' NASIR-UL-MULK,' J.--- Civil Appeals Nos.767 and 768 of 2000, filed respectively by Allandin (hereinafter mentioned as the "purchaser")and Secretary Food Department, Government of Sindh (hereinafter called "Food Department"), are disposed of by this common judgment as they arise out of the same judgment dated 5-8-1999 of the High Court of Sindh, Karachi whereby the appeals of both the parties against the judgment of the learned Single Judge dated 29-5-1998 were dismissed. Leave to appeal was granted in both cases on 12-7-2000 to examine the following contentions:--
(i) Whether, under the circumstances, learned Single Judge and learned D.B. Were not justified in decreasing and disallowing certain amounts, which were awarded by the Arbitrator?
(ii) Whether the award was in conflict with the provisions of section 26-A of the Arbitration Act?
(iii) Whether the finding of the Arbitration on the point of damages is not in accordance with the law?
2. The brief facts that led to the filing of these appeals are that the purchaser had entered into an, agreement on 7-5-1986 with the Food Department for the purchase of 4893.137 metric tons of sugar from Mehran Sugar Mills at the rate of Rs,7111 per metric ton. According to the purchaser sugar in bags, purporting to contain only 910 metric ton was delivered to the purchaser, and even in the bags supplied the actual quantity of sugar weighed 10 per cent. Less than the ostensible weight. Further that the sugar so supplied was of bad quality and unfit for human consumption.
That in any event, the sugar was not supplied within the period agreed between the parties. The purchaser thus, lodged his claim for refund of the earnest money along with damages and then in view of the arbitration clause in the agreement submitted an application under section 20 of the Arbitration Act before the High Court of Sindh. The first arbitrator appointed passed away. The case could also not proceed for some reasons before the substitute arbitrator and eventually Mr. M.
Allem Sheikh, Additional Secretary, Zakat and Ushr Department completed the arbitration proceeding after the contesting parties pleaded their respective case before him. Six items were considered by the arbitrator based on the claim made by the purchaser. The arbitrator, after holding that the Food Department was unable to rebut the purchaser's allegation allowed the following four amounts to the purchaser:--
(i) Refund of earnest'money Rs,6,96,025.
(ii) Compensation for shortage of sugar supplies Rs,6,47,101.
(iii) Loss of expected profits Rs,10,00,000
(iv) Other damages including loss suffered on account of employment of trucks/trawlers which returned without loading any sugar as well as loss of goodwill and reputation Rs,6,00,000.
' Upon filing of the award in Court the Food Department objected to it mainly on the ground of failure of the arbitrator to furnish reasons in support of his findings, thus, not fulfilling the requirements of section 26-A of the Arbitration Act. The Single Judge upheld the amount mentioned in items (i) to (iii) allowed to the purchaser, but declined to award the claim under item No,(iv). Both the contesting parties preferred appeals to a Division Bench of the same Court, which as stated above, were dismissed.
3. Mr. Muhammad Akram Zubairi appearing for the purchaser submitted that the award of the arbitrator was well-reasoned and once the reasoning was accepted by the Court the entire findings should have been made rule of the Court and thus, deletion of one of the item by the Court was not warranted in law. The learned counsel further contended that the finding of the arbitrator on item No,(iv) in any event does find support from the evidence. He finally argued that the Food Department had not filed any objections to the award and were therefore, estopped from questioning the findings of the arbitrator. Reliance was placed on. A. Qutubuddin Khan v. Karachi Electric Supply Corporation Ltd. Karachi 1980 CLC 1977; The Federation of Pakistan Chambers of Commerce and Industry v. Messrs Al Farooq Builders, Builders and Contractors NLR 2001 Civil 1; Messrs Ibad & Company v. Province of Sindh through Secretary to the Government Communication and Works Department and 2 others PLD 1980 Kar.
207.
4. Mr. Raja Abdul Ghafoor, Advocate-on-Record representing Food Department defended the impugned judgment as regards rejection of claim of the purchaser under item No,(iv), and reading out the grounds given, therefore in the judgment the learned counsel maintained that the learned Single Judge as well as the Division Bench had given convincing reasons for their conclusions. As regards the appeal filed by the Food Department the only argument advanced by the learned counsel was that the arbitrator had failed to give reasons for his findings and had thus violated the provision of section 26-A of the Arbitration Act, which requires an Arbitrator to furnish reasons for his decision.
5. The purchaser's grievance is restricted to reduction of quantum of damages from Rs,1.6 million to Rs,1 million. He has already been granted by the Courts Rs,1 million as damages for loss of expected profit that he would have earned had the sugar been supplied to him within the time prescribed in the agreement and its proper state and correct weight. The purchaser was however, denied by the High Court Rs,6,00,000 granted to him by the arbitrator for the loss suffered by him by the employment of Trucks/Trawlers that remained idle and loss of goodwill and reputation. The finding of the arbitrator on this item has been stated in the following terms:- "The claimant has further claimed a sum of Rs,1, 08,000 as damages, loss suffered on account of non-delivery of the sugar as his trucks, trawlers remained at Mills's premises (Mehran Sugar Mills) and returned back without loading any sugar.
' The claimant has further claimed a sum of Rs,100,000 as damages, for loss of business, reputation, goodwill as detailed in legal notice dated 25-8-1986. No question on this issue has specifically been put to the claimant either by the Food Department or by the Mehran Sugar Mills as such the same was not rebutted in cross to the claimant. I award a consolidated sum of Rs,600,000 (Rupees six lac) only against the Food Department, Government of Sindh as damages in this account."
' The learned Division Bench in the impugned judgment had aptly rejected the above claim on the ground, that compensation for loss of goodwill or reputation is generally not awarded, particularly in the absence of tangible evidence showing additional loss and further that since the purchaser was already awarded Rs,1 million by the arbitrator as compensation for the anticipated loss of profit further compensation on account of loss of goodwill and reputation was not justified. We find ourselves in agreement with the reasoning of the learned Division Bench. The learned counsel appearing for the purchaser was unable to show any discussion by the arbitrator in the award regarding the loss suffered by the purchaser on account of reputation or goodwill. Apart from a bare claim of the purchaser, the learned counsel could not even refer to any evidence produced by the purchaser before the arbitrator on this issue. The finding of the arbitrator on the issue reproduced above indicates the absence of such evidence as he had awarded compensation on the item simply on the ground that the purchaser was not questioned on behalf of the Food Department on the issue. Such failure by the department does not go to prove the loss caused to the purchaser. It was the burden to the purchaser to have produced independent evidence of the damage caused to his reputation and goodwill on account of non-performance of the contract by the Food Department. Bald statement of the petitioner, without more, that he had suffered loss on this account was not sufficient to establish the claim. In this view of the matter the purchaser was rightly denied damages for loss of goodwill and reputation.
6. The contention of the learned counsel for the purchaser that the Court is not entitled to disagree with the findings of the arbitrator is without force. It is true that the trial Court does not sit in appeal from the finding of the arbitrator but at the same time the Court is empowered to reverse the finding of the arbitrator on any issue if it does not find support from the evidence. The very incorporation of section 26-A of the Arbitration Act requiring the arbitrator to furnish reasons for his finding was to enable the Court to examine the soundness of the reasons. As already held the arbitrator in the case before us had granted damages for loss of reputation and goodwill without there being any evidence to that effect. The Courts were, therefore, justified in denying this claim to the purchaser.
7. The award of the arbitrator, apart from the above flaw, is otherwise comprehensive and well- reasoned. It stretches over 18 pages and each issue has separately dealt with in sufficient details.
The argument of the learned counsel representing the Food Department that the award is not well- reasoned is, therefore, unfounded.
8. In the light of the above discussions we do not consider that the impugned judgment of the High Court of Sindh, suffers from any infirmity or illegality. Consequently, both the appeals are dismissed and the parties are left to bear their respective costs.