1. ' By this application Sole Arbitrator Mr. Syed Ali has filed the award in Court under section 14 of the Arbitration Act.
2. ' Briefly the facts as narrated by the plaintiffs are that the defendants intended to construct their factory in Nooriabad Industrial Area, District Dadu and for that purpose they employed M/s. Two Stars Enterprises as their Architects. The plaintiffs were engaged as contractors to execute the work of construction of the factory and allied buildings under the supervision of the said Architects. An agreement was prepared describing the buildings to be constructed, the quantum of work, schedule of payment and description and items of the work to be carried out in each building, as well as items of rates in case of any addition or deduction. The contract was estimated at a lumpsum Rs,21,43,000 excluding the cost of steel, cement and water which was to be supplied by the defendant free of cost and stagewise payment was stipulated. Ten months' period was stipulated for completion of the work. The work started on 15-12-1985. Mobilization advance of Rs,1,50,000 was given to the plaintiffs. The Architects were supervising the work and Director Saleem Usman of the Defendants was visiting the site regularly. The first running account bill was submitted on 3-3-1986, checked by the Architects and recommended for payment. The second running bill was submitted on 30-11-1986 checked and recommended by the Architects. Thereafter, the defendants asked the plaintiffs to slow down the work and ultimately determined the contract, as there were differences between the Directors of the Defendants' company. The Defendants delayed the payment of the running bills on the plea that the measurement should not be made by the Architects/Messrs Two Stars Enterprises, but by their own friend, an Engineer Mr. Syed Ali.
3. Consequently a meeting was held between the parties wherein it was agreed that Syed Ali would be the Arbitrator to settle the dispute of payment to the plaintiffs, and that he will measure, assess and evaluate the work done at an agreed formula and that his decision shall be final and binding on both the parties. A writing to this effect was prepared and signed by the parties. The Arbitrator fixed 26-9-1987 for taking the measurements and asked the parties to be present there.
4. Accordingly Hashim Director of the defendants and Idrees of the Plaintiffs were present at the site where the Arbitrator took the daily measurements in their presence and obtained the relevant decuments and plans from the the parties. Thereafter the Arbitrator gave his Award on 6-1-1988 and then filed it in the Court on receipt of notice of J. Miscellaneous No, 13 of 1988 filed by the plaintiffs in this Court.
5. ' The defendants denied that there was any written agreement executed between the parties for the execution of construction work. The plaintiffs, they alleged, commenced the work in connivance with the Architects etc. Before the parties could settle the terms and execute the agreement. The defendants have denied that the typed, and signed agreement Annexure P/1 filed by the plaintiffs was settled between the parties or executed. They have alleged that it was an afterthought. It is alleged by the defendants that the work executed by the plaintiffs was against the approved plan and is violative of Building Rules and Regulations. Besides, it is defective, useless and not according to specifications given in the approved plan. The execution of the document annexed to his application by the Arbitrator purporting to be a reference is admitted by the defendants. They have, however, alleged that this does not come within the definition of Arbitration Agreement. In this case only measurement and its valuation was assigned to Syed Ali, that too on his own persuasion. This agreement is vague and uncertain as it does not cover the dispute which led to the stoppage of incomplete construction work. The so-called Arbitrator did not give notice to the defendants. It is also denied that he had taken measurements on 26-9-1987 in presence of Hashim, Director of the defendants, or on any other date in their presence. It was alleged that the Arbitrator had mis-conducted himself by holding the enquiry behind the back of the defendants. It is further alleged that the Arbitrator was neighbour of the plaintiffs and played fraud upon the defendants.
6. ' The Award was contested by the Defendants alone. Who filed an application under sections 13 and 30 read with section 33 of the Arbitration Act, 1940. This application was supported by an affidavit filed by Mohammad Hashim, their Director which contained the contentions shown above.
7. A counter-affidavit was filed by Idrees Ahmed, Sole Proprietor of the plaintiffs firm, which contained in detail the facts of the plaintiffs' case, which I have already briefly narrated above. The defendants filed a rejoinder wherein nothing new was stated, except denial of certain facts mentioned in the counter-affidavit and repetition of the facts contained in the affidavit. The defendants' counsel has formulated the following points for decision in this case:--
(a) Whether there is any written agreement to execute the work?
(b) Whether the construction work has been done in accordance with approved plan? If not, its effect?
8. ' Whether there is any arbitration agreement? If not, what is the position of writing dated 22-9-1987 claimed by the plaintiff to be Arbitration Agreement?
(d) In case the writing dated 22-9-1987 is an Arbitration Agreement as claimed by the plaintiff, whether the Arbitrator misconducted himself and/or the proceedings.
9. ' For the sake of convenience I have also decided to deal with the various contentions raised by the parties in accordance with these points.
(a) Whether there was any written agreement to execute the work?
10. ' The plaintiffs have produced photostat copy of a typed document which bears the signature of defendant alone and has stated that this agreement was got prepared by the defendants with the help of their said Architects. The original of this agreement was retained by the defendant after signing it himself also. He did not supply the photostat copy of the original after it was signed by him to the plaintiffs. The Defendants have, however, denied that any such agreement was executed. They have stated in their affidavit that the construction work was assigned to the plaintiffs verbally on the specific condition that the construction work shall be executed strictly in accordance with the approved plan. The defendants have denied that there was any written agreement for execution of work, what to say of arbitration clause exiting therein. In their Rejoinder Affidavit they have disowned Annexure 'A'. The contention of the defendants does not appear to be readily acceptable. It appears improbable that the construction of a huge project like a Textile Mill could have been given on contract without a written agreement, particularly when an Architect was appointed to supervise the same. However, this point does not appear to be very material for the purposes of this case. Even if there was no agreement in writing, it is admitted by the defendant that contract for construction of the Textile Mill was given to the plaintiffs to be constructed in accordance with this approved plan. It is also admitted that the defendants had constructed the Mill. Hence even if it is assumed that the contract was oral or had not been finalised, then also the defendants were bound to pay to the plaintiffs for the construction work done by them. Section 70 of the Contract Act provides that "even if there was no contract, then also where a person lawfully does anything for another person or delivers anything to him, not intending to do so gratuitously and such other person enjoys the benefit thereof the latter is bound to make compensation to the former in respect of or to restore the thing so done or delivered".
(b) Whether the construction work has been done in accordance with the approved plan? If not, what is the effect?
11. ' The defendant has stated in his affidavit that the plaintiffs were bound to do the work in accordance with the approved plan. The work done by the plaintiffs was not only against the approved plan, but it was violative of the Building Rules and Regulations.The work was defective and useless. The plaintiffs have asserted that their work was according to the approved plan. He has stated that the Architect was supervising the work. The bills were verified by him. Director Saleem Usman was visiting the site daily and was inspecting the same. Hence it does not appeal to reason that the plaintiffs would have been allowed to do sub-standard work or the work in violation of the approved plan or the Building Construction Rules against the wishes of the defendants.
12. However, for the purposes of this case even this point is not material, because the Arbitration Agreement provides only for the measurement of the work done. There is no mention whatsoever of any dispute on the nature or quality of the work done in the Arbitration Agreement. The fact that Rs, 85 per sq. Ft. Of the covered area is mentioned in the Arbitration Agreement and that only measurement of the work done was to be assessed in itself shows that the construction, whether it was good or bad, was agreed to be paid at Rs, 85 per sq. Ft. Of the covered area.
(c) Whether there is any Arbitration Agreement? If not, what is the position of writing dated 22-9- 1987 claimed by the plaintiff to be Arbitration Agreement?
13. ' The defendants have asserted in their objections that there was no Arbitration Agreement between the parties and the document referred to by the plaintiffs is a writing or a joint-note of the parties which is vague and does not amount to an Arbitration Agreement or a reference to the Arbitrator. The defendants' counsel cited a number of rulings in his support. The important rulings are PLD 1971 Lah. 522, (Pak. Cement Industries Ltd. v. Teekayea Trading Co.), PLD 1971 SC 516 (Mohammad Salim v. Mohammad Ikram) and AIR 1934 Sindh 200 (Hormusji v. Local Board, Karachi).
14. ' In the case of Pak. Cement Industries Ltd. v. Teekayea Trading Co., there was an application under section 28 of Arbitration Act, 1940 for extension of time for making award. The application was resisted on the ground that Arbitration Agreement was not stamped. No doubt it was held that there being no properly stamped Arbitration Agreement, the question of enlargement of time in terms of section 28 did not arise. The Court, however, took notice of a subsequent event that is payment of duty and penalty on, the stamp before the Administrative Civil Judge and held that it was competent for the arbitrator to proceed with the arbitration on the basis of that agreement.
15. ' The case of Mohammad Salim v. Mohammad Ikram goes against the defendants as it was held therein that once a document was admitted in evidence without objection, its admissibility cannot subsequently be challenged on the technical ground such as non-payment of stamp duty. In this case also the agreement has been admitted in evidence without any objection being raised to its admissibility. Now the defendants cannot raise objection as to its admissibility.
16. ' The case of Hormusji v. Local Board, Karachi is also distinguishable from the facts of the present case. In that it was held that the decision of the President of the Local Board, on any complaint of the contractor, was to be considered as final, but this did not mean that he could not go to the Civil Court on a claim which did not amount to a complaint to the (sic).
17. ' The said document reads as under:- "We the undersigned both the parties have agreed to the rate of Rs, 85 (Rupees eighty-five only) per square foot of covered area of the factory building and other structure on Plot No, C-16 Road No, 10 at Nooriabad Industrial Area, Nooriabad (Dadu District).
18. ' The assessm ent of the work done shall be measured by Mr. Syed Ali and his decision shall be binding on both undersigned parties.
19. ' The valuation of compound wall and underground tank will be done on the basis of market rates."
20. ' A perusal of this document would show that it is in no way vague. It is an express writing authorising Syed Ali, Engineer to decide the matter by measuring the work done by the plaintiffs and assess the same at the rate of Rs, 85 per sq. Ft. Of the covered area of the factory building and other structure on Plot No, C-16, Road No, 10, Nooriabad Industrial Area, Dadu District. It was further agreed therein that the valuation of the compound wall and underground tank will be done on the basis of the market rate. The parties had agreed to bind themselves by the decision of the Arbitrator. This document is signed by the plaintiffs as well as the defendants. It is dated 22-9-1987.
21. The defendants have not denied the execution of this document. Clause (a) of section 2 of the Arbitration Act defines an Arbitration Agreement to mean "written agreement to submit present or future differences to arbitration, whether an Arbitrator is named therein or not." It is not necessary to use the words "Arbitrator" or ##TE# "Arbitration Agreement" in the document. In AIR 1947 Lah. 215 (Gover.norGeneral-in-Council v. Simla Banking & Industrial Co Ltd.), a clause in the agreement between the parties provided that the decision of the Superintending Engineer shall be final, conclusive and binding on all parties to the contract on all questions relating to the meaning of specifications etc. The Sub-Judge held that the agreement in the clause did not indicate any animus arbitrandi and was in the nature of a reference to a valuer or an assessor. It was held by a Division Bench consisting of two most eminent Judges Sir Abdul Rashid Actg. C.J. And Abdur Rahman, J. That "the finding was not correct.
22. A perusal of the clauses showed that not only questions about workmanship etc., but all questions whatsoever arising between the parties were agreed to be left to the decision of the Superintending Engineer. It was true that the words 'arbitration', 'arbitrator' or `arbitration agreement' did not appear in the clause, but that was immaterial so long as the parties were found to have agreed to allow the matter to be decided by a person of their own selection, .Whose decision was to be final, conclusive and binding on them".
23. ' In AIR 1938 Sindh 45 (Harnam Singh v. Parasram Lalchand) a Division Bench held that "when a member of the firm of Architects is holding an enquiry as to the cost of certain work done in a cast of a dispute between the owner and contractor, he acts in his capacity as an Arbitrator and is subject to the provisions of the Arbitration Act." The facts of this ruling are similar to the facts of the present case and it applies to the present case with full force.
24. ' The next ruling on this point is PLD 1977 SC 644 (Shamim Akhtar v. Najma Baqai). It was observed in this ruling as follows:-- "In this connection it is evident from the facts stated above that actually there was no bilateral instrument executed inter se between the parties as such for the appointment of the two arbitrators respectively nominated by them and reference of the dispute to their arbitration. The fact of the matter is that, as explained above, on 16-10-1970 respondents 2 to 4 wrote to the Staff Officer, Deputy Sub-Administrator, Martial Law, Lahore, nominating Mr. Yaqoob Shah as their arbitrator in this dispute. Similarly on 4-11-1970 the appellant separately wrote to the Deputy Sub- Martial Law Administrator, Lahore nominating Capt. Shafiq Ahmed as her arbitrator for the settlement of the dispute. Afterwards respondent No, 1 also informed the Deputy Sub-Martial Law Administrator about her willingness to the appointment of Syed Yagoob Shah as their nominee to act as their arbitrator. In my opinion these letters unilaterally written by the respective parties addressed to the Martial Law Authorities read together constituted a valid 'arbitration agreement' within the meanings of section 2(a) of the Arbitration Act, 1940 for the purposes of the reference of the dispute to the arbitration of the two arbitrators appointed by them.
25. ' In section 2(a) of the Arbitration Act, 1940 'arbitration agreement' is defined to mean a 'written agreement' to submit present or future differences to arbitration, whether an arbitrator is named therein or not. In the past there has been a considerable divergence of opinion as to whether this 'written agreement' was also required to be signed by the parties. But of late the Courts are unanimous in holding that the written agreement of arbitration need not necessarily be signed by the parties as long as its terms and conditions can he readily ascertained and have been freely agreed to between the parties. On the face of it section 2(a) of the Act does not lay down and it is not a requirement of the law that the arbitration agreement must also the signed by the parties."
26. ' Similar view has been taken in PLD 1978 Lahore 829 (Province of Punjab v. The Industrial Machine Pool). The ratio decidendi of this ruling is that though the Arbitration Act requires the Agreement of Arbitration to be in writing, it does not require that it should be contained in a formal document. It may be in any form attributed to the parties whereby their intention to refer their dispute to Arbitration is manifestly proved in accordance with law. Even the correspondence between the parties or a statement made by their counsel and recorded by the Court was considered sufficient to be treated as an Arbitration Agreement.
27. ' I am, therefore, of the clear view that the agreement dated 22-9-1987 amounts to a valid 'arbitration agreement' and that the proceedings taken by Syed Ali in pursuance of the said reference would amount to arbitration proceedings and his decision would amount to an award.
(d) In case the writing dated 22-9-1987 is an Arbitration Agreement as claimed by the plaintiff, whether the Arbitrator misconducted himself and/or the proceedings?
28. 'It has been alleged by the defendants that the Arbitrator took the measurements at site behind the back of the defendants' Director and it has also been alleged by them that they had not submitted documents before the Arbitrator, whereas the plaintiff has alleged that the measurements were taken, matters were discussed in the presence of the parties and the parties submitted the documents before the Arbitrator. Thus it would appear that there is a word against word. The record of Arbitrator supports the plaintiff's version. In this respect, the settled law is that if there is a challenge to what happened before the Arbitrator and the procedure that he had adopted and whether evidence was taken by him or not, in such cases the Arbitrator should have been called by such party to ascertain as to what had actually happened and what was actually done by the Arbitrator. In this respect reliance was placed on a number of rulings, including PLD 1970 Kar. 357 (Tayab v. Eastern Textile Mills Ltd). An Arbitrator is within his own right to fix a date and communicate to the parties even orally whereby the parties were bound to attend him on the date so fixed and communicated. The Arbitrator in this case, after his appointment on 22-9-1987 had fixed 26-9-1987 for the purpose of measurements at site and asked the parties to be present on the date fixed. The Arbitrator and the parties were present at the site of works where the detailed measurements were taken by the Arbitrator in the presence of Mr. Hasham on behalf of the defendant and Mr. Idrees on behalf of the plaintiff. This is evident from the proceedings sheet of the Arbitrator as recorded by him on 22-9-1987 and 26-9-1987. Reliance was placed on PLD 1958 Kar.
29. 145 (Ch. Abdul Rauf v. Mohammad Saeed Akhtar) where it was held as follows:-- "I would hold that Mohammad Ibrahim, though he had not been served with any notice by the arbitrators, had knowledge of the proceedings and had participated in the same. The Arbitration Act does not prescribe any procedure as to how proceedings before the Arbitrators should be conducted. All that it requires is that noting should be done ex parte, and that the parties should have notice in the sense that they know when the matter is to be taken up by the arbitrators. It is open to the arbitrators to convey to the parties concerned even orally the date fixed by them under the Arbitration Act, the arbitrators cannot proceed ex parte in the absence of parties who are affected by the award. I am inclined to hold that under the circumstances of the present case that the arbitration proceedings against Ibrahim were not ex parte and that Ibrahim did participate in the proceedings before the arbitrators. This objection is accordingly disposed of."
30. ' In fact only M/s. Two Stars Enterprise Architects were appointed by the defendants to supervise the work. M/s. Ashrafi Abbasi Architect, who had no concern with the contract work is attempted to be introduced by the defendants unauthorisedly to confuse the matter and anything done by them is liable to be ignored.
31. ' In fact the dispute was in respect of the claim for payment made by the plaintiff for the work done which has been resolved in the manner agreed as aforestated by the Arbitrator. From the objections of the defendants also one can deduce that the arbitrator was a man of defendants' own choice, but when he gave the award the defendant felt that he had been let down by the arbitrator. The objections of the defendant are frivolous and baseless and have been filed only to avoid the payment of the work done and carried out by the plaintiff, as such the objections are dismissed. Award is therefore made rule of the Court.