MUHAMMAD MAROOF vs MUHAMMAD FAROOQ through L.Rs, and 8 others
This petition for leave to appeal arises from a civil suit for declaration and permanent injunction concerning the inheritance of properties among the legal heirs of Abdul Aula. The dispute centers on an arbitration agreement where parties appointed three arbitrators to resolve the distribution of joint properties. During proceedings, one arbitrator disassociated, and the remaining two submitted an award, which the trial court subsequently made a rule of the court, a decision upheld by the appellate and revisional courts. The petitioner challenges the validity of this award, arguing that the arbitration agreement required all three arbitrators to sign and submit the award, and that the arbitrators exceeded their authority by excluding the petitioner from his inheritance. The Supreme Court, finding merit in the petitioner's contentions regarding the validity of the award and the scope of the arbitrators' authority, granted leave to appeal. The Court held that the matter requires determination regarding whether the two-member award violated the arbitration agreement and whether the decree based on an award exceeding the scope of the reference constitutes a nullity in law.
- Whether an arbitration award signed by only two out of three appointed arbitrators is valid when the agreement requires the participation of all three?
- Whether an arbitration award that exceeds the scope of the reference agreement can be made a rule of the court?
- Does a decree passed on the basis of an invalid arbitration award constitute a nullity in law?
- Article 185(3), Constitution of Islamic Republic of Pakistan 1973
ORDER
' MUHAMMAD NAWAZ ABBASI, J.--- This petition under Article 185(3) of the Constitution of Islamic Republic of Pakistan, 1973 has been preferred against the judgment, dated 26-9-2002 passed by a learned Single Judge of the Lahore High Court, Lahore in a civil revision arising out of a suit for declaration and permanent injunction. The parties in the present petition are legal heirs of Abdul Aula and the dispute between them related to their inherited property.
2. Muhammad Farooq, predecessor-in-interest of respondents 1-A to 1-K claiming ownership of the disputed properties, filed a suit for declaration and permanent injunction against the present petitioner and others in the Court of Senior Civil Judge, Gujranwala and except the petitioner and Muhammad Iqbal, the other legal heirs of Abdul Aula conceded in favor of Muhammad Farooq. The petitioner and Muhammad Iqbal contested the suit and during the course of proceedings the parties entered into an arbitration agreement wherein they by consent and mutual understanding appointed three Arbitrators namely Raja Waheed Sultan, Ch. Naseerud Din and Raja Khalid Iqbal for decision of the dispute in the suit and distribution of the joint properties amongst the legal heirs of Abdul Aula. However, pending finalization of the arbitration proceedings, one of the Arbitrator namely Raja Khalid Iqbal, disassociated himself from the arbitration and the award was submitted by the two Arbitrators. The learned trial Judge while making the award rule of the Court, decreed the suit vide judgment dated 14-3-2000 and the decree passed was further upheld by the Appellate as well as the revisional Court.
3. Learned counsel for the petitioner has contended that the Arbitrators have not conducted themselves fairly and the suit would not be decreed on the basis of arbitration award. The learned counsel urged that as per terms of the reference, the award was required to be signed and submitted by three Arbitrators but the same was submitted under the signature of two Arbitrators and the disassociation of third Arbitrator from the proceedings much before the submission of award would render the arbitration award illegal and ineffective to the rights of petitioner. Learned cou,nsel submitted that in the given situation the proper course for the trial Court was either to reconstitute the arbitration with the consent of parties or proceed with the suit on merits and that in any case the Arbitrators while proceeding in departure to the terms of the agreement and beyond their authority excluded the petitioner from inheritance of his father instead of undertaking the exercise of distribution of property as per the entitlement of legal heirs of Abdul Aula.
4. Learned counsel representing the respondents, on the other hand, has contended that as per terms of reference, the award submitted by majority was binding on the parties and disassociation of one of the Arbitrator at final stage would not invalidate the award. Learned counsel next submitted that the refusal of the High Court to interfere in the concurrent finding of facts of two Courts in its revisional jurisdiction was not suffering from any misreading or non-reading of evidence to question the validity of judgment and decree in the suit before this Court.
5. We having heard the learned counsel for the parties and going through the record find sufficient force in the above contentions and consequently the following question would need determination.
(a) Whether the submission of award with the signatures of two Arbitrators was valid and was not in conflict to the terms of agreement according to which it should be signed by the three Arbitrators. (b) Whether the award being beyond the scope of agreement between the parties could not be made rule of Court and the decree passed on the basis of award was nullity in law.
We accordingly grant leave in this petition and direct that the parties while maintaining status quo shall not change the character of the properties in their respective possession in any manner or alienate the same pending final disposal of the appeal.