' M. TABASSUM AFTAB ALVI, J.---The supra titled appeal has been filed against the judgment and decree passed by the learned Additional District Judge, Muzaffarabad, dated 28-6-2012 whereby an award of Arbitrators dated 4-5-2012 has been made rule of the Court by partly allowing application of Messrs Design and Engineering System-respondent, moved under section 20 of Arbitration Act, 1940.
2. Precise facts giving rise to the instant appeal are that Messrs Design and Engineering System through its Chief Executive, Salman Yasin filed an application under section 20 of Arbitration Act, 1940 in the Court of District Judge, Muzaffarabad, which was made over to Additional District Judge, for hearing and disposal under law on 28-2-2011. It was stated in the application that Messrs Design and Engineering System, respondent No,1 (hereinafter referred to as the Contractor-respondent) is a reputed company having its registered office at 22 KM main Bedian Road Near Phase VI, DHA Lahore which had undertaken construction of various projects throughout 'Pakistan and Azad Jammu and Kashmir. It was alleged that contractor-respondent submitted its bid for reconstruction and rehabilitation of Bagh-Arja Road and the same was accepted by the Azad Govt.
Of the State of Jammu and Kashmir, State Earthquake Reconstruction and Rehabilitation Agency (SEERA), Earthquake Emergency Assistance Project (EEAP) through its Chief Engineer (Reconstruction) against contract amount of the equivalent of PKRs 301,601,086.00 (Pak Rupees three hundred one million, six hundred and one thousand eighty six only) vide letter dated 2-7- 2008. It was claimed that the parties executed a formal contract on 6-8-2008. The intended completion period of the project was stipulated 12 months i.e, till 5-8-2009. The contractor- respondent herein despite granting two extensions up to 20-6-2010 could not complete the work within stipulated period. It was further alleged that in accordance with the terms of the contract the project could not be completed up to the required target due to heavy floods, utter deterioration, non-availability of ROW, destruction of site project, nonpayment of approved IPCs, hence, further extension was solicited till December 2010, however, instead of granting extension of time, the contract was terminated by the Chief Engineer on 13-10-2010. It was further stated that other contractors like ICCB, INCB5, INCB 6, INCP 7 in the vicinity were also delayed due to the afore-stated reasons and measures but their contracts were not terminated and instead they were granted extension time and again till December 2010, however, contractor-respondent was discriminated against for mala fide reasons. It was claimed that 'illegal termination of the contract resulted into heavy financial losses to the contractor who was constrained to invoke the provision of section 20 of Arbitration Act, 1940. After receiving objections and hearing, the learned Additional District Judge concluded that differences between the parties were required to be resolved through arbitration, hence, employer-appellant and contractor-respondent were directed to file agreement before the Court within fifteen days and parties were also directed to submit names of. Arbitrators. The order of the learned Additional District Judge was assailed through an appeal before this Court which was dismissed, however, on request of the parties, the learned Additional District Judge was directed to decide the arbitration proceedings within three months vide order dated 11-10-2011. The learned Additional District Judge with the consent of the parties appointed Col. (Retd) Imran Masood Qureshi, nominated on behalf of the contractor, and Abdul Majid Khan, Advisor DMR Division Nespak Islamabad, nominated on behalf of the employer-appellant as Arbitrators. The above Arbitrators submitted their award in the month of May, 2012 wherein it was held that due to nonpayment of IPC's within stipulated time, force measure and discriminatory treatment, contractor was constrained to accelerate the progress of construction work, who was entitled to extension of time, however, on wrong report of Project Manager, contract was terminated which resulted into the financial losses of contractor-respondent, thereto' e, entitled to be paid amount of Rs,19.369 million along with release of performance guarantee amounting to Rs,15.23 million. The learned Additional District Judge, after hearing made the award rule of the Court and granted decree of Rs,19:369 million as determined in para No,31 of award, in addition to 15.23 million in favour of contractor-respondent vide impugned judgment and decree dated 28-6-2012. Feeling aggrieved from the above judgment and decree the Communication and Works Department through Chief Engineer EEAP has filed the instant appeal.
3. Mr. Abdul Rasheed Karnahi, standing counsel for appellant vehemently argued that contract was executed between the parties on 6-8-2008 pertaining to reconstruction and rehabilitation of Bagh-Arja Road, which was liable to be completed within one year i.e,, till 5-8-2009, however, contractor-respondent despite obtaining two extensions till 20-6-2010, failed to complete the project within stipulated period. The learned counsel maintained that about slow progress of the work, firstly a letter was written by the employer on 20-2-2009. Second letter for the same purpose was written on 22-4-2009 and last notice was served upon him on 21-6-2010 to get the work completed by 30-7-2010 but contractor-respondent failed to show any positive progress in the completion of the project. He further submitted that application for third extension was moved on 10-8-2010 which was belated one hence, the same was not entertainable. The learned counsel emphasized that as contractor failed to complete project within stipulated period, hence, under compelling circumstances, the Communication and Works Department through its Chief Engineer cancelled the contract on 13-10-2010 and process with regard to award fresh contract was initiated on 14-12-2010. He further emphasized that new contractor started work on 5-1-2011 and completed the project consisting of 16-1/2 k.m road within 6 months, while contractor-respondent completed only 1.5 k.m road within about two years period. The learned counsel pressed into service that award was given by the Arbitrators against terms of reference, therefore, same was liable to be quashed. The learned counsel further submitted that there was no flood in the month of July, 2010 as alleged by the contractor, which important aspect was not considered by the Arbitrators in light of the record. The learned counsel urged that Arbitrators admitted that cancellation of contract by Chief Engineer was justified, however, findings were given against Project Manager without providing an opportunity of hearing. The learned counsel further maintained that arbitration proceedings could not be initiated without referring lastly the matter to adjudicator. The learned counsel further argued that contractor not solicited remedy pertaining to machinery rent from 1- 10-2010 to 20-4-2011, despite of that the Arbitrators have granted relief to respondent, hence, they have committed misconduct and their award to that extent was liable to be quashed. The learned counsel in support of his contentions referred to and relied upon the following case-law: -- ' Kh. Ghulam Rasool Lone v. Azad Jammu and Kashmir Government (PLD 1971 AJK 127);
(ii) Ghulam Abbas v. Trustees of the Port of Karachi (PLD 1987 SC 393);
(iii) Messrs Combined Enterprises v. Water and Power Development Authority, Lahore (PLD 1988 SC 39);
(iv) Government of East Pakistan v. Messrs A. Rab & Sons and another (PLD 1967 (Dacca) 797);
(v) Dr. Khalida Malik and 2 others v. Mst. Farida Malik and 7 others (1994 MLD (Quetta) 2348) and;
(vi) Province of Punjab through Secretary to Government of the Punjab Communications and Works Department Lahore and another v. Messrs Tarmic Construction (PVT.) Limited (1999 CLC 946).
' In Kh. Ghulam Rasool Lone's case it was held that award was not based on evidence and clearly opposed to it, hence, opined that Arbitrator not free to ignore important evidence or by-pass it or to return verdict clearly opposed to evidence. Arbitrator found to have violated such principles, hence, misconducted himself, therefore, award and consequential decree were set aside.
' In Ghulam Abbas's case, it was held by the apex Court of Pakistan that an award is final as to both fact and law but there is a rule that an error of law, if it appears on the face of the award, is a ground for setting it aside which is an exception to the general rule. It was further held that as general principle, the Arbitrator has always been considered to have impartial authority to follow ordinary rules of law. The intentional disregard of law would, therefore, seem to be such a misconduct on the part of Arbitrator would justify setting his award aside.
' In Messrs Combined Enterprises's case referred to hereinabove, it was held that when the award is filed in the Court which affirmed or set-aside the same such an order is appealable under section 39 of the Arbitration Act, 1940.
' In case of Government of East Pakistan supra, it was held that award can be remitted only when question of law necessarily arises on face of award and ex-facie has been decided wrongly.
' In Dr. Khalida Malik's case, it was held by the Quetta High Court that award is final determination of lis between parties who according to their own concurrence authorized arbitrators to finally settle their dispute through arbitration. Award is not necessarily a judicial decision giving detailed reasons for arbitrator's conclusions. Award, however, is an intelligible decision which defines rights of parties, in relation to the subject-matter of reference. Where award was found to be in consonance with reference and was intelligible decision of the terms of reference it could not be set aside.
' In case of Province of Punjab through Secretary to Government of the Punjab Communications and Works Department Lahore and another, it was held by the Lahore High Court that without framing issues or without recording any evidence and denying opportunity of producing evidence of the parties the award could not be approved by lower Court.
4. Barrister Humayun Nawaz Khan, the learned counsel for contesting respondent while controverting arguments of the learned counsel for appellant submitted that construction of Bagh-Arja road consisting of 16.03 k.m on the basis of contract dated 6-8-2008 was liable to be completed within one year, however, due to flood, utter deterioration, non-availability of ROW and non-payment of approved bills the same could not be completed within time. He further argued that application for third extension was moved by the contractor-respondent on 14-5-2010 much before completion period and not on 10-8-2010 as alleged by the appellant. The learned counsel argued that on the basis of clause 23.1 of the General Clauses of the contract the contractor- respondent notified appointment of adjudicator on 20-8-2010, however, the appellant failed to accept this request. The learned counsel emphasized that various other contractors were granted extensions, however, the respondent was discriminated by the appellant for mala fide reasons, hence, under compelling circumstances an application for arbitration proceedings in accordance with Arbitration Act, 1940 was moved. The learned counsel pressed into service that appellant seeking reappraisal of evidence which was submitted by both the parties and considered in the award of Arbitrators, which is not permissible under law. The learned counsel urged that there are concurrent. Findings of facts and law recorded by the Arbitrators and the learned Court below, against which, the instant appeal is bad in law. He further maintained that contract of contractor- respondent was cancelled by the appellant for mala fide reasons, which was later on given to sub- contractor of the contesting respondent through re-award, which was completed a year later of allocated time extension required by the respondent, that too, on an escalated price of 260 million instead of 150 million. The learned counsel emphasized that Arbitrators concurrently decided the matter strictly in accordance with documentary evidence produced by the parties, as well as in accordance with terms of reference, hence, submitted for dismissal of appeal. The learned counsel in support of his contentions referred to and relied upon following case-law:--
(i) Pakistan Steel Mills Corporation, Karachi v. Messrs Mustafa Sons (PVT.) LTD., Karachi (PLD 2003 SC 301);
(ii) Messrs Tribal Friends Co. v. Province of Balochistan (2002 SCMR 1903);
(iii) Zakaullah Khan v. Government of Pakistan through Secretary, Buildings and Roads Department, Lahore (PLD 1998 Lah. 132);
(iv) S.G. Rayon Mills (PVT.) Limited v. Fida Hussain and Associates (2002 CLC 353); ' In Pakistan Steel Mills Corporation's case, it was held that normal procedure was followed by the Arbitrator and all the pleas raised by the parties were considered and answered accordingly, hence, Arbitrator in circumstances had not acted capriciously or arbitrarily. It was further held that Arbitrator is final Judge on the law and facts and it is pot open to a party to challenge decision of the Arbitrator, if it is otherwise valid.
' In Messrs Tribal Friends Co's case, it was held that while examining the validity of an award under the Arbitration Act, 1940, one has to find out errors apparent on face of record and documents relied upon and referred to in award.
' In Zakaullah Khan's case supra, it was held that the object of arbitration proceedings is to curtail period of litigation to encourage resolution of conflict through Judges of their own choice. It was further held that Arbitrators are not bound by rules of technicalities embodied in procedural law as well as Qanun-e-Shahadat/Evidence Act.
' In case of S.G. Rayon Mills (PVT.) Limited, ibid, it was held that where the various findings recorded by the sole Arbitrator on all the issues framed by him in respect of the controversy between the parties were well reasoned, based on material available on record and no error of law and facts appeared in the findings, High Court declined to differ with the findings or to take another view of the matter, which even otherwise was not permissible under the law.
5. Pro forma respondent No,3 appeared in person and reiterated his view taken in the arbitration award, while pro forma respondent No,4 also appeared in person and supported claim of appellant.
6. t After hearing the learned counsel for parties at great length we have perused the contents of appeal and examined the record made available with utmost care.
7. A contemplate perusal of record reveals that learned Additional District Judge (Arbitration Court), Muzaffarabad, framed as many as 18 issues on the basis of pleadings of parties, which were treated TOR for decision of the Arbitrators. A perusal of award reveals that all the above mentioned TOR were attended by the Arbitrators in judicious manner which were decided with sound and cogent reasons. It appears that both the parties submitted their claims, arguments and all other relevant documents before the Arbitrators in shape of book No,1 to book No,8 and almost every piece of evidence was attended to by the Arbitrators. An arbitration forum is one of exclusive jurisdiction based on the choice of parties. Award rendered in arbitration proceedings is not to be lightly interfered with as grounds for interference are very limited. Out of such grounds an error of law apparent on the face of award, misconduct on part of arbitrator or in proceedings, or an award improperly procured or is otherwise invalid are recognized by law. This Court while adjudicating the validity of an award, does not sit as a court of appeal over the Arbitrators as well as Arbitration Court. If the findings of the Arbitrator are based on documentary evidence and are not perverse and &there is no misreading or non-reading of evidence, the findings of Arbitrators cannot be disturbed. Weight of the judicial opinion has always been in favour of non-interference in the findings of the Arbitrator/Arbitrators if it is based on evidence. Until and unless it is found that gross miscarriage of justice has been caused due to any perverse findings by the Arbitrators, a Court of law will not disturb such findings, even if different view of the matter can be taken. An award can only be set aside on grounds set forth in section 30 of the Arbitration Act, 1940. It will be appropriate here to reproduce section 30 of the Act, supra, which is as under:-- "30. Grounds of setting aside award. An award shall not be set aside except on one or more of the following grounds, namely:-
(a) that an arbitrator or umpire has misconducted himself or the proceeding;
(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings had been invalid, under section 35;
(c) that an award has been improperly procured or is otherwise invalid".
' A bare reading of the above Section makes it crystal clear that an award shall not be set aside except where an Arbitrator or umpire misconducted himself or the proceedings; or an award has been made after issue of order by the Court superseding the arbitration or that an award has been improperly procured or is otherwise invalid. The whole object underline to the Arbitration Act, is to enforce the arbitration agreement whereby the parties have bound themselves to have their disputes, arising out of the transaction to which such an agreement is applicable adjudicated upon and decided by a domestic Tribunal. The object of the Tribunal is to decide disputes speedily by quasi-Judicial means by avoiding formalities, technicalities of law delay and expensive litigation.
8. A perusal of award dated 4-5-2012 reveals that while deciding issues Nos.1 and 2, it was held by the Arbitrators that contractor-respondent was qualified for time extension, who was discriminated against by the employer-appellant. It reflects from record that other contracts awarded in the same vicinity by the appellant with the same date of completion had been awarded four extensions of times till April, 2011 and none of them were terminated by the employer-appellant for slow progress or breach of the conditions of the contract. Similarly issues Nos.3 and 4 were also decided by the Arbitrators in accordance with documentary evidence. As the employer-appellant delayed the payment of contractor, hence, it was rightly held that employer committed fundamental breach of contract. The work on spot was also stopped by the constructor- respondent due to non-payment of dues through intimation to Chief Engineer-appellant vide letter (Annexure-B) dated 13-8-2010. Likewise while deciding issue/term of reference No,5, it was held that Chief Engineer bonafidely terminated the contract under the advice and certificate of Project Manager for which contractor deserve for mitigation, however, as project was already completed through re-award, therefore, contractor was declared as qualified for certain damages/losses. The amount payable by the employer-appellant to contractor-respondent as laid down in para 31 of award was, therefore, granted by the Arbitrators in shape of proved losses and covered in TOR/issue No, 5 as referred by the Arbitration Court, hence, contention of the learned counsel for appellant that amount of various heads was given by the Arbitrators out of TOR is misconceived.
The learned Arbitrators while deciding terms of reference declared that heavy rains had caused delay in execution of project. It reflects from record that during the period from 17 July to 14 August, 2010, the dates on the basis of which, the appellant invoked GCC clause 56.2(a) out of 28 days, 22 were rainy days. Even during last week of July, 2010 heavy flood also caused major destruction in the area including damage of the culvert and crush plant of the contractor-respondent. Both the Arbitrators, while deciding TOR 7 hold that Project Manager stop accepting the check requests on 15-8-2010 by notifying cause of suspension vide letter dated 15-8-2010. It was also held that no idle charges were applicable from 15-8-2010 to 1-10-2010. The Arbitrators and learned Court below also discussed issues Nos.9 to 18 strictly on the basis of available record and documentary evidence and no misreading and non-reading of the same was pointed out and we do, not find any error in the said concurrent findings.
9. A perusal of award further reveals that taking into consideration discrimination meted out to the contractor with regard to extension of time vis-a-vis the other contractors in the same territory and non-payment of IPC-14 within stipulated period as inserted in the contract the application under section 20 of Arbitration Act was partly accepted. It was also held that employer-appellant was not entitled to confiscation of performance security of the contractor by declaring that employer shall also idle charges of machinery for the period of 6 months, for which it remains confiscated amounting to Rs, 4.935 million. Both the Arbitrators concurrently concluded that contractor- respondent was qualified to obtain damages and losses payable by the employer-appellant in following heads as per award:-- "- Final Amount of 14th and final Bill Rs.-(1.332) million - Liquidated Damages for 15 days Rs.-(4.515) million - Stone Masonry/Aggregate Base Course Rs.+ 4.600 million --Retention Money Rs.+ 14.290 million - Payment of Insurance Premium Rs.+1.391 million - Idle charges of machinery Rs.+ 4.935 million Total Rs. 19.369 million ' In addition to above the Performance Guarantee amounting to Rs,15.23 million shall also be released to the Contractor (applicant) by the Employer."
10. A glance perusal of findings and conclusions arrived at by both the Arbitrators reveals that keeping in view the whole situation of the case, position of the parties, their liabilities, faults, factual and substantial loss sustained by the parties, the contractor was compensated to the extent of losses and damages ibid. However, his whole claim was not accepted and only to the extent of some necessary bills, damages and release of performance guarantee, contractor-respondent was declared entitled for amount mentioned above, which findings clearly indicate good conscious, honesty and professional skills of the Arbitrators-respondents.
11. The contention of the learned counsel for appellant that contract was executed on 6-8-2008 which was liable to be completed within one year i.e, till 5-8-2009, however, the same was not completed despite granting two extensions till 20-6-2010 was not controverted by the, contractor- respondent. However, as held earlier it was established through record that delay was caused due to failure of employer-appellant to pay within time regarding certain heads and due to flood, heavy rains and force majeure, therefore, we upheld on the above point findings of both the Arbitrators and of the Arbitration Court. It was also proved through record that in the same vicinity various other contractors were granted extension, however, contractor-respondent was discriminated against, hence, the above contention is hereby turned down.
12. The contention of the learned counsel for appellant that learned Arbitrators recorded findings against Project Manager who was a necessary party is also not tenable as contract was executed between the contractor-respondent and Public Works Department through its Chief Engineer. The findings intelligibly pertained to appellant and not effected Project Manager personally in any manner, hence, objection is over-ruled.
13. The contention of the learned counsel for appellant that Arbitrators committed misconduct is also not impressed us. The term misconduct has not been defined in the Arbitration Act, 1940.
However, the same is akin to neglect duties and responsibilities of the Arbitrators. As already held that the learned Arbitrators minutely considered every piece of evidence pertaining to both the parties, therefore, they have not committed misconduct as alleged.
14. The contention that the documents of appellant were not considered is also baseless. It appears that both the parties presented documents, in shape of Book No,1 to Book No,8 before the Arbitrators, which were not controverted by each other in the arbitration proceedings. The Arbitrators considered almost all relevant documents and gave findings in judicious manner through the award, hence, we do not find any error in the same warranting interference of this Court. The contention of the learned counsel for appellant that without resorting to Adjudicator, the arbitration proceedings could not be initiated is also misconceived. It reflects from record that contractor-respondent notified appointment of Adjudicator on 20-8-2010, however, appellant failed to accept the request.
15. The contention of the learned counsel for appellant that wrong conclusion was drawn by the Arbitrators is also baseless. After perusal of record, we are of the opinion that no such wrong appraisal of any document could be pointed out and findings of the Arbitrators are neither perverse nor contrary to evidence, therefore, we do not find any patent error in the impugned judgment.
16. The crux of above discussion is that finding no force in the instant appeal the same is hereby dismissed with no order as to costs.