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Suit No. 894 of 1952, decided on 6th September 1963.

, S. 21‑Words "all the parties interested"‑Mere non‑joinder of party regardless of fact whether party concerned was or was not interested in matter‑Renders neither reference bad nor award void‑Whether party interested or not‑Question of fact to be decided in circumstances of each case.

Mst. Ghafooran v. Abdul Hamid 174 I C 766 distinguished.

T. S. Suba Rao v. Appadurai lyer 86 I C 839 dissented from.

Kirkwood alias Ma Thein v. Maung Sin and another A I R 1925 P C 216 ; Madan Lal v. Nabi Bakhsh A I R 1947 Lah. 177 ; Achiran Bibi v. Babu Ali Sapui A I R 1945 Cal. 156 ; Toyo Menka Kaisha Ltd. v. Sohansingh Harnamsingh A I R 1944 Sind 51 ; Sugnomal Vasandmal v. Parumal A I R 1930 Sind 256 and M. N. Nerkar v. N. D. Samant A I R 1928 Bom. 248 ref.

S. M. Sadiq for Plaintiffs.

A. Aziz for Defendants.

Dates of hearing : 20th and 22nd August 1963.

This suit has come before me for hearing objections to the award which was made upon a reference by Court. The material facts are these : This suit was instituted in the year 1952, for dissolution of partnership and accounts by three persons, namely Haji Muhammad Sharif and his two sons Khwaja Gulzar Ahmad and Khwaja Mukhtar Ahmad. There were five defen dants, namely Haji Ata Muhammad, Dost Muhammad, Haji Amir Muhammad, Muhammad Farooq and Illahi Bakhsh. They are also inter‑related between themselves. During the pendency of this suit, the first plaintiff Haji Muhammad Sharif died and his heirs were brought on record. Amongst these were the widow, sons and daughters of Haji Muhammad Sharif including the plaintiffs Nos. 2 and 3. These were joined as plaintiffs. One of the heirs of Haji Muhammad Sharif was his father Haji Muhammad Saeed who was joined as defendant No. 6. He died and his legal representatives were brought on record as defendants 6 (a), 6 (b) and 6 (c). Of these 6 (a) died and his legal representatives were joined as 6 (a‑1) to 6 (a‑9).

2. A preliminary decree was passed in this suit on 30th May 1961, the terms of which are stated in the decree and the Official Assignee was appointed Commissioner to take the accounts for the purpose of passing the final decree.

3. The Commissioner had not been able to make any headway and on 29‑3‑62, the parties applied to the Court under section 21 of the Arbitration Act praying to refer all the matters, accounts and differences which had yet to be decided to the sole arbitration of Mian S. A. Abdullah of Messrs M. Abdullah Moula Bux, South Napier Road, Karachi. It was stated that the award by the said Mian S. A. Abdullah shall be binding on all the parties and that the arbitrator shall have the power and authority to proceed with arbitration in the manner which he thinks proper and no party shall be entitled to raise any objection to the award. Upon this application an order of reference was made by the Court on 31‑3‑62, whereupon the matter was referred to the sole arbitra tion of the said arbitrator who entered upon the reference and after elaborate proceedings gave his award on 2nd February 1963, which was duly filed in Court. Upon notice being issued the plaintiffs filed an application under sections 30 and 33 of the Arbitration Act on 13th March 1963, praying that the award be set aside. None of the defendants have objected to the award.

4. I have heard Mr. Sheikh Muhammad Sadiq Advocate for the plaintiffs in support of the aforesaid application at some length. He raised the following objections before me

(1) The reference was bad because all the parties had not joined in it.

(2) The arbitrator did not decide the dispute referred to him.

(3) The award is inoperative for want of certainty.

(4) The arbitrator committed legal misconduct inasmuch as he failed to have the accounts audited and further evidence taken thereafter and he did not examine a band‑writing expert with regard to a certain document.

I shall now proceed to deal with these objections.

5. It was the first objection upon which the main emphasis was laid. The contention of Mr. Sadiq was that inasmuch as defendants 6 (a‑1) to 6 (a‑3) and 6 (a‑7) to 6(a‑9) had not joined in the application to make the reference, the reference was bad and the award made by the arbitrator upon such a defective reference was wholly void. It may be stated straightaway that no objection has been taken by any of the aforesaid six defendants to the was Sadiq appearing for the plaintiffs urged that he press this objection on behalf of the plaintiffs because, according to him, the reference not being in accordance with section 21 of the Arbitration Act, the arbitrator had no jurisdiction to make the award and, therefore, the whole award must be set aside which would fulfil the purpose of the plaintiffs who have applied in this regard.

6. In order to deal with this objection it would be necessary to revert to certain facts. It has already been shown that the partnership was between the three original plaintiffs and the five original defendants and they were the accounting parties inter se. On the death of the first plaintiff Haji Muhammad Sharif during the pendency of the suit, his father Haji Muhammad Saeed was joined as defendant No. 6. On his death. his two sons, namely, Haji Muhammad Siddiq and Abdur Rashid and a daughter Saleha Bibi were brought on record as his legal represen tatives. They were joined as defendants 6 (a), 6 (b) and 6 (c). From amongst these three, Haji Siddiq died soon after his father and the legal representatives of Muhammad Siddiq were brought on record as defendants 6 (a‑1) to 6 (a‑9). Amongst these 6 (a‑4) to 6 (a‑6) were minors. On their behalf the Nazir of the Court, who was appointed guardian, has taken no objection to the award. Mr. Sadiq's objection is based upon defendants 6 (a‑1) to (a‑3) and 6 (a‑7) to 6 (a‑9) not having joined the reference.

7. It is a matter of admission that neither Haji Muhammad Saeed who was originally joined as defendant No. 6, nor his son Haji Muhammad Siddiq who was joined as defendant No. 6 (a) on the former's death, nor the legal representatives of Muhammad Siddiq, took any part in the proceedings in the suit. In fact defendants 6 (a‑1) to 6 (a‑3) and 6 (a‑7) to 6 (a‑9) were ex parte. Defendants 6 (a‑4) to 6 (a‑6) were formally represented by the Nazir who had been appointed their guardian ad‑litem. It may also be stated that the plaintiffs from the time of the making of the reference until the making of the award raised no objection with regard to these six defendants not having joined the reference. They fully participated in the arbitration proceedings and it is only after the award was made that this objection was raised for the first time in the application for setting aside the award.

8. It may now be convenient to refer to section 21 of the Arbitration Act which reads as follows :‑

"21. Where in any suit all the parties interested agree that any matter in difference between them in the suit shall be referred to arbitration, they may at any time before judgment is pronounced apply in writing to the Court for an order of reference."

The contention of Mr. Sadiq was that these aforesaid six defen dants were "parties interested" within the meaning of this section and that it made no difference that they had not appeared in Court and the proceedings against them were ex parte. He referred to a number of Indian decisions, of which two may be noted upon which great stress was laid. The first of these is the decision of the Oudh Chief Court in the case of Mst. Ghafooran v. Abdul Hamid (174 I C 766). This was a partition suit in which a reference to arbitration had been made and one of the parties namely Mst. Ghafooran, who was entitled to 1/5th share in the property and who did not join in the reference, challenged the award in appeal. It was held that the reference in this case was invalid for want of Mst. Ghafooran having joined it and the award was, therefore, void. It was further observed that the fact that Mst. Ghafooran was ex parte did not make any difference to the position. This case is easily distinguishable : firstly because it was a partition suit and Mst. Ghafooran was entitled to 1/5th share of the property of her father and it was she who was aggrieved by the Award and came forward to challenge it in Court. Moreover, the facts of the present case are entirely different from the facts of the case upon which the above view was taken. I am prepared to agree that merely because a party has remained absent in the proceedings in Court he does not necessarily cease to be an interested party for the purposes of section 21 of the Arbitration Act. But from this it does not follow that every reference in which each and every party to the proceedings has not joined is bad regardless of the fact whether the said party was or was not interested in the dispute which was referred to arbitration. Whether a party is or is not so interested is a question of fact and must be decided upon the facts of each case, and it is upon such a decision that the question must be considered whether the non-joinder in the reference does or does not vitiate the arbitration proceedings or the award which may be eventually made.

9. The next case which may be noted and which was relied upon by the learned counsel for the plaintiffs is a Single Judge decision from the Madras High Court in the case of T. S. Subba Rao v. Appadurai dyer (1). This was a suit for possession by a usufructuary mortgagee and the fourth defendant who was the mortgagor had remained absent in the proceedings before the Court and had not joined in the reference. The award made by the arbitrator upon this reference was held to be void. It was held that what gives the Court jurisdiction to refer the matter to arbitration is the consent of all the parties and, therefore, a consent subsequently given cannot give jurisdiction to the Court which he did not possess at the time when it referred the matter to arbitration. With very great respect I find myself wholly unable to accept the view that merely because a party to the suit has not joined in the reference, the award must be held to be void upon the ground of absence of jurisdiction regardless of the fact whether the party concerned was or was not interested in the matter. No attempt was made in this case to examine whether the defendant No. 4 had any interest in the dispute and this is precisely what must be seen having regard to the plain words of section 21. For instance, if a proforma‑defendant or a person who has ceased to have any interest in the property in suit or in the dispute which is before the Court or which may be referred to the arbitrator, has not joined the reference, can it be said that the reference' is without jurisdiction and all proceedings thereafter are vitiated 7 The answer, in my opinion, must be in the negative. I am fortified in this view by a large number of authorities, of which I will mention only the followings

(1) A I R 1925 P C 216 Kirkwood alias Ma Thein v. Maung Sin and another.

(2) A I R 1947 Lah. 177 Madan Lal v. Nabi Bakhsh.

(3) A I R 1945 Cal. 156 Achiran Bibi v. Babu Ali Sapui.

(4) A I R 1944 Sind 51 Toyo Menka Kaisha Ltd. v. Sohansingh Harnamsingh.

(5) A I R 1930 Sind 256 Sugnomal Vasandmal v. Parumal.

(6) A I R 1928 Bom. 248 M. N. Nerkar v. N. D. Samant.

In the case before me it has to be noted that this was a suit for dissolution and accounts of partnership business. Haji Muhammad Sharif was one of the partners. The other two original plaintiffs who were partners were two of his sons, namely Gulzar Ahmad and Mukhtar Ahmad. On Haji Muhammad Sharif's death all his sons and daughters and his widow were joined as plaintiffs.

It were Gulzar Ahmad and Mukhtar Ahmad who throughout acted on the side of the plaintiffs. The interest of Haji Muhammad Sharif was effectively represented by these plaintiffs as far as the suit and the arbitration proceedings were concerned. Haji Muhammad Saeed, the father of the original plaintiff Haji Muhammad Sharif, was joined as a defendant in the suit merely as an heir of the partner, namely Muhammad Sharif. Likewise, on Haji Muhammad Saeed's death his son Muhammad Siddiq was joined as his heir and legal representative. On Muhammad Siddiq's death his widow and eight children were joined as his legal representatives. They had nothing to do with the partnership business or accounts. They took no interest in the proceedings in Court. If anything came to the share of Haji Muhammad Sharif, these six defendants about whose non-joinder so much has been said would have got an infinitesimal share. In fact the plaintiffs themselves in their letter dated 12th October 1962 (AA) told the arbitrator that the share of the minor children of Muhammad Siddiq "comes to almost nil figure." The other two children of Muhammad Saeed, namely Abdur Rashid and Saleha Bibi, defendants 6 (b) and 6 (c), also did not join in the reference but no objection had been taken by the plaintiffs on this ground, because when the office pointed it out, the plaintiffs' counsel himself stated that they had given up their interest. I am, therefore, of the opinion that the objections which is now raised by the plaintiffs to the validity of the reference upon the ground of the defendants 6 (a‑1) to (a‑3) and 6 (a‑7) to (a‑9) not having joined the reference is neither bona fide nor of any substance. I am further of the view that it doesn't lie in the mouth of the plaintiffs who have throughout participated in the proceedings before the arbitrator to question the validity of the award upon the non-joinder in the reference of the aforesaid defendants. They were not "parties interested" within the meaning of section 21 of the Arbitration Act for the purposes of the reference, and in any case the plaintiffs are not competent to raise this objection on their behalf. I have, therefore, no hesitation in over‑ruling the first objection of the learned counsel for the plaintiffs.

10. I shall next take up point No. 4 because it would be convenient to deal with it before I deal with points 2 and 3. This objection relates to the alleged legal misconduct of the arbitrator inasmuch as it is said that he failed to have the accounts audited where after the plaintiffs would have led further evidence and that he also failed to examine a handwriting expert with regard to an acknowledgment receipt alleged to have been executed by Muhammad Farooq.

11. It would be useful to reproduce here para. 3 of the reference signed by the parties and their Advocates

(3) That the award by Mian S. M. Abdullah shall be binding on all the parties and the arbitrator shall have the power and authority to proceed with arbitration in the manner he would think proper. No party shall be entitled to raise any objection to the award.

The arbitrator had, therefore, full authority under the terms of reference to proceed with the arbitration in whatever manner he thought proper. However, I have gone through the proceedings of the arbitrator and I find that he has gone into the matter most elaborately. There have been numerous sittings and all the documents and prolific extracts of accounts which the parties wanted to produce had been produced before the arbitrator and the respective contention of the parties with regard to them was fully recorded and examined. The proceedings started on 6th June 1962, and on 23rd August 1962, the parties closed their case. This was what the plaintiffs stated in writing

We have completed our evidence and have nothing further to submit or produce. We close our case and request you to proceed to give your award in the matter.

A similar statement was made on behalf of the defendants. The arbitrator, however, gave the parties further opportunity by his letter dated 11th October 1962, to produce any further document or evidence if they found it necessary, and he fixed the case for hearing on 24th October 1962. He told them that if the plaintiffs wanted to produce any books from the Court (office of the Official Assignee) they should do so and bring all the evidence that they might like further to produce. To that the plaintiffs replied by their letter dated 12th October 1962 and said

We hereby fully empower you to take up the arbitration proceedings in any way you like either by accounts or by mutual consent of the parties or in any way you like or feel better in the interest of the parties, and your award will be binding on us.

A hearing then took place on 24th October 1962 in which the plaintiff's produced certain extracts of accounts and an acknowledgment receipt dated 16‑9‑49 alleged to have bees executed by Muhammad Farooq. Muhammad Farooq denied to have executed this receipt and the defendants stated that they were not in any case bound by it. When the hearing concluded on 24‑10‑62 the plaintiffs, who were throughout represented by Gulzar Ahmad and Mukhtar Ahmad, stated that "they had concluded their evidence and they had no further evidence to produce". It is also a matter of admission that the account books were examined for two days in the office of the Official Assignee by the arbitrator in the presence of the parties. In view of all this it is futile for the plaintiffs to complain that any of their evidence was excluded or that the arbitrator was bound to have the accounts audited or take any further evidence after such auditing. The question whether a handwriting expert should have been examined was also within the discretion of the arbitrator and he was not bound to examine any. In fact, the plaintiffs themselves stated on 24‑10‑62 that they had concluded their evidence. It was only later on that the plaintiffs started writing long letters to the arbitrator and even then the arbitrator gave them further opportunity and a further hearing took place, on 22nd January 1963, when the submissions of the plaintiffs were recorded and the matter of account was gone into. In my opinion, the arbitrator was more than fair to the plaintiffs and gave them adequate opportunity to present their case and pro duce their evidence. The objection of legal misconduct is completely unfounded and, I, therefore, repel the fourth point raised by the learned counsel for the plaintiffs.

12. I shall now take points 2 and 3. Mr. Sadiq appeared to contend that the arbitrator had failed to decide "all the matters, accounts and differences remaining as yet to be decided" which he was required to do under para. 2 of the terms of the reference. He was, however, not able to point out as to what particular dispute the arbitrator had failed to decide. In this case there had been a preliminary decree and certain matters such as dissolution etc. had been settled by the preliminary decree itself. What remained to be decided was the matter of accounts and the right of liability of the parties arising there from. This has been effectively done in the award. Reference may be made to para. 8, sub‑clauses (1) to (6) of the award. I am, therefore, clearly of the opinion that the award has adequately determined the disputes which were referred to the arbitrator. As to the third point I must confess that I have not been able to find any uncertainty in the award. Para. 8 of the award and its sub‑clauses contain no uncertainty.

13. For the reasons given above I reject the objections to the award and order that it shall be made the rule of the Court.

14. There shall be a final decree in terms of the award. The plaintiffs shall pay the costs of these proceedings to the defendants.

K. B. A. Award made rule of Court.

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