1. ' This award under section 14 is filed by the Arbitrator for confirmation and making it rule of the Court. Confirmation of the award is opposed by the defendant on the following grounds:-
(1) That the learned Arbirtrator wrongly allowed a sum of Rs.25,000 as costs of proceedings to the plaintiff since both in the Reference and in the contract under which the Reference was made to the learned Arbitrator it is provided that the parties will bear their respective costs of arbitration.
(2) That the award of interest on the amount found due and payable by the learned Arbitrator from the date of award is illegal as interest on the above amount could only be awarded by the Court under section 20 of the Arbitration Act.
(3) That the admission of a sum of Rs.3,88,508.22 payable to plaintiff made in the written statement of the defendant also included the sum of Rs.83,518.42 as the balance of the retention money payable to plaintiff but the learned Arbitrator under a misapprehension awarded separately to plaintiff the said sum of Rs.83,518.42 in addition to the sum of Rs.3,88,508.22 which amounted to awarding the sum of Rs.83,518.42 as balance of the retention to the plaintiff twice.
(4) That the sum of Rs.16,350 in respect of R. C. C. linings awarded by the learned Arbitrator is not covered under the contract and was therefore, wrongly awarded.
(5) That the award of a sum of Rs.1,88,722.29 in respect of the Girder as an extra item is wholly without jurisdiction as this item of work was a B.O.Q. item.
(6) That the learned Arbitrator illegally disallowed the claim of defendant for laboratory charges and costs of M.S. bar and cement amounting to Rs.18,350 and Rs.15,939 respectively.
(7) That the learned Arbitrator wrongly disallowed the sum of Rs.45,083 claimed by the defendant by way of liquidated damages; and
(8) That in any case the claim of the plaintiff was barred by limitation and, therefore, the learned Arbitrator could not decree the same.
2. ' In reply to the above objections of defendant, the learned counsel for the plaintiff has contended that the sum of Rs.25,000 awarded by the learned Arbitrator as costs is in fact the fee of arbitrator which is not the costs of arbitration proceedings as provided in the agreement. That the interest on the sum found due and payable has been rightly awarded as the provisions of section 29 of the Arbitration Act do not bar the jurisdiction of arbitrator or the umpire to award interest in arbitration proceedings. That the retention money amounting to Rs.83,518.42 was admitted by learned counsel for the defendant before the Arbitrator as payable to plaintiff in addition to the sum of Rs.3,88,508.22 and, therefore, it has been rightly awarded separately by the Arbitrator. That a sum of Rs.16,350 for R.C.C. lining was righly awarded by the Arbitrator as ample evidence was produced before him in support of this claim. That the sum of Rs.1,88,722.29 awarded for girders as an extra item by the Arbitrator is based on sufficient evidence. That the Arbitrator disallowed the claim for laboratory charges, deduction of costs of M.S. bars and cement and the liquidated damages on sound and equitable principles and the claim of the piaintiff before the Arbitrator was within time. In addition to the above submissions the learned counsel for the plaintiff also urged that most of the conten tions raised by the learned counsel for the defendant need re-examination and re-assessment of the evidence produced before the Arbitrator which is not the function of this Court while hearing objections to award under section 30 of the Arbitration Act and have accordingly prayed that the objections be rejected and the award be made rule of the Court.. I will consider separately each one of the objections raised by the defendant.
3. ' The first objection of the defendant to the award is regarding the sum of Rs.25,000 awarded as costs to the plaintiff by the Arbitrator. It is contended on behalf of defendant that this amount could not be awarded by the learned Arbitrator in view of the clear provision made in the arbitration clause of the agreement as well as the letter by which the Reference was made to him. In order to appreciate the contention of the learned counsel for the defendant I would first refer the letter, dated 31st May, 1981 whereby the dispute was referred to the learned Arbitrator. The letter reads as follows:- "Mr.Ali Ahmed Fazeel, Advocate, Muhamandi House, I.I.Chundrigar Road, Karachi.
4. ' Subject:- Arbitration between Syed Altaf Hussain and Pakistan Steel Mills Corporation.
5. ' Dear Sir, ' A dispute regarding the payment for the works done by Syed Altaf Hussain and recovery of amount due to Pakistan Steel from him under Contract dated 24-4-1976 for the construdtion of Bridge at Construction Base, Pakistan Steel, has arisen between Syed Altaf Hussain and Pakistan Steel and they have invoked the Arbitration Clause of the said Contract requesting for appoint ment of an arbitration to resolve the dispute.
6. ' Pakistan Steel is pleased to appoint you as Sole Arbitrator in the aforesaid matter and you are requested kindly to proceed in the reference.
7. ' It is also stated that both the parties to the Arbitration shall equally bear the expenses of the arbitration including your fee.
8. Yours faithfully, Sd/-- ( A nis A . K . Lod hi)"
9. ' A reading of above letter will show that it is clearly stated in the concluding paragraph of this letter that both the parties to the arbitration shall equally bear the expenses of the arbitration including arbitrator's fee. A copy of this letter was endorsed to the plaintiff and he raised no objection at any stage to above condition of arbitration. Apart from it the learned Arbitrator in his award at page 3 in paragraph 6 has reproduced the relevant clause 10 of the agreement relating to submission of dispute to Arbitrator and the last sentence of the said paragraph reads as under:- "The parties hereto shall equally bear their own separate expenses in respect of arbitration."
10. ' In view of the above stipulations in the agreement as well as in the Reference letter reproduced above it is quite clear that the parties were required to bear their respective costs including arbitrator's fee as a condition of arbitration and, therefore, the arbitrator could not award costs to plaintiff in these circumstances. The learned counsel for the plaintiff contended that the payment of the fee of the Arbitrator is not included in the costs of the arbitration as mentioned in clause 10 of the agreement and therefore, while mentioning in their letter, written by the defendant to the arbitrator referring the dispute, that the costs of proceedings including arbitrator's fee shall be borne by the parties respectively, they acted outside the scope of the authority available to defendant under the relevant clause and as such the Arbitrator rightly exercised the discretion under the Arbitration Act in awarding costs of Rs.25,000 to plaintiff. The learned counsel for the plaintiff also relied on section 38 of the Arbitration Act to contend that in case of dispute regarding remuneration to be paid to the Arbitrator the final authority rests with the Court and, therefore, it was not open to the defendant to have unilaterally closed that question while referring the dispute to the Arbitrator. the learned counsel further referred the passage appearing at pages 464-65 of the Book on Arbitration written by Russel (19 Edition), and contended that in any case the provisions made in the contract providing for bearing the Arbitrator fee equally by the parties is against the public policy. I find no force in the submission of the learned counsel for the plaintiff. The learned counsel is unable to point out any provision in the Arbitration Act which prohibited parties from entering into an arbitration agreement which provided for bearing of arbitration costs equally by them. I am also unable to agree with the learned counsel for the plaintiff that the fee payable to the Arbitrator did not form part of the costs of arbitration proceedings. In my view payment of fee of the Arbitrator is a necessary incident of arbitration and if parties agree between themselves that the costs of arbitration will be borne by them equally then the payment of arbitrator's fee in such circumstances will also be shared equally by them. I accordingly uphold the objection raised by the defendant.
11. ' The second objection of the defendant relates to the award of interest by the arbitrator on the amount found due and payable to the plaintiff. The learned counsel for the defendant contends that in view of the provisions of section 29 of the Arbitration Act interest on the amount found due and payable by the arbitrator in an award can be awarded by the Court alone from the date of decree and, therefore, award of interest by the arbitrator for the post decree period is wholly without jurisdiction. It is also contended that the Arbitrator, in any case, had no authority to award interest on the amount of damages. The learned counsel for the defendant relied on the case of Mahboob Alain v. Mumtaz Ahmed PLD 1960 Lah. 601 in support of his contention. The learned counsel for the plaintiff on the other hand cited AIR 1963 Cal. 70, AIR 1924 Cal. 524; AIR 1.951 Pat.
12. 201; AIR 1977 Born. 10; AIR 1980 Orissa 110; AIR 1955 SC 468 and AIR 1967 SC 1030 to contend that the arbitrator has the implied authority to award interest on the amount found due and payable by him to plaintiff from the date of award. It is however, not necessary in this case to examine the controversy whether the arbitrator is competent or not to award interest on the amount found due and payable by him to a party to arbitration from the date of award as in the present case after going through the record I find that question of payment of interest on the amount was before the arbitrator in the reference and the law seems to be settled on the point that where the parties refer to arbitrator the question of payment of interest on the sum claimed, the Arbitrate has the authority to make direction for payment of interest in his award. It is quite clear from the letter dated 31-5-1981 reproduced above, written by the defendant to the arbitrator referring the dispute that the particulars of the dispute were not specified. Therefore, in order to ascertain the scope of arbitration proceedings a reference has to be made to the respective claims of the parties filed before the Arbitrator. The plaintiff submitted his claim before the Arbitrator on 23-6-1981 and in the concluding paragraph of their claim they stated as follows:- "Your honour will be pleased to investigate into the claims of the plaintiff/claimant formalized in his final bill aforesaid and disputes between the parties after calling upon the parties to produce all relevant documents and taking all evidence which may be necesary or which the parties may like to adduce and pass an Award in favour of the plaintiff/claimant and against the defendant for the net payable amount under the said final bill and/or such amount which your honour may deem fit and proper in the circumstances of the case alongwith loss of profit @ 20% on the amount found due and payable by the defendant with effect from the date it was payable to the plaintiff."
13. ' In reply to this prayer clause the defendant in their written statement have denied that the plaintiff is entitled to the payment as claimed by him and stated that the plaintiff is only entitled to the payment of Rs.3,88,508.22 which the defendant has always been ready and willing to pay. The contention of the learned counsel for the defendant is that in the concluding paragraph of their claim the plaintiff has claimed loss of profit and not interest and, therefore, the Arbitrator could not award interest on the amount found due and payable in absence of proof of loss of profit. Although the plaintiff in their claim before the Arbitrator has not used the word "interest" specifically but a fair reading of their claim will show that what was described by them as profit was nothing but the interest. I am, therefore, of the view that in the present case the question of payment of interest on the sum claimed by the plaintiff was very much raised before the Arbitrator and, therefore, it was within the competence of Arbitrator to award C the same. The learned Arbitrator has found a specific amount due and payable to the plaintiff and awarded 14% interest on that amount from the date of award which is quite reasonable in the circumstances of the case. I accordingly overrule second objection raised by the defendant.
14. ' The third objection raised by the defendant to the award is with regard to retention of money amounting to Rs.83,518.42. It is contended by the defendant that this amount has been awarded by the arbitrator twice in his award to plaintiff as this amount is already included in the sum of Rs.3,88,508.22 admitted by the defendant in its written statement. It may be mentioned here that in its original memo of claim filed before the Arbitrator the plaintiff in paragraph 5 claimed a net amount of Rs.15,01,256.46 as the amount payable to them under the final bill. On 28th June, 1981 the plaintiff made an application before the learned Arbitrator and requested that they may be allowed to add the following sentence in the end of paragraph 5:- "This is exclusive of retention money which has also become payable now as the maintenance period has expired and as such the net payable amount now comes to Rs.16,34,371.51 after inclusion of retention money."
15. ' In their written statement which was filed in the case after amendment of the claim by plaintiff the defendant admitted that the net amount payable to plaintiff comes to Rs.3,88,508.22 but they did not specifically mentioned that this also included the balance of the retention money amounting to Rs.83,518.07. The contention of the learned counsel for the defendant is that this amount of Rs.3,88,508.22 mentioned by them in paragraph 4 of their written statement included the sum of Rs.83,518.42 which was payable to the defendant as balance of the earnest money. In this regard the learned counsel relied on document Exh. D/50 which is the summary of final bill entered in the measurement book. A perusal of document Exh.D/50 which is the typed summary and is in fact the reproduction of what is stated at pages 146 to 149 of the measurement book Exh.D/61, will show that the amount of retention money equivalent to 5% which is stated to have become payable as a result of expiry of maintenance period is mentioned as Rs.86,772. It is significant that the plaintiff claimed before the arbitrator in their claim a sum of Rs.1,83,115.05 as the balance of retention money. The defendant in its written statement made no specific reference to it while admitting the net amount payable to plaintiff as Rs.3,88,508.22. Again before the learned arbitrator the stand of defendant was that the balance of retention money due and payable to plaintiff comes to Rs.1,00,248.91 and out of this amount they are entitled to deduct a sum of Rs.16,730 and, therefore, the balance amount of retention money payable is only Rs.83,518.42. In fact the learned counsel for the defendant categorically stated before the arbitrator that this amount may be awarded to plaintiff and this concession is recorded by the arbitrator at page 48 paragraph 89 of the award. It has not been contended before me that the learned Arbitrator recorded the concession made before him incorrectly. This amount, besides having been admitted before the learned Arbitrator as payable to the plaintiff is also not disputed in the evidence of the plaintiff or in the evidence of the defendant. Keeping in view the above-stated facts and the fact that the sum of Rs.88,518.42 awarded by the arbitrator on concession made before him in respect of the balance of the retention money was different from the amount mentioned in the documents Exhs. D/50 and D/61 relied by the defendant; it cannot be said that the Arbitrator acted against the evidence on record in awarding the sum of Rs.83,518 in addition to the admitted amount. I accordingly overrule the third objection raised by the defendant.
16. ' The fourth objection of the defendant relates to the award of a sum of Rs.16,350 in respect of R.C.C. linings. It is contended by the learned counsel for the defendant that this item is not covered under the contract. The learned Arbitrator has examined in detail the contention of the defendant and I have not been able to discover any misreading of the evidence by the learned Arbitrator or any perverse conclusion in this regard. I accordingly overrule this objection also.
17. ' The next objection of the defendant relates to the award of a sum of Rs.1,88,722.29 in respect of girders as an extra item of work by the aribtrator. This is the main item of contest before me. It is contended by the defendant that this was a B.O.Q. item and, therefore, the learned arbitrator should have allowed payment only at the rate mentioned in the contract. It is not in dispute that this item was oirginally mentioned in the contract as a B.O.Q. item. It is also not in dispute that as a result of variation in the contract quantity of this item was substantially increased. The lerned Arbitrator in his award relying on paragraphs 51-52 of the contract came to the conclusion that this item was got done by the Engineers appointed by the defendant as an extra item of work. It is an admitted position that as a result of increase in the quantity of work the plaintiff demanded enhanced rate of Rs.2,335 per cu.met. and as against this the Engineer of defendant recommended payment at the rate of Rs.1,459.44 vide Exh.D/22. It is also an admitted position that in response to the above letter Exh.D/22, the plaintiff conveyed their acceptance of the rate fixed by Engineer.
18. However, it appears that on 9th July, 1977 the defendant's Engineer wrote to the defendant that the recommendation for this item at the rate of 1,459.44 by them was an error and accordingly the plaintiff was also communicated that they will not be paid at that rate. The learned Arbitrator after considering the whole correspondence between the parties on the subject and relying on the provision of Article 51 of the contract came to the conclusion that the fixation of the rate of Rs.1,459.44 was an act which was permissible under paragraph 52 of the Contract and with the acceptance of the same by the Contractor (plaintiff) it became conclusive and, therefore, it could not be recalled. The learned counsel for the defendant contends that the provision of clause 52 of the contract has been misread by the learned Arbitrator inasmuch as the said clause did not permit the Engineer to fix rate in respect of item which is a B.O.Q. item. In order to appreciate the contention of the learned counsel for the parties it will be advantageous to reproduce here the relevant paragraph 52 of the Contract which reads as under:- "52. Valuation Variations.--(1)The Engineer shall determine the amount (if any) which in his opinion shall be added to or deducted from the sum named in the Tender in respect of any extra or additional work done or work omitted by his order. All such work shall be valued at the rates set out in the Contract, if in the opinion of the Engineer the same shall be applicable. If the Contract shall not contain any rates applicable to the extra or additional work suitable prices shall be agreed upon between the Engineer and the Contractor. In the event of dispute the Engineer shall fix such prices as shall in his opinion be reasonable and proper."
19. ' It is not in dispute before me that as a result of variation of the contract the original approved quantity of this item was substantially increased and this is also established from the letter of defendant's Engineer addressed to defendant in this behalf which has been referred by the learned Arbitrator in his award. Clause 52 quoted above authorised the Engineers of defendant to determine the amount which should be added or reduced from the sum named in the tender in respect of any extra or additional work done and all such work is to be valued at the rate set out in the contract if in the opinion of the Engineer the same shall be applicable. Therefore, it is possible to interpret under the above condition of contract that in spite of the fact that an item in the contract is quoted as a B.O.Q., item but if it is got done as an additional or extra item the valuation could be settled otherwise if in the opinion of the Engineer the rates mentioned in the contract are not applicable. In the present case after the quantity of this item was substantially increased the Engineer wrote to the defendant recommending a rate different from the one quoted in the contract and, therefore, it cannot be said that the learned Arbitrator interpreted the clause in an arbitrary or perverse manner. The interpretation adopted by the learned Arbitrator is one which is possible on the language of clause 52 of the contract and therefore, even if I were to agree with the learned counsel for the defendant that another interpretation of this clause is possible, I would not substitute the same. The learned counsel for the defendant alternatively urged that in any case since the above item was a B.O.Q. item the quantity which was in excess of the quantity mentioned in the contract alone, could be treated as an extra or additional item. This contention is neither raised in the memo. of objection filed in the case nor was it raised before the learned Arbitrator and, therefore, it cannot be allowed to be raised for the first time in the arguments. I accordingly overrule the objection.
20. ' The next objection of the learned counsel for the defendant relates to the deductions of laboratory charges and deduction of costs of M.S. bars and cement. In so far the claim for laboratory charges amounting to Rs.18,315 is concerned, the learned Arbitrator disallowed this claim on the ground that no evidence in support of this claim was produced before him. The learned counsel contends that no evidence in this regard was necessary as the testing was carried out in the laboratory of Pakistan Steel Mills. I however, find that in the evidence of defendant before the arbitrator it was admitted that vouchers relating to these charges were sent to the Account Department but they were not produced in evidence before the learned Arbitrator. It is also admitted position that the test reports were neither supplied to the plaintiff nor were produced before the learned Arbitrator.
21. In these circumstances the learned Arbitrator rightly disallowed the claim for Rs.18,315. In so far the deduction for the cost of M.S. bar and cement is concerned the learned Arbitrator disallowed the claim keeping in view the earlier deduction made by the defendant from the running bills of the plaintiff. The learned counsel contended that deductions were made in accordance with Exh.D/58 wherein the rate of M.S. bar are given. The date of Exh.D/58 is 19-8-1981 while admittedly the contract was completed on 26-9-1977. No evidence was produced before the learned Arbitrator to show the rates applicable on the date of completion of the contract. I, therefore, find no fault with the finding of the learned Arbitrator in disallowing the claim for M.S. bars and cement.
22. ' The next objection relates to a claim of liquidated damages amounting to Rs.45,083 made by the defendant against the plaintiff on account.of delay in completion. It is an admitted position that no evidence in support of damages was led before the learned Arbitrator. The learned counsel for the defendant contends that under section 73 of the Contract Act the defendants were entitled to reasonable compensation without proof, as liquidated damages are payable in the event of breach under the contract. In view of pronouncement of the Supreme Court in the case of Syed Sibte Raza v. Habib Bank Limited PLD 1971 SC 743 it is now a settled law that in order to enable the Court to award even reasonable compensation in a case where a specific amount is payable as liquidated damages, some evidence must be produced before the F Court to determine the same. In the present case no evidence of any kind with regard to claim of damages was led before the learned Arbitrator and, therefore, he rightly disallowed the claim.
23. ' The last submission of the learned counsel relates to limitation. It is contended that the limitation in this case started running from the date of completion of work namely 26-9-1977 and since application under section 20 of-the Arbitration Act was filed after 3 years of the date, it was time- barred. The learned Arbitrator in his award has referred to the various dates which are relevant for purposes of determining the limitation period in paragraph 27 of his award. I find no ground to disagree with the same. I accordingly overrule the objection.
24. ' As a result of above discussion I confirm the Award and make it rule of the Court subject to the condition that a sum of Rs.25,000 awarded by the learned Arbitrator as costs of the proceedings will be deducted from the amount found due and payable by him. Decree to follow accordingly.