The Export Promotion Bureau, Government of Pakistan (the plaintiff herein) granted a licence to Messrs Rizvi & Co. (the defendants herein) to enter upon 20 acres of Government land situated in K.
D. A. Gulshan Scheme No. 24 on Country Club Road, Karachi, for the purpose of holding two National Industrial Exhibitions and to do all acts necessary or incidental to that purpose, for a period commencing on 1-3-68 and ending on 30-6-70. .
2. The terms and conditions agreed between the parties were reduced in writing and incorporated in Licence Deed dated 7-10-69 executed by both parties. The total consideration for the grant of licence agreed between the parties was Rs. 50,000 out of which Rs. 15,000 were paid by the defendants to the plaintiff before the date of agreement. As to the remaining balance of Rs. 35,000, the Deed stipulated as under;---- "The aforesaid fee of Rs. 35,000 shall be payable as follows :---- Fifty per cent. On or before 31-12-69 and the remaining fifty per cent. Within one week after opening of the 2nd fair which the licensee proposed to hold some time during January-June, 1970."
3. It is common ground that the defendants in enjoyment of his rights utilized the licence for holding the first Exhibition. However before the second Exhibition could be held disputes arose between the parties. The plaintiff claimed the balance of licence fee amounting to Rs. 35,000 and compensation for use and occupation of the land with effect from 1-7-70 until the vacant possession was delivered by the defendants. The defendants on the other hand maintained that the transaction between the parties was a lease-hold of land. They further contended that the sum of Rs. 15,000 originally paid was in respect of the first Exhibition held by them. It was their case that the amount of Rs. 35,000 was in respect of the Second Exhibition and was payable after the commencement of the said Exhibition. They alleged that this Exhibition could not be held during the stipulated period owing to political upheaval crisis, non-co-operation and unfair treatment on the part of the plaintiff, disentitling it from receiving the balance amount. The defendants also claimed extension of the lease period on the plea that they had suffered loss on account of the breach of contract on the part of the plaintiff as stated above, as well as on account of plaintiff's granting permission to another concern to set up an amusement park on the land adjacent to land in occupation of the plaintiff.
4. These disputes were referred by tire parties to the sole arbitrator for decision in pursuance of the arbitration clause of the contract. The parties agreed in writing to the following points of dispute which were incorporated in the submission :---- "(i) Whether the opponents are liabe to pay licence fee as claimed by the claimants.
(ii) Whether the opponents are liable to hand over the vacant possession of the land to the claimants.
(iii) Whether the opponents are liable: to be ejected or entitled to the grant of any extension of the licence period ; if so on what terms.
(iv) Whether the licence agreement between the claimants and the opponents is a valid legal document, if so whether the premises covered by it are held by the opponents under lease or licence.
(v) Whether the claimants have caused: 6ny damage(s) to the opponents; if so whether the latter have any counter-claim against the former.
(vi) What should be the award."
5. The sole arbitrator after hearing evidence produced by the parties made his award on 8-3-74.
On the first point of difference he reached a finding that the balance of licence fee was contingent upon the holding of the Second Exhibition some time during January-June 1970 which could not be held due to the disputes that had ariaien between the parties. On the second and third points of difference the arbitrator held that the defendants are not liable to be ejected and on the contrary are entitled to extension of time for 8 months with permission to bold another Exhibition subject, however, to the condition that they nay 'licence fee of Rs. 25.000 in two instalments. The first instalment of Rs. 10,000 was payable during the second week after the Exhibition starts and Rs.
15,000 before one week of the termination of the Exhibition. As regards the fourth point of difference the arbitrator gave a finding that the agreement between the parties was for grant of licence and not for lease. Under the fifth point of difference the arbitrator awarded a sum of Rs. 20,000 by way of compensation to the defendants. Finally the arbitrator directed the plaintiff to grant extension of time for 8 months to the defendants with permission to hold the Second Exhibition subject to payment of Rs. 25,000 as set out earlier.
6. The award was filed in this Court on 24-5-74. Pursuant to notices issued to the parties, the plaintiff filed objections to the award on 20-1-77.
7. I have heard Mr. Saeeduzzaman Siddiqui on behalf of the plaintiff and Mr. Sabir Hussain Rehmani for the defendants.
8. In support of the objections to the award filed by the plaintiff Mr. Siddiqui first contended that the award is vitiated on account of illegalities on the face of the award. In this connection learned counsel argued that in awarding compensation to the defendants the arbitrator despite a finding reached by him that the plaintiff is not responsible for any loss suffered by the defendants/licensees, awarded compensation in the sum of Rs. 20,000 to the defendants on compassionate ground. My attention was invited to the reasoning adopted by the arbitrator under point of difference No. (v) in the award. The arbitrator has given his reasons in the following manner; "The licenser was under no contractual obligation with the licensee to ensure that no other fair or Exhibition was held in Karachi during the period of licence in, question. As such, the licenser cannot be held responsible for any logs suffered by the licensee."
9. Despite this clear finding the learned arbitrator referred to the fact that another fair by the name of Decarama had ,been announced by the Chamber of Commerce and Industries during the licence period, as a result of which the defendants had complained to the plaintiff and had requested for extension in the licence period up to the end of December, 1970. In view of this fact the learned arbitrator expressed the view that the licensing authority being a Government organization a more purposeful and sympathetic approach was expected from it to grant the extension requested for. Taking this view of the' matter the learned arbitrator awarded the compensation as stated above. Learned counsel for the plaintiff placing reliance on Union of India v. Praim Satram Das (AIR 1951 Pat. 201) argued that in the circumstances of this case, the award is open to attack as there was no legal basis for awarding compensation purely on moral considerations. There is considerable force in this contention. Having arrived at a finding of fact that the plaintiff was not responsible for any loss that may have resulted to the defendants on account of another fair being advertised, the arbitrator was not justified to give a decision according to his notions of justice and morality as observed by Lakshmikanta Jha, C. J. In the cited case. The arbitrator's jurisdiction was td fix the contractual and not moral liability. As far as the contractual obligations of the plaintiff are concerned, the arbitrator gave a clear finding that no liability arose in the circumstances of the case. The illegality therefore, is apparent on the face of the award. In Maniti v. Akaram (AIR 1947 Bona. 400) it wee observed that where the award was in direct contravention of the finding arrived at and definitely recorded by the arbitrator, the award would be illegal on the face of it.
10. It was next contended on behalf of the plaintiff that the arbitrator had no jurisdiction to vary the terms of the contract agreed to between the parties. It would be recalled that the balance of the licence fee remaining to be paid was Rs. 35,0i 0, 50% of which was payable on or before 31-12-69 irrespective of the fact whether the second Exhibition was opened or not. Yet on point No. (i), contrary to the clearly stipulated terms of the contract, the arbitrator gave a finding that payment of the balance of licence fee was contingent upon the holding of second fair. The arbitrator has therefore patently construed the contractual terms contrary to the express stipulations of the contract. In the case of Union of India referred to above in some--what similar circumstances, the learned Judges of the Patna High Court held that if the arbitrator construes a document and gives his own construction or interpretation of the document as a reason for the award, it is open to the Court to examine the reason and set aside the award if the error in the construction is apparent on the face of the award. In this case the arbitrator has reproduced the relevant terms of the contract and then arrived at his interpretation as stated above. The error is therefore apparent on the face of the record. Besides the arbitrator also reduced the balance of the licence fee by a sum of Rs.
10,000 for which there is no warrant under the terms of the contract.
11. Learned counsel for the defendants made no other submission except that the award cannot be upset as the decision was given on the evidence led before the arbitrator. However as pointed out in the foregoing part of this judgment there are - illegalities apparent on the face of the award.
12. For the foregoing reasons I have come to the conclusion that the arbitrator was guilty of judicial misconduct and the award is therefor liable to be set aside. I therefore hereby set aside the award.
There will however be no order as to costs.