Choudhry MUHAMMAD NISAR vs WAQAR ALI KHAN S — 2026 CLC 316 LAHORE-HIGH-COURT-LAHORE

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Choudhry MUHAMMAD NISAR VS WAQAR ALI KHAN S. 20---arbitrator, appointment of---Formal reference, not filing of---Effect---Submission of award---Validity---It is an admitted position that parties were running the business with certain name and style as a registered firm---There also exists an arbitration agreement inter se parties to settle their disputes arising from joint business---Chapter III of the arbitration act 1940, ('the act 1940 ') provides a mechanism of arbitration with intervention of court where there is no suit pending---S. 20 of the act, 1940 directly deals with the matter in issue and respondents while invoking said provision filed a petition before the civil court, seeking intervention that the agreement be filed in the court and dispute be referred to arbitrator---appellants, while submitting reply to the petition, conceded the same and requested the court that the matter may be resolved by appointing an arbitrator---On the basis of statement of the counsel for the appellants, the Trial Court directed the parties to nominate an arbitrator---Both the sides ultimately agreed on appointment of an advocate as arbitrator by way of relevant order---However, record revealed that no formal reference was framed by the Trial Court for the arbitrator to submit his award as mandated in subsection (4) of S. 20 of the act, 1940, whereas before referring the matter to the arbitrator an order of reference by the court is sine qua non---Thus, framing of reference in terms of subsection (4) of S. 20 of the act, 1940 and referring it to the arbitrator is a necessary corollary and pre-condition for the arbitrator to start the arbitration proceedings---When the very basis of the arbitration proceedings are suffering with patent illegalities, the superstructure built thereupon would automatically crumble---Trial Court erred in law while making award the rule of the court---High Court set-aside the impugned judgment and decree; as a sequel, petition under S. 20 of the act, 1940, moved by the respondents, shall be deemed to be pending before Trial Court, who shall first appoint the arbitrator and then frame a reference for determination of the arbitrator---appeal was allowed accordingly.

Choudhry MUHAMMAD NISAR vs WAQAR ALI KHAN S — 2026 CLC 316 LAHORE-HIGH-COURT-LAHORE

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