P L D 1967 Karachi 275 (PLP)

Date of hearing: 25th May 1965. This is an application under section 20 of the Arbitration Act by Syed Ghousuddin Ahmed who had submitted a tender to the K. P. T. in respect of a certain work for which tenders had been invited. The tenders were opened on 12‑5‑64 and it was found that the tender of the applicant Ghousuddin Ahmed was substantially lower than others. The Deputy Chief Engineer then wrote to the contractor on 3‑6‑64 and in para. 3 of that letter he pointedly asked the contractor to examine clauses 6, 8, 9 and 17 of the specifications and state expressly whether he was agreeable to them. His attention was particularly invited to the method of measurement which, according to the specification, would be based on the cross sectional area calculated from the levels of the ground taken jointly before starting the work and the finished levels of the items concerned without taking into account the sinkage and penetration of stones in the ground and change of levels of the ground during the course of work after the first joint measurements of the levels of the ground taken before the start of work. It is plain that this was a very important part of the terms contained in the specification and it was for this reason that the Dy. Chief Engineer attempted to make sure from the contractor that he had fully understood these terms and was agreeable to them. The contractor wrote back on 5th June 1964, and the letter which now appears on record and about which the allegation of the Karachi Port Trust is that this letter has been replaced as against the original letter, sets out the following statement in para. 3:‑ "We have seen clauses 6, 8, 9 and 1 7 and are not agreeable to the same. Payment for the sinking and penetration of stones under the ground of the sea will be charged @ Rs. 50% oft."

2. It is the case of the K. P. T. that such a communication was not contained in the letter which had been received. This stand of the K. P. T. finds considerable support from the subsequent event. On 11th June 1964, the Dy. Chief Engineer recorded a note which appears at page 167 of the record and in this he has pointedly referred to tile fact that a categorical assurance was sought from the contractor upon the point referred to above and that the contractor had confirmed its acceptance. On the 2nd of June the Chief Engineer recorded his note (page 169 and in this also there is again a specific reference to the assurance confirming the term to which reference was made by the letter dated 3rd June 1964, written by the Deputy Chief Engineer. The next document is the report of the Board Tender Committee (175). There again reference has been clearly made that the contractor had confirmed the terms as contained in the specification with reference to the letter of 3rd June 1964. There is then the minutes of meeting of the Board of Trustees (189) and at page 199 this is what the Board recorded:‑ "Since this tender was substantially lower than the Port Trust estimate for this work Messrs G. Ahmed Traders were asked to clarify if they had understood the requirements of the work and the method of measurements specified, to which they have replied in the affirmative." It was upon this assurance that the letter of acceptance was sent by the K. P. T. to the applicant on 15‑8‑1964.

3. It has naturally been contended on behalf of the applicant that the letter of 5th June 1964 as it appears on record is the genuine letter and that the subsequent acceptance of 15th August 1964 must be read in the light of the clarification contained in their letter of 5th Tune 1964. In my opinion, however there are compelling circumstances to which I have made reference which go against the theory that the contractor had declined to accept some of the most important terms of the contract and the K. P. T. had yet proceeded to award him the contract without any demur. If the letter of 5th June 1964 which was the reply of the contractor to the Deputy Chief Engineer's letter of 3rd June had been in the form in which it now appears there is no explanation‑for the various reports .of responsible persons as referred to above in which this fact has clearly been armed that the contractor had given the assurance as required by the Dy. Chief Engineer by his letter of 3rd June.

4. There is another aspect of the question. The Karachi Port. Trust is a statutory body and is governed by the statute and its bye‑laws. Before a contact of this high valuation could have been validly awarded it would have to be with the consent not only of the Chief Engineer but also of the Board. In the present case, ire Chief Engineer and the Board gave their consent upon the basis that the contractor had agreed to all the terms contained in the specification, particularly those mentioned in the Deputy Chief Engineer's letter of 3rd June 1964. Therefore, apart from everything else if the consent of the authorities concerned was based upon a wrong set of facts or the consent given was upon the basis of a mistake upon a question of fact there would be no valid contract.

5. For the reasons given I hold that there is no valid and subsisting contract between the parties. The arbitration clause which is contained in the specification cannot, therefore, be enforced. This application under section 20 of the Arbitration Act must, therefore, be dismissed. I order accordingly. The plaintiff shall pay the defendant's costs. K. M. A. Petition dismissed.