Muhammad Razaq vs Umar Ali

Stereo.HCJDA 38.

Judgment Sheet

IN THE LAHORE HIGH COURT,

MULTAN BENCH, MULTAN

JUDICIAL DEPARTMENT

F.A.O. No.54 of 2015.

Muhammad Razzaq.

Versus

Umar Ali.

J U D G M E N T.

Date of hearing: 01.04.2026.

Appellant by: Syed Muhammad Ali Gillani, Advocate.

Respondent by: M/s Rana Muhammad Ashraf Jameel and Malik Ghulam Nazik Kanhoo, Advocates.

AHMAD NADEEM ARSHAD, J. Through this appeal, the appellant has called into question validity and legality of judgment dated 02.03.2015 pursuant whereto while accepting the appeal of the respondent matter was remanded to the learned Trial Court for decision afresh after recording of evidence.

2.The germane facts forming the background of the present proceedings are that the appellant instituted a suit for declaration along with permanent injunction and in alternate prayed for specific performance of an agreement to sell against the respondent, asserting therein that the respondent, vide agreement to sell dated 14.03.2001, agreed to alienate the suit property measuring 20 Kanals & 16

Marlas for a total sale consideration of Rs.650,000/-, and after receiving the entire consideration amount, delivered possession thereof to the appellant. The respondent, however, contested the suit by filing a written statement controverting the assertions so made.

During the pendency of the suit, the parties, on 05.12.2012, consented to resolve their dispute through a Referee, and accordingly, one Alhaaj Rana Shaukat Hayat Noon was appointed as Referee, whereupon the matter was referred to him. The Referee rendered his decision on 17.12.2012, which was produced before the Court on 18.12.2012. The respondent, however, raised objections thereto, disputing the authorship of the said decision, whereupon the learned Trial Court summoned the Referee for personal appearance. The Referee appeared before the Court on 29.03.2013 and duly verified that the decision in question was indeed dictated and pronounced by him. In the light of such verification, the learned Trial Court decreed the suit in terms of the Referee’s decision. Feeling aggrieved, the respondent preferred an appeal, which was accepted by the learned Appellate Court vide judgment dated 02.03.2015, and the case was remanded to the learned Trial Court for decision afresh after recording evidence of the parties. Being dissatisfied with the said judgment, the appellant has filed the instant appeal.

3.I have heard learned counsel for the parties at length and gone through the record with their able assistance.

4.At the very outset, it is considered imperative to elucidate the terms “Referee,” “Arbitrator,” and “Mediator,” as these expressions

are often used interchangeably despite embodying distinct legal connotations and differing in their respective roles, functions, and the legal effect of their determinations.

5.An Arbitrator adjudicates disputes, interse, parties wherein, they agree to a consensual mode of resolution of controversies. This mode of determination has statutory backing governed primarily by the Arbitration Act, 1940. The essence of arbitration lies in the existence of a written agreement or a consensual agreement whereby the parties consciously agree to submit their disputes to a private forum/person for adjudication.

6.The Arbitrator, in such proceedings, assumes the role of a quasi-judicial authority and is empowered to determine the rights and liabilities of the parties after affording them an opportunity of hearing. The proceedings, though less formal than those of a Court, are nonetheless structured and guided by the ambit and scope of the consent of the parties to the arbitrate. The Arbitrator is appointed either by mutual consent of the parties, in terms of the arbitration clause, or through the Court where parties fail to agree. His functions include recording of evidence, hearing arguments, evaluating material on record, and ultimately rendering a reasoned decision. The proceedings culminate into an “award,” which upon made rule of Court carries binding legal force and is enforceable as a decree of the Court. The award can only be challenged on limited grounds such as misconduct or illegality. Importantly, in the absence of a valid arbitration agreement, any decision rendered, even if by mutual

understanding, cannot be treated as an arbitral award, and informal determinations such as those by a Panchayat do not attain the status of a binding arbitral award.

7.A Mediator, on the other hand, operates in an entirely different sphere, rooted in facilitation rather than adjudication. Mediation is recognized under Section 89-A and Orders IX-A and IX-B of the Civil Procedure Code, 1908, as well as under the Alternative Dispute Resolution Act, 2017 and Sections 276 to 278 of the Companies Act, 2017. Mediation is a modern, flexible and globally recognized method of dispute resolution, particularly in commercial and corporate matters, aimed at saving time, cost and judicial resources while promoting a culture of amicable settlement.

8.A Mediator is appointed either by mutual consent of the parties or by the Court, and in corporate disputes may also be selected from panels maintained by regulatory bodies such as Securities and Exchange Commission of Pakistan (SECP). The Mediator does not adjudicate, determine rights, or impose any decision; rather, his role is confined to facilitating dialogue, identifying issues, encouraging open communication, and guiding the parties towards a mutually acceptable resolution.

9.The process is informal, confidential, and party-driven, allowing flexibility and creative solutions. The outcome of mediation is not a binding decision but a “settlement,” which derives its enforceability only when voluntarily agreed upon by the parties and,

where required, incorporated into a decree of the Court. Thus, unlike arbitration, mediation does not result in an enforceable adjudication unless judicially endorsed.

10.Referee is a person who is invited with the consensus of the parties to a suit and his personal opinion is sought for resolving the controversy and his appointment is always with the consent of the parties. He must not hold any inquiries nor is supposed to collect evidence and the judgment and decree in that particular suit has to be based upon his opinion which would amount to admission by the parties to the suit and the same has binding effect. For reference reliance is placed upon "Qamar-ud-Din V. Abdul Latif” (2010 YLR

11.Statement made by the Referee under the provision of Article 33 of Qanun-e-Shahadat Order, 1984, is to be treated as an admission on behalf of the parties referring. Article 33 reads as under:- "33. Admission by person 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 a matter in dispute are admissions."

12.Although, the Referee is barred from making inquiries, however, this Court, in a case titled "Haji Anwar Ali V. Bashir Ahmad" (2002 CLC 421) held that where a referee makes some inquiry which is merely supplementary to his personal knowledge for the purpose of arriving at a just conclusion, such inquiry cannot be treated as travelling beyond the scope of Article 33 of the Qanun-e- Shahadat Order, 1984.

F.A.O. No.54 of 2015. 6

13.In this particular case, it has been observed that the parties, with their mutual consent, appointed Alhaaj Rana Shaukat Hayat Noon as Referee for amicable settlement of their dispute. The learned Trial Court vide order dated 05.12.2012 observed as under:- "Both plaintiff and defendant requested for referring the entire dispute to Rana Shoukat Hayat Noon for decision. They have also given their undertaking to abide by the decision of the referee in letter and spirit. Hence, with the consent of both parties matter is referred to Rana Shaukat Hayat for decision. Robkar be sent to the referee. To come up for the decision of the referee on 15.12.12."

14.The said Referee, in pursuance of such appointment, rendered his decision dated 17.12.2012, which was subsequently produced before the Court on 18.12.2012. The said decision is reproduced verbatim hereunder:-

:"ہلصیف

فرنیقی ےن ہقفتم وطر رپ ےھجم ررفیی.11501.50 ہی ہک دقمہم ونعان باال ںیم بروےئ مکح ومرہخ رمہلاکمہلکزرنمثووصل51انکل0.رقمرایکےھ۔ریماہلصیفےھہکدماعہیلعےندمیعےسارایض 042/51 ،0. ،50،55 ،7 ،1 ،4 ،2/042 رکایل وھا ےھ۔ اس رطح دمیع اھکہت ربمنان رسخہ "ہضبقارایضےنیلاکدقحارےھ۔اناحالتںیمدمیعاکدوعی ٰاچسےھ۔دوعی ٰدمیعڈرگیفرامبااجوے۔

15.The respondent/defendant raised an objection before the learned Trial Court contending that, since the decision had not been submitted by the Referee himself before the Court, the same could not be attributed to him and, thus, lacked authenticity. In view of the said objection. The learned Trial Court deemed it appropriate to summon the Referee for his personal appearance. In compliance with the said direction, the Referee appeared before the Court on 29.03.2013 and got his statement recorded to the following effect:-

ت "ےھجمدعالےنررفییرقمرایکاھت۔ںیمےنوطبرررفییہلصیفایک۔ہلصیفریمےاسےنمےہ۔سجرپ ت ریمے دطختس یھب وموجد ںیہ۔ ہلصیف ریمے دہای رپ یشنم ےن رحتبر ایک۔ ہلصیف " ریمایہےھ۔5715010.50ومرہخ

16.In view of the above, once the Referee himself appeared before the learned Trial Court and unequivocally affirmed the correctness, genuineness, and authorship of the decision dated 17.12.2012, all doubts and objections raised by the respondent with regard to its authenticity stood conclusively resolved. The Referee, being the person duly appointed by both parties with their mutual consent, categorically stated on oath that the decision bearing his signatures was rendered by him and was finalized under his instructions. In the presence of such clear and unambiguous affirmation, no plausible ground remained to doubt the veracity of the Referee’s verdict. The verification by the Referee himself lent full credence to the decision, thereby elevating it to an unquestionable and reliable determination of the dispute between the parties.

17.Article 33 of the Qanun-e-Shahadat Order, 1984, provides that statement of information of a third person referred to by the parties shall constitute the admission of the referring parties. In these circumstances, the learned Trial Court was fully justified in placing reliance upon the Referee’s decision and proceeding to decree the suit in accordance therewith.

18.The learned Appellate Court, while passing the impugned judgment dated 02.03.2015, primarily laid emphasis on the

contention that the description of the property, as recorded in the decision rendered by the Referee, was erroneous, and on that basis observed that the land mentioned therein appeared to be distinguishable, thereby casting doubt as to whether the decision was based on the personal knowledge of the Referee, and consequently repelled reliance upon his statement. Of course, there exists an error in the Khasra number in the Referee’s decision, wherein it is recorded as 243 instead of 247, however, such an error, at the most, can be characterized as a clerical mistake, which, in itself, is insufficient to discredit the entire decision or to lead to the presumption that the Referee was not referring to the suit property. It is well settled that minor inaccuracies or clerical errors do not vitiate a judgment or decision when the substance of the matter remains clear and unambiguous.

19.A perusal of the decision dated 17.12.2012 reveals that the Referee has specifically mentioned the name of the Court, the title of the suit, and the nature of the proceedings, thereby clearly demonstrating that the decision pertained to the very lis pending before the Court. Furthermore, the Referee, upon his personal appearance before the Court, categorically stated that he was appointed by the Court as Referee and that the decision rendered by him was in respect of the dispute between the parties before the Court. In view of this unequivocal statement, there remains no room for doubt or inference that the decision relates to any other property or subject matter. Consequently, the minor discrepancy in the Khasra

number does not, by any stretch of reasoning, undermine the authenticity or applicability of the Referee’s decision to the suit property, nor does it justify the conclusion drawn by the learned Appellate Court in discarding the same.

20.Moreover, learned Appellate Court also erred in law while remanding the matter to the learned Trial Court for decision afresh after recording evidence of the parties. When the parties, of their own volition and with mutual consensus, approached the learned Trial Court and unequivocally expressed their desire to have the dispute amicably resolved through the appointment of a Referee. The appointment of the said Referee, having been made with the free consent of both parties, is an admitted and undisputed position on the record.

21.By adopting such a course, the parties consciously invited the Court to resort to a procedure not expressly envisaged under the provisions of the Code of Civil Procedure, 1908, and, in essence, opted for a mode falling within the realm of extra cursum curiae.

Having elected to pursue this agreed mechanism for adjudication of their dispute, it does not lie in the mouth of either party, particularly the one now resiling, to challenge the very procedure to which it had earlier acceded.

22.In such circumstances, the doctrine of estoppel squarely comes into play, precluding a party from approbating and reprobating simultaneously, or, in other words, from blowing hot and cold in the

same breath. Consequently, any attempt to wriggle out of the agreed course, after having derived or sought to derive benefit therefrom, is legally untenable and liable to be discouraged. In such a state of affairs, even challenge to the decree by preferring an appeal was not tenable. Reliance is placed on the case titled "S.E Makudam Muhammad V. T.V. Muhammad Sheik Abdul Kadir and another" (AIR 1936 Mad. 856) wherein the Court observed as under:

"When a party invites the Court to adopt a procedure which is not contemplated by the Civil P.C., and is in fact a procedure extra cursum curiae, he cannot turn round and say that the Court is to blame for adopting the very procedure which he invited the Court of follow. There is such a thing as estoppel apart from the question of adjustment and the doctrine of estoppel would apply to a party who attempts to blow hot and cold in this fashion. As was held in (1896) A C 136 (1), where with the acquiescence of the parties the Judge departed from the ordinary course of procedure and decided upon a question of fact, it was incompetent for the parties afterwards to contend that they have an alternative mode of proceeding with the trial as if it had been heard in due course. Lord Watson observed in that case that there were several decisions of the House of Lords which affirmed that the judgment of the court below pronounced extra cursum curiae, is in the nature of an arbiter's award and that as a general rule at least no appeal from it will lie."

23.In view of the foregoing discussion, it is evident that the parties, with their free consent and mutual understanding, consciously elected to resolve their dispute through the appointment of a Referee and, having availed themselves of such a mode of adjudication, were bound by the outcome thereof, subject only to its verification, which in the present case was duly carried out by the Referee himself before the learned Trial Court. Once the Referee had categorically affirmed the correctness, genuineness, and authorship of his decision, and the same stood corroborated on the record, there remained no lawful or rational basis to disregard the said

determination. In such circumstances, the learned Appellate Court, instead of giving due weight to the consensual mechanism adopted by the parties and the verified verdict of the Referee, proceeded to remand the matter to the learned Trial Court for recording of evidence and fresh adjudication on grounds which are, with respect, neither legally sustainable nor factually justified.

24.Even the statement made by the Referee is having a binding effect on the parties and the decree based upon such statement could not be challenged by any party in appeal unless the same was the result of fraud or misrepresentation. Reliance is placed on the cases titled "Mushtaq Ahmad V. Muhammad Ismail" (PLD 2002 Lahore

190)and "Tariq Aslam Sheikh Tooni V. Haq Nawaz" (2005 CLC

25.Considering the above, the impugned judgment, therefore, reflects an approach that is arbitrary, capricious, and contrary to settled principles governing consensual dispute resolution. The learned Appellate Court appears to have ignored the binding effect of the parties’ agreement to refer their dispute to a Referee and has unduly diluted the sanctity of the Referee’s decision without any cogent or legally tenable reason. Such an exercise, based on a superficial appreciation of the record and a misapplication of the law, results in manifest perversity. It is well-settled that an order or judgment suffering from patent illegality, misreading of evidence, or non-consideration of material facts warrants interference in appellate jurisdiction. The impugned judgment, being a classic instance of

such perversity and flawed reasoning, cannot be sustained in the eyes of law and thus calls for interference by this Court.

26.As an inevitable corollary of above discussion, this appeal is allowed. Consequently, impugned judgment dated 02.03.2015 passed by the learned Appellate Court is set-aside and judgment/decree of the learned Trial Court dated 29.03.2013 is restored. No order as to costs.

(AHMAD NADEEM ARSHAD)

JUDGE.

APPROVED FOR REPORTING.

JUDGE.

M. Arsalan*