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Civil Revision No. 289 of 1966, decided on 22nd September 1967.
, S. 115‑New plea Ordinarily new grounds not allowed to be taken at revisional stage, nevertheless, questions, being purely, legal, permitted to be argued.
Ss. 21 & 23‑Reference of "matter in difference"‑Court referring whole case to arbitrators appointed by parries‑Contention that "matter in dispute" not specifically mentioned in order of reference itself and, therefore, reference bad‑Held : not tenable.
Where the order of the Court directed the arbitrators appointed by the parties for it was held that the Court had referred the whole case to the arbitrators and the order of reference could not be held to be suffering from any defect on the ground that the matter in difference had not been specifically mentioned in the order of reference itself.
Gopalam v. Myneni Suryanarayana and others A I R 1926 Mad. 752 held not applicable.
Ss. 14 & 10 (3)‑Expression "they shall sign it" in S. 14‑Matter referred to four arbitrators and an umpire‑Two arbitrators and umpire giving majority award and rest of arbitrators signing contemporaneously a note of dissent--Majority award having been properly signed by makers thereof cannot be held defective on ground that "award should have been signed by alt the arbitrators including the umpire".
Kazee Syed Nasar Ali v. Mst. Tinoo Dossia (1866) 6 W R 95 Raghunath Prasad Singh and others v. Yahya Hussain and others A I R 1916 Pat. 157 and Mansa Ram and another v. Karta Ram A I R 1923 Lah. 411 ref.
Ss. 14 & 30‑Award, setting aside of‑Arbitrators when can be held guilty of misconduct on ground that legal point had not been correctly decided by them.
Where an award was sought to be set aside on the ground that a legal point had not been correctly decided by the arbitrators.
Held : It is no doubt a well‑established principle of law that if a mistake of law appears on the face of the award of an arbitrator, that makes the award bad, and it can be set aside taut it is equally clear that if a specific question of law is submitted to an arbitrator for his decision, and he does decide it, the fact that the decision is erroneous does not make the award bad on its face so as to permit of its being set aside. Otherwise it would be futile ever to submit a question of law to an arbitrator. A distinction exists between two types of cases viz. where disputes are referred to arbitrators in the decision of which a question of law becomes material and those in which a specific question of law has been referred to them for decision. The authorities make a clear distinction between these two cases, and, they decide that in the former case the Court can interfere if and when any error of law appears on the face of the award, but that in the latter case no such interference is possible upon the ground that it so appears that the decision upon the question of law is an erroneous one.
Messrs G. P. Gunnis & Co. Ltd. v. Messrs Amanmal Tulsidas A I R 1924 Sind 75; Russel on Arbitration 14th Edn., 1949 p. 150; Champsey Bhara & Company v. Jivraj Balloo Spinning & Weaving Company Ltd. 1923 AC480; Colonization of Government Lands Act by Altaf Hussain, 1st Edn., pp. 245, 247; Fareed and others v. Mst. Sughra Bibi P L D 1961 B J 52 ; Manzoor Hussain and others v. Walt Muhammad and another P L D 1962 Kar. 877 1 Durga Prasad Chamaria and another v. Sewkishandas Bhattar and others P L D 1949 Y C 187 ; Hodgkinson v. Ferinie and another 140 E R 712 ; F. R. Absolm Limited v. Great Western (London) Garden Village Society Limited 1933 A C 592 ; David Taylor & Son Ltd. v. Barnett (1953) 1 All E R 843 ; Government of Kelantan v. Duff' Development Company Ltd. 1932 A C 395 ; Lilo Shah v. Bhola Nath and another A I R 1923 Lah. 52 ; Adams v. Great North of Scotland Ry. 1891 A C 31 ; Knox v. Symmonds (1791) 1, Ves. Jun. 369 and In re : King and Duveen (1913) 2 K B 32 ref.
Ch. Khalil‑ur‑Rehman for Petitioners.
Ch. Asghar Ali Bhatti for Respondents.
Date of hearing : 17th April 1967.
The facts leading up to this revision petition are that in a suit brought by Bashir Ahmad and Nazir Ahmad (respondents Nos. 1 and 2) as against the petitioners and the third and the fourth respondents seeking declaration to the effect that they were owners in possession of the suit land by virtue of an oral gift by Din Muhammad deceased, the husband of petitioner No. 1 and father of petitioners Nos. 2 and 3, and that mutation No. 40 attested on the 9th of February 1962 was illegal and inoperative as against their rights. On the 30th of June 1964 the parties except ing the third and the fourth respondents, who had earlier confessed judgment in the case, made statements to the effect that they had agreed to refer the dispute in the suit to the arbitration of four arbitrators, two appointed by each party, with powers to appoint an umpire and the trial Court referred the whole case to the named arbitrators the same day. However, the umpire selected by the arbitrators was subsequently removed by the Court on representa tion of the parties and the arbitration and the vacancy was ordered to be filled by Mr. Muhammad Malik Ghumman, Pleader. The arbitrators and the umpire proceeded with the matters in dispute and after having recorded evidence led by the parties before them, delivered a majority award, three against two, decreeing the plaintiffs‑respondents' suit. The two arbitrators appointed by the petitioner gave a separate dissenting note the same day. The petitioners filed objections against the award under section 30 of the Arbitration Act to the effect:
(1) That the umpire, Mr. Muhammad Malik Ghumman, Pleader, was not appointed with the consent of the petitioners;
(2) that the umpire has misconducted himself; and
(3) that the arbitrators have not given their decision on various law points involved in the case.
The learned trial Judge rejected all the three objections. His conclusion under the first objection was that since the parties and their counsel were present before the Court on the 18th of July 1964 (when they themselves proposed the name of the new umpire) and thereafter they had submitted to his jurisdiction, the objection was without force. In respect of the second objection, he referred to the statement dated the 2nd of October 1964 of the attorney of the petitioners made before the Court in support of the objections and observed that the objection remained unsub stantiated. As regards the third objection, his finding was that the award was on detail and the parties were bound by their statements referring the suit to arbitration and the award was binding on them.
2. Feeling aggrieved by the order of the trial Court, the petitioners preferred an appeal before the learned District Judge under section 39 of the Arbitration Act and the three objections raised before the trial Court were again agitated, However, from paragraphs Nos. 3 and 4 of the judgment, it transpires that the last two objections, namely, the misconduct of the umpire and the non‑decision of law points involved in the case, were not pressed and the only objection on which the appeal proceeded was with regard to the validity or otherwise of the appointment of the umpire without the consent of the petitioners. The learned lower Appellate Court has examined this aspect of the case in detail and has found itself in agreement with the conclusion of the trial Court that the petitioners had not only consented to the appointment of the umpire in Court but also submitted to his jurisdiction and as such the objection could not prevail.
3. In this revision petition, the objections put forward on behalf of the petitioners are fourfold:
(i) The matter in difference between the parties having not been referred to the arbitrators, the reference is bad.
(ii) All the arbitrators having not signed the award, the same is illegal, inoperative and ineffective.
(iii) In any case since the matters in difference had to be ascertained from the pleadings of the parties, which pleadings raised multiple issues, the arbitrators have misconducted themselves in not determining all the issues arising in the case and, therefore, the award is bad.
(iv) The arbitrators have misconstrued and misapplied section 19 of the Punjab Colonization of Government Lands Act and it being a patent error of law, the award suffers from legal misconduct.
At the very outset it may he observed that the questions convassed before this Court were not urged before the Courts below in the present form and it is for the first time that these objections have been taken in revision proceedings. Ordinarily I would not have allowed these grounds to be taken at revisional stage but as some: of them are purely legal contentions I have permitted the same to be argued.
4. Under the first objection, learned counsel has referred me to sections 21, 22 and 23 of the Arbitration Act, which read as under:‑‑
"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.
22. The arbitrator shall be appointed in such manner as may be agreed upon between the parties.
23. (1) The Court shall, by order, refer to the arbitrator the matter in difference which he is required to determine, and shall in the order specify such time as it thinks reasonable for the making of the award.
(2) Where a matter is referred to arbitration the Court shall not, save in the manner and to the extent provided in this Act, deal with such matter in the suit."
Learned counsel tried to argue that because the provisions reproduced above talk of the matter in difference between them in the suit' to be referred and that the matter in difference having not been specifically mentioned in the order of reference itself, the same is bad and the award thereon is also bad in law. The contention needs no serious consideration for the simple reason that in the statements of both the parties the words used at three places are:
about the import of which phraseology there cannot be two opinions. Accordingly the Court referred the whole case to the arbitrators appointed by the parties and the order of reference suffers from no defect in this regard. Learned counsel tried to draw some support from Gopalam v. Myneni, Suryanarayana and others (A I R 1926 Mad. 752) but in view of the factual position stated above, the decision has no application.
5. Learned counsel contends that under the provisions of section 14 of the Arbitration Act, reproduced below, the award should have been signed by all the arbitrators including the umpire:‑
14. (l) When the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award.
(2) The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the award, cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award.
(3) Where the arbitrators or umpire state a special case under clause (b) of section 13, the Court, After giving notice to the parties and hearing them, shall pronounce its opinion thereon and such opinion shall be added to, and shall form part of, the award."
Section 10 (3) of the Arbitration Act reads as under:‑‑
"10. (1),
(2)
(3) Where an arbitration agreement provides for the appoint ment of more arbitrators than three, the award of the majority, or if the arbitrators are equally divided in their opinions‑ the award of the umpire shall, unless the arbitration agreement otherwise provides, prevail."
When the attention of learned counsel was drawn to the fact that by virtue of the provisions of section 10(3), the Act itself conceives of the position of a majority award where the matter has been referred to more than three arbitrators and there is no provision in the Act to the contrary, learned counsel could not give any satisfactory reply. It may be stated at this stage that learned counsel for the respondents in reply to the argument of. the other side has relied on Kazee Syed Nasar Ali v. Mst. Tinoo Dossia ((186) 6 W R 95) Raghunath Prasad Singh and others v. Yahya Hussain and others (A I R 1916 Pat. 157) and Mansa Ram and another v. Karta Ram (A I R 1923 Lah. 411). I fully agree with the contention of learned counsel for the respondents and hold that there are two documents on the record, one is a majority award by the umpire and two arbitrators appointed by the respondents‑plaintiffs and the other a note of dissent signed contemporaneously by the minority, i.e., the two c arbitrators appointed by the petitioners. The majority award, having been properly signed by the makers thereof, is in no way violative of the provisions of section 14 of the Arbitration Act and is to prevail, if otherwise not defective. The second objection also fails and is repelled.
6. Since the third and the fourth objections are inter connected y I propose to consider the two together. It is contended that it was not established on the record before the arbitrators that possession passed to the donees and even if it be held that possession did pass, the gift was void ab initio because the pre‑requisite of the permission of the Commissioner under section 19 of the Punjab Colonization of Government Lands Act had not been complied with. It is further contended that this aspect of the case has not been considered by the arbitrators and as such they have misconducted themselves and the award stands vitiated. It is argued that in any case the arbitrators have committed judicial misconduct in misconstruing section 19 and as such this Court should set aside the award. The argument centres round section 19 of the Punjab Colonization of Government Lands Act, which provision of law is reproduced below:
"19. Transfer of rights to be void.‑Except as provided in section 17, none of the rights or interests vested in a tenant by or under the Government Tenants (Punjab) Act, 1893, or this Act, shall, without the consent in writing of the Commissioner, or of such officer as he may by written order empower in this behalf, be transferred or charged by any sale, exchange, gift, will, mortgage or other private contract, other than a sub lease for not more than one year in the case of a tenant who has not acquired a right of occupancy, and seven years in the case of a tenant who has acquired a right of occupancy. Any such transfer or charge made without such consent in writing shall be void, and if (after the commencement of this Act) the transferee has obtained possession, he shall be ejected under the order of the Collector Provided that the right of sub‑letting conferred by this section shall not release any tenant from a condition requiring him to reside in the estate in which his tenancy is situated."
I have been taken through the award and I find that the arbit rators were conscious of the pleas of violation of section 19 of the Punjab Colonization of Government Lands Act and of absence of possession following the alleged gift. They have agreed with the contention of the petitioners that the tamliknama being an un registered document executed at the time when malikana had not been paid in full by the donor, was inoperative and ineffective. Further having accepted the plea that for purposes of transfer by a tenant, prior sanction of the Commissioner under section 19 of the Punjab Colonization of Government Lands Act was necessary, they have refused to apply the rigour of section 19 to the facts of this case on the ground that irrespective of the tamliknama, the subsequent oral gift made by the donor Din Muhammad after payment of malikana, before his murder, was a valid and effective transaction between the donor and the donees, who were already in possession of the land in, dispute. It, therefore, cannot be said that the pleas specifically raised in the pleadings have not been determined by the arbitrators and they have misconducted themselves or the proceedings.
7. For the further contention that the award suffers from a patent error and should be set aside, learned counsel has strongly relied on the under-mentioned observations in Messrs G. P. Gunnis & Co. Ltd. v. Messrs Amanmal Tulsidas (A I R 1924 Sind 75 at p. 87)
"As observed by Russel and his work on arbitration, it is now well‑settled law in England and it has been consistently followed in India that patent errors of law are legal misconduct on which Courts can, in their inherent powers, set aside the award under section 14 of the Arbitration Act. Whether the Court should do so or should only remit the award is a matter on which no hard and fast rules can be laid down, depending as it does, on the peculiar circumstances of each case."
Learned counsel has also referred to the following observations at page 150 in 'Russel on Arbitration' (14th Edn., 1949):
"Although, When a specific question of law is referred to an arbitrator, the parties are, generally speaking, bound by his decision, whether right or wrong . . . . . an arbitrator is guilty of misconduct if he intentionally disregards the law applicable to the case before him."
He has also invited my attention to Champsey Bhara & Company v. Jivraj Balloo Spinning & Weaving Company Ltd. (1923 A C 480) which forms the basis of observations in Messrs G. P. Gunnis & Co. Ltd. v. Messrs Amanmal Tulsidas.
8. The other argument put forward by learned counsel for the petitioners to show that the award suffers from a legal error is that in view of the conditions of sale (clauses 4 and 12) appearing at pages 245 to 247 of the Colonization of Government Lands Act by Altaf Hussain, (1st Edn.,) there could not be any transfer of title without a conveyance having been executed by the Government in favour of the grantee. It is contended that the findings in the award in disregard of the said conditions is an error in the eye of law and the award should be set aside.
9. As against this, Mr. Bhatti, learned counsel for the respondents‑plaintiffs, has drawn my attention to Fareed and others v. Mst. Sughran Bibi (P L D 1961 B J 52) which is an authority for the view that a tenant under the Punjab Colonization of Government Lands Act acquires perfect title on deposit of the malikana. He urges that regardless of the tamlik executed on the 27th of August 1958, the title of Din Muhammad (donor) having become perfect on the deposit of malikana on the 12th of November 1959, he could make a valid gift after the said date and if he has made a gift of the land to persons already in possession, after the ripening of his title and evidence with regard to that produced before the arbitrators has been accepted by them, it is not for this Court to interfere with that finding of fact.
10. As regards the conditions of sale, learned counsel for the respondents argued, and correctly, that conditions of sale applicable in the instant case have not been brought on the record and it cannot be presumed that the conditions of sale prevalent in the Punjab were also the conditions of sale in the case before me. He further argued that the conditions of sale cannot override the Act itself and when once it is held that the tenant becomes owner of the property and his title ripens on deposit of malikana it cannot be urged with success that the donor acted in contraven tion of any conditions of grant of sale and he could not make a valid gift before the execution of a regular conveyance in his favour by the Government. I hold that in the absence of any conditions of sale available on the record, the pro forma conditions of sale prepared for transactions in the defunct province of the Punjab by the Punjab Government cannot be considered to be applicable to sales to the defunct State of Bahawalpur and the contention fails.
11. Learned counsel for the respondents, further argues that section 19 of the Punjab Colonization of Government Lands Act has no application to the‑ facts of the case before me and the arbitrators have not fallen into any legal error in the interpreta tion of section 19. However, on the issue of setting aside of an award because of a legal point having not been correctly decided by the arbitrators, learned counsel for the respondents relied on Manzoor Hussain and others v. Wali Muhammad and another (P L D 1962 Kar. 877) Durga Prosad Chamaria and another v. Sewkishendas Bhattar and others (P L D 1949 P C 187). I have also been referred to Hodgkinson v. Ferinie and another (140 E R 712), F. R. Absalom Limited v. Great Western (London) Garden Village Society Limited (1933 A C 592), David Taylor & Son Ltd. v. Barnett ((1953) 1 All E R 843), Government of Kelantan v. Duff' Development Company Limited (1932 A C 395) and Lilo Shah v. Bhola Nath and another (A I R 1923 Lah. 52).
12. The law on the point has been tersely stated in Durga Prosand Chamaria and another v. Sewkishendas Bhattar and others which observations I reproduce below:‑
However that may be, their Lordships are satisfied that the two points of law as to which it is said that the arbitrator's error vitiate the award were specifically referred to him to decide: and, if this is so, it would be contrary to well‑established principles such as are laid down in In re : King and Duveen (1913) 2 K B 32 and F. R. Absalom Ltd v. Great , West (London) Garden Village Society 1933 A C 592 for a Court of law to interfere with the award even if the Court itself would have taken a different view of either of the points of law had they been before it."
On the question of setting aside and award because of an error of law on its face, in Adams v. Great North of Scotland Ry. ((1891) A C 31) Lord Halsbury, after referring to Lord Thurlow's judgment in Knox v. Symmonds ((1791) 1 Ves. Jun. 369) proceeded :‑
"And in the Court of Common Pleas, forty years ago, in a case in which the arbitrator had a question of law submitted to him according to the ordinary forms of pleadings, the Court, having come to the conclusion that the decision of the arbit rator, was, in the sense in which they understood the words, erroneous in deciding upon a question of law on demurrer, nevertheless held that the parties, having' submitted that question to the arbitrator, it was for the arbitrator to determine it; in their own language, the parties had agreed to accept the arbitrator's decision upon the question of law, as well as his decision upon the facts. In the Court of Queen's Bench thirty years ago, that decision was adopted as being the law which would guide the Court in the decision of such questions."
Channell, J. stated the rule concisely as follows in In re : King and Duveen ((1913) 2 K B 32):‑
"It is no doubt a well‑established principle of law that if a mistake of law appears on the face of the award of an arbit rator, that makes the award bad, and it can be set aside .but it is equally clear that if a specific question of law is submitted to an arbitrator for his decision, and he U does decide it, the fact that the decision is erroneous does not make the award bad on its face so as to permit of its being set aside. Otherwise it would be futile ever to submit a questions of law to an arbitrator."
The law as laid down in both the aforesaid judgments has been followed with approval by the House of Lords in Government of Kelantan v. Duff Development Company Limited (1923 A C 395).
In an earlier case Champsey Bhara & Company v. Jivraj Balloo Spinning and Weaving Company, Limited also relied upon by learned counsel for the petitioners, their Lordships of the Judicial Committee applied with approval the law on the subject as stated by Williams, J. in Hodgkinson v. Fernie and another.
"The law has for many years been settled, and remains so all this day, that, where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact . . . The only exceptions to that rule, are, cases where the award is the result of corruption or fraud, and one other, which though it is to be regretted, is now, I think, firmly established, viz. where the question of law necessarily arises on the face of the award, or upon some paper accompanying and forming part of the award. Though the propriety of this latter may very well be doubted, I think it may be considered as established."
It was further observed in the case:‑
An error in law on the face of the award means, in their Lordships' view, that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.
In F. R. Absalom v. Great Western (London) Garden Village Society the distinction between two types of cases, namely, where disputes are referred to an arbitrator in the decision of which a question of law becomes material, and those in which specific question of law has been referred to him for decision, was clearly indicated in the following words:‑‑
"The authorities make a clear distinction between these two cases, and, as they appear to me, they decide that in the former case the Court can interfere if and when any error of law e appears on the face of the award, but that in the latter case no such interference is possible upon the ground that it so appears that the decision upon the question of law is an erroneous one.
The same distinction appears in the judgment of the Privy Council in the case of Attorney. General for Manitoba v. Kelly ((1922) 1 A C 268) in which the following passage occurs Where a question of law has not specifically been referred to an umpire, but in material in the decision of matters which have been referred to him, and he makes a mistake, apparent on the face of the award, and award can be set aside on the ground that it contains an error of law apparent on the face of the award'."
The question to be decided is: Does the error of law appear on, the face of the award In the present case the matters relating to the application of section 19 of the Punjab Colonization of Government Lands Act, the effectiveness of the previous tamliknama and the subsequent oral gift alleged to have been made after payment of entire malikana and passing of possession lo to the donees were before the arbitrators, which questions they' have proceeded to decide on evidence produced before them. They do not appear to have erred in law in this regard and even if at be assumed that their decision on the aforesaid particular question of law is erroneous, since the question had been specifically referred to them, it is not for this Court to interfere, in view of the well‑settled proposition of law stated above.
13. The upshot of this discussion is that all the contentions raised before this Court fail and are repelled. The revision petition fails and is dismissed, leaving the parties to bear their own costs.
K.B.A. Petition dismissed.
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