ALPHA INSURANCE CO. LIMITED Versus NIZAM DIN & SONS

This judgment will dispose of F.A.0. No.30 of 1995 and Cross- Objection 3‑C of 1995. The brief resume of the case is that respondent No. l a sole proprietor of concern carrying on business of Stockist/Distributor of Cigarettes and Match Boxes at his shop known as Ch. Nizam‑ud‑Din & Sons, Minhas Shaheed Road, Sahiwal. The respondents had availed of financial facilities from Habib Bank Ltd. Jinah Chowk, Sahiwal and United Bank Ltd., Church Road, Sahiwal in August, 1988. Respondent No. l had also got incurred his shop against two Insurance Policies No.SWL/FP 1182/87 for a period of one year commencing from 1‑1‑1988 to 1‑1‑1989 for Rs.10 lacs covering the stock of Cigarettes and Match Boxes, Air Conditioner, Fans, furniture and fixtures of the shop and trivans pannier boxes lying in the said shop under lien to the Habib Bank, Jinah Chowk and No.SWL/FP‑1269/8/88 Cover Note No.SLFC/88/1234 for a period of one year from 7‑8‑1988 to 7‑8‑1989 for Rs.3 lacs covering stock of cigarettes only, under lien to the United Bank, Church Road, Sahiwal against loss or damage due to fire, riot; strike, burglary etc.

2. That suddenly on 10‑8‑1988 at about 11‑00 p.m. the said shop of respondent No. l had caught fire while stock of cigarettes and Match Boxes were lying in the shop. The Fire Brigade was informed there and then and after about two hours the conflagration became under control. Respondent No. l was out of city and when on next morning he returned, the local police was informed through a telegram and letter, dated 8‑11‑1988 about the occurrence and the loss sustained by fire. Respondent No. l also requested for survey and assessment of the loss caused to him. The appellants had also been informed by respondent No. l and the appellants sent two surveyors, who unilaterally assessed the loss to the tune of Rs.19,113.11 vide their survey report, dated 25‑9‑1988. Respondent No. l rejected this report as well as offer of the appellant for payment of the said amount. The claim of respondent is that the loss caused to him was upto Rs.11,09,973.60. He asked for the Arbitration under clause 18 of the Insurance Policy. Respondent No.l nominated Haji Muhammad Sharif respondent No‑2 as Arbitrator and asked the appellant to nominate his Arbitrator under the said clause and under section 9 of the Arbitration Act, 1940. The appellant initially nominated Saeed Hassan, 156 P.I.B. Colony, Karachi, who refused to act as such. Despite repeated reminders and time relaxation the appellant failed/refused to nominate substitute Arbitrator, therefore, the respondent No. l appointed respondent No.2 as sole Arbitrator and authorized him to act as such. Respondent No. l had adjusted the limits of the two banks, thus, their liens discontinued and the banks were then no more interested in this dispute. .

3. The appellant did not appear before the sole Arbitrator‑respondent No.2 in spite of numerous notices/reminders issued by him hence the appellant was proceeded against ex parte.

4. The sole Arbitrator/respondent No.2 after taking into consideration all the evidence adduced by respondent No. l announced the award and declared the appellant liable to pay Rs.11,09,973.60 plus 15% calculated on monthly basis since 1‑1‑1989 to the date of actual payment. The appellant was further held liable to pay Rs.26,250 half of Rs.52,500 on account of cost of Arbitration.

5. Respondent No.l, thereafter applied to the civil Court to make the award as rule of the Court. Respondent No.2 filed original award consisting of pages Nos. l to 38 alongwith depositions and documents in the Court.

6. The appellant‑Alpha Insurance Company has also filed an application under sections 30 and 33 of the Arbitration Act, 1940 for setting aside the award, dated 16‑4‑1991 awarded by respondent No.2 on the ground being void, without jurisdiction, corem non judice. The appellant alleged that Arbitrator was not appointed in accordance with law. From the factual controversy appearing on the pleadings of the parties the Court framed the following issues:‑‑

(1) Whether the objections to the award have been signed and filed on behalf of the respondent No.l who duly appointed authorized agent of the Company? OPA‑1.

(2) Whether the respondent No.l is estopped by its default and conduct from filing the objections to the Award? OPA

(3) Whether the award is void and non‑existent in the eye of law?

(4) Whether the Arbitrator lack the appointment and authority to enter upon the reference? OPI

(5) Whether the award is liable to be set aside on the basis of objection raised by the respondent?

(6) Relief.

7. After recording and appreciating the evidence of the parties, pro and contra, the Court vide impugned judgment, dated 30‑4‑1995 made the award as rule of the Court and rejected the objections filed by the appellants.

8. The learned counsel for the appellants contended that the Arbitration was to be requested to be conducted in accordance with the terms of clause 18 of the Insurance Policy which has provided that the parties would nominate two arbitrators one each and this panel of arbitrators would appoint a third person umpire. The appellant has appointed and authorized Sayed Hassan as Arbitrator and on his refusal further appointed Abdur Rehman as substitute Arbitrator. Respondent No. l had not issued registered notice for the appointment of his Arbitrator. He further, argued in case of failure by one party to appoint his arbitrator within specified period, the appointment of sole arbitrator was to be made by the Court of competent jurisdiction and the so‑called sole Arbitrator has not been appointed under the order of the Court. He continued that the appointment of respondent No.2 as sole arbitrator by respondent No. l without the consent and agreement of appellant was illegal and without lawful authority.

9. Learned counsel for the appellants further contended that the appointment of sole Arbitrator was subject to certain contingencies and conditions as alternate mode of Arbitrations and such conditions were not available before appointment of sole Arbitrator. He argued that the clause 18 of the Insurance Policy has excluded the application of section 9 of the Arbitration Act. Learned counsel continued that no specific formal registered notice was served upon the appellant calling upon him to appoint an Arbitrator failing which the insured/respondent No. l would appoint a sole Arbitrator. He further contended that a substitute Arbitrator namely Abdul Rehman had been appointed by the appellant, his appointment was intimated to respondent No. l and to his Arbitrator‑respondent No.2 by the appellant. The said Abdul Rehman personally informed to the sole Arbitrator/ respondent No.2 of his appointment, thus, there was no legal justification for appointment of sole Arbitrator by one party only.

10. The learned counsel further argued that the appellant had been condemned unheard. The award was announced without taking into consideration the terms of clause 18 of the Insurance Policy and without examining the report of the surveyors and liability of the appellant.

11. The learned counsel for the appellant stressed that the Arbitrator had proceeded by basing his award on his personal knowledge, than the evidence, therefore, award is liable to be set aside. He further argued that subject‑matter of the contract of insurance vested in Habib Bank Ltd. who could only claim for Arbitration and respondent No. l had no locus standi to ask for the Arbitration proceedings. The learned counsel challenged that the award was result of fraud, the announcement of the award was reserved on 14‑4‑1991 and on the same day the respondent No. l had been directed by Arbitrator to remit the amount for the purchase of necessary stamp. The award had been announced on Eid‑ul‑Fitr, which is a public holiday, it is not believable that about 19 pages have been typed, written, checked, signed and announced.

12. On the other hand, learned counsel for the respondent No. 1 vehemently opposed the arguments of the learned counsel for the appellant contending that the objections and additional objection under sections 30 and 33 of the Arbitration Act have not been filed by duly constituted and authorized agent of the company. He denied the authority of Mr. F.U. Baig, Deputy General Manager of the appellant's Insurance Company. He argued that the objections raised by learned counsel for appellant are baseless and untenable in law. He continued that the learned counsel has misinterpreted the provisions of the Arbitration Clause 18 of the Insurance Policy and misconstrued sections 8 and 9 of the Arbitration Clause.

13. Learned counsel for respondent No. l forcefully contended that appointment of single Arbitrator is conditional on both the parties mutually agreeing to do so. There is an alternate mode of appointment of two Arbitrators one by each party and appointment of an umpire by the two arbitrators consensually. In case of failure or refusal of appointment by one party, the other party is fully authorised to appoint a sole Arbitrator. The learned counsel further submitted that the name of Haji Sharif as sole Arbitrator had been suggested by respondent No. l but the appellants proceeded to appoint Syed Hassan his Arbitrator who afterward refused to act as such. This appointment of two Arbitrators was an alternate mode of Arbitration as provided by clause 18 of the Insurance Contract. The appellant failed to appoint the substitute within the period of limitation in spite of notices issued by the respondents. After the expiry of required time the respondent No.l had appointed Haji Sharif respondent No.2 as sole Arbitrator in compliance with clause 18 and section 9 of the Arbitration Act. The sole Arbitrator had also served on the appellant a registered notice on 7‑4‑1991 to the effect that he is going to proceed as Arbitrator in case the appellant did not appear he would be proceeded against ex parte.

14. I have heard the arguments of the learned counsel for the parties and examined the record minutely.

15. The parties adduced their evidence in support of their own versions. Mr. Farhat Ullah Baig appeared as A.W.1, who was Deputy General Manager of the appellant Insurance Company while on the other hand Haji Muhammad Sharif respondent No.2 appeared as P.W.1 and Muhammad Shabbir appeared as P.W.2 to corroborate his case.

16. The objections against the award have been filed under sections 30 and 33 of the Arbitration Act by A.W.1 Farhat Ullah Baig, Deputy General Manager of Messrs Alpha Insurance Company, the appellant as attorney. The power of attorney has been produced as Exh.P.l. The said attorney could file the same provided he is legally authorised agent of the company. The photostat copy of the same has been produced which shows that 'Mr. Farhat Ullah Baig was empowered in this behalf, but question that requires determination is who has given the power to him. The executant on behalf of public limited company, whether the Director of the Company were competent to delegate such powers to said attorney. The deed of power of attorney had been executed by one Gonsolves, Managing Director of the Insurance Company. This deed is neither registered nor attested by Notary Public. The company had passed a resolution on 25‑1‑1969 giving same powers to Gonsalves but this resolution had not been produced in evidence. The memorandum of articles of Association of the Company had also not been produced. So, it is not established on record whether the company had invested the Managing Director with the power to institute a civil suit. The copy of the power of attorney had not been proved in accordance with the provisions of Articles of Qanun‑e‑Shahadat Order. The executant who was alive at the time of recording of evidence has not appeared in evidence. The document Exh. P.1 was not produced on record, therefore, this being inadmissible in evidence cannot be read in evidence, thus, excluded from consideration. The power of attorney is not proved as a result of which A.W.1 Farhat Ullah Baig, would not be authorised and competent to sign, verify and file the objections and in circumstances the objection filed on behalf of appellant would be deemed to be non‑existent.

17. It reveals from the pleading that the objections were filed by a constituted attorney of a public limited company and the attorney could do so, if he was duly authorized in that behalf. This could be ascertained as to whether he who gave the attorney power was competent to do so for that purpose a reference to the Articles of Association of the company and Resolution, dated 25‑1‑1969 passed by the Board of Directors was necessary to see, which have not been produced in spite of the permission granted by the Court, therefore, the presumption would be that the Director had not authorised the Managing Director Gonsalves, and thus, he could not authorise P.W.1, in this context. A reference can be made to case of Messrs Muhammad Siddique, Muhammad Usman v. The Australia Bank Ltd. PLD 1996 SC 684, Abubakar Saleh v. Abbot Laboratories 1987 CLC 367 and Millat Tractors Ltd. v. Ch. Tawakal Ullah NLR 1991 AC 432. A Division Bench of Lahore High Court in case of Government of Pakistan v. Premier Sugar Mills and others PLD 1991 Lah. 381 observed that when a company instituted a suit, it has to establish that the suit has been competently and authorisedly instituted on its behalf.

18. Learned counsel for the appellant has failed to establish that the objections having filed by a competent and authorized person. Farhat Ullah Baig P.W.1 has not been established as authorized agent of the company, therefore, he could not appoint validly counsel for the appellant. It has been held in case of The Thal Development Authority v. Nisar Ahmed Qureshi PLD 1962 (W.P.) Lah. 830 that no Pleader or Advocate, can act in Court unless duly appointed by, instrument in writing for the reasons stated above the findings of the lower Court on Issue No. l is affirmed.

19. It will be useful to reproduce the Arbitration Clause No. 18 of the Insurance Policy which reads as follows:‑‑

"If any difference arises as to the amount of any loss or damage, such difference shall independently of all other questions be referred to decision of an arbitrator to be appointed in writing by the parties in difference or if they cannot agree upon a single Arbitrator to the decision of the disinterested person as arbitrator of whom one shall be appointed in writing by each of the parties within the calendar months after having been required so to do in writing by the other party. In case either party shall refuse or fail to appoint a sole arbitrator, with two calendar months after receipt of notice in writing requiring an appointment, the other party shall be at liberty to appoint a sole arbitrator, and a case of disagreement between the Arbitrators, the difference shall be referred to on the decision of an umpire who shall have been appointed by them in writing before entering on the reference and who shall sit with the arbitrators and preside at their meetings. The each of any party shall not revoke or effect the authority or power of the Arbitrator, Arbitrators, Umpire respectively and in the event of the death of an arbitrator or umpire another shall in each case he appointed in his stead by the party of the Arbitrators (as the case may be) by whom the Arbitrator, umpire so dying was appointed. The costs of the reference and of the award shall be in the discretion of the Arbitrators, umpire, making the award. And it is hereby expressly stipulated and declared that it shall be conciliation precedent to any right of action or suit upon this policy that the award by such Arbitrators Umpire of the amount of the loss or damage, it disputed shall be first obtained."

20. The above referred Arbitration clause had provided remedies to the parties in case of difference to the amount of any loss or damage.

Firstly, to refer the dispute to an arbitrator appointed in writing by the parties. In the instant case arbitrator was never appointed by the parties in writing as they did not agree on one person.

Secondly; to refer the dispute to two disinterested persons as Arbitrators of whom one was to be appointed by each of the parties.

21. This mode of reference had been adopted by the parties. The appellant nominated Saeed Hassan, Advocate as Arbitrator and respondent No.l appointed Haji Muhammad Sharif respondent No.2 as his Arbitrator. Before both Arbitrators could meet together Saeed Hassan, Arbitrator of the appellant expressed his inability to do so. Mr. Abdul Rouf, Advocate of appellant through a letter, dated 11‑7‑1990 Exh.R.5 informed respondent No. l and intended that substitute Arbitrator would be appointed after 5‑8‑1990 since the day of this letter till 21‑3‑1991 the appellant in spite repeated requests of respondent No. l failed to appoint the substitute Arbitrator. The Arbitration clause has provided two calendar months for the appointment of substituted Arbitrators. Respondent No. I the insured had issued notice to the appellant for nomination of his Arbitrator as the counsel for the appellant through letter, dated 5‑12‑1990 Exh.R.6 intimated respondent No. l that no person is willing to act as Arbitrator for Alpha Insurance. The respondents after expiry of period of two calendar months on 21‑3‑1990 asked his Arbitrator to act as sole Arbitrator as the Alpha Insurance had failed to appoint the Arbitrator. Clause 18 of the Insurance Policy has empowered to one party to appoint a sole Arbitrator in case the other party failed to appoint his Arbitrator.

22. Section 8 of the Arbitration Act, 1940 reads as follows:‑‑

"Section 8. Power of Court to appoint arbitrator or Umpire .‑‑ In any of the following cases‑‑

(a) Where an arbitration agreement provides that the reference shall be made to one or more 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 any umpire and do not appoint him;

23. A perusal of section 8 of the Arbitration Act would show that it applies to such cases where the Arbitrator or Arbitrators are to be appointed by the consent of all parties and not to those where each party is to appoint to his own Arbitrator. Clause (a) of subsection (1) of section 8 deals with cases of omission to make initial appointment, whereas clause (b) covers the cases where appointed Arbitrator neglects or refuses to act or is incapable of acting or dies. But the common feature of both these sub‑clauses is that the nature of agreement should be such where the concerned arbitrator or arbitrators are to be appointed with consent of the parties. This is more clear from subsection (2) where it is written that the Court may appoint an Arbitrator or Arbitrators 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 the consent of all parties. This shows that in cases where any Arbitrator was to be appointed by the parties collectively then on failure to do so, when Court itself makes an appointment. It is to be considered that the appointee has been appointed by the consent of all parties.

24. Section 9 of the Arbitration Act enumerates that wherein arbitration agreement provides that a reference shall be to two arbitrators, one to be appointed by each party, then, unless a different intention is expressed in the agreement‑‑----

(a) if either of the appointed arbitrators neglects or refuses to act, or is incapable of acting, or dies the party who appointed him may appoint a new Arbitrator in his place;

(b) if one party fails to appoint an Arbitrator, either originally or by way of substitution as aforesaid for fifteen clear days after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an arbitrator may appoint that arbitrator to act as sole arbitrator in the reference and his award shall be binding on both parties as if he had been appointed by consent;

Provided that the Court may set aside any appointment as sole arbitrator made under clause (b) and either, on sufficient cause being shown, allow further time to the defaulting party to appoint an arbitrator or pass such other order as it thinks fit.

Both the sections provide that a substitute can be appointed by a certain party in the place of an arbitrator who neglects to act (a) If the party who is to concur in such an appointment or is to appoint such a substitute, fails in terms of the section, to do so, the under section 8(2) recourse to be taken to the Court but under section 9(b) the opposite party may appoint his own arbitrator to act as the sole arbitrator. In other words, course to the Court is not required under section 9. Secondly, the words by consent of the parties, which occur after clause (c) of that subsection unmistakably indicate that the section applies to those arbitration agreements under which arbitrators are appointed by the consent of both the parties. On the other hand section 9 applies to those of such agreements under which two arbitrators are appointed and one of them is to be appointed by each party.

25. In the instant case two arbitrators according to clause 18 of the Insurance Policy were to be appointed and one of them was to be appointed by each party, therefore, the facts of the instant case would attract to section 9 and not section 8. Reference in this context can be made to case of Haroon Oil Mills v. Kohinoor Cotton Ginning Factory PLD 1967 Kar. 175, Abdul Hakim K. Khan v. Begum Khanum Jan and others 1989 MLD 1304 and Azhar Farooqui v. Pervez Anwar and another 1986 CLC 359.

26. Following the dictum laid down in the cases (supra) it is observed that when one party fails to appoint a substitute arbitrator within specific time then failure of that party to appoint or substitute arbitrator on his behalf would justify arbitrator appointed by the other party to act as a sole arbitrator.

27. The appointment and authority of respondent No.2/sole Arbitrator has been discussed above in detail. The Arbitrator before proceeding on Arbitration wrote to the appellant to appoint a substitute Arbitrator and the counsel for the appellant Mr. Abdul Rouf on 11‑7‑1999 informed respondent No.l vide letter that due to summer vacation the High Court is closed, therefore, the appellant is not in a position to find out an Arbitrator. This letter had been received by the respondents on 12‑7‑1990. The Alpha Insurance Company/appellant could not appoint their Arbitrator. In month of September, 1990 a registered letter had been written by respondent No.l to the appellant for appointment a second Arbitrator because his previous Arbitrator Saeed Hassan, Advocate has expressed his inability to act as such On 5‑12‑1990 the appellant's counsel Mr. Abdul Rouf, Advocate in response to a letter, dated 11‑7‑1990 by respondent No. l and letter, dated 15‑10‑1990 by counsel for respondent No.l Mr. Abid Iqbal, Chaudhry, Advocate informed that due to the law and order situation prevailing the Province of Sindh the journey by train has become risky. Secondly Airport is not available at Sahiwal and one has to travel by air via Multan or Lahore to Sahiwal, therefore, no person is willing to act as Arbitrator for Alpha Insurance Company and regretted to appoint the Arbitrator. In another letter, dated 2‑1‑1991 Mr. Abdul Rouf, Advocate for the appellant requested 10 days time and promised to appoint the Arbitrator by 15‑2‑1991. When the appellant had failed/omitted to appoint substitute Arbitrator respondent No. l on 21‑3‑1991 asked his nominee to act as a sole Arbitrator. The meticulous examination of the record shows that respondent No. l has been asking the appellant to nominate his second Arbitrator.

28. Respondent No.2 after assuming the role of a sole Arbitrator issued notice to the appellant to join the Arbitration proceeding vide the copies of the notices have been placed on record as Annexures "R.6" and "R.7". It is established that registered notice was issued by the sole Arbitrator to the appellant/Alpha Insurance Company, the receipt on the record is sufficient proof of the fact. The correspondence vide Exh.R.III to Exh.R.X by the counsel and office of the appellant has been admitted by A.W.1 Farhat Ullah Baig. The relevant portion of his statement is reproduced as under:‑‑--

The sole Arbitrator has complied with the requirement of natural justice and law. He fixed the date 10‑4‑1991 for Arbitration but none on behalf of the appellant had participated in the proceedings. The registered notice is sufficient proof of the service of the appellant. In case of Water and Power Development Authority v. Saeed Badar PLD 1991 SC 660, the Honourable Supreme Court has observed as under:‑‑

"Reference may also be made to section 27 of General Clause Act, 1897 which on proof of the fact that a pre‑paid and properly addressed letter, containing a document has been sent by registered post gives rise of presumption of due service.

It would be beneficial to refer here the observation appearing in Harihar Banerji and others v. Ramshashi Roy and others AIR 1918 PC 102:‑‑

"If a letter properly directed, containing a notice to quit, is proved to have been put into the letter box reached its destination at the proper time according to the regular course of business of the post officer, and was received by the person to whom it was addressed. That presumption would appear to their Lordships to apply with still greater force to letter which the sender has taken the precaution to register and is not rebutted but strengthened by the fact that a receipt for the letter is produced signed on behalf of the addressee by some person other than the addressee himself."

29. It is true that the presumption of due service is rebuttable presumption and the appellant denied to have received the notice by the sole Arbitrator but when having regard to the common course of natural event and human conduct upon the facts of a particular case, such a presumption is drawn by the Court in favour of one party, the burden of proof shifts to the opposite side.

30. In the instant case a registered notice was issued by respondent No.2l to appellant, therefore, the presumption would be that the notice was issued by the Arbitrator to the other party i.e. the appellant and now the burden is l on the appellant to rebut that he has not been served. No such evidence has been produced on the record to establish that the appellant has been condemned unheard. It has been observed in case of Paracha Textile Mills Ltd., Karachi v. Nanikaram Shamandas PLD 1977 Kar. 37 by Honourable Judge of the Karachi High Court that by the combined effect of section 114 of Evidence Act and section 27 of General Clauses Act a letter which is properly, addressed must be deemed to be proved and to have been received by the addressee, unless proved to the contrary. In case in hand besides the mere denial of the appellant no other evidence has been produced to displace the presumption under the law. The statement of A.W.1 has not been corroborated by any other witness.

31. In case of non‑cooperation by the appellant no option was left with Arbitrator but to proceed ex parte. The appellant did not bother to participate in the arbitration proceedings. The Arbitrator after taking into consideration the evidence produced by one party/respondent No. l assessed the loss caused by the fire to the Insured and gave the award.

32. As regards the plea of the learned counsel for the appellant that the award is void and non‑existent on the ground of fraudulent proceeding of Arbitration. It would be suffice to observe that the appellant purposely avoided to join the Arbitration proceeding before the Arbitrator and what ever evidence was produced before him he based his decision on the same. The only objection of the learned counsel for the appellant is that the report of the Surveyors was not made the basis of the award or that it was not adverted to by the Arbitrator, the answer would be that this report was neither produced or proved in accordance with provisions of the Qanun‑e -Shahadat Order, 1984, thus, it was inadmissible in evidence. The most significant feature of the case is that the loss caused by the fire to the respondent No. l was to be determined by the Arbitration and not otherwise.

33. The Court while examining the legality of the award does not act as a Court of appeal, therefore, the Court while hearing the objections to the award cannot undertake reappraisal of evidence recorded by the Arbitrator in order to discover the error or infirmity in the award. The error or infirmity in the award which rendered the award and should be discovered by mere reading of the same. In this context reference can be placed on case of Messrs Joint Venture/Rist through D.P. Giesler G.M. Eangard Strassee 34000 Dusseldorf 30 Federal Republic of Germany v. Federation of Pakistan PLD 1996 SC 108. In case of Zaka Ullah Khan v. Government of Pakistan through Secretary Building and Roads Department PLD 1998 Lah. 132 observed as under:‑‑----

"It is settled that Arbitration is a settlement of controversies/disputes by one or more persons chosen by the parties themselves. The Judges so chosen are known as Arbitrators/Umpires. The object of Arbitration proceedings is to curtail period of litigation; to encourage resolution of conflict through Judges of their own choice, that Arbitrators are not strictly bound by rules of technicality embodied in procedural laws as well as Qanun‑e‑Shahdat Order; that the Courts are given role to see that these Judges decide causes strictly in accordance with law, in exercise of their supervisory powers contained in sections 14 to 17 and sections 30 to 33 of the Act, thus, it is clear that the rule of Court, in the scheme of Arbitration Act, is of supervisory Character and is not taken to appellate powers under the Code of Civil Procedure."

The Privy Council in case of Champsey Bhara Company v. Jivarjh Balloo Spinning and Weaving Company AIR 1923 PC 66 observed as under:‑‑ "where a cause of matters in difference is referred to an arbitrator, whether a lawyer or a layman, he is the constituted the sole and final Judge of all questions both of law and fact. The only exception to that rule are cases where the award is result of corruption or fraud and one other, which though it is to be regretted is now firmly established viz. where the question of law necessarily arises on the fact of the award or upon some paper accompanying and forming part of the award.

An error in law on the face of the award means that you can find in the award or a document actually in. corporated thereto as for instance, a note appended by the Arbitrator stating the reasons for his judgment some legal proposition 'which is the bases of the award, which you can then say is erroneous."

34. The law leans in favour of upholding the award and not vitiating it. This rule has been enumerated in case of Ashfaq Ali Qureshi v. Municipal Corporation, Multan and another 1985 SCMR 597, the Honourable Supreme Court held that:‑‑

"It is well‑established rule of law that where a. dispute is referred to an Arbitrator of the choice of the parties and he makes an award, it becomes the duty of the Court to give every reasonable intendment in favour of the award and lean toward upholding it than vitiating it.

A similar view was expressed in case of Abdul Rouf v. Muhammad Saeed Akhtar PLD 1985 (W.P.) Kar. 145 which is as under:‑‑

"A well‑settled rule of construction of the award is that the award should be construed liberally and in accordance with the common sense, it should be so read that it can be given effect to and not so that would nullify the efforts of the Arbitrator appointed by the parties. "

35. Applying these principles, it is held that the award if, passed by the Arbitrator without lawful authority and same on the face of it suffered with illegalities or infirmities would not be immune from the judicial scrutiny of the Court, otherwise the Court would uphold the award and not vitiate it.

36. Learned counsel for the appellant has not been able to point out any glaring illegality in the impugned judgment of the trial Court which could call for interference. In view of the above discussion the findings of the trial Court on Issues Nos. 3 and 5 are maintained.

37. For the foregoing reasons and in agreeing with the principle laid down in the cases (supra) referred by the learned counsel for the respondents, there is no force in this appeal, which is dismissed.

38. The respondents have filed Cross‑Objection No.3‑C of 1995 praying for modification of order impugned by awarding interest (Q 15% p.m. to respondents/cross‑objectors from 1‑1‑1989 upto the date of actual payment by the appellant.

39. In view of the dictum laid down in case of Dr. M. Aslam Khaki v. Syed Muhammad Hashim and 2 others PLD 2000 SC 225 wherein the interest has been declared against the Injunction of the Qur'an and Sunnah, therefore, the relief claimed by the cross‑objectors cannot be granted to them. Thus, there is no force in this cross‑objection which is also dismissed.

Q.M.H./M.A.K./A‑125/L Order accordingly.