Mazhar Ullah deceased through 5 LRs Vs Muhammad deceased through LRs etc

Stereo. H C J D A-38.

JUDGMENT SHEET

IN THE LAHORE HIGH COURT, LAHORE.

JUDICIAL DEPARTMENT

FAO No.28405 of 2025 Mazhar Ullah (deceased) through LRs, etc.

Versus Muhammad (deceased) through LRs, etc.

JUDGMENT

Date of hearing: 12.02.2026.

Petitioners by: Mr. Ali Masood Hayat, Advocate. Respondents by: M/s Malik Khadim Hussain Wattoo and Malik Muhammad Rizwan Wattoo, Advocates.

MUHAMMAD SAJID MEHMOOD SETHI, J.- Through the instant appeal, the appellants have assailed judgment dated 05.04.2025, passed by learned Additional District Judge, Faisalabad, whereby, while disposing of the appeal, filed by respondents No.1 to 4, the arbitration award dated 18.04.1988 was made rule of the Court.

2.The facts in brief are that respondents No.1 to 4 were owners of property situated at Chak No.214 RB, Faisalabad. On 11.05.1960, the deceased respondent No.1, acting on his own behalf and as attorney for the respondents No.2 to 4, leased the property to the deceased respondent No.5 and the predecessors-in-interest of the appellants for a period of twenty (20) years at an annual rent of Rs.700/-, with an option to purchase the property for Rs.17,500/- during the period 1970–1980. In 1974, the lessees sought to exercise the option to purchase. Although the respondents initially reaffirmed the agreement, they subsequently refused in 1979 to execute the sale deed on the plea that the property had already been sold to another person. The appellants filed a suit for specific performance, which was decreed by the learned trial Court vide judgment and decree dated 02.11.1986. The respondents preferred

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an appeal. During pendency of the appeal, the parties agreed to refer the dispute to arbitration. The arbitration agreement was executed on 25.03.1988, appointing Muhammad Asif (Advocate) as the sole arbitrator. The arbitration award was announced on 18.04.1988 and submitted before the Court on 23.04.1988. Objections were filed, issues were framed, evidence recorded and learned Appellate Court eventually made the arbitration award rule of the Court, giving rise to the instant appeal.

3.Learned counsel for the appellants submits that the arbitration proceedings were procedurally flawed. He further argues that the arbitrator did not record the presence of parties, failed to take statements or obtain signatures, and did not verify the agreement in his presence. He contends that there are contradictions in the testimonies of the witnesses, and that the oath proceedings were not conducted in accordance with law. He argues that the authority of the parties to enter into arbitration was not properly established and that the award is the result of fraud and procedural irregularity. He relies upon case laws reported as Muhammad Akhtar v. Mst. Manna and 3 others (2001 SCMR 1700), Muhammad Yasin and another v. Dost Muhammad through Legal Heirs and another (PLD 2002 Supreme Court 71), Province of the Punjab through Collector, Sheikhupura and others v. Syed Ghazanfar Ali Shah and others (2017 SCMR 172) and Jehangir v. Mst. Shams Sultana and others (2022 SCMR 309).

4.Conversely, learned counsel for the respondents submits that during pendency of appeal, both parties voluntarily filed a joint application on 19.03.1988 consenting to arbitration and appointing the sole arbitrator, whose decision was agreed to be final and binding. He further submits that statements of parties were recorded in Court, the arbitration agreement (Exh.PB) was duly executed, and the award was submitted within time. He argues that the objections are belated, unsubstantiated, and insufficient to dislodge a court-sanctioned arbitration award. He relies upon case laws reported as Messrs Jame’s Constructions Company (Pvt.) Ltd,

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through Executive Director v. Province of Punjab through Secretary to the Government of Punjab (Communication and Works) Department, Lahore and 3 others (PLD 2002 Supreme Court 310), Government of Punjab through Secretary Cooperative Societies Department, Lahore and others v. Asad Abbas (2023 PLC (C.S.) 763), Hassan Akhtar and others v. Azhar Hameed and others (PLD 2010 Supreme Court 657) and Federation of Pakistan through Secretary, Ministry of Food, Islamabad and others v. Messrs Joint Venture Kocks K.G./RIST (PLD 2011 Supreme Court 506).

5.Arguments heard. Record perused.

6.Section 4 of the Arbitration Act, 1940 recognizes the validity of an arbitration agreement where parties agree to refer existing or future disputes to arbitration. The essential elements are: existence of a dispute; mutual consent; and clear appointment of an arbitrator. The record demonstrates that during pendency of appeal, both parties voluntarily submitted a joint application agreeing to arbitration and nominating the sole arbitrator. Their statements were recorded by the Court. Thus, the reference was not a private arrangement but one made with Court intervention, which carries significant legal weight. Reliance is placed on Muhammad Qasim and 2 others v. Muhammad Ismail and others (2024 CLC 449), Noor Muhammad and others v. Khan Muhammad and others (2010 YLR 984) and Syed Mukhtar Hussain Naqvi v. Mst. Hajiani Zubeda and another (2003 YLR 3289).

7.The arbitrator appeared as PW-1 and affirmed that proceedings were conducted in the presence of the parties and their counsel. His testimony was corroborated by other witnesses. The award itself (Exh.PA) contains reasons and reflects application of mind. The appellants failed to establish through cogent evidence that fraud, collusion, or mala fides were involved. Mere allegations or suspicion, unsupported by reliable proof, cannot rebut the presumption of regularity attached to a court-referred arbitration. Reliance is placed on Mian Corporation through Managing Partner

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v. Messrs Lever Brothers of Pakistan Ltd. through General Sales Manager, Karachi (PLD 2006 Supreme Court 169), Pakistan Steel Mills Corporation, Karachi v. Messrs Mustafa Sons (Pvt.) Ltd., Karachi (PLD 2003 Supreme Court 301) and Messrs National Telecommunication Corporation v. Messrs Zahra Communcations (2025 CLC 1260).

8.The objections raised by the appellants largely pertain to alleged procedural deficiencies, such as who drafted the arbitration agreement, whether presence was minutely recorded, and the manner of oath administration. However, the Arbitration Act, 1940 does not prescribe rigid procedural formalities unless incorporated by agreement of the parties. Sections 7 and 23 confer discretion upon the arbitrator to regulate proceedings. An award can be set aside only on limited grounds such as misconduct, fraud, or patent illegality causing miscarriage of justice. Minor irregularities or technical lapses, if any, do not vitiate the award unless prejudice is demonstrated. Reliance is placed on Pakistan Railways through Chief Controller of Purchase, Pakistan Railways, Lahore v. CRRC Ziyang Co. Limited, Lahore (PLD 2025 Supreme Court 706), Gerry’s International (Pvt.) Ltd. v. Aeroflot Russian International Airlines (2018 SCMR 662), Federation of Pakistan through Secretary, Ministry of Food, Islamabad and others (PLD 2011 Supreme Court 506) and Muhammad Farooq Shah v. Shakirullah

(2006 SCMR 1657).

9.As regards the authority of appellant No.1 to act on behalf of the other appellants, the record indicates that he was acting as special attorney, and no timely objection was raised at the stage of reference to arbitration. Even otherwise, a copy of the power of attorney is available on the record, which clearly reflects that respondent No.1 had been granted full authority to prosecute, defend, and otherwise handle the case on behalf of the other respondents. In these circumstances, the plea regarding lack of authority is devoid of substance. A party who consciously participates in arbitration proceedings and acquiesces in the process

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cannot subsequently challenge the authority of representation without clear and convincing proof of invalidity. The principles of agency and estoppel squarely apply. Reliance is placed on Karachi Dock Labour Board v. Messrs Quality Builders Ltd. (PLD 2016 Supreme Court 121), WAPDA and another v. Messrs Khanzada Muhammad Abdul Haque Khan Khattak and Company (PLD 1990 Supreme Court 359) and Oil and Gas Development Company Limited v. Admore Gas (Pvt.) Limited (2021 CLC 1465).

10.The learned Court below, after framing issues and evaluating evidence, concluded that the arbitration agreement was voluntarily executed and the award validly rendered. The findings are supported by the record and do not disclose any jurisdictional error or legal infirmity warranting interference in the exercise of appellate jurisdiction. The case laws referred to by the learned counsel for appellants are not applicable to the case in hand, being distinguishable on facts and circumstances.

11.In view of the above, this appeal, being devoid of merit, is hereby dismissed. No order as to costs.

(Muhammad Sajid Mehmood Sethi) Judge

Approved for reporting.

Judge *Waseem*