1998 PLP 1671 (CLC)

9. Aforesaid discussion brings us to another limb of objection resulting in payment by respondent demurrage charges to the ship owners owing to slow rate of discharge. In the contract with the ship owners admittedly there was no mention of the type of the vessel to be employed in the shipment of wheat. It is however, well‑settled principle of law and shipping practice that the vessel to be provided for shipment of cargo like wheat must be a bulker while in the matter of transport of liquid consignment a tanker is ordinarily employed. In the case of cargo such as wheat a tanker could not be employed as required by customary law and thus, the rate of discharge as stipulated in the contract could not be legitimately achieved by the claimant. In the absence of any express stipulation in the clearing and forwarding contract, clearing and handling agents were justified to assume that vessel for shipment of cargo like wheat shall be bulker and the agreement containing the rate of discharge is required to be weighed in the light of this legitimate expectancy. Obviously in the case in hand, instead of bulker, the vessel provided was in the nature of tanker which could not be legally expected to keep pace with the rate of discharge in contrast to the discharge from a bulker. Be that as it may, legally speaking Cargo Handling Contractor cannot be held responsible for this deviation from the general and long‑standing established practice. The rate of discharge being slow as compared to the stipulated rate, it can hardly be justified that the Cargo Handling Contractor should be saddled with penalty by way of demurrage charges paid by the respondent to the shipper. Again at the cost of repetition, it may be observed that the Arbitrator has taken this aspect of the case into consideration and applied his mind to the pros and cons of this issue expressing the view that the respondent did not resist the claim on account of demurrage charges and felt ever willing to disburse the same without realizing that in all probability it was not the liability of the respondent. In any event, and as rightly observed by the Arbitrator, claimant being not a party to the settlement of demurrage charges between respondent and the ship owners, deduction of demurrage charges from their bills were wholly uncalled for and without any lawful authority.

10. It is well‑settled law that while examining the validity of an award, the Court does not act as a Court of appeal. Therefore, a Court hearing objections to the award cannot undertake reappraisal of evidence recorded by the Arbitrator in order to discover the error or infirmity in the award. Indeed, the error or infirmity in the award which renders the award invalid must appear on the face of the award and should be discoverable by reading the award itself. Where reasons recorded by the Arbitrator are impugned as perverse, the perversity in the reasoning must be substantiated with, reference to the material considered by the Arbitrator in the award.

11. Last but not the least objection taken by the respondent is to the effect that he had no contractual obligation towards the claimant as the contract for discharge and handling of the cargo was with the Port Qasim Authority. From perusal of the award, it seems that this preliminary objection was taken before the Arbitrator as well which did not find favour with him. The main reason which heavily weighed with the Arbitrator was that in the first instance respondent by his letter, dated 14th October, 1990 had appointed him to settle the dispute between him and the claimant. The letter was treated as arbitration agreement in terms of Arbitration Act, 1940 which was duly accepted by the parties willingly and voluntarily. The factual position of the matter is that throughout the proceedings before the Arbitrator, Port Qasim Authority had been pursuing and supporting the claimant's case who were duly appointed as authorised agent by Port Qasim Authority and were definitely a party to the arbitration agreement as contained in the letter of reference. The objection on the face of it, appears to be frivolous and without any legal or factual basis. The claimant having actively participated in the discharge and handling of the cargo on account of Port Qasim Authority it is not open to the respondent to turn round and blow hot and cold at the same time. Submission in this behalf is, thus, devoid of any force and must be repelled.

12. Lastly learned Standing Counsel contended with vehemence that the award is vitiated by reason of the fact that it was made long after expiry of four months which is the time stipulated in law for making the award. It may be pertinent to point out that the proceedings before the Arbitrator took place between 31‑10‑1990 and 7‑7‑1991 whereas the award was announced on 27‑7‑1991. A reference to section 28 of the Arbitration Act in this behalf would be relevant which enables the Court to enlarge time for making award irrespective of the fact whether the time has expired or not and whether the award has been made or not. Under this provision of law, the Court can enlarge time for making an award either before or even after the time for making an award has expired. The power is permissive and discretionary and it negates the right to extend the time by agreement by the parties to the arbitration proceedings. However, the discretion is to be exercised only when cogent reasons are available including all circumstances surrounding the making of award. There is nothing in this section to suggest that an application for enlargement of time should be expressly made. Time may be granted even on oral application or on Court's own accord. There is plethora of case‑law on this subject and there is consensus of opinion that if the parties after expiry of four months submit themselves to the jurisdiction of the Arbitrator and take part in the proceedings enabling the Arbitrator to make an award then such party cannot say that the Arbitrator acted without jurisdiction. It is further held that in such situations principle of waiver and estoppel would apply with full force. In Province of Sindh v. Haji Khan (PLD 1983 Karachi 621) late Naimuddin, J. (as he then was) held that although the award was given beyond time fixed by the Court but the said time was impliedly extended by the Court under section 28 which extension was neither arbitrary nor capricious. Likewise in Amamath v. Uggar Sen (AIR 1949 Allahabad 399) a Division Bench took the view that section 23 of the Arbitration Act gives unrestricted power to Court to enlarge the time for making award irrespective of the fact whether the time for making award has expired or not. In Hari Shankar Lal v. Shamboonath (AIR 1962 SC 78) it was held that after expiry of four months Arbitrators become functus officio unless the period is extended by the Court. It was further held that such time can be extended by Court even after making award. A reference may also be made to the case reported as Elite Builders and Developers v. Nooruddin Hemani (1988 CLC 564) in which it was held by this Court that Court can extend time for making an award by an express order and by implication as well. There is a classic judgment of the erstwhile Sindh Chief Court reported as Tayab Sharif v. Kasam Adamji (PLD 1955 Sindh 224) authored by late Inamullah, J. Learned Judge quoted with approval the view taken in Bibi Patto Kumari Saheba v. Upendra Nath Ghosh 50 Indian Cases 52 as under: "Where parties attend and recognise that the arbitrator has jurisdiction to continue the arbitration, even though the time for making the award has expired, they are estopped by their conduct from seeking to impugn the award on the ground that it was invalid by reason of being filed out time. " Learned Judge after an elaborate and precise discussion with regard to the time limit stipulated under para. 3 Schedule I of the Arbitration Act held that if an award is made beyond four months it is not void as such it is only voidable. He further observed that there is a presumption that whatever the Arbitrators have done they have done bona fide and in good faith unless otherwise proved. In Shamboonath v. Surja Devi AIR 1961 All. 180 Allahabad High Court expressed the view that a party to an arbitration agreement who voluntarily takes part in the arbitration proceedings after the expiry of the period of four months will be deemed to have waived the implied condition as to time. This question was the subject‑matter of Letters Patent Appeal before a Division Bench of Lahore High Court in Ghulam Mohyuddin' v. Federation of Pakistan PLD 1967 Lah. 204 in which the Court after a review of an earlier judgment held that the award cannot become invalid due to mere fact that it was not given within four months, the reasons being that the appellant did not raise this objection at the proper time and rather acquiesced in the continuance of the Arbitration proceedings learned Judges of the Lahore High Court observed that if the terms of an agreement can be changed by the parties by their mutual consent (as for example by writing) then it is obvious that the terms about time matter could also be changed with their consent implied from their conduct. Aforesaid view was also affirmed by Rasheed Ahmed Razvi, J. in Engro Chemical Pak. Limited v. Trading Corporation of Pakistan 1996 CLC

344. Lastly this question came up for consideration before their lordships of the Supreme Court of Pakistan in Joint Venture KG/Rist v. Federation of Pakistan (PLD 1996 SC 108) laying down the principles to test the validity of an award. Ratio decidendi of the case seems to be that the Court while examining the validity of an award does not act as a Court of appeal, thus, a Court hearing objections to the award cannot undertake reappraisal of evidence recorded by the Arbitrator.

13. Period for giving the award, generally, speaking is not incorporated in an arbitration agreement. It is, however, by dint of the provisions contained in section 3 of the Arbitration Act postulating that an arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference that the provisions contained in para. 3 of the First Schedule are generally invoked *for ascertaining the period for making an award. This paragraph reads as under: "The arbitrators shall make their award within four months after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the Court may allow."

14. The period is to be calculated from the day when the Arbitrators entered on the reference or when called upon by any party to act by a notice in writing. It further appears that in computing this period for making the award the first day is to be excluded but the last day is to be included. There is consensus of opinion that if after the expiry of four months parties submit themselves to the jurisdiction of the Arbitrator and take part in proceedings enabling the Arbitrator to pass an award, it cannot be said that they acted without jurisdiction. To my mind in such a contingency the principle of waiver and estoppel would be fully attracted to the circumstances. It is, thus, clear and the position of law appears to be that the parties are free to enlarge the time for making the award with their mutual consent as by consent of all the parties a term can be incorporated in the arbitration agreement giving powers to the Arbitrator to enlarge the time for making the award. Indeed by condition No.3 in the First Schedule, statutorily an implied term is incorporated in the agreement that the award shall be made within four months after entering upon the reference. By reason of this legal proposition, this term is to be taken an integral part of arbitration agreement and is always subject to alteration with the consent of the parties like any other term of a contract. If that were not the intention of the Legislature, section 28(2) would not make valid a provision in the arbitration agreement empowering the Arbitrator or Arbitrators to enlarge the time for making the award with the consent of the parties.

15. Examination of the proceedings before the Arbitrator clearly reflects that throughout the proceedings not only a representative of the respondent alongwith Mr. Akhlaq Ahmed Siddiqui, Advocate appeared before the Arbitrator they willingly took active part in the proceedings without any protest or objection. The conduct and participation in the proceedings by the respondent clearly reflects that the respondent had consented to the continuation of the proceedings even after the expiry of four months' period which is deemed to have been extended by consent of the parties. I am, therefore, of the considered view that it is too late in the day to urge at this stage of the case that the award is vitiated by reason of making it beyond the time fixed by law. In fact the time stood impliedly enlarged by consent of the parties and respondent is legally estopped from taking a plea to the contrary. Reliance is placed on WAPDA v. Khanzada Muhammad Abdul Haq Khan (PLD 1990 SC 359).

16. For the aforesaid facts and reasons, objections taken to the award are without any merit and substance. Accordingly award is made rule of the Court. A.A./K‑48/K?????????????????????????????????????????????????????????????????????????? Award made rule of Court.