GOVERNMENT OF N. W. F. P. THROUGH CHIEF ENGINEER, PUBLIC HEALTH vs AZIZ KHAN, CONTRACTOR, BABU HAIDER ROAD, PESHAWAR
This matter concerns a contractual dispute between a government department and a contractor regarding a water supply scheme. The core legal question was whether an arbitration award was valid when the arbitrator appointed by the trial court did not meet the rank requirement stipulated in the arbitration clause of the contract. The appellant contended that the contract mandated the arbitrator be an officer not below the rank of Superintending Engineer, yet the court appointed an S.D.O. The Supreme Court found that the High Court had erroneously concluded that the appellant failed to object to the appointment of the S.D.O. as arbitrator. Upon reviewing the record, the Supreme Court determined that the appellant had, in fact, repeatedly raised objections regarding the arbitrator's lack of requisite rank. Consequently, the Supreme Court held that the High Court's judgment was based on a misapprehension of facts and a non-reading of the record. The case was remanded to the High Court for a fresh decision, establishing the principle that courts must accurately verify the record regarding procedural objections before dismissing them as waived.
- Can a court appoint an arbitrator who does not meet the rank requirements specified in the arbitration clause of a contract?
- Does a failure to object to an arbitrator's appointment constitute a waiver if the record shows objections were in fact raised?
- Is a judgment based on a misreading of the record liable to be set aside?
- Section 20, Arbitration Act 1940
- Order XLVII Rule 1, Code of Civil Procedure 1908
- Section 151, Code of Civil Procedure 1908
' MIAN BURHANUDDIN KHAN, J.-Leave was granted against the judgment and decree of a learned Division Bench of Peshawar High Court, dated 27-11-1978, vide order of this Court, dated 10-6-1979.
2. The respondent, according to the appellant's case, is a contractor and was awarded a contract for execution of water supply scheme, Thathi Nasrati Tehsil Karak, District Kohat. The respondent laid a claim in connection with some payment due to him under the contract and in this behalf be moved an application under section 20 of the. Arbitration Act in the Court of the Senior Civil Judge, Peshawar, for reference of the dispute to arbitration in accordance with clause 25 of the Contract Agreement. Accordingly the Court referred the dispute to arbitration. Mr. Ataur Rahman Khan, Superintending Engineer who, in due course, made an award on 22-12-1970 which was made a rule of the Court for the recovery of Rs, 9,441/50 in favour of the respondent against the appellant. Later on, the respondent applied for a review of that order and award under rule (1) of section 47 and section 151, C. P. C. The appellant resisted the application. Nonetheless on 21-6-1971 the learned Senior Civil Judge, Peshawar accepted the review application ; set aside the award already made between the parties and referred the dispute for arbitration afresh ny Mr. Bashir Hussain, S. D.
0. Mr. Bashir Hussain gave his award for the recovery of Rs, 98,737/33 against the appellant which was filed in the Court on 17-11-1976. The appellant filed objections against the award which were rejected by the Court and the award was made rule of the Court for the recovery of the aforesaid amount against the appellant. Regular First Appeal filed by the appellant before a Division Bench of the Peshawar High Court was dismissed vide the impugned judgment.
3. Learned counsel for the appellant contended that in accordance with arbitration clause 25 the dispute or difference between the parties had to be referred to arbitration by an officer not below the rank of Superintending Engineer and as such the appointment of Mr. Bashir Hussain, S. D.
0. By the learned civil Court was made without any lawful authority ; and secondly that the award was void ad initio.
4. We have heard the learned counsel. It appears that the objection to the appointment of Mr. Bashir Hussain, S. D.
0. Was raised on behalf of the appellant at the earliest and repeatedly. Ongoing through the record we find an application on page 27 of the paper-book wherein the appellant have objected to the appointment of S. D.
0. As an arbitrator and in another similar application, dated 11-5-1973, placed on page 26 of the paper-book the appellant reiterated his stand and objected to the appointment as arbitrator of any officer below the rank of Superintending Engineer. Thus, the High Court was not justified in observing that there is nothing on the record to show that the appellant had objected to the appointment of the said S. D. O as arbitrator. This observation appears to be based on misapprehension Of facts and non-reading of the record. Relevant portion of paragraph 5 of the impugned judgment of the learned Bench of the High Court reads:- "Mr. Bashir Hussain a Civil Engineer, who was working as S. D. 0 in the department of the appellant was appointed as the arbitrator. There is nothing on the record to show that the appellant objected to his appointment, on the other hand the objections to the award, reproduced here above reveal that therein no objection was raised about the competency of Mr. Bashir Hussain to act as an arbitrator in the dispute."
' We, therefore, remand the case to the learned High Court for decision afresh on the points raised.