P L D 1961 (W (PLP)

(i) That the awards were bad, because the arbitrator had given no finding whether the cancellation of the contracts was justified or otherwise; (ii) that the adjudication suffers from an apparent defect, because it is not possible to know from the awards whether the arbitrator had accepted or rejected the certificates of the engineer which were binding on him ; (iii) that the arbitrator was not entitled to grant interest to the plaintiff, which he has done under item No. 2 of the awards; and (iv) that the claim under item No. 3 was outside the contract and in the alternative the grant of damages under this head was prohibited by the contract itself. These were the only points which were urged before me by the learned counsel for the defendant, and I shall now proceed to deal with them.

6. Uncertainty of arbitration clause:‑To understand the contention of the learned counsel it would be necessary to reproduce the arbitration clause of the contract which is common in all the cases. It is clause 68 of the General Conditions of Contracts for lump‑sum Contracts :‑ "

68. Arbitration.‑All disputes between the parties to the contract arising out of or relating to the contract, other than those for which the decision of the C.M. E.S/S.E. or of any other person is by the contract expressed to be final and conclusive, shall after written notice by either party to the Con tract to the other of them be referred to the sole arbitration of the officer of the M. E. S. appointed in the tender documents. Unless the parties otherwise agree, such reference shall not take place until after the completion, alleged completion of abandonment of the works or the determination of the contract. The venue of arbitration shall be such place or place as may be fixed by the arbitrator in his sole discretion. The award of the arbitrator shall be final, conclusive and binding on both the parties to the contract." Under this clause the disputes other than those which are accepted are to tie referred to the sole arbitration of the officer of the M. E. S. appointed in the tender documents. We must, therefore, refer to the tender documents, which apply to these cases. The ‑relevant portion of the said documents reads as follows: "In the case of contracts accepted by the Engineer‑in‑Chief the Director of Works, Deputy Chief Engineers and CMES exercise enhanced powers the arbitrator will be an Engineer Officer Y the MES not below the following ranks and nominated by the QMG "GHQ (Qr. Master General, General Head Qrs.):‑ (a) For claims below Rs. 2,00,000 Lt. Col. S. E. (b) for claim of Rs. 2,00,000 and over Col. or S. E. holding an appointment normally tenable by Colonel." Mr. Sharifuddin argued that there was uncertainty in this clause inasmuch as it could not be definitely said as to who would be the person who would be the arbitrator in case of dispute between the parties. He said it might be a Lt. Colonel or a Colonel or S. E. (Superintending Engineer) and then it was not known as to which Lt. Colonel, S. E. or Colonel it would be in case of a particular dispute. He based this argument almost entirely upon a judgment of S. A. Rahman, C. J., as he then was, in the case of Porvince of the Punjab v. Messrs Irfan & Co. (P L D 1956 Lah. 442). The arbitration clause in that case was in the following terms:‑ "Any dispute under this contract will be referred to the Secretary to Government Punjab, Civil Supplies Department whose decision will be final and binding on the parties." The question before his Lordship was whether in view of the presence of this clause in the contract the plaintiff's suit should have been stayed by the trial Judge upon an application by the defendant, namely, the Province of the Punjab under section 34 of the Arbitration Act, which application the learned trial Judge had rejected. The learned Chief Justice relying upon the case of Governor‑General v. Simla Bonking and Industrial Co, (A I R 1947 Lah. 215) observed as follows:‑ "In my opinion, the position in the present case is somewhat similar. It is conceded by the learned Advocate‑General that there is no officer with the designation of Secretary Civil Supplies existing. The Civil Supplies Department was redesign ated as the Food Department sometime ago and there now exists a Secretary Food but not a Secretary Civil Supplies. In terms, therefore, the clause sought to be invoked by the Province does not refer to any existing officer. Then again it is not clear whether the intention of the parties was to refer the dispute to the arbitration of the officer holding the post of Secretary Civil Supplies at the time the contract was concluded or at the time when the dispute arose or at the time of the actual refer ence. In my humble judgment, this involves an uncertainty which vitiates the arbitration clause. I hold, therefore; that the clause .is unenforceable as an arbitration. clause. The order passed by the learned Civil Judge can, therefore, be sustained, though not on the grounds mentioned by him." In the Lahore case, on which his Lordship had relied, the arbitration clause contained the word "the Superintending Engineer of the Circle for the time being", and it was held with reference to those particular words that it was not possible to say with certainty which of the Superintending Engineer who held charge of the circle at various times was intended to arbitrate.

7. In my opinion, these cases render no assistance to the learned counsel for the defendant in the case before me for the simple reason that the contract provides that the arbitrator will be an Engineer Officer of the M. E. S nominated by the QMG GHQ: It is common ground that Col. Humayune was nominated by the QMG GHQ to be the sole arbitrator in all these cases. Inasmuch as the arbitration clause read with the tender documents provides A that an officer of the M.E.S. of a certain rank has to be nominated by the QMG GHQ to act as the arbitrator, no question of uncertain y arises. The appointment depends upon the nomination by the QMG GHQ of a particular officer after the dispute has arisen. In the present case such an appointment was made and I do not see how it can lie with the department to complain of the uncertainty of the arbitration clause, Col. Humayune was an Engineer and an officer of M.E.S. from whose head quarters his appointment had been made‑and not, only that his appoint ment was accepted by the department be they also submitted to his jurisdiction in the long drawn‑out proceedings which lasted for as many as 63 hearing, without raising a word of protest and I do not see how it is open to them now to question his jurisdic tion on the ground of the uncertainty of the arbitration clause. It was further contended by Mr. Sharifuddin, though faintly, that when the reference was made to Col. Humayune he was only a Lt. Colonel and not a Colonel and inasmuch as the claim in one of the 4 cases was a little over two lacs of rupees his, appointment was not in the terms of the contract. In the first place, when the claims were filed before the arbitrator in the first instance all of them were w thin two lacs of rupees and it was later on that one of the claims was amended by the plaintiff and slightly exceeded two lacs. But before this amendment was made Mr. Humayune had already become a Colonel. The exact date of his 'appointment is not known but it was conceded that he was appointed sometime before May 1958 and his appointment as Colonel was given retrospective effect from July 1957, whereas he was appointed arbitrator in these cases on 21‑2‑

58. There is thus no force in this contention as well. On the first point, therefore, I hold that there was no uncertainty in the arbitration clause in the present case and the awards .are not vitiated on that ground.

8. The next question for consideration is whether the arbitration proceedings were premature and thus without jurisdic tion. Mr., Sharifuddin based his argument upon the second paragraph of clause 68 of the agreement which reads as follows:‑ "Unless the parties otherwise agree such reference shall not take place until after the alleged completion or abandonment of the works or the termination of the contract." He contended that the plaintiff had admittedly not completed the work nor had he alleged completion. With regard to abandon ment he argued that though, according to the defendant, there was such an abandonment yet the plaintiff had not admitted that position and, therefore, he cold not seek arbitration. As regards the question of the determination of the contract he argued that this determination must be read with reference to clause 55 of the agreement, which only‑relates to a situation when the Government itself does not require the whole or any part of the works to be carried out. 'This, he said, had not happened in this case. The argument, therefore, was that as none of these conditions had been fulfilled the reference to the arbitration was premature and, therefore, without jurisdiction. He relied upon an English case of the Court of Appeal in Smith v. Martin (1925 K B Vol. I p. 745) in that case condition‑31 of the contract provided that should the building owner not pay the builder any sum certified by the architect within the time limited by the contract, the builder would be at liberty to determine the contract and recover from the building owner payment for all work executed, and condition‑32 provided that in case any difference should arise between the building owner and the builder as to the construction of the cont ract or as to any matter arising thereunder, such difference was to be referred to arbitration, but that "such reference" shall not be opened until after the completion of the works? The builder had in that case determined the contract upon the neglect of the owner to pay a sum certified by the architect and had commenced arbitration proceedings while the contract works were still uncompleted, and the arbitrator had made an award in his favour for the money due to him under the contract. Upon these facts and with reference to the 2 conditions mentioned above, it was held by their Lordships that in view of the clear words in con dition‑32 the arbitration was premature inasmuch as the whole of the works contracted for had not been completed. This case, however, is clearly distinguishable from the case before me. For one thing, the clause which had been reproduced above, itself provides that it will operate unless the parties otherwise agree. In the present case, it must be held that the defendant had agreed to arbitration, because we find that the QMG appointed Col. Humayune as the arbitrator. We also find that the Department took part in the arbitration proceedings without protest and filed their own claim before him and did not at any time throughout the lengthy proceedings contend that the arbitration was premature. C They cannot now, therefore, raise this objection. But quite apart from this I find that in the present case on the defendant's own showing there was abandonment of the works which would attract the arbitration clause and also because the contract was admittedly cancelled by the Department. The expression "deter mination of the contract" used in this clause has not been used to be limited to cases of determination as provided by clause 55 referred to above. The determination intended here is actual determination of the contract for any reason and not merely when the Government had decided not to carry out the works. I further find that upon the defendant's own showing the work was actually completed by the Department as is stated in the objections, and it was upon basis that they made their own claim against the contractor in the arbitration proceedings. I, therefore, have no hesitation in rejecting the contention raised by the learned counsel.

9. The third contention of the learned counsel was that there was no dispute which could be referred to arbitration. He con tended that inasmuch as the plaintiff had not, submitted his claim to the Department there was no occasion for any dispute to arise. I do not agree. On the defendant's own showing the plaintiff had abandoned the work and the defendant cancelled the contract. The contractor on the other hand was contending that the Department had wrongfully withheld the payment of his bills, which compelled him to stop the work. In these circumstances, I do not see how it can be urged that there was no dispute which was referable to the arbitrator. In point of fact, the awards themselves show that there were claims and counter‑claims between the parties, which same to be determined by the arbitrator. There is no force in this contention and I reject it.

10. Coming to the merits of the case, the first contention of the learned counsel for the defendant was that the awards were bad, because the arbitrator had given no finding whether the cancellation of the contract was justified or not. He further argued that the awards did not contain enough material, from which it could be seen as to what were the grounds upon which the decision was reached by the arbitrator. But an arbitrator is not: bound to give reasons for his decision, nor is he bound by any technical rule or procedure and he need not record separate findings on the point on which the parties are at issue. What has to be seen is whether he has given an intelligible decision which determines the rights of the parties in relation to the subject matter of the reference. Looked at from this standard there is no doubt that the awards before me are not open to objections. There is no ambiguity or inconsistency‑ in the awards and they were given after a very elaborate inquiry, in which both the parties were represented. He considered the claims of the plaintiff as well as of the defendant and gave a decision in these cases, which are clear and which conclusively determines the rights of the parties, in relation to the subject‑matter of the reference. I, therefore, hold that the awards are not open to challenge upon the ground mentioned above as urged by the learned counsel for the defendant.

11. With regard to the second contention of the learned counsel for the defendant on merits that it is not possible to know from the, awards whether the arbitrator had accepted or rejected the certificates of the Engineer which were binding on him under clause 68 of the agreement, the short answer is that there is nothing on the face of the awards from which it could be said that the arbitrator had rejected the certificates, if any, of the Engineer in charge. The certificates., is contemplated by clause 33 of the agreement. Inasmuch as there is nothing on the face of the awards to show that the arbitrator had rejected any such certificate or decision which was binding on 'him under the contract, it is not for me to enter upon an inquiry on that point. I, therefore, reject the contention of the learned counsel.

12. The third objection on merits is with regard to the grant of interest to the plaintiff. The amount of interest allowed by the arbitrator to the plaintiff is shown against claim No. 2 in three awards, namely, the awards in Suits Nos. 157, 158 and 159 of 1959 and as item No. 4 is the award in Suit .No. 160/1959. The various sums allowed in the four awards are as follows :‑ Suit No. 157/59 ... ... 4 806 Suit No. 158/59 ... ... 7,082 Suit No. 159/59 ... ... 2,523 Suit No. 160/59 ... ... 1,627 True copies of the statements of claim of the plaintiff in all four cases were produced by the defendant, in which the various items of claim are shown, which have be‑en dealt with seriatim in all the awards. Dr. Mahmud appearing for the plaintiff did not dispute that these were true copies of the statements of claim filed by the plaintiffs in the four cases before the arbitrator, but he contended that it was not open to me to look into these statements and that I must restrict myself to the awards alone to see if there is any error apparent on the face of them. I cannot accept this con tention, because in the awards various amounts are granted to the 'plaintiff as against the respective claims under various heads made by the plaintiff. In order, therefore, to understand as to what these claims are it becomes necessary to refer to the statements of claim filed by the plaintiff himself and this is all that I have done in order to determine whether the award is bad on the face of it to the extent that it grants interest to the plaintiff. In support of his contention Mr: Sharifuddin relied upon a decision of a Supreme Court of India in Thawardas Pherumal v. Union of India (A I R 1955 S C 468). The relevant passage appears at page 477 in para

30. In that case the arbitrator had granted interest to the plaintiff in respect of a claim arising out of a contract for the supply of bricks. The contention of the plaintiff before the arbitrator was that as the department delayed in deciding the contractor's claim his money remained blocked up and he was, therefore, entitled to interest. This was accepted by the arbitrator. The matter had then gone to Court which had struck out the amount of interest from the award and when the plaintiff appealed to the Supreme Court, this is what their Lordships held on that point :‑ "The arbitrator sets out the amounts awarded under each head of claim. A perusal of them shows that each head relates to a claim for an unliquidated sum. The Interest Act, 1939 applies, as interest is not otherwise payable by law in this kind of case (see B. N. Ry. Co. v. Ruttanji Ramji A I R 1938 P C 67)." Their Lordships then considered the relevant provision of the Interest Act and found that the contractor was not entitled to interest and they, therefore, held that the amount of interest awarded by the arbitrator was rightly struck out from the award. This decision is in point. But there is another compelling reason for striking out the item of interest in these awards and it is this. The arbitrator has allowed damages to the plaintiff in all these four cases under the head of claim 3 of the plaintiff's statements of claim. These could only have been granted on the principle of section 73 of the Contract Act. It must, therefore, follow that having granted damages under this head he could not have in addition granted interest by way of further damages. These four items M account of interest, which have been stated earlier, must therefore be struck out from the respective awards on the ground of obvious error. All the four awards are accordingly modified.

13. With regard to the fourth contention of Mr. Sharifuddin which related to the claim of damages and which came under the claim 3 in all the four /awards his first contention was that these claims fell outside the contract. This contention was based on the four statements of claim filed by the plaintiff before the arbitrator as item No. 3, which reads as follows :‑ "Damages and compensation for the alleged cancellation of the C. A. (Contract Agreement) by the Chief Engineer South, Karachi, which is ultra vires, unwarranted, mala fide, illegal, inoperative in law and constitutes breaches of the C. A. besides causing harassment, loss of business, good will and reputa tion." The learned counsel argued that it is not possible to know whether the damages under this head were granted on account of the cancellation of the contract or on account of harassment, loss of business, good will and reputation. I cannot accept this contention. In the first place, these claims: as they are formulated are clearly on the ground of the cancellation of the contract and the last portion of the statements of claim reproduced above is superfluous and has been added to indicate that the plaintiff, besides suffering loss on account of the cancellation of the contract has suffered in reputation and goodwill etc., but this has not been made the basis of the claim. Apart from this it does not appear from the awards that any portion of the damages granted under this head includes a claim for damages on account of harassment, loss of reputation etc. It has been held that wrong basis of damages is no ground for challenging an award. And in so far as the alleged error does not appear on the face of the awards, it is not for me to enter into the merits of this claim. It must be remembered that the arbitrator being a Judge selected by the parties, and in this case he was selected by the Department of which he belonged, was chosen to decide these matters without appeal and this Court has nothing to do with mere error in judgment, if any, on his part. Mr. Sharifuddin's alternative contention on `this point was that the grant of damages was pro hibited by the contract itself. He relied upon clause 55 of the contract which expressly deals with a situation in which after the acceptance of tender the Government might not for any reason whatsoever require the whole or part of the works to be carried out. In that event it is provided that no claim of any compensa tion etc. would lie. The short answer to this contention is that in the present case the contract was specifically cancelled by the Government under clause 53 and, therefore, the immunity provided under clause 55 would obviously be not extended to a case which did not fall under that clause. I reject both these contentions and overrule the objection with regard to the claim of damages referred to above.

14. It was also contended by Mr. Sharifuddin that the grant of cost by the arbitrator at a uniform rate of Rs. 2,000 in all these cases was arbitrary. I do not think so. These proceeding occupied 63 hearings and it was for the arbitrator to judge what should be the reasonable amount of cost of arbitration and he having granted that sum it is not for me to strike it out or reduce it.

15. Mr. Sharifnddin lastly contended that‑the awards were made beyond time. The arbitrator was appointed on 24‑2‑58 by the QMG GHQ and the plaintiff filed his statements of claim on 26‑3‑58 and the awards were made on 15‑5‑

59. But in the mean time extensions had been granted at the instance of the arbitrator by the Court of the First Additional District Judge, Karachi, and it was conceded by Mr. Sharifuddin that if those extensions are taken into account then the awards are within time. He, however, contended that the First Additional District Judge did not have any jurisdiction to grant these extensions, because the claims involved in these cases were beyond the pecuniary jurisdiction of the Court of the First Additional District Judge. That is so, but these extensions were granted by the Additional District Judge with the full knowledge of the defendant and evidently with their consent, though of course, that would not grant jurisdiction to the Additional District Judge. An application has been made on behalf of the plaintiff in each of the four cases under section 28 of the Arbitration Act for enlarging the time for the making of the awards upto the day on which they were made, namely, the 15th of May 1959. These are supported by affidavits, the facts of which have not been repudiated by the defendant. Even otherwise, I think this is a fit case for the enlargement of time and I order accordingly in terms of the prayer of the plaintiff in their applica tion under section 28 of the Arbitration Act. This objection, therefore, also fails.

16. In view of the conclusion recorded by me I order that all the four awards with the modification in respect of the claim of interest shall be made a rule of the Court and the decree shall follow in each of these four cases. I further order under section 29 of the Arbitration Act that the amounts of each of these awards as modified by me shall carry interest at 6% per annum from the date of the decree. There will be no order of cost in respect of the proceedings before me. K. B. A. Suits decreed.