Find a Lawyer

Suit No. 127 of 1971, decided on 22nd January 1976.

S. 30-Award can be set aside by Court only when error of law apparent on face of it-[Award].

Sheikh Muhammad Saddiq, Muhammad Afzal v. Ministry of Industries Government of Pakistan P L D 1966 Kar. 412 ref.

S. 30-Issue of law not framed by arbitrator but arising out of pleadings of parties-Such point later withdrawn by party concerned Omission of Arbitrator to give finding on such point-Held, cannot suggest that arbitrator committed any error.-[Arbitrator].

S. 30-Issue not separately framed but arbitrator giving definite finding thereon-Mere fact that separate issue was not framed on point-Held, cannot be said to have prejudiced party concerned, in circumstances of case.-[Arbitrator].

Munawar Abbas for Plaintiff.

Muhammad Arif for Respondent No. 1.

Mohsin Tayab Ali for Respondent No. 2.

Dates of hearing : 4th, 5th, 12th, 19th, 21st and 26th November 1975.

The defendant No. 1 Muhammadi Re-Rolling Mills, a regitered firm have by the present application prayed that award dated 28th December 1970 given by Mr. Fakhurddin G. Ibrahim Barrister be wholly set aside, as being not valid and also improperly procured.

In order to appreciate the contentions of the parties it would be con venient first to enumerate briefly the material facts of the case. This firm owned a ship known as "the Ocean Endearom" which they desired to sell as scrap but as it had been hypothecated with the Bank of Bahawalpur, and they could not pay its debts, they entered into an agreement dated 28th of January 1967, with the plaintiff and defendant No. 2, jointly, for dismantling and delivering to them the material of the said ship. A sum of Re. 5,22,000 was paid to defendant No. 2 and a sum not exceeding Rs. 4,00,000 was to be paid directly to the Bank of Bahawalpur. The plaintiff and defendant No. 2 were entitled to sell the material delivered to them and to adjust the sale-proceeds against the payment made by them. The plaintiff and the second defendant had executed a separate agreement dated 2-2-1969 for the sale of the dismantled material of the ship received under the first agreement dated 28th January 1969, and both were to divide the profits and losses of this venture in equal shares. This prima facie created a partnership for the single venture but it was admittedly not registered. In the subsequent events this partnership received material only of the value of Re. 5,73,700, whereafter the 1st defendant stopped any further delivery, as the Bank of Babawalpur in exercise of its rights as pledgee of the ship, refused to allow removal of further material from the ship without its permission. It was in these circumstances that the Ist defendant entered into one more agreement on 15-6-1968 with plaintiff and defendant No. 2 jointly, in consequence of which the latter made more payments to the Bank. On 21st July 1969, the 1st defendant executed another agreement with the second defendant exclusively, whereby the latter was permitted to dismantle the ship and sell its material. This became necessary as the plaintiff was allegedly not co-operating in taking of the material. Now, in the agreement dated 15-6-1968, the 1st defendant had admitted that a total amount of Re. 14,12,000 had been paid by the partnership up to that date.

The partnership also claimed a further of Rs. 1,13,909 thus making a total of Rs. 15,25,909.80, as against which they had received goods of the value . of Rs. 1.20,516.54 only. The partnership was therefore, entitled to receive the balance of Rs. 3,20,893 from Muhammadi Re-Rolling Co. and as the plaintiff claimed to be shareholder to the extent of 50 % with defendant No. 2, a claim for half of this amount i.e. 1,60,446.63 was set up by them on the ground that no goods had been delivered to them for this amount. The defendant No. 1 set up the plea that on account of the subsequent agreement by the second defendant, the plaintiff could not claim anything from them. The plaintiffs bad themselves become indifferent and did not co-operate and now it was a matter between them and the defendant No. 2. The matter was referred for arbitration to Mr. Fakhruddin G. Ibrahim Barrister-at-Law, the sole arbitrator as per original agreement, before whom the plaintiff further claimed Rs. 35,000 and Rs. 10,000 as damages for the breach of the contract. The learned arbitrator, in his award on 28-12-1970 held that the plaintiffs were entitled to recover the amount of Rs. 1,60,466.63 from the defendant No. 1 as claimed but no damages were awarded. He also held that the subsequent agreement between the second defendant and the first defendant did not affect this claim at all. The plain tiff was also awarded the costs of the proceedings. This award was filed in Court, against which defendant No. 1 Muhammadi Re-Rolling Mills have filed objections which have now come up for hearing.

2. Mr. Arif, the learned counsel for the objector defendant, first contended that the partnership between the plaintiff and the 2nd defendant being unregistered admittedly, the award in favour of the plaintiff was invalid under section 69 of the Partnership Act and that the learned arbitrator had .failed to take notice of this objection though it was specifically raised before ,him. He referred to the objection/statement of case filed by Muhammadi .Re-Rolling Mills before the learned arbitrator, para. 3 of which is in terms. "That the partnership between Yousif Ali Ibrahim & Co. and Shumusddin Alibhay being unregistered the arbitration proceedings are null and void and barred by section 69 of the Partnership Act." To support this contention the learned counsel referred to the judgment in J. Misc. 106 of 1969, which -was in a matter between the same parties and wherein Dorab Patel J., by referring to the admissions made by the parties, had described this partnership as an unregistered Firm. This judgment had been produced before the learned arbitrator, by the 1st defendant. Mr. Munnawar Abbas the learned counsel for the plaintiff contended that in the first place the issue relating -to jurisdiction of the arbitrator in these proceedings, had been dropped by Mr. Nomani the counsel who appeared before the arbitrator for Muhammadi Re-Rolling Mills, and the arbitrator was not therefore, required to decide this question of law at all as specifically withdrawn. In the second place the Courts interfere with an award only when there is an error apparent on the face of the award and for that purpose cannot refer to material which does not find place in the award itself.

3. Now it is a well settled rule of law that an award can be set aside by a Court only when there is an error of law which appears on the face of the award. In Sheikh Muhammad Saddiq, Muhammad Afzal v. Ministry of Industries Government of Pakistan (P L D 1966 Kar. 412), while interpreting this expression it was observed,

" An error of law on the face of the award means that one can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reason of his judgment some legal proposition which is the basis of the award and which one can then say is erroneous. The real question for consideration would be whether a question of law was specifically referred to the arbitrator or it merely arose in the course of proceed ings. If a question of law is specifically referred and it is evident that the parties desire to have a decision from the arbitrator about that rather than one from the Court. then the Courts will not interfere. However, in cases where the question of law is incidently material in order to decide the question actually referred to the arbitrators it is -open to the Court to set aside the award if an error of law is found patent on the face of the record."

In the instant case the very fact that an issue was framed, whether the arbitrator has jurisdiction to proceed with the reference' shows, in the background of the pleadings that the parties had raised the question of law about the bar created by section 69 of the Partnership Act, and also desired to have a decision thereon from the learned arbitrator. This issue apparently arises out of pleadings of the parties and was not framed by the arbitrator of his own. But should the arbitrator proceed to examine the point of law ,& although the party that initially refers that to him withdraws the same and thereby expresses its desire that the arbitrator should not give his finding on it Mr. Arif's reply is that Mr. Nomani had wrongly dropped that issue and that this being a legal issue his clients were not bound by the action of the counsel. This however, by no means suggests that the learned arbitrator committed any error, by not giving a finding on an issue which had been admittedly dropped. Even if documents were produced and any other evidence led before the arbitrator on this point, that would all become irrelevant, in view of the deliberate withdrawal of the party to have a decision. The learned arbitrator was therefore, not wrong if he did not give any finding on this issue and did not consider the affect of section 69 of they Partnership Act, on the proceedings.

As I have found the learned arbitrator has not committed any error in this regard, it is not necessary to examine the second part of the question whether the documents referred to by Mr. Arif in support of this contention,. are in fact specifically mentioned in the award, before him and whether they could be looked into or not.

4. Mr. Arif then contended that a fresh agreement dated 24-7-1969 had been executed by which the defendant No. 2 Shamsuddin Alibboy bad under taken to pay up all the liabilities of the defendant No. 1 and had also agreed to make settlements with plaintiff Yousif Ali Ibrahim & Co. and further to, satisfy their claims. According to him, in view of this agreement the decision of the learned arbitrator in holding the plaintiff to be still responsible for the claim of the plaintiff was wrong and that the arbitrator should have: framed a separate issue about this agreement, and its effects. Failure to do so had resulted in miscarriage of justice as the award does not have the, effect of finally settling the dispute of all the parties who were before the arbitrator. The learned counsel referred to this agreement which was docu ment R-4 before the arbitrator and also the evidence of witnesses Fida Ali and Nooruddin, to show that the alleged ground raised by the plaintiff had really been substantiated by them before the arbitrator.

This argument seems to have no force, as although no separate issue was framed referring specifically to the agreement R-4, but the learned Arbitrator :made a clear mention of these facts in the following words :-

"It is further alleged that in view of a subsequent agreement arrived at between Muhammadi Re-Rolling Mills and Shamsuddin Alibhoy dated 24-7-1969 Exh. R-4 liability of Muhammadi Re-Rolling Mills, if any, has been taken over by Shamsuddin Alibhoy and therefore, nothing is due and payable by Muhammadi Re-Rolling Mills to Yousif Ali Ibrahim & Co."

And while deciding the issue whether claimants were entitled to the relief as per their claim, learned arbitrator has given a definite finding of this issue, with his reasons. The defendant No. 1 could not be said to have been prejudiced merely because no separate issue was framed. Their evidence on the point has been taken on the record and a finding about the document R-4 is given in clear terms.

No other ground is argued; accordingly I hold that the objections against the award are not sustainable and as a result the award is decreed but the parties shall bear their own costs in this Court.

S. Q. Order accordingly.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.