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Judicial Miscellaneous No.49 of 1984, decided on 5th May, 1987.

---Ss.5 & 8(2)--Arbitrator--Appointment by Court--Dispute over execution of contracted construction work--Court by consent order appointing arbitrators of parties--Arbitrators entering upon reference but same was delayed and no progress made on account of conduct of respondent who failed and neglected to file any statement of claim before Arbitrators--Respondent taking premium out of his own failure and neglect appointing sole Arbitrator himself without getting revoked the authority of Arbitrators appointed by Court--Such appointment of sole Arbitrator by respondent, held, was illegal as such power vested in Court and could have been invoked by filing an application under S.8(2)--Authority of sole Arbitrator so appointed was revoked and sole Arbitrator was removed from office--Arbitrators appointed by Court having failed or neglected to make their award within statutory period, matter left to parties to take any other legal course open to them.

Sayeed A.Shaikh for Applicant.

Abdul Rauf Khan for Respondents.

Date of hearing: 5th May, 1987.

This is an application under Section 5 of the Arbitration Act, 1940 filed by PIA.

2. The applicant's case is that respondent No.1 was awarded a contract by the applicant PIA for construction of Sheet Metal Shop Extension IInd Floor, at Karachi Air Port by agreement dated 24-4-1978. The contract was for the lump sum value of Rs.20,81,109.40 and was to be completed within a period of 180 days i.e. by 24 October, 1978, The agreement contained an arbitration clause. The dispute having arisen between the parties relating to the execution of the said contracted works, the matter of appointment of Arbitrators under Clause 25 of the general conditions of the agreement dated 17-5-1978 became the subject-matter of J. Misc, No.26 of 1983 of this Court. Ultimately a consent order was passed and Mr. Kazi Khalid Ali was appointed as Arbitrator by respondent No.1 and Mr.Qamarul Islam Advocate was appointed as Arbitrator by the applicant. The two Arbitrators appointed Mr.Muzzafar Hassan Advocate as the Umpire. The appointed Arbitrators entered upon the reference on 17-5-1984 but the same was delayed and no progress could be made on account of the conduct of respondent No.1 who failed and neglected to file any statement of claim before the Arbitrators. The respondent No.1 tried to take premium out of his own failure and neglect and appointed Mr. Khawaja Bilal Ahmed as the Sole Arbitrator in spite of the appointment of the Arbitrators by the Court by consent order as shown above. This appointment of the Sole Arbitrator by the respondent No.1 is therefore illegal as no other Arbitrator or Umpire could be appointed without first getting the authority revoked.

3. The respondent No.1 contested the application and has filed objections wherein he has challenged the competence of the application. He has pointed out that on two occasions the arbitrations were rendered infructuous and then the Sole Arbitrator Mr.Kazi Khalid Ali entered upon reference which was challenged in J.M.26/83. It was admitted that a consent order was passed removing Mr. Kazi Khalid Ali and appointing the two Arbitrators mentioned in the application. These arbitration proceedings also failed on account of refusal and neglect of the arbitrators who acted for more than 7 months. The applicant's arbitrator unilaterally 'held that the arbitration proceedings were rendered infructuous. The opponents were therefore forced to invoke the arbitration clause and started fresh proceedings. The applicants failed/neglected/refused to participate in the arbitration proceedings thereby justifying the opponent No.1 to appoint opponent No.2 as Sole Arbitrator. He has therefore pressed for dismissal of the application.

The respondent No.2 has chosen to remain absent and has not even filed any, objections.

4. Mr.Saeed A.Sheikh, Advocate for the applicant has contended that when the Arbitrators appointed-by the Court with the consent of the parties had refused or neglected to decide the matter and to make the award the only way left for the applicant or respondent No.1 was to approach the Court. Reference was made by him to section 5 of the Arbitration Act which reads as under:-

"5. The authority of an Appointed arbitrator or Umpire shall not be revocable except contrary intention is expressed in the arbitration agreement."

5. Mr.Saeed A.Sheikh Advocate then submitted that respondent No.1 could not take the law into his own hands and appoint a Sole Arbitrator or Umpire as he has purported to have done in this case, and referred to subsection (2) of section 8 of the Arbitration Act. Mr. A . Rauf Khan was unable to refute the above contentions of the applicant's counsel.

I agree with the arguments of the plaintiff's counsel that according to subsection (2) of section 8 of the Arbitration Act under which the respondent No.1 had purported to appoint Mr. Khawaja Bilal the Sole Arbitrator, the respondent No.1 could not have done so himself but this power vests in the Court and could have been invoked by filing an application under subsection (2) of section 8 of the Act. This is clear from the plain wordings of section which reads as under:----

"8. (1) In any of the following cases--

(a) where an arbitration agreement provides that the reference shall be to one or mere arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or

(b) if any appointed arbitrator or Umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy; or

(c) where the parties or the arbitrators are required to appoint an Umpire and do not appoint him;

any party may serve the other parties or the arbitrators; as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.

(2) If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or Umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties."

6. I am satisfied that the respondent No.1. had no' authority to appoint respondent No.2 as a Sole Arbitrator without the leave of the Court. I therefore revoke the authority of respondent No.2 to act as Sole Arbitrator in the matter and remove him from the office. Since the two Arbitrators appointed by the Court are said to have failed or neglected to enter upon the reference or make their award within the statutory period I leave it to the parties to take any other legal course which is open to them.

S. Q. /P-28/ K Order accordingly.

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