NAZIR AHMAD and others Versus MUHAMMAD QASIM and others

SARDAR MUHAMMAD RAZA KHAN, J.‑‑ ‑--These appeals after leave of Court have been filed against the judgment, dated 2‑3‑1998 of Lahore High Court whereby Civil Revisions Nos.2101 and 2102 of 1990 were dismissed.

2. During the pendency of partition suits between the parties, both agreed to the appointment of Ch. Muhammad Ashraf Cheema, Advocate as referee. On submission of decision by him the learned trial Court vide judgment, date 15‑4‑1989 passed a preliminary decree. The present appellants filed an appeal before the learned Additional District Judge which was dismissed on 6‑9‑1990 and so was the revision dismissed by the High Court on 2‑3‑1998 and hence the appeals.

3. The main contention of the learned counsel for the appellants yeas that the reference in question with all its material particulars was a reference for Arbitration, that the decision furnished by the Arbitrator was an award but the decree based thereon was granted without giving opportunity to the parties to submit objections thereto.

4. On the other hand, learned counsel for the respondents was of the view that it was a reference in terms of Article 33 of Qanun‑e -Shahadat of 1984 and thus any statement made by the referee or any decision rendered was binding upon the parties and that the party having agreed to refer, could not have even filed an appeal. The controversy between the parties requires to be fully thrashed in the light of law on the subject and the circumstances of the case itself.

5. Under various laws the matters can be referred for determination to a third party. First is the Arbitration Act of 1940 under which, during arbitration in suits the matters are referred to an Arbitrator who files an award. Second is the Civil Procedure Code under Order 26 rule 9 whereof the commissions are appointed for local investigations and third is the law of evidence under Article 33 whereof the matter is referred to a referee from making statements. To ascertain as to which of the laws aforesaid is attracted in the present case, one has to refer to the conduct of the parties as well as the order of the Court under which the matter was referred and the appointment made. In fact it is the nature of appointment or reference that matters and not the words used either advertently or inadvertently.

5‑A. At page 34 of the Paper Book of Civil Appeal No.709 the statements of the parties and the order of the Court are available which should be reproduced for the convenience of reference:‑‑

Statement of Muhammad Qasim plaintiff:

Urdu 1295

Statement of Nazir Ahmed defendant and his counsel:‑‑

Whether in the light of the aforesaid statements of the parties and the order passed by the Court, the appointee can be dubbed as a Local Commission. Order 26, rule 9, C.P.C. provides that "in any suit in which the Court deems a local investigation to be requisite or proper for the purpose of elucidating any matter in dispute, or of ascertaining the market value of any property, or the amount or any mesne profits or damages or annual net profits, the Court may issue a commission to such person as it thinks fit directing him to make such investigation and to report thereon to the Court". The words underlined above would clearly indicate that Local Commissions are appointed only to get certain explanations and clarifications regarding the matters in confusion. There are occasions when the evidence on record does not furnish a clear picture and certain ambiguities become apparent on record. In such circumstances, the Courts are empowered to issue Local Commission so as to elucidate, clarify or explain the matter in question. In the instant case no ambiguity was confronted. Rather, the evidence was not at all placed reliance upon. Instead, the parties agreed that the entire matter be decided by Muhammad Ashraf Cheema, Advocate. This appointment does not coincide with the appointment of a Local Commission under Order 26, rule 9, C.P.C. The appointment of Local Commission is, therefore, excluded in the circumstances and we hold that Muhammad Ashraf Cheema, Advocate was not a commission to make local investigation.

6. The second possibility is of reference under Article 33 of Qanun‑e‑Shahadat which is reproduced below:‑‑

"33. Admission by persons expressly referred to by party to suit .‑‑ Statements made by persons to whom a party to the suit has expressly referred for information in reference to matter in dispute are admissions."

The Article 33 in unambiguous words goes to lay down that the reliance by the party in a litigation is made on the statement of a third party. The law provides that if the matter is left to the statement of third party, such statement is to be considered as admission by the party. The illustrations below Article 33 further elaborate the matter that when the question is, whether a horse sold by A to B is sound, the statement of C regarding the condition of horse would amount to an admission ,provided A made an offer to B to "Go and ask C. C knows all about it". There are four ingredients of Article 33 aforesaid. First that some party must have referred the matter to a third person. Second, that the reference must be for information and third, that the referee must make a statement qua such information and lastly that such statement shall be deemed to be an admission by the party who expressly referred to such third person for information. Here the status of such third person is more of a witness than of either an arbitrator or a local commission. Whatever is stated by the third party is nothing but an information. Whenever a case is agreed upon to be decided on the statement of a referee, the matter might fall under Article 33 of Qanun‑e‑Shahadat but a reference to a third person to decide a matter in dispute is a reference to arbitration.

7. In the instant case, the parties never agreed that Ch. Muhammad Ashraf Cheema, Advocate should make a statement simpliciter furnishing information but the entire decision of the dispute between the parties was entrusted to him. It is, therefore, more close to an arbitration in suits under Chapter IV of the Arbitration Act rather than to an appointment under Article 33 of Qanun‑c‑Shahadat.

8. To further elaborate one may refer to statement of Muhammad Qasim who clearly had undertaken that the disputed matter may be referred to Muhammad Ashraf Cheema, Advocate for decision in the case and not for making mere statement. So was the statement of Nazir Ahmad, the defendant who also wanted Muhammad Ashraf Cheema, Advocate to decide the matter between the parties. The intention of the parties was perfectly reflected in the order, dated 8‑1‑1989 of the Court which appointed Muhammad Ashraf, Advocate, for giving a decision over the pending dispute between the parties with further direction that after hearing both the parties (like Court) he would render his written judgment in Court. For this specified job, a fee of Rs.300 was also fixed. What else could be a better reference to arbitration than the appointment aforesaid. Under no stretch of imagination a person referred to under section 33 of Qanun‑e‑Shahadat, is a person asked to decide a matter after hearing the parties and to furnish his complete judgment. Under such section the referee is a mere witness with some information about which he gives statement whereas the appointment in hand was made for complete decision of the case after hearing the parties. It is a complete arbitration for all intents and purposes but confused by the trial Court by using the word referee for the appointee. We, therefore, hold that the appointment in hand was nothing but reference to arbitration and the judgment rendered by the Arbitrator was nothing but an award.

9. This Court had categorically determined in Ghulam Farid Khan v. Muhammad Hanif Khan 1990 SCMR 763 that a reference for decision C and a referee's "Faisala" could hardly be treated as a "statement furnishing information" within the meaning of Article 33 of Qanun‑e Shahadat, 1984. The case of Himachal Singh v. Jatwar Singh AIR 1924 All. 571 cannot help the respondents because in that case the referee Pandit Gopal Das Sharma Vakil, had made a statement on oath qua the status of the parties who had jointly given a statement making a reference to him. It was his statement which was so relied upon as an admission within the contemplation of section 31 of the old Evidence Act. Ram Narain v. Santosh Kumar AIR 1952 Punjab 344 is not attracted because in there the parties had not only agreed for a reference to arbitration but had even entered into a compromise before such Arbitrator and thus, it was only held to be a valid adjustment between the parties.

10. In Umarai Ali Khan v. Intizami Begum AIR 1939. All. 176, the parties had agreed to abide by statement made by referee. They had agreed that the case be decided according to whatever statement he made and that, that statement would be binding on the parties. This appointment for making a statement should sound like one made under Article 33 of Qanun‑e‑Shahadat but the one in hand cannot be so determined being for complete decision in the case. In S.E. Makudam Mahmommad v. T.V. Mahommad Sheikh Abdul Kadir AIR 1936 Mad. 856 the agreement between the parties regarding the opening of a door lock with a key was totally of a nature altogether different from what happened in the instant case. Consequently, we hold that in the instant case, by mere use of word referee, the matter does not fall under Article 33 of Qanun‑e‑Shahadat. Muhammad Ashraf Cheema, Advocate was never referred to by the parties to make some statement but to render a complete decision regarding the entire matter in dispute so much so that a fee was also fixed for the purpose and that such appointment squarely amounted to arbitration in status. It is further held that no decree could be passed on such decision, which for all intents and purposes was an award, unless the parties were given an opportunity to furnish their objections within the period and in the manner provided by Arbitration Act of 1940.

11. Consequently, the appeals are accepted, the judgments of all the three Courts are set aside and the case is remanded to the trial Court for inviting objections from the parties against the award of the Arbitrator.

The trial Court is further directed that it shall decide the matter not later than six months. Parties are directed to appear before the trial Court on 16‑6‑2004.

M.B.A./N‑17/S Case remanded.