MUHAMMADVASI SAIGAL Versus RASHID AHMAD

This is an application under section 14(2) of Arbitration Act 1940 filed by the petitioner Muhammad Wasi Saigal praying that the Arbitrator Sheikh Rashid Ahmad, respondent No. 1 be directed to file award given by him on 23‑1‑1986 in pursuance of the reference dated 25‑10‑1985 between the parties with respect to the division, partition and distribution of the estate of deceased Muhammad Yousaf among his heirs namely the petitioner and respondents Nos. 2 to 8.

2. Arbitrator Shaikh Rashid Ahmed, the respondent No. 1 has filed counter‑affidavit wherein he has opposed the application of the applicant. He has submitted that the award was made, signed and pronounced on 23‑1‑1986 in the presence of the parties who signed the diary of the proceedings on the same day in token of their acceptance of the award. This application has now been made by the applicant as he appears to have changed his mind afterwards. The Arbitrator has claimed Rs.3,00,000 as fee and has alleged that neither the applicant nor the respondents have paid the fee to him so far. He has further stated that he had given the award to the respondents so that the same may be implemented at Japan in accordance with the laws of that country. Having therefore, parted with the possession of the award he is no longer in a position to file the same in this Court.

3. Rejoinder was filed by the applicant in which he admitted his signatures on the diary of the proceedings on 23‑1‑1986 when the award was pronounced in token of his knowledge thereof and that it was pronounced in his presence but he denied that he had accepted the award or had given up his right to challenge the same. He has stated that the Arbitrator never demand the fee from him and that the demand was exhorbitant. He also denied that the Arbitrator had parted with the award or had given it to the respondents to file in any Court of Japan. He has produced, by an application under section 151, C . P. C . a letter of a lawyer from Japan showing that no such award had been filed in any Court of Japan but there was evidence to show that the estates of the deceased were distributed among his heirs based on the arbitration award and some of the estates were also sold to a third party.

4. I have heard Mr. Syed Inayat Ali, Advocate for the applicant and Mr. Saeed A. Shaikh, Advocate for the respondent No. 1. There is no appearance for the remaining respondents.

5. Mr. Saeed A . Shaikh has pointed out that the application under section 14(2) of the Arbitration Act which was filed by the petitioner is barred by limitation. In this connection he has placed reliance on Article 178 of the Limitation Act which reads as under:‑‑

"178.‑ Under the Arbitration Ninety The date of service of Act, 1940 for the filing days. the notice of the making in Court of an award of the award."

He submitted that the award was given on 23‑1‑1986 in presence of the parties whose signatures were taken thereon. As such they had notice of the making of the award on that very day. This application should have been filed within 90 days thereof. The application has admittedly been filed on 28‑4‑1986 and is therefore delayed by as many as 5 days.

6. Mr. Syed Inayat Ali who appeared for the applicant contended that the notice required to be given under subsection (1) of section 14 of Arbitration Act referred to in Article 178, of the making of the award is to be regulated by section 42 of the Arbitration Act which reads as under:‑‑

"42. Service of notice by party or arbitrator. Any notice required by this Act to be served otherwise than through the Court by a party to an arbitration agreement or by an arbitrator or umpire shall be served in the manner provided in the arbitration agreement, or if there is no such provision, either‑‑

(a) by delivering it to the person on whom it is to be served, or

(b) by sending it by post in a letter addressed to that person at his usual or last known place of abode or business in Pakistan and registered under Chapter VI of the Post Office Act, 1898."

He clarified that the mere fact that the Arbitrator had pronounced the award in presence of the parties and obtained their signatures thereon is not sufficient to attract the provisions of Article 178 of the Limitation Act. In this connection he relied upon the following rulings:‑‑

(i) A I R 1947 Sind 145 Holaram Verhomal v. Governor General where the notice of filing of the award in Court was served on the Advocate of the party, it was held that this was not a sufficient compliance of section 14 of the Arbitration Act and the party had a statutory right to be served personally.

(ii) P L D 1964 (W.P.) Kar. 66 Abdul Qayum Khan v. M.A. Qudus Khan. The applicant came to know of the award on the day when it was made i.e. 21‑8‑1960. Application under section 14(2) of the Arbitration Act was made on 28‑2‑1961. It was held that mere knowledge of making of the award was not sufficient. The Limitation Act must be construed strictly. Service of notice by the Arbitrator is obligatory.

(iii) A I R 1955 All. 573 Misri Lal v. Bhagwati Prasad. It was held that starting point of limitation under Article 178 of Limitation Act is the date of service of notice and not the date of knowledge of the award.

(iv) A I R 1949 Pat. (?) Jagdish Mahton v. Sundar Mahton. It was held that as soon as a party knows that an award has been made it is open to him to file an application to the Court to direct the award to be filed. Time will however not run against him till a written notice has been served upon him as required by subsection (1). This provision is necessary as a safeguard against fraud.

(v) A I R 1955 Nagpur 126 Chouthmal Jivrajjee Poddar v. Ramchandra Jivrajee Poddar. It was held that under Article 178 time begins to run from the date of the service of the notice of the making of the award. Section 14 has to be complied with strictly and any other compliance thereof would not make limitation run.

7. Mr. Saeed A. Shaikh, Advocate who appeared for the Arbitrator Shaikh Rashid Ahmad, the respondent No. 1 contended that service of a written notice under subsection

(1) of section 14 of Arbitration Act is not essential and that it is sufficient if the party had a notice of making of the award. He cited the following rulings:‑‑

(i) A I R 1952 Punjab 350 Gunga Ram v. Radha Kishan. In this case the Arbitrator made the award on the next day of reference which was signed by both the parties. No further action was taken for one year, thereafter one of the parties filed a suit for declaration that the award should not be dealt with by the other party. In the meantime the other party made an application for making the award the rule of the Court. It was held that the party had notice of the making of the award and therefore the application should have been filed within 90 days of the date of their signing the award.

(ii) Ashfaq Ali Qureshi v. Municipal Corporation, Multan reported in 1985 S C M R 597. The award in this ruling had been signed and announced by the Arbitrator on 4‑3‑1980 and copy had been supplied to each of the claimant and the original was filing in the Court. It was held that where the fact of filing the award by Arbitrator had already been in the knowledge of the parties and their counsels and they in response to notice issued by the Court appeared and took time to file their objections, insistence on a formal service of notice would be not necessary.

8. In this ruling Holaram's case cited by the applicant's counsels and some other rulings on subsection (2) of section 14 were referred to by the Supreme Court. It was observed that there appears to have been some controversy over the question whether a formal notice under subsection (2) of section 14 of the Arbitration Act is necessary even though the parties or their counsel have knowledge of the filing of the award and even have acted in furtherance of that knowledge. After referring to both the views the Supreme Court relied upon the view taken in the case of Shaft Corporation Limited v. Government of Pakistan reported in P L D 1981 Karachi 730, which was to the following effect:‑‑

"There is, therefore, no warrant on the plain language of the section to interpret the expression 'give notice to the parties' to mean only a formal written notice served upon a party in the prescribed manner and exclude a constructive, oral or an informal notice." and held as follows:‑‑

"9. Apparently, the prevalent view is that the provision of the Law is meant to enable the parties to know that the award has been filed in Court so that they may file their objections, if any, within the time prescribed, a formal compliance in strict conformity with the relevant provision of law is not to be insisted upon when substantial compliance has been made of it. In keeping with this view where the fact of filing of the award by the Arbitrator had already been in the knowledge of the parties and their counsel had in response to notice issued by the Court appeared and taken time to file their objections, as is in the present case, an insistence on a formal service of notice under Order XXIX would be a mere technicality. Even otherwise, an objection on this score had neither been taken before the trial Court nor in the memorandum of appeal before the High Court and was, therefore, only an afterthought not entitled to serious consideration."

9. Mr. Syed Inayat Ali then submitted that these rulings are distinguishable from the present case because these relate to the notice by the Court under subsection (2) of section 14 of the Arbitration Act of the filing of the award in Court and not to the notice under subsection (1) of section 14 of the Arbitration Act of the making of the award by the Arbitrator to which Article 178 o fl the Limitation Act applies. I agree with the contention of Mr. Syed Inayat Ali. The principle embodied in this ruling speaks of a notice of filing of the award in the Court under subsection (2) of section 14 of the Arbitration Act which requires a Court to "give a notice to the party of the filing of the award." The wordings of subsection (2) are quite different from the wordings of subsection (1) wherein it is clearly laid down that the Arbitrator after making and signing the award; shall give notice in writing to the parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award". The addition of words "in writing" in subsection (1) after the words "notice" and their omission in subsection (2) of section 14 is meaningful.

10. I am, therefore, of the clear view that a notice required to be given by the arbitrator under subsection (1) of section 14 of Arbitration Act must be served upon the parties in writing and it is B not a mere formality and the period of limitation had to be computed from the date of service of such notice. In the absence of such notice by the Arbitrator the period cannot be computed under Article 178 of the Arbitration Act.

11. The next contention of Mr. Saeed A. Sheikh, Advocate was that the Arbitrator had already parted with the award in that he had given the same to respondent No. 3 who is a Japan national and a permanent resident of Japan for being implemented in accordance with the law of Japan. Para 8 of the agreement empowered the Arbitrator to file the award in Pakistan or Japan. He was therefore unable to file the same in the Court. The applicant has filed rejoinder and has denied this fact. He has stated that the Arbitrator is deliberately suppressing the award. He has also produced a letter from a lawyer in Japan which shows to the best of his knowledge, that after reasonable search and investigation, he finds no evidence to show that such execution judgment is sought to execute the award in Japan. The burden to prove this fact was on the respondent No. 1 and he has failed to prove the same. However, if the Arbitrato was not filing the award in Court in spite of the directions of the Court, true copy of the award filed by the applicant can be taken by the Court as secondary evidence of the said award and can be acted upon.

12. The third objection of the Arbitrator was that the Arbitrator has a claim of Rs.3,00,000 as fees and Rs.50,000 as charges and that he had a right to withhold the award unless and until such fees and charges are paid to him.

This objection of the Arbitrator also does not hold good in view of section 38 of the Arbitration Act.

13. Under these circumstances I allow the application and direct the Arbitrator to file the award in Court within a period of one l: month. This order will be subject to the condition that the applicant deposits a sum of Rs.3,50,000 in Court within a period of 15 days.

M.Y.H./M‑296/K Petition allowed.