#TBE #TBS For the Plaintiffs: Liaquat Merchant, Advocate. For the Defendant: Samiuddin Sarni, Advocate. Date of hearing: 13th October, 2003. #TBE #TBS (Para 21) #TBE ZIA PERWEZ, J.--- This is a suit under Section 14 of the Arbitration Act, 1940, seeking that the Award dated 24.12.1998, given by Mr. Abu Shamim Arif and I Mr. Abdul Monem Khan, in favour of the plaintiff, be made rule of the Court.
2. Brief facts are that Rice Export Corporation of Pakistan (RECP), as it then was, entered into a contract, No. RECP/Exp/5(32)/94, dated 11.8.1994 with the plaintiff for supply of 150,000 metric tons of Pakistan Long Grain Irri-6 Sindh White Rice 15/20% broken from the crops of 1992-03 and/or 1993-94 at the rate of US$ 182.50 per metric ton FOB to be shipped by 23.1.1995. Plaintiff deposited 2% of the value of the Contract price as security deposit.
Defendant supplied 114,572.95 metric' tons. Of rice only. On failure of the defendant to deliver the balance quantity of 35,427.65 metric tons of rice under the Contract, the parties entered into protracted communication. Subsequent failure of the defendant to respond to the request of the plaintiff, led them to invoke the arbitration clause under the Contract. Defendants appointed Mr. Abu Shamim Arif, Vice Chairman, Export Promotion Bureau and Secretary, Ministry of Production, Government of Pakistan, while the plaintiff appointed Mr. Abdul Monem Khan, Advocate, as their respective Arbitrators. The two Arbitrators appointed Mr. Justice (Retd.) Imam A.I Kazi, a former Judge of this Court, as Umpire on 19.5.1996. The time for making the Award was extended from time to time under Section 28 of the Arbitration Act by this Court Upto 13.3.1998 and, therefore, by 'consent, upto 23.5.1998. The claimants/plaintiff claimed the following:
(i) to supply the Claimant balance quantity of 35.427.05 metric tons Pakistan Long Grain Irri6 Sindh White Rice 1 5/ 20% broken under agreement No. RECP/Exp/5(32)/94, dated 11.8.1994 forthwith:
(ii) to pay to the Claimant liquidated damages to the tune of US$ 2,135,640.42 as under:-
(a) 6407.7000 tons shipped on m.v. IVAN KOROEEV for which RECP completed shipment on 3.2.1995 (delayed period 11 days) at the rate of 2% Liquidated damages for each 30 days calculated to: US$ 8,575.64
(a) 12,000 tons shipped in m.v. MANLEY EXETER for which RECP completed shipment on 23.4.1995 (delayed period 90 days) at the rate of 2% Liquidated damages for each 30 days calculated to:- US# 131,400-00
(c) 35,427.05 tons still remain unshipped, Liquidated damages calculated till 30 April, 1996 (delayed period 463 days) at the rate of 2% Liquidated damages for each 30 days calculated to: US$ 1,995,664.78.
US$ 2,135,640.42
3. The Written Statement filed by the defendant is available at page 415 of the Arbitration file. On the biass of the pleadings of the parties, nine issues were framed.
4. An application, under Order VI, Rule 17 read with Section 151, CPC, seeking- amendment, was disposed of by the learned Arbitrators vide order dated 3.11.1998, allowing the proceedings to continue subject to the prayer and after recording of evidence and consideration the documents on record, ,the Arbitrators unanimously allowed the claim of the plaintiff in the following terms:--
(i) Rice Export Corporation of Pakistan (Pvt.) Limited, the respondent (RECP) to provide unshipped balance i.e. 35,427.05 m. Tons of rice to M/s. Agrimpex Trading Company Limited, Budapest, Hungary, through its agents M/s, Hashoo International (Pvt.) Limited, the Claimants, a contracted specification or the Comparable rice of other specifications subject to normal premium and discount acceptance to the Claimant/Buyer.
OR Rice Export 'Corporation of Pakistan (Pvt.) Limited to pay an amount of US$ 10,35,072.12 to M/s. Agrimpex Trading Company Limited, Budapest Hungary, through its agents M/s. Hashoo International (Pvt.) Limited, the Claimants, within 90 days from the issue of this Award. After expiry of that period the respondent will be liable to pay to the claimant the ruling interest rate on the amount of the Award, in addition to the Award for the time period the subject payment is delayed by the respondent (RECP).
(ii) Rice Export Corporation of Pakistan (Pvt.) limited to pay an amount of US 139,975.64 (US Dollars one hundred thirty-nine thousand nine hundred seventy-five and cents sixty-four only) to M/s. Agrimpex Trading Company Limited, Budapest, Hungary, through its agents M/s. Hashoo international (Pvt.) Limited, the Claimants, as damages for delay in shipment of 6407.7000 M/Tons of rice shipped on m.v. IVAN KOROTEEV for 11 days and delay in shipment of 12,000 M/Tons shipped on m.v. MANLEY EXETER for 90 days within 90 days of the issue of this Award. After expiry of that period the respondent Will be liable to pay to the Claimants the interest at the prevailing rate on this amount for the time period the subject payment is made."
5. Before hearing of the Objections filed by the defendant , an application under Section 151, CPC (CMA No. 1008/2002), was moved on behalf of the defendant seeking orders for setting aside the Award on the strength of the letter dated 17.1.2002 by the plaintiff to the defendant, which is reproduced as follows :- "Mr. A.1. Pirzada Manager Rice Export Corporation of Pakistan (Pvt.) Ltd. C/o Trading Corporation of Pakistan (Pvt.) Ltd.
Karachi.
Dear Sir, Agreement No. RECP/Exp/5(32)/94, dated 11 August, ,1994 for purchase of 150,000 tons rice by M/s. Agrimpex Trading Company Limited, Budapest, Hundary.
As you are aware, against above agreement Arbitration Award was awarded by Arbitrators in favour of M/s. Agrimpex Trading Company Limited, Budapest, Hungary.
Now, as a matter of co-operation and in the interest of Rice Export Corporation of Pakistan (Pvt.)
Ltd., we as agent had decided to withdraw the claim of Award against Rice Export Corporation of Pakistan (Pvt.) Limited.
Therefore; as agents of M/s. Agrimpex Trading Company Limited Budapest, Hungary, we hereby withdraw the above claim of Award in the highest interest of Rice Export Corporation of Pakistan (Pvt.) Limited and Government of Pakistan.
Thanking you.
Sd/-"
Objections were filed to this application by the plaintiff . On 16.12.2002. CMA No. 1008/2002 Was disposed of and it was ordered that the objections raised in this application shall be disposed of alongwith the main case. First, 1 propose to take-up this application.
7. Defendant did not file a copy of the letter dated 17.1.2002. However, the plaintiff, alongwith its counter-affidavit, filed a copy thereof as Annexure X-1. They also filed a copy of their letter dated 18.3.2002, cancelling the letter dated 17.1.2002, as annexure X-2. In paragraph 3 of the counter- affidavit, the plaintiff has explained the reason for addressing this letter as follows:- '(iii) The letter dated 17.1.2002 was issued at the request of the defendants which expressed its intention to settle the outstanding dispute with the plaintiffs amicably and made it conditional to the plaintiff issuing the letter dated 17.1.2002 while agreeing to keep the above legal proceedings pending in this Hon'ble Court so that the case of the plaintiffs would not be prejudiced. Having obtained the letter dated 17.1.2002 from the plaintiffs, the defendants, management could not put into effect an amicable settlement under the joint award of the arbitrators and, therefore, the plaintiffs were left with no option except to cancel and withdraw the letter dated 17.1.2002 vide letter dated 18.3.2002. Both parties were fully conscious and aware that the above legal proceedings were pending in this Hon tie Court and that the exchange of letters was merely an informal exercise to make an attempt to settle the disputes amicably but this could not the achieved. Hence, the legal right and obligations of the parties will be decided by this Hon'ble Court.
No other steps or actions were taken by -the defendants by acting upon the letter dated 17.1.2002 and, therefore, the, plaintiffs were not estopped barred or prevented from canceling and withdrawing the' said letter dated 17.1.2002 vide its letter dated " 18.3.2002. The plaintiffs had no intention whatsoever of withdrawing the above legal proceedings from this Hon'ble Court. The letter dated 17.1.2002 stands canceled and withdrawn vide letter dated 18.32002. The defendants attempt to seek rejection of the joint award on the of the letter dated 17.1.2002, is incorrect, misplaced unlawful and unjustified.'
8. Learned counsel for the defendant contended that the aforesaid letter confer valuable rights and result in estopple under the provisions of Section 114 of the Qanun-e-Shahadat, 1984, he proceeded to argue that consequent upon receipt of this letter, the defendant communicated the same to the Government of Pakistan as well as to the Auditors and thus they have acted upon the letter which confers valuable rights upon the defendant. Reliance was placed on the cases of Haji Muhammad Yunus v. Hail Muhammad Ismail (PLD 1959 Kar. 755) and All Hussain v. A.I Ahmed Khan Warsi (through 1 Rs.) (1982 CLC 2616):
9. In view of the explanation given in paragraph (iii) of the counter-affidavit in the plaintiff to CMA No. 1008/2002, reproduced above, it has been clearly stated that the object of writing the letter was to arrive at a settlement and as this settlement was not arrived at between the parties, the letter was subsequently withdrawn by the plaintiff. In view of the above, mere writing of the letter in anticipation of a settlement would not deprive the plaintiff from following up the present suit which calls for proper application under the provisions of Order XXIII, Rule '3', CPC in case of compromise between the parties. Mere steps taken out of Court towards such settlement would not confer any right upon the defendant or create an estoppel against the plaintiffs under the circumstances of the present case.
10. In view of the above discussion, CMA No. 1008/2002 is dismissed.
11. The first objection to the Award raised by learned counsel for the defendant is that in the absence of any clause providing for payment of damages under the contract, the plaintiff is not entitled to claim any damages from The defendant and the. Award is liable to be set aside.
Reliance is placed on the case of As/am Saeed and Company v. Trading Corporation of Pakistan (PLD 1985 SC 69).
12: On being asked the learned counsel whether this point was pleaded before the learned Arbitrators and he candidly admitted that neither this ground was pleaded before the Arbitrators nor any issue thereon was framed.
13. The case of M/s. Aslam Saeed and Company (supra), attracted clause 6 of the agreement between the parties providing for imposition of liquidated damages and recovery of penalty in case of breach of contract by the appellant's. Mr. Samiuddin Sami has not been able to show that there is a similar clause available to for breach of the contract by the defendant. Rather, it is other way around in the present case and, as such, the case relied upon is distinguishable on facts from the present case.
14. The second objection of the learned counsel for the defendant is that the prayer of specific performance allowed by the learned Arbitrators in their unanimous Award is illegal as the arbitration as the Arbitrators are not competent order specific performance of contract under the laws of Pakistan.
He has placed reliance on the case of Muhammad Azam Muhammad Fazil and Co. v. N.A.
Industries Karachi (PLD 1977 Kar, 21). In this case, Mr. Justice Zafar Hussain Mirza (as he then was), after considering the effect of Section 58 of the Sales of Goods Act, was pleased to hold that the arbitrators cannot act against the law of the land and grant relief of specific performance in a case where such a relief is hit by the provisions of Chapter II of the Specific Relief Act and cannot be granted by the Court of' law. However, no such eventuality arises in the present case as it relates to a commodity freely traded in the open market and there is no bar to the grant of relief by a Court in the present suit that may be extended to the exercise of the power by the learned Arbitrators.
15. His third contention is that the arbitration was invoked by M/s. - Hashoo International (Pvt.)
Limited who .Are agents of the contracting party M/s. Agrimpex Trading Company Limited, Budapest, Hungary. He placed reliance on the case of Muhammad Mehrban v. Sadrud Din and another (1995,CLC 1541). There is no cavil with the contention that an agent cannot act beyond the authority conferred upon him. However, a perusal of the claim in the present suit shows that the claim is filed by Agrimpex Trading Company Limited, Budapest, Hungary through their Agents. The letter of authority dated 2.5.1996, authority the filing of the claim, issued by the Principals, is available at page 295 of the file of the Arbitrators, followed by the Resolution of M/s. Hashoo International (Pvt.) Limited, available at page 291. Prior to this, M/s. Hashoo International (Pvt.)
Limited has been dealing with the defendant in all the matters through out and their authority to act on behalf of their Principals was never challenged by :the defendant . Even reliance was placed on the authority of . M/s. Hashoo International for grant of CMA No. 1008/2002. On the one hand the defendant are relying on the authority of the Agents of the plaintiff and accepting them so for all purposes prior to the ward, during proceedings before the Arbitrators and even during the present case and seeking grant of CMA No. 1008/2002 on the basis of a letter written by Agents of the plaintiff and, at the same time, the defendant take a contrary stand which was neither pleaded nor was a issue before the -learned Arbitrators and the same is an afterthought resulting in blowing hot and cold in the same breath which cannot be allowed.
16. The fourth contention of Mr. Samiuddin Sami is that the contract was frustrated as the rice did not exist. He placed reliance on the case of Balagamwalla Cotton Ginning and Pressing Factory Karachi v. Lalchand (.PLD 1961 (WP) Kar. 1). However; he agrees that this is a question of fact which was neither pleaded nor placed before the Arbitrators and cannot be made ground for setting aside the Award.
17. His last and fifth contention is that the plaintiff has failed to prove the loss suffered by him as required by law as such the Award allowing the claim of loss suffered by the plaintiff on the basis of difference in market price, is liable to be set aside. In support of this contention, the learned counsel placed reliance on the cases of (i) M/s. Kaysons v. Ahmed Juvenile Industries (PLD 1963 (W.P.) Kar.
766), and (ii) Ashrafi (Pvt.) Limited v. Abdul Majeed Rawani though Rs. (1991 MLD 11011.
18. The contract pertains to rice which is a commodity traded internationally and the difference of market price has been brought on record through the authority letter which is attested by the Pakistan Consul.
19. In view of the above, there is sufficient material to support the finding arrived at by the learned Arbitrators.
20. In an unreported judgment in Suit No. 1587 of 1999, Geomin SA Trading Company v. Trading Corporation of Pakistan, my learned brother, Mushir Alam, J. In a similar case of short fall in the supply of rice, was pleased to dismiss similar objections of the defendant and made the Award of the Arbitrators rule of the Court which are attracted on all fours to the present suit, except for the additional objection as to authority of the agent.
21. While opposing the Objections to the Award, Mr. Liaquat Merchant, learned counsel for the plaintiff, has relied on the following cases: (i) Pakistan Steel Mills Corp., Karachi v. Mustafa Sons (Pvt.) Limited (KLR 2003 (SC) 257) and (ii)--------- . Following passage from the case of Pakistan Steel Mills (supra) may be quoted: '17. Much stress has been laid by the learned counsel for the petitioner on sub-section (c) of Section 30 ibid (the Arbitration Act) says that the award is otherwise invalid. It is noted that the Arbitrator is the final Judge on the law and facts and it is not pen to a party to challenge the decision of the Arbitrator, if it is otherwise valid. If the Arbitrator has given his decision in terms of the submission nothing adverse could be attributed to him. Even, if there was wrong interpretation of a clause in a contract, in such cases, view has been taken that an Arbitrator is not bound to give specific ,findings on each and every issue nor he is required to state reasons for his conclusion, if the findings are within the parameters of submissions made before him. It is also no ground to set aside an award on the plea that different view was possible if the facts would have been appreciated with different angle'.
22 In view of the above discussion, no error apparent on the face of the Award called for setting aside the Award is made out. The Objections are dismissed and the Award is made a rule of the Court with costs throughout in favour of the plaintiff. .