1. ' SH. RIAZ AHMED, C.J.--- This direct appeal calls in question the judgment, dated 15-2-2002 delivered by a Division. Bench of Sindh High Court in a High Court appeal whereby judgment and decree, dated. 5-3-1995 passed by a learned Single Judge of the said Court in a civil suit was set aside.
2. ' The relevant facts for disposal of this appeal are that the appellant/plaintiff being an "A Class" No Limit Contractor, was enlisted with the respondent's society and was pre-qualified for their works.
3. The respondent society floated tenders for their works. The appellant company participated in the tenders and gave lowest tender for three works whereas the fourth tender was. Second lowest. The detail of the works is enumerated as under:--
(i) Work of providing and laying sewerage disposal at Project No,2 Gulshan-e-Jamal Karachi estimated to cost Rs,8,41,722 (on 12-2-1987).
(ii) Work of "Providing and laying Sewerage Disposal at Project No,2-A, University Town, Karachi' estimated to cost Rs,37,22,940 (on 14-4-1998).
(iii) Construction of culverts at Project No,2-A1 at Depot Hill Station Karachi, estimated to cost Rs,73,89,475 (on 4-4-1991). v) "providing and laying sewerage line at Project 2-Al, estimated to cost Rs,63,16,200 (in September, 1989).
4. ' In consequence to the offer made in the tender the above work was awarded to the appellant. The respondent society also floated another tender for the project of the development of 20 undeveloped commercial plots. The appellant having participated in the said tender offered highest bid which was accepted. The plots were to be allotted by respondent against the payment of priceless the amount of earnest money paid with the tender. The appellant had to construct the commercial units on the plots in question for disposal by him to buyers in the open market and the respondent society had to execute the lease deeds in favor of such buyers to enable them to get their title incorporated in the record of rights.
5. ' The execution of work was in progress, when certain disputes referable to the arbitration in terms of clause 45 of the tender document had arisen between the parties. The appellant while invoking the arbitration clause of the agreement asked the respondent for appointment of an Arbitrator, and on failure of respondent to appoint an Arbitrator, the appellant appointed Mr. Qutab-ud-Din as the sole Arbitrator under section 18-B of the Arbitration Act, 1940 in terms of Article 45 of the Tender Documents. The appellant before the appointment of sole Arbitrator approached the Federal Ombudsman in the matter who referred the dispute to the Deputy Registrar Cooperative Society, but the respondent despite repeated notices sent by the Deputy Registrar Cooperative Society did not appear before him and consequently, the appellant having no option proceeded for arbitration. The Arbitrator sent the notice along with copies of claim of the appellant to the respondent on 17-7-1993 for hearing of the case on 2-8-1993, but the respondent despite service of notice failed to attend the hearing. The second notice was sent for 1-9-1993 but respondent again did not appear before the Arbitrator and then the respondent was warned by the Arbitrator that in the event of his non-appearance on the next date he would be proceeded ex parte. However, on 14-9-1993 a third notice in the series was sent to respondent to participate in the proceeding but the respondent again did not pay any head to the notice of Arbitrator and constraint by the consistent failure of the respondent to attend the arbitration proceedings the Arbitrator proceeded ex parte in the matter.
6. ' The Arbitrator having concluded the proceedings announced the Award and by rejecting the claim of the appellant/plaintiff for Sewerage work of Project No,2, allowed the claim of Rs,30,73,525 for the project 2-A, Rs,60,11,634 against the claim of the works of Project 2A-1 (culverts and sewerage) and Rs,25,000 as cost of the Arbitrator with direction to the respondent to make the payment within one month. In addition to the above claim the respondent was also directed to allot 20 undeveloped commercial plots to the appellant for a sum of,Rs,5,96,000 which were to be utilized for construction of commercial units for disposal in open market.
7. ' Pursuant to the Award the appellant invoked the jurisdiction of the High Court of Sindh at Karachi for making the Award as rule of the Court and a learned Single Judge after hearing the appellant and the respondent and examining the record in detail, made the award Rule of the Court vide judgment, dated 5-7-1995. The respondent being aggrieved of the said judgment filed a High Court appeal and a learned Division Bench of the High Court accepted the appeal vide judgment dated 15-2-2000 impugned in the present appeal.
8. ' It may be stated here that after filing of the Award in the Sindh High Court, despite service of the notice on 24-2-1994, the respondent failed to file objection within time and even no objection what so ever was raised in the application under section 30 and 33 of the Arbitration Act which were filed one year after the notice of the filing of the Award.
9. ' Article 45 of the tender documents provided as under:-- "All the disputes or differences in respect of which the decision (if any) of the architect has not become final and binding as aforesaid shall be finally settled under the provisions of the Pakistan Arbitration Act of 1940 and the rules made thereunder as amended from time to time by two Arbitrators one to be nominated by the Owner and the other by the Contractor and in the case of the, arbitration not agreeing to the award of an umpire to be appointed by the . Arbitrators in writing before proceeding with the reference to the arbitration and the decision of the Arbitrators or in the event of their disagreement of the umpire will be final and conclusive. The venue of the arbitration proceedings shall be in Karachi. The said Arbitrators or umpire as the case may be shall have full power to open up review and revise any decision opinion direction certificate or valuation of the architect and neither party shall be limited in the proceedings before such Arbitrators or umpire to the evidence or arguments put before the Architect for the purpose of obtaining his said decision. No decision given by the Architect in accordance with the foregoing provisions shall disqualify him as being called as witness and evidence before the Arbitrators or umpire on any giving matter whatsoever relevant to the dispute or difference referred to the Arbitrators as aforesaid. The Arbitrator shall not enter on the reference until after the completion or alleged completion of the works unless with the written consent of the owner and the contractor provided always."
10. ' The learned Single Judge made the award Rule of Court with the following observation:-- "(18) Keeping in view the tender document vide clause 45 mentioned earlier it is established that the matter has rightly been referred for the arbitration between the parties. As the defendant has failed to nominate their own Arbitrator Mr. A. Qutubuddin Khan the learned Arbitrator acted as sole Arbitrator and issued 3 notices on different dates to the defendants. The notices were issued through registered post A.D. At the addresses of the defendants through their secretary but even after service of the notices the defendant did not participate before the Arbitrator and there was no other way out left to the Arbitrator, as such the learned Arbitrator after hearing the plaintiff and perusing the necessary documents/papers announced the award. The award was filed in this Court and necessary process was issued as discussed earlier but even then the defendant failed to file any objection in time.
(19) The case-law cited by Mr. K.M.A. Samdani is very much relevant, applicable and helpful to the case of the plaintiff. The defendants have deliberately remained absent before the Arbitrator and even after receipt of the notice through bailiff as well as through registered post A.D. Did not file any objection to the award in time in the Court. Their plea that they were not served with the notice is not borne out from the record. From initial stage it appears that the defendants were not punctual and prompt to pursue their case at the proper time and place. The objections filed by the learned counsel for the defendants are hopelessly time-barred and are not even fit to be considered. The contention of the learned counsel that the defendants came to know on 9-4-1994 through postal service is not borne by the record. Therefore, their plea that they came to know on 9-4-1994 is not believable and their contention that the limitation is to be counted from the date of knowledge is also not tenable. In view of the overwhelming documentary evidence which is annexed with the R&P of the case and the record of the learned Arbitrator, there is not any mistake in the award itself and legal formalities and hearing the plaintiff and perusing and verifying the relevant documents at issue. For the foregoing reasons the award is made rule of the Court and as such J.M. 10 of 1995 stands dismissed with no order as to costs."
11. ' The learned Division Bench in appeal held that there was no evidence of acceptance of bid offered by the appellant to constitute a valid contract and without existence of the contract, there could be no arbitration and consequently the award given by the Arbitrator was void ab initio. The conclusion drawn by the Appellate Bench of the High Court was as under:-- "(13) In any case, rights and liabilities could follow on completion of a contract which could only be on acceptance of the bid by the appellant. There is no material on record to establish that the bids of the respondent were accepted by the appellant.
12. ' Consequently, the reference to arbitration was invalid and the Award given by the Arbitrator, was void ab initio. Award being void ab initio, the pleas regarding limitation etc., would be insignificant."
13. ' The respondent in appeal before the High. Court denied the existence of a valid contract between the parties and pleaded that the arbitration without the contract was illegal and claim of the appellant was also time-barred. The appellant on the other hand contested the appeal with the objection of non-payment of proper court-fee, limitation and on merits pleaded that award was rightly made rule of the Court. In the light of the controversy between the parties, the crucial question for determination would be regarding the existence or non-existence of a valid contract between the parties.
14. ' The learned counsel for the appellant has contended that there was sufficient evidence in the form of correspondence made by both sides to establish the existence of a valid contract between the parties. It was pointed out by the learned counsel that the respondent having accepted the bid offered by the appellant without issuing a formal work order instructed the appellant for execution of work and in consequence thereto the appellant has taken the following essential steps for carrying out the work:--
(a) The purchase and supply of RCC pipe at the site for the sewerage work.
(b) Employment of architect and other staff.
15. ' The Secretary and the Vice-President of the Society vide their letter dated 8-4-1991 issued instruction to the appellant for execution of work, but subsequently because of their non- cooperation, the appellant could not proceed with the project and was compelled to sell the pipe with colossal loss. The learned counsel submitted that respondent despite having given assurance to make payment of actual loss caused to the appellant failed to honour the commitment.
16. ' The fate of this appeal would be directly linked with the question of existence or non-existence of the contract between the parties. In the Court of first instance, the respondent did not claim the non-existence of an agreement between the parties and for the first time in appeal it was pleased that there was no contract between the parties.
17. ' The case of the appellant is that the offer made by the appellant in the tender for the construction of the projects in question was accepted by the respondent and also issued him instruction in writing for execution of work but subsequently refused to issue work order for ulterior motives and that apart from merits the appeal was not maintainable for non-payment of court-fee and being time-barred was bound to be dismissed.
18. ' Precisely the contention of the learned counsel was that the existence of .a valid contract was, admitted in the letter dated 8-4-1991 written by the Secretary of the Society to the appellant containing the instructions for execution of work. The above letter is reproduced hereunder:-- "No,PRECHS/P-2-2A-2A1 Dated the 8th April, 1991 To ' M.A. Khan & CO., E-18, Pak Tamir Plaza Block No,14, Gulshan-e-lqbal, Karachi.
19. ' Subject: Providing and laying sewerage disposal line at Project No,2 Gulshan-e-Jamal Rs,8,41,722, Project No,2-A University Town Rs,37,22,940, Project No,2A-1 Depot Hill Station Rs,63,16,200, culverts at Project No,2A1 at Depot Hill Station Rs,73,89,475 and purchase 20 commercial plots at project No,8 Chanesar Halt.
20. ' Dear Sir, ' With reference to our negotiation and discussion in my office in the meeting attended by you and representatives of Consultants you were asked to commence two works by collecting material previously. Now it is to require from you to take up all works and collect the requisite pipe and material for other works also at site for the purpose as agreed between us, since you emerged lowest tenderer in respect of subjected works and highest in respect of 20 plots at Chanesar Halt Project No,8. Necessary formalities of work orders and allotment of 20 commercial plots and execution of agreements etc. Will be completed in due course.
21. ' This is in confirmation of our verbal instruction after the meetings referred to above.
22. ' Hope that you will execute the work in right earliest.
23. ' Dated 8-4-1991 Secretary, P.R.E.C.H. Society ' The learned counsel for the appellant with reference to the correspondence between the parties on the subject vehemently argued that notwithstanding the non-issue of formal work order, the existence of the contract and start of execution of work at the site under the instruction of the respondent was established on record.
24. ' Learned counsel for the respondent on the other hand contended that without execution of an agreement and issue of formal work orders, there would be no proof of contract and unilateral arbitration at the instance of Appellant(?) would be of no consequence.
25. ' The tender notice is an invitation which is extended for making offer and it is not an offer or proposal and similarly offer made by a person without acceptance does not create any promise or agreement but acceptance of an offer or proposal by the person who called for tender would constitute an agreement. The acceptance of the offer may be express or implied or it can be gathered from the conduct of parties and the circumstance of the case. The acceptance of an offer would give rise to an agreement which if is enforceable in law is a valid contract and the contract is complete as soon as the offer is accepted and the terms of contract required to be reduced in writing would be only incidental to the completion of contract. In a contract by correspondence if the acceptance of offer is established through the letters, the non-execution of the formal agreement would not be essential to constitute a valid contract. The letters of offer and acceptance indicating the term agreed upon by the parties would constitute a valid contract which would not be affected by subsequent negotiation and the terms of the contract would necessarily be judged from the letter of acceptance.
26. ' The transaction to be recognized as a contract must contain the essential elements of proposal and its unqualified acceptance and in order to ascertain the existence of an agreement between the parties for a contract, the negotiation and correspon&nce between them would be considered.
27. In the present case the lowest offer made by the appellant in the tender for execution of work and the acceptance of his offer by the respondent is established by the letter dated 8-4-1991 sent by the respondent to the appellant wherein the respondent in an unequivocal terms admitted the existence of an unqualified and absolute agreement in respect of the works and projects for which the lowest and highest tenders were given. The respondent in the said letter with reference to the earlier negotiation and discussion has confirmed the award of contract and execution of work mentioned therein and requested the appellant to proceed with the execution of work by giving assurance that necessary formalities of issue of work order and execution of agreement would be completed in due course of time.
28. ' We having heard the learned counsel for the parties and gone through the record have not been able to find out any substance in the opinion formed by the Division Bench of the High Court in appeal about the non-existence of an enforceable contract between the parties. We also find that the appeal was decided in a perfunctory manner without attending the question of its maintainability due to the non-payment of court-fee and being barred by time and discussing the case of parties on merits. In view of our conclusion that an agreement was in existence between the parties, we have no option except to set aside the impugned judgment and remand the case to the High Court for decision of the appeal afresh on merits. Order accordingly.
29. ' The learned counsel for the appellant has submitted that the appellant having made huge investment in the project was facing financial hardships for the last more than 10 years, therefore, the decrial amount deposited with the Nazir of the High Court may be ordered to be paid to him subject to the furnishing security equal to the amount in question to the satisfaction of Nazir with condition of return of amount in question if ultimately the respondent succeeds. The learned counsel for the respondent has seriously opposed the withdrawal of decretal amount on the ground that neither there was any evidence in support of claim of appellant that he made investment nor that any loss was caused to him and requested that a direction may be given for early disposal of appeal by the High Court. However, on the statement made by the learned counsel for the appellant before us that respondent was prepared to make payment of Rs,50, 00,000 to the appellant for settlement of the dispute out of the Court. Learned counsel for the respondent candidly stated that such an offer was made for payment of Rs,40, 00,000. Be that as it may, we keeping in view the nature of dispute, the claim of appellant of making investment in the project and the intention of parties for an amicable settlement out of Court without causing prejudice to the case of either party in appeal deem it proper to direct for withdrawal of an amount of Rs,40,00,000 out of the decretal amount be paid to the appellant subject to his furnishing adequate security to the satisfaction of Registrar of Sindh High Court with the undertaking to return the amount in question if ultimately the decree is set aside. We for the foregoing reasons allow this appeal in the above terms. The High Court should make efforts for the disposal of appeal within two months. There shall be no order as to costs.