represented by his widow Chirista Ali and two daughters namely, Saima Ali and Asma Ali) for making as rule of the Court the said Award, were rejected, whereas objections filed on the 19th (the correct date is 20th) of January, 1986 to the validity of the said Award, as well as an application, dated the 4th of May, 1986 filed by Sh. Murtaza Ali, respondent No,2 under sections 33 and 35 of the Arbitration Act assailing legality of the same on the ground of having been pronounced during the pendency of a suit for administration, through partition, filed by him, were accepted, and as a consequence thereof the entire proceedings conducted by the said two learned Arbitrators and the resultant Awards were scrapped and declared to be void, allowing the suit by Sh. Murtaza Ali to proceed in accordance with law, subject, of course, to the following inhibition:- "Through order dated 13-1-1990 the compromise entered between Sh. Saleem Ali,. Sh. Akhtar Ali and Sh. Shaukat Ali in respect of their rights in the companies and properties mentioned in paragraphs 25 and 26 of the award was accepted and it was made clear that in case ultimately the proceedings are restored Sh. Saleem Ali and Sh. Akhtar Ali who had taken over the interest of Sh.
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Shaukat Ali in the said companies would step into the shoes of Sh. Shaukat Ali and in case Sh. Shaukat Ali is found to be not entitled to or any of the rights taken by the others in the proceedings they shall get the same subject to the said decision, therefore, for the purpose of further proceedings in the suit Sh. Akhtar Ali and Sh. Saleem Ali may defend the rights of Sh. Shaukat Ali to maintain with them whatever they got from Sh. Shaukat Ali through the said compromise and if Sh. Shaukat Ali is found to be not entitled to all or any of them they would not claim any right on the basis of the said order against the others but may pursue further remedy against such determination in accordance with law. There will be no order as to costs." 2. The parties to this litigation are offspring of one Sh. Ghulam Mustafa, who originally hailed from Jalapur Jattan, a town of Gujrat District; had been an Honourary Magistrate at Lahore; had business undertakings of manufacture of Oil Expellers and Oil Engines at Brandreth Road, Lahore, Re-rolling of steel at Karachi, and, being in affluent circumstances, enjoyed the luxury of having more wives than one, the first in point of time being Mst. Ghulam Fatima who produced two sons named Muhammad Nawaz and Muhammad Riaz, both of them having died since long have left behind even no troubles of this transitory life; she was followed by Mst. Sardar Begum who gave birth to four sons by the names of Sh. Akhtar Ali, (respondent No,1) Sh.Shaukat Ali (respondent No,5), Sh. Saleem Ali (appellant) and Sh. Murtaza Ali (respondent No,2 herein), besides two daughters Mst. Razia Begum and Mst. Ijaz Amanullah, whereas his last known wife was Mst. Taj Begum, predecessor-in-interest of Sh. Mumtaz Ali and Mst. MazharKhanum, respondents 6 and 8, respectively. The business undertakings, immovable properties and liquid assets gave rise to disputes between his progeny. Stripped off unnecessary details, the disputes between the parties having been referred to the two learned Arbitrators, named above, the same were resolved by means of the afore-mentioned Award, date the 11th of November 1985, though as per Sh. Ghulam Murtaza, there was no valid reference. Be that as it may, on the 20th of November, 1985, Sh. Akhtar Ali filed an application under section 14(2) of the Arbitration Act 1940, in the Court of the learned Senior Civil Judge, Lahore, with the prayer that the two learned Arbitrators be asked to file the Award dated the 11th of November, 1985 so that the same was made rule of the Court. The learned Arbitrators filed the Award in Court through .Syed Muzammil Ali Akram, Advocate, on the 22nd of December, 1985. On the 7th of December, 1985, Sh. Shaukat Ali filed an application under sections 17 and 18 with the prayer that in case the Award was objected to, itsparts vis-a-vis Sh. Akhtar Ali and Sh. Saleem Ali be made a rule of Court and decree passed accordingly. Sh. Saleem Ali (appellant) filed on the 18th of January, 1986, an application seeking modification of the Award in certain aspects, whereas objections were filed on the 13th of January, 1986 by Mst. Muzhar Khanum (respondent No,8), on the 18th of January, 1986 by Mr. Javed Shafi and Mrs. Razia Shafi (respondents 3 and 4) and on the 19th of January, 1986 by Sh. Murtaza Ali (respondent No,2) for setting aside the Award. As mentioned above, the learned Single Judge, while rejecting the application of Sh. Akhtar Ali, accepted Objections of Sh. Murtaza Ali and passed the impugned order, dated the 15th of January, 1997. Hence this Intra-Court Appeal by Sh. Saleem Ali. 3. We have heard the learned counsel for the parties and have perused the record. 4. At the outset, Sh. Murtaza Ali, respondent No,2 raised objection to the maintainability of this Intra- Court Appeal by submitting that the same having been filed, as it 'is "under section 3(1) of the Law Reforms Amendment Act 1972 (Act No,VIII of 1972)" is incompetent. His precise argument is that an Intra-Court Appeal is competent only if a decree is passed or a final order is made by a learned Single Judge of this Court in the exercise of "original civil jurisdiction". According to him, the impugned order, dated the 15th of January, 1997 was passed under the provisions of the Arbitration Act, and an appeal against an order setting aside an Award is competent under section 39(1)(vi) of the Arbitration Act. It is not denied that the application under section 14(2) was originally filed in the Court of the learned Senior Civil Judge, Lahore, but was transferred to the original side of this Court.
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Proceedings commenced on an application under section 14(2) are in the nature of civil proceedings, and by virtue of section 41 of the Arbitration Act, the provisions of the Code of the Civil Procedure 1908 have been made applicable to not only to the proceedings before the Court, but also to appeals under the said Act. Therefore, upon transfer of the application under section 14 (2), as aforementioned, the learned Single Judge of this Court while dealing with the matters, exercised "civil original jurisdiction". Section 3 (1) of the Law Reforms Ordinance (No,XII) of the 1972, as amended by Law Reforms (Amendment) Act (No,VIII) of 1972 reads as follows:-- "3. Appeal to High Court in certain cases.--(1) An appeal shall lie to a Bench of two or more Judges, of a High Court from a decree passed or final order made by a Single Judge of that Court in the exercise of its original civil jurisdiction." Upon plain reading of afore-quoted section 3(1), we are clearly of the view that the learned Single Judge passed the impugned order, dated the 15th of January, 1997 in the exercise of his original civil jurisdiction and, therefore, this Intra Court appeal, being otherwise not barred by subsections (2) and (3) of section 3 ibid is competent. Even otherwise, vide the impugned order, dated the 15th of January, 1997, the learned Single Judge had set aside the Award, dated the 1 1 th of November, 1985, and appeal is competent under section 39 (1) (vi) of the Arbitration Act, 1940. It is settled law that a party cannot be non-suited on the ground that the provision of law under which the proceedings have been instituted has been inadvertently misquoted. The preliminary objection is, therefore, not tenable and is overruled. 5. In view of the diverse nature of the pleas of the parties, the learned Single Judge had framed the following Issues on the 19th of November 1986:- (1) Whether the award under agreement dated 24th May, 1984, as filed is hit by the provisions of section 35 of the Arbitration Act? OPR 1-3. (2) Whether there is validly executed arbitration agreement between the parties? OP applicant. (3) Whether the arbitration agreement dated 24th May, 1984 is not a valid agreement? OPR 1-3. (4) What is the effect of the participation of respondent No,1 and others in the very proceedings of arbitration? OPR 1-3. (5) Whether the arbitrators have misconducted themselves during the preceding and in making the award? OPR 1-3. (6) Whether the award has been given beyond the prescribed time? OPR 1-3. (7) What is the status of respondent No,4 under the arbitration agreement dated 24th May, 1984? OPR-4. (8) What is the impact of the award given by respondent No,4 on the next arbitration by the Chief Justice (Rtd.) Khan Bashiruddin Ahmad and the Chief Justice (Rtd.) Maulvi Mushtaq Hussain? OPR 1-3. (9) Whether the proceedings held by the Chief Justice (Rtd.) Khan Bashiruddin Ahmad and the Chief Justice (Rtd.) Maulvi Mushtaq Hussain are de novo proceedings pursuant to the agreement dated 24th May, 1984? OP Applicant. (10) Whether the award as made suffers from patent illegalities which have the effect of vitiating the award? OPR 1-3. (11) Whether the documents tendered in evidence by respondent No,1 have not been brought on to the record and whether the same have been returned to respondent No,5 without exhibiting? OPR 1-3. (12) Whether the arbitrators have acted beyond the reference? If so, what is its effect? OPR 1-3. (13) Whether the arbitrators have misdirected themselves as to the property in dispute, the very subject-matter of the reference? OPR 1-3. (14) Whether the award has been improperly procured? OPR 1-3. (15) Whether the award as it is, is opposed to the natural justice?.
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(16) Whether the arbitrators have acted in excess of their power under the reference, qua 250 shares belonging to respondent No,5 in Vulcan Arms Company Ltd. By giving the same to the applicant? OPR 5. (17) Whether the arbitrators are competent to award interest on the sum to be given to respondent No,4? OPR 5. (18) Whether there have been Arithmetical errors in the award in working out the accounts? OPR 4. (19) Whether the arbitrators have acted in excess of their power by transferring the shares of respondent No,1 in the Vulcan Arms Company Ltd. Ally Brothers and Capital Flour Mill to the applicant and respondent No,5? OPR 1. (20) Whether the part of the award which is not being contested by the parties can be made as a Rule of the Court in case the parts of the award under contest are otherwise decided as not valid? OPR 4-7. (21) Relief. The learned Judge has not dealt with each Issue separately. However, after recording some evidence and hearing learned counsel for the parties, the Award was set aside vide impugned decision, dated the 15th of January, 1997, and the reasons for the said decision took the following form:-- (a) That "there was no concluded and valid arbitration agreement executed by and binding on all the parties, interested in the disputes for referring the matter to Mr. Justice (Retd.) Bashiruddin Ahmad and Mr. Justice (Retd.) Maulvi Mushtaq Hussain, as such, all the arbitration proceedings initiated by the said two Arbitrators were nullity in the eye of law and as a consequence thereof the Award delivered by them on the 11th of November, 1985 is also void ab initio and of no legal effect". (b) That "no arbitration in the matter could take place after 16-1-1985 when Sh. Murtaza Ali, respondent No,1 filed a suit for administration of partition of the properties in which the application made by Sh. Saleem Ali under section 34 of the Arbitration Act, for stay of proceedings had been rejected as under section 21 of the Arbitration Act, no reference could be made for arbitration in respect of any matter which was subject-matter of a civil suit except through Court in which the same was pending, therefore, the arbitration proceedings after 16-1-1985 were also void". (c) That the learned Arbitrators were guilty of "misconduct" inasmuch as before their formal appointment as Arbitrators, they had been issuing directions to the Mediator regarding four matters mentioned in the Note of Sh. Shaukat Ali, dated the 14th of May, 1984 to proceed in a particular manner and. (d). "That Mr. Justice (Retd.) Mushtaq Hussain sold his property to Sh. Akhtar Ali one of the contesting parties in the dispute" which, in the opinion of the learned Judge, recoiled adversely on the impartiality of the said learned Arbitrator, and amounted to "misconduct" as "none of the arbitrators could act in that manner as they were required to decide the disputes between the parties impartially which should have been maintained up to the date of delivery of the award". 6. So far as the first reason for setting aside the Award is concerned, the grounds which can be spelt out from a rather lengthy discussion, spread over about 20 pages, may be summarized as follows:- (a) Though according to the parties, except Sh. Murtaza Ali whowas respondent No,1 before the learned Single Judge, the arbitration agreement was allegedly executed on the 24th of May, 1984, but in paragraph 9 of the Award the learned Arbitrators had relied upon arbitration agreement, dated the 25th of May, 1984. (b) The agreement appended with the Award was not a formal agreement but merely a Memorandum of the discussion held in a meeting attended by the learned Arbitrators, besides the parties; that this document revealed that the parties had agreed that the learned Arbitrators should give their award concerning 33 items of dispute tabulated therein, and that in the event of
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disagreement between the learned Arbitrators, the matter was to be referred to Chief Justice (Recd.) Anwarul Hag as Umpire; that the meeting dispersed with the understanding that formal arbitration agreement would be signed on the next day; that. On the next day, viz. The 14th of May, 1984, instead of executing a formal arbitration agreement, the parties assented to the arrangement that instead of referring all the disputes straightaway to the two proposed Arbitrators, 33 items of dispute should first be gone into by former Justice Shaukat All as a mediator, who even otherwise was a member of the family and a party to the dispute, and that if the parties did not accept his mediation, then that matter only be referred to the _decision of the Arbitrators. (c) On the unstamped Memorandum, Sh. Saleem Ali and Sh. Akhtar Ali put their signatures at the end of item No,4 on the 25th of May, 1984 whereas under the remaining items Nos. 5 and 6, Sh.Shaukat Ali put his signatures as mediator/Arbitrator, and signatures of Mr. Murtaza Ali, Sh. Mumtaz Ali and Mr. Javed All are also present; that under the signatures of Sh. Laved Ali, the date indicated is "1-6-1984"; that at the end of the document, there are signatures of Sh. Akhtar Ali but without any date; that on a bare perusal of the document, it is apparent that so far as Sh. Akhtar All and Sh. Saleem All are concerned, they had agreed to the mediation/arbitration of Sh. Shaukat All only in respect of the four items, below which they had put their signatures on the 25th of May, 1984 whereas Mr. Murtaza Ali. Sh. Mumtaz Ali and Sh. Javed Ali signed this document on the 1st of June, 1984; that Mrs. Ejaz Amanullah, though shown as party through Mr. Sohail Akhtar, but the document contained. Neither the signatures of Mrs. Ejaz Amanullah nor of Mr. Sohail Akhtar, and since the document was admitted, in the evidence on the 10th of May, 1985, it clearly meant that Sh. Saleem All and Mr. Javed Ali were made to put their signatures on the same on the said date viz. The 10th of May, 1985. (d) In the statements of Sh. Murtaza Ali, Sh. Saleem All and Sh.Akhtar All recorded by the learned Arbitrators on the 25th of May, 1984, all the three had clarified that they had agreed to the mediation of Sh. Shaukat Ali only in respect of items Nos. 1 to 4. (e) The afore-mentioned statements, were wrongly taken by the learned Arbitrators to be an arbitration agreement on the basis of which they initiated proceedings and delivered the impugned Award, dated the 11th of November, 1985. (f) The agreement wherein 34 items of dispute between the parties were mentioned, appeared to have been prepared pursuant to the meeting held on the 13th of the May, 1984 which decision was modified in the next day's (14th May, 1984) meeting to the extent that the parties would first get the decision from Sh.Shaukat All as a Mediator, and that as clarified in the statements of 25th of May, 1984, the mediation was restricted only to first four items mentioned in the Memorandum. (g) As per Sh. Shaukat Ali's Letter, dated the 6th of April, 1985 (C.Ws.3/5) an arbitration agreement was drawn up and was signed by Sh. Saleem Ali, but the agreement dated the 24th of May, 1984 did not bear signatures of Sh.Saleem All as well as of Mst. Razia Shafi Beg and Mr. Ljaz Amanullah, the latter being out of country. (h) Pursuant to the stamped agreement, dated the 26th of May, 1984, bearing signatures of Sh. Saleem Ali, Sh. Akhtar Ali, Mr.Mumtaz Ali and Javed Ali, but not of Sh. Murtaza Ali, Mst.Razia Shafi, Beg and Mrs. Ijaz Amanullah, Sh. Shaukat All proceeded in the matter as a Mediator and delivered his decision/award, dated the 12th of June, 1984 which having been challenged by Sh. Saleem All and Sh. Akhtar All before the learned Arbitrators, an order was passed on the 31st of January 1985 by Chief Justice (Retd.) Khan Bashiruddin Ahmad adjourning the proceedings sine die on the ground that he had become functus officio. (i) In his letter, dated 28th of June, 1984 (C.W.4/2), Sh. Akhtar Ali had taken up a specific stand that through agreement, dated the 26th of June, 1984, all previous arrangements, and the agreement,
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dated the 24th of May, 1984 had been superseded,but no such agreement, dated 26th of June, 1984 was in existence. (k) The agreement, dated the 24th of May, 1984 lost its efficacy and was nullified by the subsequent agreement, dated the 26th of May, 1984, which position was accepted by Sh. Shaukat Ali in his letters, dated the 6th of April, 1985 (C.Ws.3/5) and the 28th of June, 1984 (C.W.4/2). (m) The agreement, dated the 26th of May, 1984 was not executed by Sh. Murtaza Ali "as he did not put his signatures on it on the 25th of May, 1984" and that in his statement (Annex 'B') he had clarified that he had only consented to the mediation of Sh.Shaukat Ali and that too in regard to only items 1 to 4 and not about others; that if any of the parties was dissatisfied with the decision of the said mediator about any of the four items of dispute, the learned Arbitrators were to be approached through a formal reference/agreement duly signed by all the parties, with regard thereto, and that the jurisdiction of the learned Arbitrators could not extend to any other item. (n) Even if there was some sort of arbitration agreement in respect of some of the matters, i,e, four items, the same was not tantamount to bringing about a valid and concluded arbitration agreement between all the parties about any dispute as all of them had not signed, and those who signed the same were laboring under acute misconception and confusion as to its true nature and scope. 7. In clause (a) of section 2 of the Arbitration Act 1940 "arbitration agreement" has been defined to mean "a written agreement to submit present or future differences to arbitration, whether an Arbitrator is named therein or not". While interpreting the said definition of arbitration agreement, it was held in Abdul Aziz Cotton Ginning Factory v. Ali Muhammad Abdullah & Co. (PLD 1966 (W.P.) Karachi 197) that "any writing or writings attributable to the parties which-, unmistakably prove their intention to refer their disputes to arbitration are satisfactory in terms of the provisions of law". It was further held that even the signatures of the parties on such writings are not necessary. Again in Province of Punjab and another v. Messrs Industrial Machine Pool, Lahore (PLD 1978 Lahore 829) it was observed as follows:-- "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 in accordance withlaw. It may be by correspondence between the parties or by a statement made by their counsel and recorded by the Court " In Shamim Akhtar v. Najma Baqai (PLD 1977 SC 644), there was no bilateral instrument executed inter se the parties for appointment of Arbitrators named by the parties and reference of the dispute to their arbitration. There was, however, exchange of correspondence between the parties. Their lordships of the Supreme Court held that the "letters unilaterally written by the respective parties addressed to the Martial Law Authorities read together constituted a valid "arbitration agreement" within the meanings of section 2(a) of the Arbitration Act, 1940 for the purpose of the reference of the dispute to the arbitration of the two arbitrators appointed by them." In Muhammad Hussain v. Ghualm Rasool (1983 SCM R 231), by agreement of the counsel of the parties expressed in the order of the Court an Arbitrator was appointed to decide the controversial question of title and possession. The contention that there being no valid agreement between the parties was repelled by their lordships of the Supreme Court by observing as follows:-- "We find that the counsel representing the parties had agreed to the reference of the dispute to arbitration. Their statement was recorded by the Court and given effect to. It has not been shown that the learned counsel representing the parties particularly the petitioners were in any way incompetent in the matter of making such a statement or referring the matter to arbitration. The requirements of law were substantially satisfied." The same question arose in Messrs Tribal Friends Co. v. Province of Balochistan (2002 SCM R 1903), where none of the parties had filed the contract before the trial Court and only a photostatic copy
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was filed by the respondent in the High Court with its revision application, which too did not contain all the pages. Further in reply to the appellant's application, the respondent admitted that the contract contained arbitration clause but no Arbitrator was named therein. On yet another application made by the applicant for submission of dispute, the concerned Minister had nominated the sole Arbitrator to decide all disputes between the parties. On the basis of the afore- mentioned documents, their Lordships of the Supreme Court held that an-arbitration agreement could be spelt out from the said documents. By referring to the decisions hereinbefore mentioned, it was authoritatively laid down as follows:- An Arbitration Agreement should be in writing and need not to be signed by both the parties. If the intention to refer the dispute to the Arbitration is manifest from the documents it amounts to an Arbitration Agreement...." The parties had thus agreed to refer the dispute to the Arbitrator whose authority was never challenged and the respondents participated in the proceeding without any objection. The respondent, therefore, cannot challenge the validity or existence of the Arbitration Agreement" From above, it is thus clear that the Arbitration Agreement need not necessarily be incorporated in a formal document, it can be by incorporating a clause in a contract. An arbitration agreement may be spelt out from correspondence or letters exchanged between the parties or on the basis of their statements, or even those of their counsel. Such an agreement need not be signed by the parties. 8. It is now to be seen whether in the instant case there was an arbitration agreement within the parameters laid down in the aforementioned authorities. Needless to mention that except Sh. Murtaza Ali, respondent No,2, none of the other parties had challenged the authority of the learned Arbitrators to…
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