NADEEM AZHAR SIDDIQI, J.---The defendant by way of filing the objection has challenged the Award dated 13-8-1997 pronounced by late Mr. Justice (Reid.) Abdul Rahim Kazi.
The facts necessary for disposal of the case is that the defendant award the plaintiff a contract for transportation of 10,700 pipes, out of which only 6,398 was transported through plaintiff. The plaintiff submits that he has made arrangements for transporting the entire quantity and due to short shipment of pipes, he suffered losses and damages and claims the following amount:--
1. Loss on account of short supply of pipes for transportationRs,55,42,016
2. Cost of retaining establishment for 6 1/2 months Rs,32,50,000
3. Maintaining office establishment Rs,2,70,000
4. Interest @ 13% Rs,8,57,221 Total Rs,99,19,237 The defendant in its objection has denied the existence of any written agreement between the parties for referring the matter to arbitration and that there is no dispute between the parties that could be referred to arbitration and that the plaintiff was paid according to the work done within the time specified in the tender enquiry. It was further stated in the objection that the learned Arbitrator misconducted himself or the proceedings by entering into arbitration in spite of being variously informed of the absence of the agreement and illegality of the references, fraudulently and mala fide made by the plaintiff.
From the proceedings before the learned Arbitrator it appears that the defendant in spite of notice did not appear before the learned Arbitrator. The learned Arbitrator has allowed a sum of Rs, 93,95,035 to be paid by the defendant to the plaintiff.
First I will take up the objection of the defendant that there is no agreement for referring the matter to the arbitration. The offer made by the plaintiff was accepted by the defendant vide letter dated 6-12-1995. The quantity of the pipes were mentioned as 10,700 with the remarks that "these are estimated quantities and may vary as per our requirement". It was further mentioned in the said letter that award of work is subject to terms and conditions as laid down in the tender enquiry.
Clause 28 of the Tender Enquiry deals with the arbitration. The offer of the plaintiff was accepted subject to the terms and conditions laid down in the tender, enquiry which consist of arbitration clause also. In presence of arbitration clause in the Tender Enquiry the denial by the defendant is mala fide. It is not necessary that for referring the matter to the arbitration these should be a written agreement on stamp paper. The intention of the parties can be inferred by correspondence also. In this matter in view of clear clause in the Tender Enquiry the defendant cannot claim that there is no agreement for referring the matter to arbitration. It is pertinent to point out that in its letter dated September 8, 1996 (Annexure A/27 of J.M. No,16 of 1996) the defendant has relied upon the documents of Tender Enquiry for implementing the period of Contract. The defendant cannot be allowed to approbate and reprobate at the same time. In view of above, the matter was rightly referred to the arbitration.
The second question is whether the learned Arbitrator has misconducted himself and the proceedings.
From the perusal of award, it appears that the plaintiff has claimed Rs,55,42,016 on account of loss suffered by it due to short supply of pipes for transportation. The plaintiff has also claimed another amount of Rs,32,50,000 on account of extra man-months consumed by the defendant from 1-2- 1996 to 15-8-1996 for 6-1/2 months Rs,5,00,000 per month. The plaintiff has also claimed Rs,2,70,000 on account of maintaining office to follow up the recovery of claim from 1st September 1996 to 31st May 1997 and has also claimed interest @ 13% for the period before the award.
The claim of the plaintiff that he was awarded contract of transportation of 10,700 pipes is established by letter dated December 6, 1996. No doubt in the letter it was mentioned that "these are estimated quantities and may vary as per our requirement", but at no point of time the defendant informed the plaintiff about the deficiency in the quantity to be transported. In the above letter, no time period for performance has been mentioned. The first letter available on record of Suit No,16/1998 in the context of short supply is the letter of the plaintiff dated 30-1-1996 (Annex-A/17) addressed to the defendant which was replied by the defendant on 12-2-1996 (Annex-A/18). In the reply the defendant has not informed the plaintiff regarding reduction in quantity but promised to accommodate him. The plaintiff, thereafter, provided the facility of transportation in February 1996 and June 1996. However, the plaintiff has failed to provide the facility in the month of August 1996. From the contents of the claim it appears that one amount has been claimed under two accounts. At the one hand, the plaintiff has claimed that due to deficit in the quantity of transportation of pipes he suffers losses on account of deficiency in the total bill amount and on the other hand, is claiming Rs,5,00,000 per month on account of extra man- months consumed by the defendant from 1-2-1996 to 15-8-1996. In case the defendant would have allowed the plaintiff to transport the entire quantity of 10,700 pipes the plaintiff will only be entitled to claim the charges by submitting the bill of transportation charges of total quantity and will not be entitled to any other claim. In this case, the plaintiff cannot claim balance of transportation charges as he had not performed the job.
From the documents produced by the plaintiff in J.M. No,16 of 1998 it appears that after June 1996 the plaintiff was not in a position to transport further pipes as it failed to transport the pipes in terms of letter dated August 6, 1996 (Annex. A/22). The plaintiff is not entitled to claim the deficit to the total bill as he has not performed the work. However, the plaintiff is entitled to the compensation on account of breach of contract by the defendant by not providing him the agreed quantity or by not informing the plaintiff to discontinue the arrangement made by the plaintiff for transportation of the pipes, as the quantity has been reduced. The plaintiff continuously wrote letters to the defendant for supply of entire quantity, but the defendant neither supplied the remaining quantity nor informed the plaintiff regarding non-supply of further quantity, therefore, due to the conduct of defendant the plaintiff has maintained the arrangement and suffered losses.
Learned Arbitrator has also misconducted himself by awarding interest pendente lite. Learned Arbitrator has not granted interest in terms of specific provisions of agreement, but the interest was granted on the claim of damages claimed by the plaintiff which is not permissible under section 29 of the Arbitration Act.
Learned Arbitrator by not considering the above aspect of the case has misconducted the proceedings and the award is liable to be modified to that extent. The Court while examining the validity of an award does not act as a Court of appeal. Therefore, a Court hearing the objection to the award cannot undertake reappraisal of evidence recorded by the Arbitrator in order to discover the error or infirmity in the award. The error or infirmity in the award which rendered the award invalid must appear on the face of the award and should be discovered by reading the award itself. The award of charges on account of deficit in transportation of pipes and award of man-month charges at the same time and award of interest without referring to any specific provision of agreement are errors apparent on the face of the award. I, therefore, modify the award to the extent that the plaintiff is only entitled to the claim on account of extra man-months @ Rs,5,00,000 from 1-2-1996 to 30-6-1996 as there is no evidence on record that after June 1996 the arrangements were there for transpiration of pipes, as the plaintiff himself said that he has not transported pipes in August 1996. The plaintiff is, therefore, entitled to Rs,25,00,000 only with simple markup @ 10% from the date of the decree till realization of the amount. The defendant is directed to pay the above amount with markup to the plaintiff within two months.
The objections are rejected and the award is made rule of the Court. Office is directed to prepare the decree in the above terms.