P L D 1976 Karachi 617 (PLP)

I. MAHMUD, J.-This is a Letters Patent Appeal against the judgment and decree dated 28-11-1966 passed by a Single Judge sitting on the original side of the High Court in Suit No. 215/65 dismissing the Appellant's objections to the award and making it the rule of the Court.

2. Briefly, the facts are that the respondent firm, Trans Ocean Asia entered into an agreement with the Appellant, Government of Pakistan dated 5-7-1955 (as modified on 13-7-1955) to purchase for export 2,603 tons of Kangni rice 1953-54 crop at 25.10.0 per ton F. O. B. Karachi. The entire quantity of rice was to be exported within two months from the date of the contract and payment was to be made by means of Letters of Credit for full price within 10 days of the contract, but the respondent had the option to deposit the full price in Pakistan currency. The respondent had also to deposit cash security in the sum of Rs. 59,100 being 10 % of the total price of the contract goods.

3. On 1-8-1955, the Government of Pakistan devalued the Pakistan Rupee when the official rate of exchange per pound sterling increased to Rs.13.5.4 from Rs. 9.5.4 per sterling pound. The respondent approached the appellant for proportionate reduction in the contract price to the extent of devaluation, but it was declined. However, as a result of further negotiation, the appellant agreed to the export of rice by the respondent after payment of 20-0-0 per ton F. O. B. in Sterling and the balance of 5.10.0 per ton in Pakistan Rupees without prejudice to the rights of either party and subject to final decision. After- the respondent had exported in all about 1898 tons of rice under the negotiated arrangement, it claimed refund of the sum of Rs. 1,96,358 at. the rate of Rs. 102 per ton, being excess amount paid to the Government because of the devaluation. As the Government did not comply, the respondent invoked the arbitration clause. Mr. Nazeer Ahmad, Deputy Secretary in the Ministry of Food and Agriculture was appointed Sole Arbitrator. Two specific questions were referred to him for decision, of which we are concerned with the first only. It was as follows :- "Whether the firm, following devaluation of Pakistan Currency, were entitled to pay the Rupee component of the contracted price at the old rate of exchange or the revised rate of exchange." By his award dated 25-3-1965, the Arbitrator decided the question in favour of the respondent that they "were entitled to pay to the Ministry of Food a contract price at the pre-devaluation rate of exchange". Accordingly, he awarded the sum of Rs. 1,93,610 in favour of the respondent.

4. The appellant filed objections to the Award, but they were dismissed by the learned Single Judge by the impugned judgment dated 28-11-1966. The present Letters Patent Appeal is directed against the said judgment and decree.

5. Mr. Muzafar Hasan, learned counsel for the appellant assailed the impugned judgment on several grounds and contended that the award should have been set aside. The first ground was that the award was bad as it contained an error of law apparent on the face of it. The alleged error of law is said to be that the Arbitrator wrongly held that the rate of exchange prevailing on the date of the contract should be the basis for determining the liability of the respondent and not the date on which payment was made by the respondent through'\ the Letters of Credit. We have considered this submission and we do not find any force in it. In the first place, a specific question of law involving the interpretation of the terms and conditions of the contact was referred to the Arbitrator for his decision. As rightly observed by the learned Single Judge, the law is well settled, that where a specific question of law is referred for decision by an arbitrator, as distinct from a question of law arising incidentally, his award cannot be challenged even if the view of the law taken by the Arbitrator appears to A the Court to be an error. In this connection, reference has already been made in the judgment to Shaikh Muhammad Sadiq Muhammad Afzal v. Ministry of Industries, Government of Pakistan (P L D 1966 Kar. 412), in which Durga Prosad Chamria and another v. Sewkisendas Shatter and others (P L D 1949 P C 187). was referred to In the instant case, it was conceded by the counsel (vide para. 6 of the impugned judgment) that the first question above-mentioned was a specific question on a point of law. Even otherwise, we are not satisfied that there was any error of law apparent on the face of the award. We agree with the learned Single Judge that the Arbitrator's decision on the question of liability in the circumstances of the case, cannot be said to be erroneous in law. The circumstances mentioned by the Arbitrator were that the Government's unilateral action in devaluing the Rupee, cannot in fairness and equity operate against the interest of the other party to the contract and, further that the right of the parties are to be determined in accordance with law as it was before the action was taken.

6. The second submission of Mr. Muzafar Hasan was that the award should have been set aside because the Arbitrator acted beyond the terms of the reference in deciding the question of general liability, whereas according to him what was actually referred was only as to the specific part of the rate, i.e. 5.10.0 per ton which was payable in Pakistan Currency. No such plea was taken in the objections to the award ; nor is there any substance in it. The reference was general as to whether respondent was entitled to pay the Rupee component of the contracted price. It was not limited to part of the price of 5.10.0 which was negotiated as a concession pending decision of the dispute. Had the intention been otherwise, we fail to see why the question referred should not have been more appropriately worded.

7. The third submission of Mr. Muzafar Hasan was that the question appears to have been decided not on law but on equity and referred to the statement in the Award in para. (6) : "I have come to the conclusion that, whatever the legal position, the petitioners have a strong case in equity in so far as the question of price to be paid by them after devaluation is concerned." The Arbitrator was a layman and it is therefore, not surprising that he has used layman's language. However, the conclusion of law expressed by him is not to doubt. The reasoning is also based on a reported judgment mentioned by him in sub-para (viii) of para. 5 of the Award.

8. Lastly, Mr. Muzafar Hasan urged that the Award is only declaratory and the Arbitrator had no jurisdiction to award money. Not only has this objection not been taken before the Single Judge, but also counsel for the respondent, Abdul Hamid Khan stated that the amount of the award has already been recovered by the respondent.

9. For the foregoing reasons, we find no force in this appeal, which we accordingly dismiss with no order as to costs. S. Q. Appeal dismissed.