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Petitioner: J.F.C. GOLLAHER VS Respondent: SAMAD KHAN
Court Name: Sindh High Court Judge(s): Wajihuddin Ahmed Title: J.F.C. GOLLAHER vs SAMAD KHAN Case No.: Suit No,394 of 1984 Date of Judgment:1991-03-28 Reported As: 1993 MLD 726 Result: Order accordingly
JUDGMENT
JUDGMENT ' The respondent in this arbitration suit, who is a Barrister-at-Law practising at Karachi, has been a member of the Sindh Club since 1968, whereas the applicant, a partner in the firm of Surridge and Beecheno, Advocates and Solicitors, also functioning at Karachi, was the President of the Sindh Club when disputes between the respondent herein and the Sindh Club happened to be "inevitably leading to litigation" and when the applicant and the respondent, apparently attempting to arrest the drift, entered into a written agreement to refer all such disputes to the sole arbitration of Mr. Justice (Retd.) Dorab F. Patel, formerly a Senior Judge of the Supreme Court of Pakistan, who also happened to be a member of the Sindh Club. Award was duly rendered by Mr. Justice (Retd) Dorab F. Patel on March 27, 1984 which, in turn, became the subject-matter of this suit and in respect of which only the respondent has filed objections, purportedly, under sections 15, 16, 30 and 33 of the Arbitration Act, 1940. ' As narrated by the learned sole arbitrator, respondent Mr. Samad Khan had to vacate his previous residential accommodation upon the return of his landlord from Europe, the latter deciding to move into his own house and Mr. Samad Khan having failed to resist the landlord's personal requirement up to the level of the Supreme Court of Pakistan Mr. Samad Khan thus shifted with his family to the Sindh Club in 1977 and was provided with Room No,28 in what is known as the Married Block of such Club, where he has been putting up ever since. ' Mr. Samad Khan, who has argued his own case, in essence, has maintained that the management of the Sindh Club, which is, allegedly, monopolized by a certain group has been ill-motivated towards him, he having been questioning their so-called mechanics, remorselessly employed for perpetuation of power and, as a result, neither the rules of the Club, which are used as instruments
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of concentration of power in a set group of individuals, have been allowed to be set right nor he himself has been spared the consequences of the challenge registered by him in that the accommodation, which he occupies in the Sindh Club has been subjected to frequent, allegedly, mala fide, enhancements of tariff, non-commensurate either with law or facts on the ground. According to the same contention the learned sole Arbitrator, while he accepted bulk of the submissions made by Mr. Samad Khan, some how, did not deem fit to accord any relief to him. On the other hand, Mr. EA. Nomani, another partner of Messrs Surridge and Beecheno, Advocates and Solicitors, who represents the applicant here, has urged that Mr. Samad Khan is interested only in ensuring a static tariff for himself and a corresponding denial of revenues to the Sindh Club and that the rest of the grievances have only been trumped up to camouflage the base motives of Mr. Samad Khan. ' In this litigation, having elements of personal tinge from either side, I have had to hear the matter at quite some length. Before going further, it would be in order to succinctly record the respective contentions of the parties in these proceedings. ' Mr. Samad Khan, as objector to the Award, has raised the following questions: (i) The learned sole arbitrator has used personal knowledge in adjudicating the disputes before him, which circumstance alone has vitiated the Award. (ii) There is a failure to decide all the disputes on the part of the learned arbitrator and that also vitiates the award.. (iii) Relationship between the members and the Committee in a members' Club is contractual and such contract is contained in the Rules and Bye-laws. (iv) A party to a contract cannot vary its terms merely by issuance of a notice and, at the bare minimum, rentals of resident members of the Club, already in occupation of chambers, cannot be altered except through bilateral arrangements. (v) The Court has jurisdiction to go behind a rule to test its validity. The same applies to Bye-laws. (vi) A committee of management in a members' Club is required to hold the balance evenly between members, in the present case between the resident and other members. (vii) Under rule XXV of the Sindh Club Rules, the Committee can fix charges only for Rooms and nothing else and such too if and when necessary. (viii) Notice dated 15-5-1980, revising the tariff, is ultra vires, mala fide and illegal. (ix) The findings of the learned arbitrator regarding scrutineers, relative to elections in the context of rule VIII, is not supported by due reasons. (x) The distinction drawn by the learned sole arbitrator in the context of charges for room and occupancy, similarly lacks due reasons. (xi) The sole arbitrator has misconducted the proceedings by refraining to decide all the matters referred to him and, instead, assuming the role of an advisor and relinquishing that of an arbitrator. ' Rebutting what has been asserted by Mr. Samad Khan Mr. E.A. Nomani has contended as under:-- - (i) Both the parties had agreed to the arbitrator's use of personal knowledge and, besides, such is not one of the objections to the award. At any event, in the context in which use of personal knowledge is objected to, there is sufficient evidence on the record to the same effect, rendering the objection meaningless. (ii) There has been no refusal or failure on the part of the sole arbitrator to decide any question referred to him. Where necessary the learned arbitrator has struck down an offending rule. Thus rule VIII, sub-rule (8), clause (2) and rule VIII, sub-rule (8), clause (4) have been struck down. On the other hand, rule VIII (12) upon the findings of the learned arbitrator, stands amended and the original rule has been restored. Rest of the objections have been overruled or appropriate recommendations have been made.
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(iii) The sole arbitrator could not assume the role either of the General Body of members or of the Committee, as seems to be the objective of the respondent-objector. (iv) The whole exercise on the part of the respondent is mala fide, as the manifest intention is to make the room tariff static, with a view to ensure financial advantages, which arc not admissible. (v) The Court cannot sit in appeal on the findings of the learned arbitrator and even where, on the same material, it might have come to a different conclusion, the findings in the Award cannot, in law, be upset. ' It would be appropriate, now, to record a few words about the reference and the respective statements of claim preferred by the parties before the sole arbitrator. The reference is based on an arbitration agreement signed somewhere in March, 1983, between the applicant and the respondent the former acting on behalf of the Managing Committee of the Sindh Club. It covers "all disputes and differences between them" and is to the sole arbitration of Mr. Justice (Retd.) Dorab F. Patel. The applicant, in an, apparently, un dated Claim, demands an Award for Rs.7,600 alongwith interest at 14% per annum and a declaration that a revised rent of Rs.180 per day shall be payable by the respondent in future and further that the latter shall abide by all lawful decisions of the Managing Committee with regard to any revisions of the tariff in time to come. The respondent, in his statement of Claim, upon a detailed recital of facts, maintains that certain Rules of the Club were invalid on grounds of being arbitrary, unreasonable, in violation of the principles of natural justice, contrary to public policy and mala fides, and specified decisions of the Managing Committee, including notices mentioned, together with some deliberations of the General Body, were likewise illegal. Corresponding enhancement of rentals in respect of Chamber No,28 is also claimed to be illegal. Elaborate evidence was led by the parties on the above and cognate questions. While the contentions of the parties, for and against the Award, have been spelled out I do not consider it necessary either to deal with them separately or seriatim though, at the same time, effort shall be made to ensure that all the questions agitated, many of which are inter- connected, are duly and adequately addressed. ' It would be useful now to advert to the recital of disputes in the Award and more particularly in relation to the Rules with which the sole arbitrator has commenced his discourse. Thus the learned arbitrator records that Mr. Samad Khan, following upon his eviction from the rented premises, shifted to the Sindh Club with his family in April, 1977 and was accommodated in Room No,28 in the referred "Married Block", where he has lived ever since. Shortly after he moved into the Club Mr. Samad Khan was co-opted on the Committee, since he was a resident member. He was dropped from the Committee in 1978, according to the learned arbitrator because, meanwhile, he had contested at the elections and lost. The following year, Mr. Samad Khan tabled a resolution for amendment of the rules of the Club so that a resident member (who was a permanent member) shall have to be, mandatorily, co-opted on the Club's Committee. Such a move was labelled before the learned arbitrator as mala fide. However, below detailed is how he deals with the question:- "But even if it is assumed that thwarted ambition led Mr. Samad Khan to move this resolution, the resolution merely attempted to restore the relevant rule of the Club as it had stood for about a 100 years until its abrupt and unexplained amendment in 1973." ' The referred resolution itself came up at the half-yearly General meeting on 26-4-1979. The then President of the Club (not the applicant here), denounced Mr. Samad Khan and his supporters as "the Mafia of the Permanent Residents". This occasioned a letter, dated 11-6-1979 from Mr. Samad Khan "to know what the President of the Club meant " by the words "the Mafia of Permanent Residents". The learned arbitrator does not disapprove of this letter and, on the contrary, observes as under:--- "The Committee could We taken this opportunity to withdraw the unfortunate expression used on the 26th of April, 1979 without any loss of face whatsoever but I have to state with great regret that
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no reply was sent to Mr. Samad Khan." Mt. Samad Khan, inter alia, has objected here that the sole arbitrator should not have left the matter at that and "the unfortunate expression", as the learned arbitrator called it, should have been expugned from the record. Mr. Samad Khan may have had some ground for such an objection if the remark had figured on the Club record and the sole arbitrator had chosen to dispose of the controversy merely by recording an adverse observation in the quoted words. Such then could have tantamounted to leaving a matter referred undecided, the legal requirement spelling out an obligation for arbitrators to decide all cardinal points, differences or disputes referred. See Ganes Narain Singh v. Malida Koer, (10 I.C. 450), Gaja Sinva Rao v. Sujat Ali, AIR 1952 Hyd.46, Indian Mineral Co. v. Nilm Association, AIR 1958 All 692 and Union of India v. Sharma and Sons AIR 1968 Raj. 99 etc. But my query on the subject reveals that nowhere on the record this remark finds any mention. Where could it thus be expunged from? Surely, it could not be expunged from the letters of Mr. Samad Khan wherein alone it finds mention. Besides, even regrets do not belong to a genus which can ordinarily be extracted or enforced. In this situation, no better treatment could be accorded to the matter particularly when the person himself who made the offending remark had long since ceased to hold office. At any event, while passing such a remark may have had some bearing in examining good faith, expungement thereof, if only verbal, did not constitute the main difference or dispute in the reference calling for a treatment of a specific character. The learned arbitrator's treatment on the subject, in the circumstances, was therefore, wholly unexceptionable. ' Reverting back, to the aforesaid resolution placed in the half-yearly General meeting of 26-4-1979, such was deferred, pending the report of a Sub-Committee to which the matter was referred. The Sub-Committee, in due course, reported that a resident member should be coopted on the Committee of the Club provided that, at the time relevant, there were three Permanent Members residing in the Club. The matter was placed before the half-yearly general meeting on 25-10-1979, where Mr. Samad Khan's resolution was rejected, but in circumstances, which will presently be dilated upon in the words of the learned arbitrator himself, the counter-proposal of the Sub- Committee, designated for the purpose, itself was, almost unaccountably, withdrawn. ' Mr. Samad Khan, the respondent herein, then attempted to have the Election Rules for the President and members of the Club's Committee altered, because he was of the opinion that these Rules were illegal, inter alia, being against the principles of natural justice and public policy. Thus the respondent tabled another resolution which came up in a Special Meeting of the General Body on 5-10-1980. This resolution, according to the learned arbitrator, "generated a lot of heat" and once again the matter was referred to a Sub-Committee. According to the learned arbitrator, the Sub- Committee submitted its report but without expressing any opinion on the resolution for the examination.of which it had primarily been constituted. The position taken before the learned arbitrator, as recorded by him, was that such resolution had been withdrawn either unanimously or by the seconders and the other requisitionists. On the other hand, Mr. Samad Khan denied that the resolution had been withdrawn. On the subject, the learned sole arbitrator observes us under:--- ' and this controversy further soured the relations between Mr. Samad Khan and the Committee." ' Taking up now, Rule VIII, sub-rule (12), such sub-Tule, which, according to the learned arbitrator, was more than a 100 years old before its amendment, read as under:-- "If at any time the Committee does not include a member resident in the Club Chambers; the Committee shall appoint one of the permanent members so resident to the Committee. The member so appointed shall cease to be on the Committee on ceasing to reside in the Club." ' The quoted sub-rule was amended in April, 1973 by substitution of the above underlined word "shall" with the word "may". As recorded by the learned arbitrator, such amendment, according to respondent Mr. Samad Khan, was mala fide but according to the Committee it was necessitated
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because in the year 1973 there was no Permanent Member residing in the Club. The learned arbitrator has, admirably, analysed the situation as under:-- "Now, even if no Permanent Member was residing in the Club in 1973 (and only Permanent Members can be on the Club's Committee) the result would only have been that a resident Member would not have been co-opted to the Committee in 1973, but the fact that the Rule could not be given effect to in a particular year was no ground for abolishing a rule which had stood the test of time. And, on the other hand, Members of the Committee do not have and do not claim to have any powers of reading the future. Therefore, I am unable to understand why the Committee recommended the amendment of this Rule merely because its Members thought that no Permanent Member was residing in the Club in April, 1973. Further this assumption that no Permanent Member was residing in the Club in April, 1973 is not correct. We even know the name of the Permanent Member who resided in the Club almost throughout 1973, therefore, the amendment of 1973 was proposed and carried on a total misconception of the facts. ' However, unlike previous years, the Permanent Member who was residing in the Club in 1973 was a Pakistani, and for the first time there was no European born Member living in the Club in that year, therefore, Mr. Samad Khan submitted that the amendment and the decision to recommend it were mala fide. The irony of this argument escaped Mr. Nomani's attention. ' The fact that Mr. Samad Khan proposed the restoration of the old rule does not alter the fact that room service in the Club has been declining, nor does it alter the fact the old rule had been in force for about a hundred years when it was amended on a total misconception of facts by the Committee, and it is possible that Members would have rejected the amendment of the rule, if they had been correctly informed about the facts. I, therefore, do not doubt Mr. Samad Khan's bona fides at all, and similarly I do not doubt the bona fides of the Committee, because I am sure that the timing of the 1973 amendment had escaped its attention. But, in the circumstances, I would have expected the Committee to welcome a resolution for restoring the old rule, because it would have enabled the Committee to correct its own mistake. Instead the Committee opposed Mr. Samad Khan's resolution. Despite this, the resolution was referred to a Special Sub-Committee, and the resolution as well as the proposals of that Sub-Committee came up before Members at the next Half-yearly Meeting in October, 1979. Mr. Samad Khan's resolution was defeated whilst the Committee withdrew the proposals of its own Sub-Committee. The proposals were of a very tepid nature and were an attempt to strike a compromise between the old rule and those who objected to its restoration. Therefore, I expressed my surprise at the Committee's decision to withdraw the proposals of its own Sub-Committee, and that led to a heated controversy between the learned counsel. ' According to Mr. Sarnad Khan, the withdrawal of the Sub-Committee's proposal was a deliberate ploy, because the President had withdrawn the proposal without explaining why the Committee was withdrawing its own proposals. Mr. Nomani criticised very harshly the evidence thus given by Mr. Samad Khan, but he fought shy of examining the then President or any Member of the Club to give evidence about the reasons given by the President for withdrawing the Sub-Committee's proposals. He only relied on the minutes of the Half-yearly Meeting of 25th of October, 1979. But these minutes merely stated "after some discussion the proposed amendments to Rule VIII (12) by the Committee were withdrawn". This minute does not even state that the President had addressed the Members. No doubt the withdrawal could only have been made by him, but if he had given the reasons for withdrawing the Committee's proposals, it would have been so stated in the minutes. I have, therefore, no doubt in my mind that Mr. Samad Khan's version of what happened at this meeting is correct, and I am constrained to observe that it would have been better if the President had given the Committee's reasons for withdrawing its own proposals. After all it is a Members' Club. However, I would refrain from going further into the submissions advanced on this point,
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because, for the reasons which I will presently give, Mr. Samad Khan's special resolution of 1979 is still before the Members as part of his attempt to reframe rule VIII." ' While Mr. Samad Khan has contended that the learned sole arbitrator should have struck down rule VIII, sub-rule (12), altered in April, 1973, in the aforequoted circumstances as mala fide, unreasonable and oppressive because the learned abitrator had been empowered by the reference to exercise the same powers as the Court, I have been informed by Mr. E.A. Nomani that, as per directions of the learned arbitrator, a General Body meeting was held of the Sindh Club members on 14-6-1988 and rule VIII, sub-rule (12) was re-amended so as to restore it to its original form. As such, no useful purpose would be served in re-activating the controversy on this point more so because the object which the learned arbitrator wanted to achieve by his strong worded disapproval of what transpired has been achieved. ' Turning to the controversy pertaining to election procedure in the Sindh Club, a special resolution in that direction, as said above, was moved by respondent Samad Khan and seconded by one ZA. Khan (late) and came up before the General Body of members on 5-10-1980. ' A great deal of comment has been occasioned from the side of the sole arbitrator as to this requisition. No better treatment of the subject is possible than what the learned arbitrator has recorded in his Award. The following are the relevant excerpts:-- "I now turn to what happened at the Special General Meeting, and both sides agree that Mr. Samad Khan was allowed to address the House, that he explained the proposals to the Members and that this led to an extremely heated discussion. One Member then got up and said that the Club would not be the same again if a vote was taken on the proposals, whilst another Member suggested that the proposals should be examined by the Special Committee together with any other proposals that Members might like to make. According to Mr. Nomani, this suggestion was accepted by the House, and the result was that the meeting was adjourned, presumably to await the Special Committee's report. ' However, what happened to the resolution moved by Mr. Samad Khan and Mr. Z.A. Khan? The minutes of the Special General Meeting read:--- "After some further discussion, the proposers agreed to withdraw their proposals from the meeting and the following resolution was proposed and carried nem con." ' As soon as Mr. Samad Khan had received a copy of these minutes, he had challenged them as false. The next development, therefore, was that, according to the minutes of the next Half-Yearly General Meeting, what had happened on the 5th of October, 1980, was " certain amendments to the rules were proposed but the House resolved that these be withdrawn. A new resolution was then unanimously carried asking the Committee to appoint a Special Committee to look into the matter." These two versions of what happened at the Special General Meeting of the 5th of October, 1980 are patently inconsistent, and I regret to say that I cannot place any reliance on the minutes, therefore, I have to decide what happened at the Special Meeting of 5th of October, 1980, on the evidence produced before me. ' According to Mr, Nomani, Mr. Samad Khan's resolution was rejected by the consensus of the House, but as it is clear from the evidence that tempers were running high when this consensus was assessed, I cannot but express my. scepticism about the expression "consensus of the House". Apart from the premium it puts on aggressive or organized minorities, this concept opens the door to wishful thinking from which none of us is free. It is true that the evidence has proved that the Members fully approved of the proposal for a Special Committee to examine Mr. Samad Khan's proposals and other proposals that Members might make. This, however, does not mean that Mr. Samad Khan's proposals were rejected. On the contrary, Members would not have referred Mr. Samad Khan's proposals to a Special Committee if they had decided to reject them. Therefore, the point for determination is whether Mr. Samad Khan and Mr. ZA. Khan had agreed to withdraw the
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special resolution. I ay this, because, according to Mr. Samad Khan, a special resolution could not be withdrawn without the consent of the proposer and the seconder. Now, Mr. Samad Khan was emphatic not only that he had not withdrawn his resolution, but he also asserted emphatically that he had objected in very strong terms to the attempt to make him withdraw his resolution. He also denied that Mr. ZA. Khan had ever agreed to withdraw the special resolution. I have just referred to the problem of wishful thinking when tempers are roused, therefore, I will not go by Mr. Samad Khan's evidence alone, although I must say that I was impressed by the manner in which he stood in his cross-examination on this particular point. ' Next, as to the other evidence, Mr. Campbell Gallaher said that he was not sure about his recollection of the precise turn of events at this stormy meeting of the 5th of October, 1980 because of the passage of time. But the witness examined by the Club was one of the requisitionists, and he began by supporting the extreme position originally taken by the Committee that the special resolution had been withdrawn even by Mr. Samad Khan. The witness also said that he had withdrawn the resolution on behalf of the requisitionists. The witness was naturally not clear about the law and I would not reject his evidence on this ground. However, I could see that he was confused and gave inconsistent replies, because his recollection of the…
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