1980 PLP 67 (CLC)

The award dated 9th December 1974 given by Mr. N. A. Jafri as Sole arbitrator in the dispute between Messrs Ansari Enterprises, the plaintiffs and the Trading Corporation of Pakistan, the defendant whereby the arbitrator awarded to the plaintiffs a sum of Rs. 13,500 is... under challenge by the plaintiffs as they have filed objections under section 30 read with section 33 of the Arbitration Act. .The objection is that the sole arbitrator. has misconducted himself and/or the Arbitration proceedings. . It is necessary to give certain facts giving rise to the reference of the dispute to the sole Arbitrator as contained in the statement of claim filed by the plaintiffs and in the written statement filed by the defendant. The plaintiffs had entered into a contract with the defendant, being Contract No. T. C. P./R/9(II)/73(8) dated 7-8-1973 whereby the defendant agreed to sell and the plaintiffs agreed to purchase for export to Antwerp 500 metric tons of Basmati Rice of 1972-73 (plus 10 %) at a price of 208-00 per metric ton. The plaintiffs sold the rice to Messers United Rice (Dubai) Company Ltd., for shipment to Antwerp. The rice was shipped on the vessel `Gulf Mazoon' on liner terms. The plaintiffs had deposited with the defendant a sum of Rs. 1,35,000 as security deposit which was liable to be refunded to the plaintiffs immediately on completion of the shipment of rice. The rice was shipped by the plaintiffs within the agreed time. However, it appears that the vessel in which the Ace was being shipped developed engine trouble and the rice was unloaded fit. Bahrain. The defendant made a request to the plaintiffs to make alternate arrangements for the shipment of the rice to Antwerp. In reply the plaintiffs forwarded the letter dated 14th November 1973 signed by Messrs United Rice (Dubai) Company Ltd., and addressed to Messrs M. J. Towel & Co. (the ship owners) whereby Messrs United Rice (Dubai) Company Ltd., complained to the ship-owners regarding the damage caused to the rice by reason of the fact that the vessel was out of order and was being towed towards Bahrain. It further appears that for this reason the rice could not be shipped from Bahrain to Antwerp. Therefore, a dispute arose between the plaintiffs and the defendant. According to the plaintiffs they had performed the contract and what happened after shipment to the rice was not their concern. However, the defendant claimed that the plaintiffs failed to perform the contract and accordingly forfeited the amount of security deposit. Thus the plaintiffs referred the dispute in accordance with the Arbitration agreement to the Sole Arbitrator claiming the refund of the security deposit. In the written statement filed by the defendant before the Sole Arbitrator it inter alia, pleaded that it bad suffered a loss in the sum exceeding Rs. 1,35,

000. It appears that the parties filed certain documents before the Sole Arbitrator and did not produce any oral evidence. The Sole Arbitrator gave the following award: "(a) I allow and hold that the respondents should refund the sum of Rs. 13,500 (Rs. Thirteen thousand and five hundred only) to the Claim ants within a period of fifteen (15) days of the publication of this award. If payment is not made within this period, the Claimants will be entitled to claim interest at the rate of 11 % per annum from the date of the award. (b) The costs of the Arbitration proceedings shall be borne by each party. . (c) The cost of stamp duty shall also be shared equally by both the parties. On filing the award in the Court by the Sole Arbitrator, the plaintiffs have filed objections to the award. The defendant has not filed any objection. I have heard Mr. Khalid Anwar Advocate for the plaintiffs in support of the objections and Mr. A. I. Chundrigar Advocate for the defendant in reply. The only contention of Mr. Khalid Anwar is that the sole arbitrator has mis conducted himself or the arbitration proceedings inasmuch as he has awarded damages in the sum of Rs. 1,21,500 being 90 percent. of the amount of security deposit without any evidence adduced by the defendant in support thereof Mr. Khalid Anwar has relied in support of his contention on the provisions of clause. (a) of section 30 of the Arbitration Act, 1940 which provide that an award could be set aside if the arbitrator or umpire mis conducts himself or the arbitration proceedings. The learned Advocate for the plaintiffs submits that the arbitrator has based his award on no evidence and this amounts to legal misconduct on his part. The learned counsel has supported his contention by placing reliance on Amin Jute Baling Co. L,d. v. Aminpur Union Co-operative Multipurpose Society Ltd. (P L D 1961 Dacca 102), which lays down that if the arbitrator or the umpire decides the disputed questions of facts without any material or evidence, he is guilty of legal misconduct; Kh. Ghulam Rasool Lone v. Azad Jammu & Kashmir Government (P L D 1971 Azad J & K 127), which holds that if the arbitrator decides the disputed question of fact without going rightly conceded that there was no evidence before the sole arbitrator with regard to the loss or damages suffered by the defendant. He, however, contends that the arbitrator was not bound to give reasons and if he has not given any reason for his award as is the present case, the Court cannot go into the records and proceedings before him unless the same are incorporated in the award or any document made part of the award. He further contends that if there is no error apparent on the face of the award, the award cannot be set aside. The learned advocate cited the following cases in support of his contention. Muhammad Saghir Bhatti & Sons v. The Federation of Pakistan and another (P L D 1958 S C (Pak.) 221), Balawal Khan v. Captain Muhammad Alam Khan and others (P L D 1956 Lah. 494), Messrs Overseas Cotton Company v. Messrs S. M. Fuzail & Company (P L D 1958 Kar. 27), Messrs Transocean Asia v. Secretary to Government of Pakistan Ministry of Agriculture & Works (P L D 1967 Kar. 445), Suleman Haji Muhammad & Co. v. State Bank of Pakistan (P L D 1960 Kar. 78) and Champsey Bhara & Co. v. Jivaraj Balloo Spinning & Weaving Company Ltd. (A 1 R 1923 P C 66). However, the question before me for consideration is not that there is an error apparent on the face of the award as it has not been so contended by Mr. Khalid Anwar. The question simpliciter is whether the arbitrator has misconducted himself or the arbitration proceedings, and in case of allegation of misconduct of the arbitrator, or the arbitration proceedings it is generally not possible to find the reasons or evidence of such misconduct on the face of the award what had happened before him in the Arbitration proceedings. Necessarily when the allegations of misconduct are made some intrinsic evidence of such misconduct has to be given or looked into. Admittedly the defendant did not read any oral or documentary evidence before the arbitrator to establish their claim for damages. If the defendant had led some evidence, sufficiency or insufficiency whereof could not have been considered by the Court. It is not claimed that the arbitrator was an expert) in the trade that he could assess the damages on his own expert's knowledge End therefore, it was necessary for the arbitrator to have some evidence before awarding 90 per cent of the amount deposited by the plaintiffs by way of security deposit as damages which he has obviously done, for otherwise he would have simply said in his award that the plaintiffs were or were not entitled to the refund of the amount of security deposit for which they had made the claim before the arbitrator. Further, he was not authorised by the parties to decide the dispute between them on his own knowledge. 1 may mention that Mr. Khalid Anwar referred to Messrs Afiluddin Brothers Ltd. v. Messrs Pak Jute Balers, Narayangang (1970 S C M R 1), and Federation of Pakistan v. Yousuf Ali Khan (P L D 1977 S C 236), a reading whereof shows that their Lordships of the Supreme Court did go into the documents which were produced before the arbitrator and which were not referred to in the award. I, therefore, allow the objection and set aside the award. However, at the joint request of the learned Advocates for the parties I remand the same to the arbitrator to decide the dispute afresh after such evidence as may be produced by the parties to the dispute. K. M. A. Appeal allowed.