P L D 2003 Karachi 180 (PLP)

(iii) Did defendant No.3 have authority and power to act as the 'employer' qua the contract in question? If not; what is the effect? (iv) Is the plaintiff estopped by word and conduct from denying the status and authority of defendants Nos. 2 and 3 to act in regard to the contract in question?' (v) Did defendant No. 1 commit breach of contract by doing or failing to do the various acts as alleged in para. 8(a) to (d) of the Statement of Claim? (vi) Whether delay, if any, in completion of the works was due to any acts or neglect of the plaintiff/claimant or was it beyond the control of the plaintiff/claimant and/or due to default/breaches on part of the defendants/employer? (vii) Was the action of defendants Nos.2 and 3 under clause 16.1 (iii) of the General Conditions of Contract mala fide, invalid and not in accordance with law and the terms of the contract and/or without lawful authority? (viii) Are the defendants Nos. 2 and 3 successors of defendant No. 1 as employer under the contract in question? If not, what is the effect? (ix) Were the defendants. Nos.2 and 3 entitled to expel the plaintiff and his sub‑contractors from the contract works, and seize their equipment and/or use the same. If yes (a) did the defendants take measurements of the work already executed by the plaintiff? (b) have the defendants awarded the contract for the balance work yet to be executed, at highly enhanced price/rates? (x) Are any of the defendants legally entitled to encash the securities attaching to the Contract, namely, Performance Bond, Mobilization Advance Bond, Retention Money Guarantee Bond? (xi) Is the plaintiff entitled to compensation in the aggregate sum of Rs.153,448,978 as claimed in para. 20(A), Rs.8,621,623.12 in para.20(B) and Rs.1,065,500 in para.20(C) of the Statement of Claim? (xii) Are the defendants in law and on, facts of the case entitled to damages as claimed in their counter‑claim and whether their claim can be arbitrated upon by the Hon'ble Arbitrator? (xiii) What should the award be?

8. It seems that the parties led their evidence and on the basis of the evidence so adduced by the parties, the learned sole arbitrator came to the conclusion that the defendants were the defaulting patty, therefore, he was of the view that the defendants have no right to claim liquidated damages for the alleged delay. He further observed that they were also not entitled to recovery of Mobilization Advance, Performance Bond as well as Retention Monies Bond. The counter‑claim of the defendants was accordingly rejected being untenable. Learned sole arbitrator, however, awarded claim of the plaintiff in the following manner vide his Award dated 28‑9‑2001:‑ (1) Increase in overheads and Superintendence costs Rs. 66,16,110 (2) Plant Idle Cost Rs.1,00,00,000 (3) Return of the Plant and Respondents shall return Plant and Machincry taken over by Machinery to the claimants as per the respondent details given in para. 67 of the Award.

9. Since the defendants failed to file Objections within the stipulated period, as such, their application under section 148, C.P.C. for extension of time was dismissed vide order dated 18‑9‑2002.

10. I have heard Mr. Iqbal Bawany, learned counsel for the plaintiff and Mr. Sarwar Muhammad Khan, learned counsel appearing for he defendants No.2 and 3 and have carefully perused the Award.

11. It was mainly contended by the learned counsel for the plaintiff that this Court while examining the validity of the Award does not act as a Court of Appeal and, therefore, cannot undertake reappraisal of evidence recorded by the learned sole arbitrator in order to discover an error. It was next contended that in case the Objections to the Award are not filed within time, the Award is to be made the rule of the Court. It was further contended that the law leans in favour to upholding the Award‑and not vitiating the same. In support of his contentions, learned counsel has relied upon: (i) PLD 1996 SC 108: (ii) 1999 SCMR 121: (iii) 1983 SCMR 716: (iv) PLD 1998 Lah. 132: (v) 1997 CLC 546: (vi) PLD 1998 Kar. 79: (vii) 1999 MLD 2617: (viii) 2002 CLC 353.

12. Conversely, it was contended by the learned counsel for the defendants Nos.2 and 3 that this Court has inherent powers to modify or remit the award if it is satisfied that it suffers from any patent illegality. Learned counsel argued that the findings were contradictory in respect of Issue No. 11.

13. The arguments rendered by the learned counsel have been considered and the Award has been examined.

14. There is no cavil with the proposition that this Court while examining the validity an Award does not act as a Court of Appeal and is not vested with the powers to undertake reappraisal of the evidence in order to discover any error or infirmity in the Award. The authorities relied upon by the learned counsel for the plaintiff are fully applicable to that extent. However, it needs no emphasis that the role of the Courts in the scheme of the Arbitration Act, 1940 is of supervisory character. In view of the above, it hardly needs any argument that before making an award rule of the Court and pronouncing judgment in the terms of the award, it is the duty of the Court to see that there was no cause to remit the award for reconsideration or set it aside. This power can even be exercised suo motu. In Ashfaq Ali Qureshi v. Municipal Corporation, Multan and others (1985 SCMR 597), it was observed by the Honourable Supreme Court that the Court cannot act blindly on an Award and mere absence of objection will not altogether absolve the Court from its responsibility of deciding whether the award was valid on the face of it. While making the aforesaid observation, the provisions of sections 16 and 30 of the Arbitration Act, 1940 were noticed by the Honourable Court Section 16 of the Arbitration Act, 1940 gives enough powers to this Court to remit the award to the arbitrator for reconsideration on the basis of certain conditions as enumerated in section 16 itself. It will be appropriate to reproduce hereinbelow the provisions contained in sections 16 and 17 of the Arbitration Act:‑‑ "

16. Power to remit award.‑‑(1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit‑‑ (a) where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without. affecting the determination of the matters referred; or (b) where the award is so indefinite as to be incapable of execution; or . (c) where an objection to the legality of the award is apparent upon the facts of it. (2) Where an award is remitted under subsection (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court: Provided that any time so fixed may be extended by subsequent order of the Court. (3) An award remitted under subsection (1) .shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed." "

17. Judgment in terms of award.‑‑Where the Court seems no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award."

15. From the perusal of the provisions of section 17 ibid, it is glaringly evident and clear that the award is to be made rule of the Court only if Court sees no reason to set aside or remit the award. The plain reading of this section shows that the Court shall satisfy itself that the award does not suffer from patent illegality or defect necessitating either setting aside of the award or its remission to the Arbitrator. Failure of filing objections within the prescribed tithe does not absolve the Court of its responsibility to decide whether or not the award was valid on the face of it. The decision of Dacca High Court in Abdul Khaliq v. Province of East Pakistan and another (PLD 1964 Dacca 166) supports this view. Similar view was expressed by the Balochistan High Court in Province of Balochistan v. M/s. Tribal Friends Company, Loralai (PLD 1986 Quetta 321).

16. Adverting to the contents of the award, it tray be stated that Issue No. 11 which relates to the entitlement of the plaintiff to compensation as claimed by him in para. 20(a), para. 20(b) and para. 20(c) of the‑statement of claim, has been discussed in pares. Nos.57 to 67 of the Award. While discussing this claim in para. 61, the learned sole arbitrator, inter alia, observed as under:‑‑ "The next item of claim in exhibit is plant idle cost and a total sum of Rs.37,292,500 has been claimed on the basis of operational cost per day per unit of the plant in relation to the total market value of the same and its life span. There is no evidence on record of the market value or how operational cost per day per unit or for that matter of its life span, was determined. I am therefore at a loss to assess the validity of this item of claim for want of tangible evidence. The claim in arguments is totally speculative. No witness was produced to explain the method of calculation and formula adopted so that this evidence could be scrutinized and challenged in cross‑examination."

17. However, strangely enough, in para. 62 while dealing with the same item under the head of "Plant Idle Cost", it was observed as under:‑‑ "No ‑witness of the contractor has explained how and on what basis this amount has been calculated. Contractor s witness No.2 has only produced paper calculation without elucidating the basic factors on which the calculations were made. Nor was any, cross‑examination directed against the claim. The above sum is claimed for 35 months. But as I have already held that the delay attributable to the Employer was 15 months. Therefore the contractor would be entitled to Rs.1,48,06,875 at the rate of Rs.9,87,125.00 per month as claimed. However, I feel that a sum of Rs.1,00,00,000 would meet the ends of justice considering all the circumstances of the case."

18. The bare perusal of the discussion made under the above two paras. reveals that the observations made therein are inconsistent and in conflict with each other. Apparently the findings whereby the claimant/contractor was held to be entitled to a sum of Rs.1,00,00,000 are devoid of foundation, rather imaginary, more particularly, while the learned arbitrator himself was constrained to admit in para. 61 in clear terms that he was "at loss to assess the validity of this item of claim for want of tangible evidence" (Emphasis laid for convenience) on the ground that "No witness was produced to explain the method of calculation, and formula adopted", and further that there was no evidence on record of the market value or that how the operational cost was determined.

19. In my view, this is a defect apparent on the face of the award which cannot be overlooked. In view of this patent anomaly, the award cannot be made rule of the Court. In the circumstances, this is a fit case in which the award should be remitted to the learned sole arbitrator there being good cause for the same.

20. Accordingly, the award is remitted to the learned sole arbitrator for reconsideration of Issue No.

11. The learned sole arbitrator shall resubmit the decision with definite findings within a period of six months after affording full opportunity of hearing to the parties concerned. Q.M.H./A‑405/K Award remitted.