' By a short order dated 15-10-1980 I had made the award dated 18-10-1976 of the Arbitrator, late Mr. Justice H. T. Raymond, a rule of the Court and passed a decree in terms thereof with simple interest at 9% per annum from the date of the decree till realization with no order as to costs. The reasons for the order are given hereunder:-
2. The facts are that the defendant, hereinafter referred to as the K. P. T., had invited tenders for the laying of a main rail track in the oil installation area at Keamari, Karachi and on 27-7-1972 the plaintiff submitted a tender for the lump-sum amount of Rs, 10,75,847. This bid of the plaintiff was about 20 % higher than the K. P. T's. Estimate of Rs, 8,94,400. According to the tender submitted by the plaintiff, thier bid was open for 90 days.
3. On 19-10-1972 the K. P. T. Accepted the bid of the plaintiff subject to the approval of the Government, which approval was later on granted. By later dated 1-1-1973 addressed to the K. P. T., the plaintiff expressed their willingness to work at quoted rate and asked for issuance of the work order, which work order was issued by the K. P. T. On 6-1-1973.
4. The formal contract was signed between the parties on 3-4-1973 although the work was commenced by the plaintiff on 13-1-1973. Under the contract the stipulated period for completion of the work was 6 months and was to expire on 12-7-1973. The work was, however, completed by the plaintiff on 27-11-1973 and according to Mr. Abbas Ahmad, learned counsel for the K. P. T., no action was taken by the K. P. T. Against the plaintiff for the delay of about 41 months in the completion of the contract.
5. After the completion of the work, the plaintiff made their claim for escalation in the sum of Rs, 5,94,283.87 which included 7 1/2 claim on account of overhead charges. By their letter of 27-2-1974 the K. P. T. Asked the plaintiff for submission of bills and vouchers in support of their aforesaid claim for escalation. Thereafter the plaintiff kept quiet for 16 months and on 27-6-1975 they wrote another letter to K. P. T. Reminding them of the claim for escalation but with this letter also no bills or vouchers were attached. Thereafter on 2-7-1975, the plaintiff raised their original claim to Rs, 10,42,311. By letter dated 12-7-1975 the K. P. T. Rejected the claim of the plaintiff. After nearly 6 months of the rejection of the claim by legal notice dated 14-1-1976 addressed to the Chairman of K. P. T., the plaintiff sought the nomination of an arbitrator under clause 60 of the General Conditions of Contract. Clause 60 reads as follows :- "60. Any dispute regarding the quality of materials or workmanship or accuracy of measurements or reasonableness of the rate for any item or any other question of an Engineering or Technical nature shall be decided by the Engineer and his decision shall be final and binding on all the parties.
' Any other dispute of whatsoever nature (including the interpretation of this or any other relevant document) arising under this Contract (except as to any matters, the decision of which is specially provided for by these conditions) shall be referred to a sole arbitrator to be appointed by the Chairman, Karachi Port Trust, who shall have absolute discretion either to appoint an officer of the K. P. T. Or anyone else arbitrator. The decision of such sole arbitrator shall be final and conclusive and shall be binding on all the parties to the contract and the provisions of the Arbitration Act, 1940 and any statutory modification thereof and the rules framed thereunder shall be deemed to apply to and be incorporated in this contract.
' The Contractor shall not stop the work during the pendency of the arbitration proceedings, but he shall continue to execute the work with full speed. However, the Chief Engineer shall have the power to ask the contractor in writing to stop the work, in full or in part if he considers this necessary."
6. A perusal of the second paragraph of the aforesaid clause shows that a dispute under the clause was required to be referred to a sole arbitrator to be appointed by the Chairman K. P. T. By letter dated 22-1-1976 the Chairman K. P. T. Nominated late Mr. Justice H. T. Raymond as the Sole Arbitrator under clause 60. The Sole Arbitrator entered upon the reference on 11-2-1976. The plaintiff filed their claim in the sum of Rs, 11,09,866. A written statement was filed by the K. P. T. Raising several preliminary objections and also a reply on merits. The following consent issues were framed by the Sole Arbitrator in the hearing which took place on 20-3-1976 :- "(1) Can the question of rates or reasonableness thereof, be adjudicated upon in these proceedings?
(2) Are the instructions of the Ministry of Finance binding on the respondents or whether the applicants can claim the benefit of these instructions in this case?
(3) Whether the devaluation of the Rupee, increase in prices, and/or inflation affected the applicants in the execution of the contract in question?
(4) Whether the respondents on account of the devaluation of the Rupee accepted the applicants tender at a rate 20.29 per cent above the respondents estimated costs?
(5) Whether the contract in question was a fixed rate contract without any escalation clause? If so, what is its effect?
(6) Whether the applicants were able to precure the permanent way materials from the Railway Authorities at a reasonable price on the recommendation of the respondents within the contract period? If so, what is its effect?
(7) Whether the applicants were able to obtain most of the sleepers more or less within the contract period? If so, what is its effect?
(8) Whether the applicants were awarded extra items of the work on the basis of the market rates quoted by the applicants? If so, what is its effect?
(9) Whether the respondents have allowed enhanced rates to other contractors over and above the rates tendered and accepted on the basis of instructions issued by the Ministry of Finance, Government of Pakistan? If so, what is its effect?
(10) Whether the applicants are entitled to the amount mentioned in the statement marked "A" on account of escalation of prices?
(11) Are the rates shown in the statement marked 'A' reasonable, fair and market rates?
(12) Whether the instructions of the Ministry of Finance, Government of Pakistan relating to escalation of prices are not binding on the respondents or whether the respondents are estopped from disputing the binding effect of these instructions?
(13) Are the applicants materials shown in the statement marked `B' in the custody of respondents: or whether this was left behind without permission of the respondents and at the applicants risk?
(14) Whether the applicants can sue the respondents for any misfeamaterial sance, malfeasance and non-feasance of any of their servants or officer in spite of section 88 of the K. P. T. Act?
(15) Whether the applicants can recover any amount in respect of surplus materials even though the respondents have no objection to the removal of the by the applicants?
(16) Whether the alleged claim of the applicants is time-barred by virtue of section 87 of the K. P. T.
Act?
(17) What should be the Award?"
7. A perusal of the consent issues would show that several legal issues had also been framed by the Sole Arbitrator at the request and with the consent of both the parties. On 23-6-1976, on an application moved by the K. P. T., an order was passed by the Sole Arbitrator that by leading evidence before him the legal objections raised by the K. P. T. Would not stand waived. The record of proceedings of the Sole Arbitrator shows that on several dates, evidence produced by the parties was recorded and after the evidence had been closed, learned counsel for both the parties argued at length in support of their respective cases.
8. By an award made on 18-9-1976, the Sole Arbitrator awarded a sum of Rs, 3,09,418 against the K.
P. T. And in favour of the plaintiff in satisfaction of their total claims in the proceeding before the Arbitrator. The Sole Arbitrator made no provision for payment of interest and left the matter of interest for the Court under section 29 of the Arbitration Act. No reasons have been given for the award but in the recital reference has been made to the agreement between the parties, the making of claim on account of escalation, invoking of the arbitration clause by the plaintiff, appointment of the Arbitrator by the Chairman K. P. 1'. Etc. As arguments were addressed by learned counsel for the K. P. T. On matters referred to in the recital, a reference will have to be made thereto and in the circumstances I consider it convenient to reproduce the entire award :- "In the matter of an Arbitration Between, ' Messrs Sind Construction Co. Government approved contractors of 30-37/D Block 6, Nursery Pechs, Karachi & The Karachi Port Trust, Karachi.
' Whereas Messrs Sind Construction Co. Had on the 3rd day of April, 1973 entered into an agreement with the Board of Trustees of the Port of Karachi for the laying of a Main Rail Track from the siding of Messrs Dawood Petroleum Ltd. To the P. N. O. Siding and Plots Nos. 31/1 to 32/3 in the Oil Installation Area at Keamari within the precincts of the Karachi Port Trust: ' And whereas Messrs Sind Construction Co. After completing the said work and having received payment for the same from the Karachi Port Trust at the rates mutually agreed upon between them had preferred a claim for enhanced rate described as "escalation rate" on account of devaluation, abnormal rise in the prices during the year 1973 and thereafter on account of inflation which claim was rejected by the K. P. T.
' And whereas in pursuance of the arbitration clause in the aforesaid agreement of 3-4-1973 the said parties have by their letters of 14-1-1976 addressed by Messrs Sind Construction Co. To the Chairman K. P. T. Asking for arbitration in the matter of their claim of escalation and letter dated 22- 1-1976 from the said Chairman K. P. T. To the undersigned Mr. Justice H. T. Raymond (Retd.) nominating me as the Sole Arbitrator for the claim of the contractors: The parties have referred to me this matter in difference between them: ' And whereas Messrs Sind Construction Co. Thereafter filed their statement of claim before me, the Sole Arbitrator for a total sum of Rs, 11,09,866 inclusive of the sum of Rs, 67,555 being the actual cost of the excess/surplus material purchased by them but remaining over and left behind within the territorial jurisdiction of the K. P. T. To which statement of claim an elaborate written statement was filed on behalf of the respondent K. P. T.
' Now, I, Mr. Justice H. T. Raymond (Reid.) having duly considered the matter referred to me and having heard and examined the submissions made, evidence led, including documents of the said parties, and arguments advanced by their respective Advocates at no less than 42 sittings (time duly enlarged by a consent order of the High Court of Sind and (Baluchistan) and having applied my mind in great detail to the whole matter in dispute make my award as under :-
(1) I award to Messrs Sind Construction Co. a sum of Rs, 3,09,418 to be paid to them by the Karachi Port Trust in satisfaction of their total claims in their present proceedings against the Karachi Port Trust.
(2) I have made no provision for payment of interest on the sum awarded by me for under section 29 of the Arbitration Act I consider it is for the Court to do so.
(3) The costs of this Reference and stamping the award have been shared equally by both the parties. (Sd.) H. T. Raymond (Justice Retd)."
9. The award was presented by the Sole Arbitrator through his Advocate in this Court on 1-10-1976.
Notices were issued to the parties and in response the K. P. T. Has filed objections under section 33 read with section 30 of the Arbitration Act, 1940.
10. I have heard Mr. Abbas Ahmad, learned counsel for the K. P. T. And Mr. Shah Jamil Alam, learned counsel for the plaintiff. Mr. Abbas Ahmad raised the following contentions in support of his objections to the award under section 33 read with section 30 of the Arbitration Act :- "(a) No arbitration was possible in respect of the claim made by the plaintiff as the claim was outside the scope of the arbitration agreement between the parties.
(b) The claim of the plaintiff was based on certain Government instructions and memorandum which were not part of the agreement between the parties and according to learned counsel, a claim arising out of documents, not part of the contract between the parties, could not be subject- matter of arbitration under clause 60 of the General Conditions of the Contract.
(c)In any case, a perusal of the memoranda and instructions of the Government did not permit the making of the claim by the plaintiff. According to Mr. Abbas Ahmed no escalation could be allowed to the plaintiff under these memoranda and instructions of the Government.
(d) The award was arbitrary as evidence adduced before the Sole Arbitrator had not been properly considered.
(e)Two separate claims had been made by the plaintiff in their statement of claims, namely a claim on account of escalation and a separate claim on account of materials left behind at site by the plaintiff. The award gives one lump sum amount against these claims and therefore it cannot be determined what amount was awarded against the claim of escalation and what amount was granted against the other claim. According to counsel for the K. P. T., by making one lump sum award in the face of two separate claims the Arbitrator misconducted himself and the award is liable to be set aside being capricious.
11. According to the learned counsel for defendant, the claim of the plaintiff in fact related to unreasonableness of the rates and was, therefore, outside the scope of the arbitration agreement between the parties. It was argued very strenuously that question of reasonableness of rates was a matter specifically excepted from arbitration, as a dispute in relation thereto was to be decided by the Engineer. Mr. Abbas Ahmad would have been correct if the claim of the plaintiff raised a dispute respecting reasonableness of the rates. However, it was Mr. Abbas' own case that the claim of the plaintiff was based on certain government instructions and memoranda. In my view the question of applicability of the said government instructions and memoranda to the plaintiff is altogether distinct from the question of reasonableness of rates. The Government had taken some decisions that in respect of certain types of building contracts, contractors be paid extra amounts against claims for escalation at specified rates and these decisions were incorporated in the aforementioned government instructions and memoranda. If such decisions had not been taken and the said government instructions and memoranda were not in existence, and the claim of the plaintiff had been that the rates specified in the contract were no longer reasonable, I might have accepted the contention of the counsel as then, the dispute would have been regarding the reasonableness of the rates, and Mr. Shah Jamil Alam, counsel for the plaintiff also agreed that in such a case the award could not have been supported by him being outside the scope of the arbitration clause. I accordingly held that the claim of the plaintiff which is admittedly based on the said government instructions and memoranda does not come within the mischief of or is hit by first para of the arbitration clause in this case.
12. The second contention of counsel for the plaintiff was that the said Government instructions and memoranda were not a part of the agreement between the parties and, therefore, the claim of the plaintiff based on such documents could not be the subject-matter of arbitration under clause 60 of the General Conditions of the Contract. The agreement was that these documents were alien to and had no connection with the contract between the parties. Second leg of this argument was that it was a fixed rate contract without an escalation clause and the plaintiff could not in law make a claim for any amount over and above the contracted amount. It was contended that if the plaintiff could not in law make a claim for extra amount on account of escalation or otherwise, such an incompetent claim could not be subject-matter of arbitration under the arbitration clause in the instant case. On the point that the contract between the parties was a fixed rate contract, learned counsel referred to para. 2 of the Tender condition 11 of the General Conditions of Contract, para. 9 of the preamble to the Schedule of quantities under the heading "General Erections". Part II of the Specifications and the evidence of P. W.
5. He also relied upon the following judgments :- {{FOOT NOTE}}
(i) AIR 1956 All.
601.
(ii) AIR 1955 SC 468.
(iii) AIR 1956 Nag.
245.
(iv) PLD 1977 Kar.
21.
(v) PLD 1978 Kar.
585.
(vi) AIR 1960 SC 588.
(vii) (1956) 2 A E R 145. PLD 1973 SC 577. (ix) 1973 SCMR 555. {{FOOT NOTE}}
13. Learned counsel also relied upon the following passage at page 48 of the 17th Edition of Russel on Arbitration- "A reference of 'any dispute. . . Touching these presents or any clause or matter or thing herein contained, or the construction thereof' has been held to cover disputes as to the scope of the arbitration clause. The contrary has been held as to references of 'any differences or disputes which may arise between the partners' and of 'all questions arising under these terms of settlement' and it has been said that prima facie the common form, 'all disputes arising out of this contract', ' would not cover questions as to the ambit of the clause. No doubt the decision in such case will in practice depend upon whether, on the face of the arbitration clause, its scope is open to any real doubt."
14. In the case of Co-operative Development & Marketing Union Ltd. v. Ganesh SugarMills Ltd. (1), there were two agreements between the parties and a dispute arising out of the first agreement was sought to be decided through arbitration provided for in the second agreement. The dispute relating to the first agreement was referred to the Cane Commissioner who was the arbitrator provided for disputes touching the second agreement. It was held by a Division Bench of the Allahabad High Court that there was no dispute touching the second agreement which could be referred to the Cane Commissioner and, therefore, the award of the Cane Commissioner was quashed. The facts of the Allahabad case are clearly distinguishable. There were two separate agreements and a dispute arising out of the first agreement, which admittedly did not provide for arbitration, could not obviously be referred to arbitration provided for disputes arising under the second agreement.
15. In the case of Thawardas Pherumal v. Union of India (2), there was an agreement between the parties for delivery by the contractor of pucca bricks according to the Schedule to the agreement.
The Government did not remove the burnt bricks which were ready for delivery and on account of this delay lacs of Katcha bricks were destroyed by rain. Agreement between the parties contained an express stipulation that the Government would not entertain any claim for damage to unburnt bricks due to any cause whatsoever. It was held by the Indian Supreme Court that in view of the express clause the contractor was not entitled to claim anything on account of the price of the kutcha bricks. I am in agreement with the principle enunciated in this case but, as discussed later, the principle is not relevant to the instant case. In this judgment section 16(1) (c) of the Arbitration Act was also dealt with it was observed that this provision covered cases in which an error of law appeared on the face of the award. It was further observed that in determining what such error is, a distinction must be drawn between eases in which a question of law is specifically referred to and it is evident that the parties desire to have a decision from the arbitrator about that rather than one from. The Courts, that the Courts will not interefere.
16. In the case of Javantilal Keshavlal Dave v. Surendra Gangsa Johrapurkar (3), it was held that the failure of the arbitrator to enquire {{FOOT NOTE}}
(1) AIR 1956 All. 601 (2) A R 1955 SC 468
(3) AIR 1956 Nag. 245 '{{FOOT NOTE}} ' into the objections raised by a party to the arbitration amounts to misconduct of the arbitration proceedings. In that case the High Court of Nagpur had found that the objections raised by the appellant were not enquired into by the arbitrator but the proceedings were closed and in these circumstances it was held that the trial Court had rightly come to the conclusion that this conduct on the part of the arbitrator amounted to misconduct of the arbitration proceedings. This case is distinguishable too as there is no allegation that the sole arbitrator failed to enquire into the objections raised.
17. The other judgment cited was in the case of Muhammad Fazil Muhammad Azam & Co. v. Messrs N. A. Industries (1), where a learned Single Judge of this Court held that the objections to the existence or validity of an arbitration clause are to be decided by the Court and a challenge to arbitration clause founded on disputed question of interpretation of other terms of the contract is to be adjudicated and decided by the arbitrator. In the instant case, the existence or validity of the arbitration clause is not under challenge. The other principle laid down does not support the case of the defendant at all.
18. In the case of Jaffar Brothers Ltd. v. Pakistan (2), it was held that the arbitrator had stated reasons in his decision and such reasons were erroneous on point of law and, therefore, there was an error of law apparent on the face of the record and the award was liable to be set aside. The award under challenge in the present case is a non-speaking award and, therefore, a judgment laying down a principle in relation to a speaking award would not be applicable. I may nonetheless observe that I am in complete agreement with the aforesaid principle confirmed in PLD 1978 Kar.
585.
19. Learned counsel for the defendant also relied upon the case of Alopi Prasad & Sons Ltd. v. Union of India (3), where it was held that the Contract Act does not enable a party to a contract to ignore the express covenants thereof and to claim payment of compensation for performance of the contract at rates different from the stipulated rates on some vague plea of equity. In my view, this case is also distinguishable as in the instant case the claim of the plaintiff is based on government instructions and not equity.
20. In the case of Devis Contractor v. Farghan Urban District Council (4), a decision of the House of Lords where both parties to a contract expected that it would be possible to complete the work within eight months, it was held that the contract was not frustrated on account of change of circumstances, which included scarcity of labour and these expectations were not realised with the consequence that the contract became more onerous than the parties had contemplated. This decision might have helped the learned counsel for the defendant had been no Government instructions and the claim was made on equitable or other general grounds.
21. In the case of Abdul Mannan v. Province of N.-W. F. P. (5), a building contract was entered into with the Government on the basis of {{FOOT NOTE}}
(1) PLD 1977 Kar. 21 (2) PLD 1978 Kar. 585
(3) AIR 1960 SC 588 (4) (1956) 2 A E R 145
(5) PLD 1973 SC 577 {{FOOT NOTE}} ' certain schedule of rates prevalent on the date of the contract and after entering into such contract, the contractor started working. A change took place later on in the schedule of rates of the Government. It was held that subsequent changes in the schedule of rates were not applicable in respect of contract already acted upon. Rationale of this judgment has no bearing on the points involved for decision in the present case.
22. In the case of WPIDC v. Aziz Qureshi (1), it was held that a stipulation not expressed in a written contract should not be implied merely because the Court thinks that it would be reasonable to imply it and such implication can be made only if, on a consideration of the terms of the contract in a reasonable and businesslike manner, the Court is satisfied that it should necessarily have been intended by the parties when the contract was made.
23. Mr. Shah Jamil Alam, learned counsel for the plaintiff, in reply contended that the arbitrator was the sole Judge of all questions of law and jurisdiction (except the question regarding the validity or existence of an arbitration clause) if submitted to the arbitrator for decision, and his decision on such questions submitted to him Is final and cannot be challenged under section 30 or even 33 of the Arbitration' Act 1940. He, however, qualified his contention by stating that such would be the position if the award was a non-speaking award. But in case of a speaking award, according to Mr. Alam, the Court deciding objections under section 30 or considering an application under section 33 of the Arbitration Act can go into the legality or validity of the reasons given by the arbitrator.
Learned counsel in this behalf relied upon a judgment of the Privy Council in the case of Ghulam Mani v. Muhammad Hasan (2).
24. According to counsel for the plaintiff, the validity or the existence of the arbitration clause in the instant case is not in dispute. This is an admitted position. According to him, certain preliminary objections had been taken by the defendant, as would be evident from the issues framed by consent of the parties by the sole arbitrator and these objections related to the scope of the arbitration clause and whether the instructions and memorandum of the Government were at all applicable to the claim of the plaintiff. The contention of Mr. Alam was that in, view of the wordings of the arbitration clause in the instant case, the sole arbitrator appointed by the Chairman K. P. T.
Was the sole Judge of these two questions also and as no reasons had been given in the award, it was not open to the defendant to challenge the award of the arbitrator and the objections under sections 30 and 33 of the Arbitration Act raised by the defendant were incompetent and liable to be dismissed. The further contention of counsel for the plaintiff was that it is not necessary for an arbitrator to give separate findings or decisions on each issue and a lump sum award can be competently given and in such a case the law presumes that if any preliminary or legal objections had been raised and even if issues had been framed in respect thereof, such preliminary and/or legal objections are deemed to have been dismissed and such a non-speaking award would not be liable to challenge under sections 30 or 33 of the Arbitration Act, 1940.
25. There is no cavil to the proposition that the question regarding the {{FOOT NOTE}}
(1) 1973 SCM R 555 (2) 29 I A 51 {{FOOT NOTE}} ' validity or existence of an arbitration clause can always be determined by the Court, who is the final Judge in such matteRs, However, learned counsel for the plaintiff had gone further and had contended, as observed earlier, that apart from these two questions regarding validity or existence of the arbitration clause, all other questions of jurisdiction, if referred to him, can be decided by an arbitrator and if he does not give any reasons in his award, his decision on such questions of jurisdiction cannot be challenged. It is far-reaching proposition that has been advanced by the counsel, but I do not consider it necessary to give a decision on this point as I have otherwise come to the conclusion that the question applicability of the aforesaid Government instructions and memoranda is 1 matter which is within the scope of the arbitration clause in-the instant case.
26. Clause 80 of the General Conditions of the Contract relating to arbitration covers "any dispute of whatsoever nature (including the interpretation of this or any other relevant document) arises under this contract (except as to any matters, the decision of which is specifically provided for by these conditions)". Counsel for the plaintiff, had argued that the words in bracket, that is, "including the interpretation of this' or any other relevant document" include aforesaid Government instructions and memoranda within the scope of the arbitration clause. According to counsel, the contract between the parties was subject to the approval of the Government and in fact the contract between the parties came into existence only on the approval being given by the Government, and the Government itself had issued the said instructions and memoranda in relation to certain types of building contracts regarding payment of additional amounts on account of escalation at the rates specified therein. The question, it was contended, was whether such instructions and memoranda were applicable to the contract between the parties. Mr. Alam argued that these instructions and memo randa "relevant documents" (the words used in the arbitration clause) and as such the question of applicability or otherwise of these instructions and memoranda squarely fell within the scope of the arbitration clause.
27. In my view, the contention that the aforesaid instructions and memoranda of the Government, are relevant documents and the applicability or otherwise of such documents is within the scope of the arbitration clause in the instant case, has great substance. As observed earlier, the contract between the parties was subject to Government approval an although Government may not directly be a party as a signatory to the contract, the contract came into existence only when approval was given by the Government. Now, the Government had every right to issue instructions regarding payment of additional amounts on account of escalation and the Government has in fact issued certain general instructions. The claim of the plaintiff is in respect of work done under the contract. The plaintiff's claim was that he had done the work under the contract and the Government instructions and memoranda entitled him to additional payments in respect of the work done under the contract. These Government instructions and memoranda, therefore, are "relevant documents" in relation to the work done under the contract. The interpretation applicability of this relevant document are matters which properly come within the ambit of clause 60 of the General Conditions of the contract. I may further observe that in view of the wordings of the arbitration clan in the present case which brought the dispute regarding interpretation of the contract including the arbitration clause also within the scope of arbitration, clothed the arbitrator with authority to decide whether such instructions and memoranda were "relevant documents or not". Passage from Russel on Arbitration, 17th Edition at page 49, reproduced in para. 13)
Hereinabove, supports the conclusion that I have reached.
28. The next question, which arises for consideration, is whether it was mandatory for the arbitrator to give any decision or finding on each issue framed by consent in the present case. Mr. Abbas Ahmed, learned counsel for the defendant, had argued that when issues are framed the arbitrator is required to give separate findings/decision on each issue. However, Mr. Alam contended to the contrary. His contention Was that even where issues are framed by the arbitrator, it is not necessary under the law for the arbitrator to give separate findings, on each issue but the law permits him to give one lump sum award without separate findings on each issue including legal issues. He relied upon two reported decision of the superior Courts of Pakistan. First he referred to the judgment of a learned Single Judge in the case of Trading Corporation of Pakistan Ltd. v. Aslam Saeed & Co. (1). Reliance was placed on the following passage at page 75 of the said judgment:- "Thus an arbitrator is not bound to give specific finding on each of the issues, nor he is required to state reasons for his conclusion. What is required is that he should give a clear decision on the case. So where the award is silent as to the objections raised before the arbitrator, it will be presumed that he had considered those objections and had rejected them."
' The other judgment on which reliance was placed by Mr. Shah Jamil Alam is in the case of Abdul Halim v. Faizunnissa Bibi (2). In that case; the main objection raised against the award before the Court under section 30 of the Arbitration Act was that the arbitrator did not consider the question of limitation and the extinguishment of the right of the plaintiff by passage of time. This objection was rejected by the learned Single Judge of the Dacca High Court in the foil owing words:- "Non-consideration of the rights of the parties based on the ground of limitation is not a ground of misconduct of arbitrator. The parties could have obtained a decision on the point from the Court itself. The arbitrator is not the Court. The parties having agreed to refer the disputes to arbitration took the matter outside the ambit of legal rights. Their agreement to refer the disputes to an arbitrator implies a consent to have the disputes settled without reference to strict legal provisions."
I agree with the contention of this learned counsel for the plaintiff which is supported by the judgments in the aforesaid two reported cases. However, I make it clear that my decision on this point is restricted to non-speaking awards. If in the present case reasons had been given and such reasons had been erroneous in law, the Court would have examined the same to see whether there was an error apparent on the face of the record. I accordingly hold that it was not necessary under the law for the arbitrator in the present case to give separate reasons or findings on such issue and as the award is silent on the legal issues, having considered tit legal and preliminary objections, rejected the same. It is not the case of the {{FOOT NOTE}}
(1) PLD 1973 Kar. 65 (2) PLD 1969 Dacca 670 {{FOOT NOTE}} ' defendant that the arbitrator did not allow evidence to be adduced, or that arguments were not heard at length by him. On the contrary, the award shows that as many as 42 hearings took place before the arbitratoRs, Having given full opportunity to the parties to lead evidence and having heard the arguments on behalf of the parties at great length, his non-speaking award cannot be set aside on the ground that separate findings on each issue have not been given by him.
29. The contention of Mr. Abbas Ahmed that the contract between the parties was a fixed rate contract and as such no claim could be made for any additional amount on account of escalation or otherwise, was not competent as there was no escalation clause in the contract, is not relevant as I have already held that the aforesaid Government instructions and memoranda were relevant documents and their applicability was a matter within the scope of the arbitration clause in the present case. The case-law cited by Mr. Abbas and discussed in para. 12 above are distinguishable and not relevant. As observed earlier the claim of the plaintiff was based on instructions and memoranda of the Government which I found to be "relevant documents". The claim was not based on equity or on general considerations of reasonableness.
30. The next contention of Mr. Abbas Ahmed was that even if it is held that the question of applicability of Government instructions and memoranda was within the scope of the arbitration clause, if the instructions and memoranda were perused it would be found that the claim of the plaintiff was not covered by these documents. According to learned counsel, these instructions did not permit the present claim of the plaintiff as the same were not applicable to the plaintiff's claim.
I have already held that the question of applicability of these instructions was within the scope of the arbitration agreement between the parties and as such it was within the province of the sole arbitrator to decide whether the same where applicable to the plaintiff's claim or not. If the arbitrator has taken a wrong decision in coming to the conclusion that the claim of the planitiff was covered by the said instructions this would not be an error apparent on the face of the award as it is a non-speaking award and no reasons have been given by the arbitrator in his award. An erroneous decision in law does not make the award bad on its face unless from the award itself it can be determined or found that some legal proposition which is the basis of the award, is erroneous. In the present case, as observed earlier, no reasons F are given for the decision by the arbitrator and as such the award cannot be set aside on this ground. I may here with advantage refer to para. 16 of the judgment in the case of Messrs Alopi Prasad & Sons Ltd. v. Union of India (1) at p. 592 : "The extent of the jurisdiction of the Court to set aside an award on the ground of an error in making the award is well-defined. The award of an arbitrator may be set aside on the ground of an error on the face thereof only when in the award or in any document incorporated with it, as for instance, a note appended by the arbitrators, stating the reasons for his decision, there is found some legal proposition which is the basis of the award and which is erroneous-Champsey Bhara & Co. v. Jivraj Balloo Spinning & Weaving Co. Ltd., 50 I A 324: AIR 1923 P C 66. If, however, a specific question is {{FOOT NOTE}}
(1) AIR 1960 SC 588 {{FOOT NOTE}} ' submitted to the arbitrator and he answers it, the fact that the answer involves an erroneous decision on point of law, does not make the award bad on its face so as to permit of its being set aside. In re : King & Duveen (1913) 2 K B 32 and Government of Kelantan v. Duff Development Co. Ltd.
1923 A C 395."
31. I accordingly hold that the award cannot be set aside on the ground that the instructions and memoranda of the Government did not cover the claim of the plaintiff for this question itself was in issue before the arbitrator and as no reasons have been given in the award the arbitrator is deemed to have decided this issue in favour of the plaintiff. As no reasons have been given in the award, such implied decision of the arbitrator cannot be challenged under section 30 or 33 of the Arbitration Act.
32. The last contention of the learned counsel for the defendant was that evidence adduced before the arbitrator had not been properly considered by him. It was further contended that as in the recital of the award reference had been made to the claim of the plaintiff and reply of the defendant, and in the operative part of the award it had been mentioned by the arbitrator that he had duly considered the evidence led by the parties including documents and the arguments advanced, it was open to the defendant during the consideration of his objections application under sections 30 and 33 of the Arbitration Act to refer to the evidence and documents adduced produced before the arbitrator so as to show the errors committed by the arbitrator. According to the learned counsel, the evidence and documents to which reference had been made in the award became incorporated thereto and as such the Court can look into these to come to a finding whether the award was bad. In this connection reliance was placed on 3 judgments. The first is the case of Buoy Singh v. Bilasroy & Co. (1). The second is the judgment of the Indian Supreme Court reported in AIR 1960 SC 588, referred to earlier, and the third is the decision of the Privy Council in the case of Champsey Bhara & Co. v. The Jivraj Balloo Spinning & Weaving Co. Ltd. (2). The decisions in all the 3 cases are distinguishable and not applicable to the facts of the present case.
In any case, by a mere reference to the evidence or documents in the award as has been done in the present case, such evidence and documents do not become a part of the award so as to give the right to a party to refer to them and point out the inadequacies therein as a ground of attack in the objections under section 30 or 33 of the Arbitration Act. Unless the evidence led by the parties and/or documents produced before the arbitrator are set out and discussed in the award which is not the case in so far as the present award is concerned, the Court would not consider the evidence and documents for purposes of challenging the award. This question has been discussed at great length in the judgment of a learned Single Judge in the case of Suleman Haji Muhammad & Co. v. State Bank of Pakistan (3), where extensive reference have been made to various judgments of the superior Courts in Pakistan as well as from foreign jurisdiction. I quote here a passage at page 87 of the aforesaid report :- "On consideration of the case-law on the subject it is very clear that the Court hearing the application for setting aside an award cannot constitute itself into a Court of Appeal over the decision of an {{FOOT NOTE}}
(1) AIR 1952 Cal. 440 (2) A R 1923 P C 66
(3) PLD 1960 Kar. 78 {{FOOT NOTE}} ' arbitrator and cannot make a sifting investigation of the entire proceedings before the arbitrator unless it is first shown that the-award is bad on the face of it. I have already cited the view of their Lordships of the Privy Council that the arbitrators are both Judges of law and facts and in my view once the matter found to be within the jurisdiction of the arbitrators, it is not permissible for Courts of law to find out whether their decision is right or wrong on the facts urged before them by travelling outside the award for finding out what evidence was led before them and whether their conclusions are based on sufficient evidence. I am fortified in my view by a decision of the Lahore High Court reported in J. Kaikobad v. F. Khambatta (AIR 1930 Lab. 280). In that case it was urged that the finding of the arbitrator was based on insufficient evidence, but the Division Bench observed:- `An Arbitrator is fully justified in rejecting in part the case set up by either party and ascertaining the real facts according to his own view of the evidence. A counsel is not entitled to attack the findings of facts given by the arbitrator on the evidence led by the parties. Whether his conclusions are right or wrong is not a matter which is open for consideration by the trial Court or the Appellate Court on revision.
' This view is in accord with the view taken by this Court in Messrs Overseas Cotton Company v.
Messrs S. M. Fazail & Company (PLD 1958 Kar. 27) approved on appeal by a Division Bench of this Court in PLD 1959 Kar.
320. 1 therefore do not find any force in the contention raised by the learned counsel for the defendants and hold that in law it is not open to this Court to consider the evidence led by the parties before the arbitrator not set out and discussed the award."
' I am in respectful agreement with the aforesaid view expressed by Waheeduddin Ahmed, J. I am, therefore, of the view that although reference has been made to the documents and the evidence produced/adduced by the parties in the award, the same by mere reference do not become incorporated in the award and the Court would not look in the evidence and documents to come to a conclusion that the arbitrator bad given a wrong decision on evidence. I am accordingly of the view that the award in question cannot be set aside on the ground that evidence had not been properly considered by the arbitrator.
33. As a result the objections/application of the defendant under sections 30 and 33 of the Arbitration Act, 1940 are dismissed and the award dated 18-10-1976 is made a rule of the Court and a decree passed in terms of the award as ordered by my short order dated 15-10-1980.