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Ss. 17 & 39-Appeal-Arbitrator-Composite order refusing to set aside award and pronouncing judgment, held, would not take away right to challenge validity of award on ground of misconduct of arbit rator.-[Arbitrator].
PLD1971AzadJ&K127rel.
S. 17-Arbitrator-Misconduct of-Contention that arbitrator hav ing not taken into consideration certain documents as such he is guilty of misconduct, held, has no force-Arbitrator, recording in award "con sideration of all relevant documents and perusal of evidence" presumed to have taken into consideration such documents-Mere fact that arbit rator has not specifically dealt with such documents in award, non. weighing of evidentiary value thereof would not imply,- unless posit;ve evidence to contrary rebuts same.-[Arbitrator].
A I R 1944 Cal. 127 ; P L D 1971 Kar. 279 ; P L D 1981 Azad J & K 71 ; P L D 1968 Lab. 629 ; P L D 1966 Kar. 412 ; P L D 1960 Kar. 78 ; A I R 1948 Nag. 162 I A I R 1962 Pb. 173 ; A I R 1960 Cal. 590 and A I R 1944 Lab. 149 ref.
-- S. 17-Arbitrator-Award-Held, Court cannot sit as Court of appeal on award made by arbitrator and substitute its view for one held by arbitrator.-[Arbitrator].
Kh. Muhammad Saeed for Appellants.
Sheikh Abdul Aziz for Respondent.
Date of institution : 11th March, 1982.
This appeal has been directed against the judgment and decree of District Judge, Muzaffarabad dated 12-12-1981, whereby the award made by, the arbitrator was made rule of the Court and a decree was passed in favour of the respondent.
The brief facts of the case giving rise to the present appeal are that respondent, Ghulam Rasul Lone obtained a lease of snow-damaged trees in compartments Nos. 2 and 3 of Lot No. 30, in Uri Range of Muzaffarabad Forest Division, from the appellants and a lease agreement was executed bet ween the parties on 2-6-1960. According to the terms of agreement, the lessor sold 1863 kail trees measuring 65451 Cft. and 53 Chil trees measuring 1493 Cft. in lieu of royalty amounting to Rs. 1,70,000. However, subsequently, in consequence of supplementary marking, pursuance of the relevant rules,
218 kail trees measuring 9134 Cft. and 7 Chil trees measuring 252 Cft. were further marked and sold because the same were damaged due to the execu tion of the lease work and consequently, a further amount of Rs. 8,287 was to be paid by the respondent to the appellants as royalty. Thus, according to the case of the respondent, a total lease of 77743 Cft. standing volume was sold to the respondent for a consideration of Rs. 2,23,020. On conversion of the trees into timber, 49262 Cft. in form of sleepers etc., was carried by the respondent to launching depots, situated at Dhani Bapalan and Chekar and timber belonging to the respondent measuring 2884'32 Cft. which was apart from the timber brought to depots and was lying in the forest, was given to the appellants. According to the petitioner, out of the total stock of 49262 Cft. brought out of the coupe area by the lessee, the Forest Department allowed him to export 34589 Cft. against the said royalty. The remaining timber measuring 14673 Cft. plus 2884 Cft. the loan taken by the appellants, was still to be exported when the dispute arose between the parties and the possession of the timber belonging to the respondent was taken over by the Department. Thus, the respondent was obliged to file a petition under section 20 of the Arbitration Act in the High Court for getting the agreement, filed by the -appellants, for making the reference of the dispute to the arbitrator as stipulated under the terms of the agreement. Subsequently; the Chief Conservator of Forests was appointed as arbitrator by the High Court under the provisions of the 1ase agreement and an award was made, whereby the claim of the respondent was upheld only to the extent of 2884 Cft. Objec tions were filed to the said award but the same were rejected and the learned Single Judge of the High Court made the award rule of the Court. On ap peal to the Division Bench of the High Court, the judgment and decree of the Single Judge were set aside on 9-4-1971 on account of misconduct of the arbitrator and the case was remanded by the Division Bench to the Single Judge with a direction that some other person may be appointed as arbitrator to adjudicate upon the following points :--
(i) What royalty is in fact proved to be justly due to the Department by the lessee after taking into account his security with the Depart ment
(ii) How much timber was found in depots at the time of receipt of implementation of the letter Exhs. P. I and P. 2
(iii) What else quantity was covered by Form 25 thereafter
(fv) Relief to which the appellant-lessee is entitled to
The learned Single Judge after receiving back the file, appointed one Mr. Habib Hassan as arbitrator, who made an award in favour of respondent to the tune of Rs, 33,717'31 but the said award set was aside by the learned Single Judge on the ground that the arbitrator had misconducted himself. While the proceedings were pending in the High Court, an amendment was brought in law regarding pecuniary jurisdiction of the District Judges and thus, the case was transferred from the High Court to the Court of District Judge, Muzaffarabad who appointed Khawaja Ghulam Qadir, a Member of the Service Tribunal as new arbitrator who made an award in favour of the respondent in terms that appellant-lessor would hand over to lessee-respon dent 14611 Cft. and 2884 Cft. the timber taken as loan by the Department on payment of Rs. 15,870 as royalty to the appellant-lessor: The appellants filed objections to the aforesaid award but after hearing the parties, the learned District Judge upheld the award and made the same rule of the Court and in the same order, passed a decree in favour of the respondent.
We have heard the arguments and gone through the file. A preliminary objection was raised that under section 17 of the Arbitration Act, the judg ment and decree having been passed in pursuance of award, no appeal is competent; an appeal is competent only under section 39 of the Arbitration Act, against an order setting aside or refusing to set aside an award and not against the judgment and decree passed in pursuance of an award. It may be observed here that in the instant case, the learned District Judge passed a composite order whereby he refused to set aside the award, made it rule of the Court and passed a decree in pursuance of the same.
The question which needs determination is as to whether the appellant has lost his right of appeal merely because the District Judge chose to pass a composite order, whereby he has not only refused to set aside the award but also pronounced the judgment and passed a decree in pursuance of the same. We have given our earnest consideration to the matter and we are of the view that appellant does not lose his right of appeal merely because the District Judge has overruled the objections to the award, pronounced the judgment and passed the decree by a single order. If instead of passing separate orders with regard to the validity of-the award and giving the parties a fair opportunity to challenge the same, the district Judge passed a com bined order, why the appellant should suffer for none of his fault. We are of opinion that composite order, refusing to set aside the award and pro nouncing the judgment would not take away the right of the appellant to A challenge the validity of the award in question on the ground of misconduct of arbitrator. We are fortified in our view by a case reported as P L D 1971 Azad J & K 127, wherein quite a number of authorities have been referred and it has been opined that if the Court refuses to set aside the award and proceeds to pass a decree by the same order, the aggrieved party does not lose right of appeal merely because a decree has also been passed on the basis of an award.
Coming to the merits of the case, it may be observed here that the parties made statement before the arbitrator that they did not intend to lead any evidence and that evidence already led before the previous arbitrator i.e. Habib Hassan, may be read in support of the respective contentions of the parties. The learned counsel for the appellant, Khawaja Muhammad Saeed has argued that arbitrator is guilty of legal misconduct because he has not taken into consideration the documents tendered in evidence, by the appellant i.e. PY & PY/1. It is correct that these documents do not find any mention in the award but the fact remains that the arbitrator has recorded in the award that he has considered all the relevant record and perused the evidence. Thus, the presumption is that arbitrator, while making the award had also taken into consideration the aforesaid documents. Mere fact that he has not specifically dealt with the said documents in his award, would not imply that B he had not weighed the evidentiary value of these documents. If an award recites that all the relevant documents have been considered, it would be pre sumed that it was done so, until and unless there is positive evidence to the contrary, which rebuts such resumption. We are fortified in our view by a case reported as A I R 1944 Cal. 127, wherein it was held that if the award recites that arbitrators had considered all the documents submitted to them, it must be assumed that they had considered all the documents submitted to them, until and unless, of course, some evidence suggests to the contrary. It may be pointed out here that the arbitrator is not bound to give reasons in support of his conclusions nor he is bound to write a judgment as is expected from a Court of law.
In P L D 1971 Kar. 279, it was held that the arbitrator was not bound to give reasons in support of his findings and as such, the absence of the reasons in the award, would not render it invalid on the ground of misconduct by the arbitrator.
In P L D 1981 Azad J & K 71, it was held that arbitrator was not bound by the technicalities of law; neither the principles of the Evidence Act nor the provisions of C. P. C. are applicable to the proceedings before an arbitrator. It was further opined that the findings of the arbitrator cannot be disturbed until and unless it is shown that those are perverse and have resulted in miscarriage of justice.
In P L D 1968 Lab. 629, a distinction has been drawn between the cases where the disputes are referred to the arbitrator, in the decision of which the question of law becomes material and the cases in which the specific question of law has been referred to an arbitrator for decision. In former case, it was held, that the Court can interfere if and whether an error of law appears on the face of award but in the latter case, no such interference is possible on the ground that the decision upon the question of law is an erroneous one. Similar view has been expressed in a case reported as P L D 1966 Kar. 412.
In P L D 1960 Kar. 78, it was held that Court could not review the findings given by the arbitrator and come to a different conclusion. It was further opined that Court, hearing the application for setting aside an award, could not constitute itself into the Court of appeal on the decision of an arbitrator and make a sifting investigation of the proceeding before the arbitrator.
In A I R 1948 Nag. 162, it was held that the arbitrators are Judges of fact as well as of law and have the jurisdiction to decide the matter rightly or wrongly. Accordingly, it was opined, if they reach a decision and reach it fairly after hearing both the parties, their award cannot be attacked and Court filing the award has no power to sit in appeal on the decision of the arbitrators.
In A I R 1962 Pb. 173, it was opined that it is not the function of the Court before which an award is filed for making it rule of Court, to scruti nise the award on merits as if it is sitting in appeal on the verdict of an arbi trator. It was further ruled by the learned Judges that even if it be assumed that a Court of law would have taken a different view of the matter and that the arbitrator had given a wrong decision, that Would not empower the Court to set aside the award. The arbitrator by whose decision, the parties have agreed to be bound, is the final Judge, both of law and of fact and, however, erroneous the decision may be, it cannot be interfered by a Court; an error of judgment is not tantamount to a judicial misconduct.
In A I R 1960 Cal. 590, it was held that mere error in law is not miscon duct because arbitrator being final Judge, both of law and of fact, his verdict cannot be assailed on the grounds that his award is erroneous, either in law or on fact.
In A I R 1944 Lab. 149, the view taken is that it is not open to a civil Court in case of an award, otherwise valid to consider the correctness of the decision of the arbitrator or the reasons by which his conclusion is reached.
The survey of the case-law made above, shows that weight of the judicially opinion is against the interference in the award made by any arbitrator) Even in cases where a question of law is submitted for decision, the par tie are bound by the decision of the arbitrator even if the decision of the arbit rator is wrong. There in only one exception in which the court of lad
would interfere in case of a wrong decision on the question of law an that is where the question of law was not specifically referred to the arbitrator. for decision but same arose subsequently during the proceeding before the arbitrator and is material for resolving the controversy between: the parties. The arbitrator, being a Judge .of fact and of law, an award made by him, cannot be held to be invalid on the ground of legal miscon duct merely because it does nonspecifically show that a piece of evidence was not considered by the arbitrator, especially so when the award recites that arbitrator has considered all the relevant evidence necessary for resolv ing the controversy. The presumption is that the arbitrator considered all the evidence, irrespective of the fact whether the contents of the award indicate so or not.
The learned counsel for the appellants has also urged that arbitrator is guilty of misconduct because he has not awarded the royalty to the appellant according to the rates prevalent at the time of the making of the award. He has argued that on the one hand the arbitrator has held the respondent entitled to get 17799 Cft. timber from the appellant and on the other hand, the appellant bas been declared entitled to the royalty as agreed upon by the rise in agreement which was executed as early as in year 1960. It may again re-iterated here that this Court cannot sit as a Court of appeal on the award made by the arbitrator and substitute its view for one, held by the arbitrator. Even otherwise, we are of the view that the arbitrator ha made the award in view of the terms of the lease agreement and as such, there is hardly any force to the argument that the relief granted by the arbitrator, is unjust or inequitable.
In the light of what has been stated above, finding no force in this appeal it is hereby dismissed with costs.
M. A. K. Appeal dismissed.
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