1999 SCMR 2702


[Supreme, Court of Pakistan]


Present: Saiduzzaman Siddiqui and Abdur Rehman Khan, JJ






OBAIDULLAH KHAN and others—Respondents


Civil Appeal No. 1322 of 1998, decided on 23rd December, 1998.


(On appeal from the judgment dated 17-4-1998, of the Peshawar High Court, Peshawar passed in Civil Revision No.71 of 1994). ‘


Abdul Aziz Kundi, Advocate-on-Record/Advocate’ Supreme Court for Appbllant.


Mian Yunus Shah, Senior Advocate Supreme Court and S.Safdar Hussain, Advocate-on-Record for Respondents.


Date of hearing: 23rd December, 1998.




ABDUR REHMAN KHAN, J.—By the impugned judgment, a learned Single Judge, in the High Court, while accepting the revision petition filed by respondent No. 1, reversed the concurrent judgments and decree of the trial as well as the appellate Court and, consequently, made the award of the arbitration, as a rule of the Court, and passed a decree in terms of the award.


2. Leave to appeal was granted to consider, inter alia, the following questions:–


(i) Whether this case should have been filed as an appeal as of right under Article 185(2)(e) of the Constitution of Islamic Republic of Pakistan, 1973 and not as C.P.L.A.?


(ii) Whether the learned High Court was justified in upsetting the concurrent finding of the Courts below on merit of the case?


3. Factual aspect of the litigation is, that appellant and respondent No.1 are brothers while respondents Nos.2 to 8 are the heirs of their brother Abdullah Khan. There arose a dispute between them regarding the inheritance of Amir Jahan their common predecessor and so by the arbitration agreement, dated 24-12-1979 (Exh.P.W.1/1), out of them appellant and respondents No. l and 2 referred this dispute for decision of the arbitration without the invention of the Court. The arbitrators’ names in the agreement were, Col. Reid. Amanullah Khan respondent No. (9) since dead and represented by respondents No.(i) to (vii) and respondents No. 10 and 11. The arbitrators prepared their award on 28-12-1979 and therein proposed allotment and partition for various immovable properties between the parties to the agreement, and also to those co- sharers/heirs, who had not joined in the reference to the arbitration and had not signed the arbitration agreement. It was on 10-2-1983, that the arbitrators gave notice to the parties to the reference to act upon the award, otherwise they would file it in Court so as to be made, rule of the Court. It appears that the parties did not respond to the notice and all the three arbitrators by themselves, then filed the award in Court on 20-11-1983 requestiong the Court to make it rule of the Court and to pass a decree in accordance with its terms. It is to be noted that in their application in Court the arbitrators, besides the parties to the arbitration agreement, also impleaded the other co-sharers in the disputed property, as respondent Nos.3 to 9. The learned Senior Civil Judge, by his judgment dated 10-7-1989, refused to make ‘the award rule of the Court and, accordingly, dismissed the application. His finding on the relevant issues were that the application was within time, that Mst. Malooka, one of the co-sharers in the property, to whom some property has been given in the award, has not been impleaded and on that count the application was bad for non-joinder of necessary parties; that the arbitration agreement and the consequential award were defective and void as Mst. Malooka and the other co-sharers in the property, who are respondents Nos.3 to 9 in the application, were not parties to it; and that arbitrators were motivated by personal interest and the award was, therefore, partisan. It is to be noted that the legality of this order was impugned in the appellate Court by only one of the arbitrators without showing any legal justification or compelling reason to do so. In any case the appellate Court accepted the appeal on 10-7-1990 and remanded the case to the trial Court for decision afresh after taking into consideration the relevant facts as highlighted in the judgment. This judgment was set aside in revision by the High Court on 29-9-1992 with the consent of the parties and on remand of the case the appellate Court was directed to decide the case on merits in accordance with law. The appellate Court through the order dated 12-1-1994 while dismissing the appeal held the petition as not barred by time and confirmed the finding of the trial Court on the issue of limitation. The finding of the trial Court on issue No. 1. which related to the controversy, as to whether the arbitrators had any cause of action to file the application in their own right without any request from any party or direction from the Court was affirmed, but on different grounds. The relevant portion of the finding on issue No. 1, is reproduced:—–


“It, therefore, follows that the arbitrators shall file in Court the award only when either they are so requested by any party to the agreement or any other person claiming under them, or when they are so directed by the Court to which a party to the agreement has applied for the same. Nowhere fin the Act it has been provided that the arbitrators may or shall file the award in Court of their own accord. Herein the arbitrators have filed the award in Court suo motu. None of the parties had either requested them under section 14(2) (o do so or has applied to the Court under section 20 of the Act. I am afraid the arbitrators were not in their power to suo motu file the petition praying for making the award rule of the Court or giving judgment in accordance therewith. They had, therefore, no cause of action. I decide issue No. l against them, though ` on a ground not considered by the learned Trial Court.”


The finding of the trial Court on issues Nos.4 to 6 and 8 to 9 were also approved and it was held that respondents Nos. 4 to 9 and Mst. Malooka, who are admittedly co-sharers in the disputed property, had neither been joined in the arbitration agreement nor were associated in the proceedings relating to drawing of the award, therefore, these were void and as such could not be made rule of the Court. It appears that by then the arbitrators lost interest to pursue the matter to file revision in the High Court, so Obaidullah, one of the respondents in the proceedings before the appellate as well as lower Court, preferred revision petition in the High Court to impugn the legality of the judgment and decree of the appellate Court. The High Court vide its impugned judgment dated 17-4-1998, while accepting the revision petition, reversed the concurrent judgments of the two Courts and by accepting application, made the award rule of the Court and passed a decree in accordance with its terms and conditions.


4. The learned counsel for respondent No. l raised preliminary objection which has been taken note of in the leave granting order and argued that the appeal as of right was competent under Article 185(2)(e) of the Constitution and no petition for leave to appeal could lie, but according to him as the appeal had by then become time-barred, therefore, the device of filing of petition was adopted so as to avoid bar of limitation. He stressed that the property involved in this litigation is worth one crore, and as by the impugned judgment the judgments of the Courts below have been set aside, therefore, only appeal as of right was competent under Article 185(2)(e) of the Constitution. He referred to Wajid Ali (represented by legal heirs) appellant v. Syed Sajid Ali (represented by legal heirs) respondent (1985 SCMR 401) to support his view point. The learned counsel when asked that as the record indicates this point has not been raised at any stage by any side in the High Court or appellate or trial Court then how he would be competent to agitate it for the first time at this stage, then he was practically unable to answer this query so as to allow him to argue this point. It was pointed out by the learned counsel for the appellant that in fact the respondent had moved the High Court in revision and the relevant column of the form relating to valuation had been left blank by him. It is also to be noted that if the value for the purpose of jurisdiction is admitted as rupees one crore, then the first appeal was not competent before the District Judge but could lie only in the High Court. So, the argument for which there is no basis on record and which had not been agitated as such, at any stage, cannot be allowed to be, pressed at Supreme Court level as that purely becomes academic for which there is no scope while resolving a dispute in judicial proceedings of adversary nature by a judicial forum. Moreover, leave has been granted and we are determining the controversy as an appeal, therefore, the above objection cannot be a hurdle.


5. It was argued by the learned counsel for the appellant that the arbitrators had filed the award in Court after more than three years which was time-barred under Article 181 of the Limitation Act and that on that count also it could not be made rule of the Court. He relied on M. Imam-ud-Din Janjua v. The Thal Development Authority through the Chairman, .T.D.A., Jauharabad (PLD 1972 SC 123) and Peoples Bank of Northern India Ltd. (in liquidation) through Bhagwati Shankar, Official Liquidator, Lahore and another v Firm Lekhu Ram & Sons (AIR 1941 Peshawar 3). The relevant issue regarding limitation is No.2, which reads “Whether the petition is time-barred and hence liable to be dismissed?” This issue was framed on the basis of the objection taken by the appellant in his reply and was decided against him by the original” Court but he did not move the appellate Court against this finding and similarly, when it was also decided by the appellate Court against him, he did not approach; the High Court to challenge its correctness. Although the High Court has dealt with this point at his instance. It is, thus, obvious that legally the appellant could not be allowed to raise a point which had obtained finality by the unchallenged finding of the trial Court, appellate Court and such a finality, even according to the stand of the appellant in para. No.2 of the appeal, could not be challenged as, the averments in the said para. reads:—


“Whether the findings arrived at by the trial Court and the appellate Court concurrently had not attained finality and whether the learned Judge of the High Court was legally justified to disturb the said findings in exercise of his revisional jurisdiction.”


6. Moreover, in view of the special Article 178 of the Limitation Act which governs an application for filing in Court of an award to be made rule of the Court under the Arbitration Act the question of applying the residuary Article 181 of the Limitation Act would not arise. In Article 178 the period is 90 days from the date of service of notice of the making of the award as rule of the Court and in the circumstances of this case the said Article would apply. The judgments referred to by the learned counsel in his support are distinguishable as PLD 1972 SC 123 deals with a case under section 20 of the Arbitration Act, whereas present is the case covered by section 14 of the Act and both the sections regulate entirely distinct situations. The judgment reported as AIR 1941 Peshawar 3 appears to have dealt with the original Article 178 which then applied only to the application under the Civil Procedure Code and not to the amended Article 178 which specially covers section 14 of the Arbitration Act. Even otherwise, this point could lose significance and nothing would turn on it because in the latter part of this judgment we are going to hold that the arbitrators by themselves were not competent to file the award in Court as such filing of an award was not envisaged under section 14 of the Act because the arbitrators had neither been requested by any party to the arbitration agreement to file the award in Court nor had been so directed by the Court. It is also interesting to note that after the three arbitrators jointly failed to make award rule of the Court, then only one of them took upon himself this responsibility and filed appeal against it. This besides being violation of section 14 of the Act, also supports the objection of the appellant that they were motivated by personal interest and acted as partisan, because one of the arbitrators according to the learned counsel for the appellant happens to be son -in-law of Obaidullah respondent No.l, who all alone supported the award. We are, therefore, of the view that award drawn under such a background could not be sustained on the touchstone of section 30 of the Act as it is invalid and had been improperly procured. The view taken in this regard by the appellate and trial Court appears to be in consonance with the provision of section 14 of the Act while the conclusion of the High Court in reversing that finding is the result of misconstruing and misinterpreting section 14 of the Act, as it has read in the section which is not there and that is clear from the following observation in the I judgment:—–


“On the other hand a party other than the arbitrators can only file the award in Court when specifically authorised by the arbitrators. Thus, `’for all intents and purposes it is the role of the arbitrators either to file the award himself to make it a rule of the Court or tray permit/authorise the parties or one of the parties to file it. “


7. The reliance of Mian Younas Shah, learned counsel of the respondent on this count on AIR 1951 Nagpur 32 and AIR 1945 Nagpur 117, is not correct as these are distinguishable. In the first mentioned judgment, it was laid down, “The mere circumstance that the arbitrator or arbitrators do not mention in their application that the parties had requested them to file the award is not of much consequence”. This means that the arbitrators had been permitted by the parties but this fact was not mentioned in the application. The latter judgment AIR 1945 Nagpur 117 states “Where arbitrators make an application for filing an award at the request of one of the parties to the arbitration the proper procedure is to allow the parties to the arbitration to take up the litigation in their hands and relieve the arbitrators. If the application has been dismissed as untenable the mere fact that the persons who originally filed the application in the trial Court, viz., the arbitrators, have not tiled the revision application should not disentitle the persons aggrieved from continuing the revision application before the High Court and have a decision in the matter”. In the present case this is admitted position that none of the parties had approached the arbitrators to file the award in Court.


8. It was next contended that the award in this case related to the property worth lacs of rupees and was, therefore, compulsorily registerable and having been filed without being registered, therefore, neither it could be entertained by the Court nor it could create any legal effect. This argument is opposed by the learned counsel for the respondent on the strength of Lachman Dass v. Ram Lai and others (1990 PSC 809), Kh. Muhammad Yousuf v. Kh. Abdur Rashid and others (PLD 1967 Kar. 508) and Sardool Singh v. Hari Singh and others (AIR 1968 Punjab and Haryana 204). It is to be noted that no objection to the non- registration of the award was taken in the written reply and so no issue was framed and naturally no finding was given on this point, either by the trial Court or appellate Court. However, the High Court held that the award of the nature as in this case, which has not so far been made rule of the Court and no decree in its basis has so far been passed, was not compulsorily registerable. This view, prima facie, finds support from the case law relied on from the respondent’s side. As we are not inclined to make the award in this case a rule of the Court arid as such no decree could be passed on the basis of it, therefore, we would leave this point open for decision in a proper case. This point would be considered in the perspective, as to whether an award filed under section 14 of the Act affecting immovable property as of Rs.100 or moreso so as to be made rule of the Court would be compulsorily registerable in the light of the following observation in AIR 1968 Punjab and Haryana 204:—– .


(1) If an award is registered, it is still a waste paper unless it is made a rule of the Court. Thus, registration does not in any manner, add to its efficacy or give it any added competence. Section 32 of the Arbitration Act is specific for no right can be founded on an award as such after coming into force of the 1940 Arbitration Act; and


(2) It is not disputed and indeed it could not be that the Court has the power, under section 16, to remit the award from time to time. If registration of an award is an essential pre-requisite before it could be made a rule of the Court under section 17, every time an award is remitted and a new award is made, the new award will require registration. The result would be that, to the same controversy there can be not only one registration but a number of registrations regarding the same title, a situation which is not envisaged by the Registration Act.


(5) In view of the aforesaid two reasons and the reasons in Seonarain Lal’s case, AIR 1958 Pat. 252 there can be no manner of doubt that an award, after the coming into force of the Indian Arbitration Act of 1940, does not require registration before it can be made a rule of the Court”. And again,


“The award is a useless document unless it is made a rule of the Court; and once it is made a rule of the Court, it being a decree of a competent Court does not require registration. So far as a Court decree is concerned, it, to revert back to the object of the Registration Act, fulfils each one of those requirements. The only exception, whereas decree requires registration, is where it deals with property outside the subject-matter of the controversy. But otherwise decrees dealing with property, which are subject-matter of the controversy, do not require registration. On this proposition, there is no dispute.”


9. It has been further clarified in this judgment, “No party can be prejudiced by the mere existence of an award. It does not become operative and enforceable until it has been filed in Court and the Court adjudicates about its validity”.


10. Now we come to the crucial and decisive point in the case which is, ‘as to whether arbitration agreement or for that matter a consequential award would be valid and binding when it has not been joined by some of the co-sharers and interested persons?’. The answer would definitely be no, because such an award would be invalid, void and could not be made basis of a decree. In the present case it is admitted position that Mst. Malooka, who has been proposed some property in the award, was neither party to the arbitration agreement nor to the application filed for making it rule of the Court. Similarly, respondents Nos.3 to 8 are admittedly co-sharers in the disputed property, but they were not made party to the reference. The learned trial Court as well as the appellate Court were, therefore, correct to declare the reference and the award as ineffective being void. The learned Judge in the High Court, with respect, failed to take into consideration the relevant oral and documentary evidence on record in this respect. To begin with it is stated in the impugned judgment that “Now Mst. Maluka is not party to the reference. The arbitration agreement did not involve decision over the inheritance of Amir Jehan who had died long before i.e. some where in 1958. There was no claim by Mst. Maluka before the arbitrators nor was it contained in the terms of agreement for arbitration. Had the arbitrators been appointed to divide the property of Amir Jehan between his L.Rs., Mst. Maluka would have been a necessary party, and her non joining in the proceedings should have resulted in dismissal of the petition being bad for non joinder of a party necessary. On the contrary reference to the arbitration was regarding partition of the property to possession of Inayatullah, Obaidullah sons and legal heirs of Abdullah, the deceased son of Amir Jehan. The arbitration agreement nowhere authorised the arbitrators to travel beyond the terms of the agreement nor could it go into the question of inheritance of Amir Jehan as to oblige the arbitrators make all the L.Rs. of Amir Jehan party both to the arbitration agreement, as also—-party to the proceedings in hand. No doubt the arbitrators did give some property to Mst. Maluka but the question would arise, whether the property given to Mst. Maluka had been objected to by any of the parties to the agreement or for that matter Mst. Maluka herself expressed her reservation over the property given to her. The perusal of the award would reveal that the award had been signed by all the three executories of the agreement in token of acceptance. This all happened as far back as 28-12-1979 and for almost four year no one took any exception to the award of the arbitrators regarding the integrity of the arbitrators or the validity of the award on some technical grounds now being agitated to avoid its mandatory effects”. Now the question that arises is, as in what capacity Mst. Maluka was given share in the disputed property if property owned by her father Amir Jehan was not involved in the reference. Mst. Maluka is the real sister of the appellant, respondent No. l and paternal aunt of respondents Nos. 3 to 8. It is mentioned in the award.


Same is the position in the agricultural land as apparent from para. No. l reproduced as under:


According to the finding of the learned Judge himself as is reproduced “if the arbitrator had been appointed to divide the property of Amir Jehan between hip L.Rs., Mst. Maluka would have been a necessary party”. The allotment of property to Mst. Maluka has been justified as none from the parties to the reference objected to it and that Mst. Maluka also did not show any reservation about it. Once it is found that the arbitrator had acted in excess of the authority under the arbitration agreement then the award based on such an invalid agreement is not enforceable in law. The contention advanced before the learned Judge that Hamid Khan was not authorised to act on behalf of his mother, brother and sister, who are respondents Nos. 3 to 8 and who admittedly like him were co-sharers in the disputed property; was traversed on the ground that neither the signatories to the reference nor respondents Nos.3 to 8 ever objected to the arbitration agreement or proceedings leading to the award which mean that they had agreed to it. It was also justified on the ground that Hamid Khan had acted as an agent of respondents Nos.3 to 8, so his acts as detailed above were justified under sections 186 and 187 of the Contract Act. This is admitted position that Hamid Khan was neither appointed as attorney nor he was employed as agent by respondents Nos.3 to 8 to do any act on their behalf or to represent them before the arbitrators. Therefore, both the above reasons, besides being assumptive, are also misconceived and would not justify the acts of the arbitrators. Moreover, the learned Judge termed the objection to the competency of the arbitrators as well as that of Hamid Khan to act on behalf of the non- signing co-sharers, as mere technicality. This, with respect, is not correct view. These objections really hit the very roots of the arbitration agreement and the award and render both of them invalid and void. In such a situation it is the duty of the Court to decide these matters before the arbitration agreement and award are acted upon and are made basis of decree irrespective of the fact that no objection is filed before it. The learned counsel for the respondent in fairness to him had thoroughly prepared his brief and as on other points he made efforts to justify the finding in the impugned judgment on this count. He referred to some precedent cases, but as pointed out above there are so glaring jurisdictional defects in the agreement and the award which render4them invalid and void. So, they possibly could not be defended on the strength of the cited cases which are based on distinct facts and as such need not be referred and dilated upon as that would serve no useful purpose.


11. The disputed award could not be acted upon for the additional ground that as record indicates before its notice to the parties on 2-10-1983 and filing it in Court on 20-11-1983, parties had filed civil suit in respect of the property covered by this award which proves that they were not satisfied with the arrangement made in the award.


We, therefore, allow this appeal, set aside the impugned judgment of the High Court and restore that of the appellate Court and trial Court. Parties to bear their own costs of litigation.


H.B.T./1-26/S Appeal allowed.


Print Friendly, PDF & Email