1. FAZAL ELAHI KHAN, C J.--Messrs Shahnawaz Limited has assailed in this writ petition the arbitration award dated 14-5-1986 by respondent No.1 through respondent No.4, holding the petitioner liable to the demurrage charges amounting to Rs. 2,31,122 on account of delay in clearing the consignment of goods from Karachi Port, on the ground of it being arbitrary, unjust, violative of the law, without lawful authority and of no legal effect.
2. 2.This writ petition was finally heard and allowed by an oral order on 18-6-1990. As late Justice Muhammad Azam Khan, a member of the Division Bench was confined to bed, therefore, his signature on the judgment could not be obtained. Howevery when the writ petition was fixed for re- hearing Mr. N.M. Khan, the learned counsel for the writ-petitioner objected to the re-hearing of the writ petition on the ground that the oral order announced in open Court was binding on the parties and the matter cannot be re-opened. That non-signing of the judgment and order is a legal formality which can be fulfilled by making an observation to that effect. The learned Advocate- General while resisting the objection argued that there was no valid and binding judgment in the eye of law as an oral order announced in open Court did not fulfil the legal requirement of a judgment within the meaning of Order 20, rule 3 of the C.P.C. Both the learned counsel for the parties addressed lengthy arguments and produced law for and against. At the same time they were asked to address agruments on merits. After hearing the learned counsel we preferred not to enter into the controversy referred to above and decided to dispose of the writ petition on merits.
3. 3.Facts of the case as disclosed in the petition briefly stated are that Shahnawaz Limited is a Private Limited Company registered under the Companies Act, 1913, and is dealing in the supply of Mercedes Benz Cars and Trucks, International Harvesters and other Agricultural and other road machinery etc. And are approved contractors to Federal and Provincial Government. The Company has its Headquarter at Karachi with its Branches all over the country as well as in some foreign countries. That the Industrial Department, Government of N.-W.F.P. Called for tenders for the supply of International Model iH60(B) Dozers with some spares to the Chief Engineer (D.M.) C&W Department, Peshawar. On the approval of the petitioner's quotation a contract was executed on 11-1-1980, in which shipment period was extended up to 31-5-1981. An order was placed with Komatsu International Manufacturers Company Tokyo, Japan, for the supply of Dozers etc. As per specifications in the agreement for Shipment to Karachi, after completion of all the formalities, for onward transport to the consignee. The requisite Letter of Credit was opened with the National Bank of Pakistan on 15-7-1980 for 4 Nos. Of Dozers, later increased to 6 Nos. By respondent No.2. The dozers were shipped by KOMICO, Tokyo on 27-12-1980 on vessel "HYDERABAD" of the NSC, ETA Karachi on 18-1-1981 with prior intimations dated 30-12-1980 to all concerned. Under the terms of the contract non-negotiable documents were to be supplied to the Clearing Agents, respondent No.3 and others concerned by the petitioner 8 days prior to the arrival of the shipment failing which respondent No.3 was enjoined upon to effect the release and clearance of the consignment from the port on furnishing Indemnity/Guarantee Bond, to avoid delay and demurrages and to despatch the goods to the consignee without delay. Respondent No.3 failed to get the consignment cleared even though the relevant documents were supplied to them 7 days (if not 8 days) before the arrival of the ship at Karachi i.e. 28-1-1981, which resulted in delay in clearance and demurrages from 30-1-1981 to 16-3-1981.
4. 4.In letter No.CF/02/81, respondent No. 3 had held respondent No. 2 responsible for the delay in clearance of the consignment, giving their own version to respondent No.2, in which reference is made to non-availability of Bill of Landing and difficulty in the indemnity bond. There had been a minor discrepancy as to the description of the goods caused typographically which had been clarified without delay and the amended documents were supplied to respondent No.3 on 21-1- 1981, but the Clearing Agents did not effect clearance. In the beginning respondent No.2 blamed petitioner for his failure to submit the required documents but when the factual and legal aspect of the case was explained to it the liability was shifted to respondent No.3 and the petitioner was exonerated.
5. It appears that the Clearing Agents of their own applied for arbitration in the case and at their instance arbitration proceedings were initiated. In those proceedings the petitioner was requested to present certain documents and materials to enable the office for fixing responsibility for the demurrage. The petitioner reiterated that he was not responsible for the delay and brought to its notice the earlier correspondence. However, when a copy of the award was sent to the petitioner on 30-6-1986 with a demand notice for payment of the demurrage charge amounting to Rs.2,31,122 the same was duly replied. Hence the present writ petition.
6. 5.The main grounds on which the aforementioned proceedings and demand notice are challenged are:-
(a) that the impugned award has been given by an incompetent Officer (S.O.IV);
(b) that there was no lawful reference with the consent of the present petitioner;
(c) that the award is hit by the principle of natural justice as the petitioner was neither called for nor given opportunity to present their case before the so-called arbitrator, rather the petitioners were kept out of the field as party;
(d) that the proceedings were arbitrary and partial as the reference was with regard to the fixing of liability of respondent No.3 qua respondent No.2 and not the petitioner;
(e) that the amount awarded also is violative of the clearance certificate issued to petitioner by respondent No.2, clearing petitioner of any liability as to demurrage and enabling them to claim their commission vide No. 319/A-418/YC/1108,dated 23-6-1982.
7. It may be pointed out from the very outset that no rejoinder was filed by the respondents to the facts alleged in the writ petition, however, legal and technical objections were raised by the learned counsel appearing for respondent No.2. Admittedly the parties were governed by general conditions of contract applicable to the contracts of Directorate of Industries and Mineral Development(Supply Wing), Government of Punjab clause 25 whereof reads as follows:- "If the contractor intends to go for arbitration, he shall have to give 30 days' notice in writing informing the purchaser of his intention to refer to the points of differences and/or dispute for arbitration under clause 26 of these conditions of contract. He shall have to define clearly the points of differences and/or dispute in this notice."
8. Relying on the above the learned counsel for the petitioner has raised the grievance before us that he was not served with the notice as required, for the reason referred to above, that he had been exonerated of his liability by the competent authority, petitioner was,therefore, not party to the arbitration. In support of his assertion the learned counsel has drawn our attention to various letters addressed to the Director of Industries explaining his position in denying its liability. One of the letters addressed by respondent No.2 to the petitioner which is dated 23-6-1982, is reproduced as under:- "No.319/A-1418/KC/1108, Dated Peshawar the 23-6-1982.
9. From The Directorate of Industries, Commerce and Mineral Development, (Liaison Wing), N.-W.F.P., Peshawar.
10. To Messrs Shahnawai Limited, 17-The Mall,Peshawar.
11. Subject: 'ISSUANCE OF NO DEMURRAGE CERTIFICATE.
(1) Contract No. And date, A-1418/YC/1108 dated 12-7-1980.
(2) Nature of consignment.ROAD CONSTRUCTION MACHINERY.
(3) Value. Yen: 78,250,140 + 15,650,000
(4) Name of ship (i) "HYDERABAD"
(ii) "INDUS MARU"
(5) Country of origin. JAPAN.
(6) Bill of Lading No. And date.(i) YKA-53 dated 27-12-1980.
(ii) KBKR-0084 dated 24-6-1981.
12. Reference your letter No.PSG-ENG-7 dated 1-6-1981. On the above subject.
13. From the relevant documents, available in this office, it appears that the non-negotiable shipping documents, sent by you vide No.CD-CE: 187 dated 21-1-1981, were received in time by M/s. Faiz and Sons, Karachi, the Clearing Agent. As such the demurrage chaTrges incurred on the consignments, were not due to your fault. In the circumstances a No Demurrage Certificate is issued in your favour enabling you to claim your commission from Accountant-General, N.-W.F.P.
14. COUNTERSIGNED YOURS SINCERELY, (Sd.) (Sd.)
15. Gul Rehman Khan LIAISON OFFICER Director of Industries, Directorate of Industries, Commerce Commerce & Mineral Development, and Mineral Development, N.-W.F.P.
16. Govt.Of N.W.F.P., Peshawar.
17. Peshawar.
18. Endst. No. /A-1418/YC/1108, dated Peshawar the ----1980.
19. Copy forwarded to the Accountant-General, (Audit & Supply), N.-W.F.P., Peshawar, for information and necessary action please.
20. (Liaison Officer)
21. Directorate of Industries, Commerce & Mineral Development, N.-W.F.P., Peshawar.
22. As far as the arbitration proceedings are concerned, reference may be made to letter dated 27-2- 1986, addressed by respondent No.2 to the petitioner herein which is reproduced as follows:- NO. S0.1V (IND) 3-15-1986, GOVERNMENT OF N.W.F.P.
23. INDUSTRIES, COMMERCE MINERAL DEVELOPMENT LABOUR AND TRANSPORT DEPARTMENT Immediate.
24. Dated Peshawar, the 27- 2-1986.
25. To
(1) The Chief Engineer (Dev.), Communication & Works Department, Peshawar.
(2) M/s. Shahnawaz Ltd., West Wharf Road, Karachi.
26. Subject: CONTRACT NO. A/1418/YEN CREDIT/1108 DATED 14-7-1980 L.C.NO.PWE-22/43/YEN/80, DATED 15-7-1980.
27. Sir, I am directed to refer to the subject noted above and to state that M/s. Faiz & Sons have applied for arbitration against demurrage amount Rs.2,31,231. You are requested to kindly present documents and other allied material in order to support/clarify your position so as to enable this office to fix the responsibility for causing demurrage.
28. This reply should reach this office not later than 10-3-1986. Your personal appearance will also be appreciated.
29. Your obedient servant.
30. (Sd.)
31. (ABDUL NAZIR KHAN)
32. SECTION OFFICER-IV.
33. In compliance with the above the petitioner submitted the relevant document enclosed with a letter dated 6th of March 1986 but strangely enough, for the first time respondent No.2 vide its letter dated 30th of June, 1986, informed the petitioner of the arbitration award dated 19-5-1986 and asked to pay the demurrage amounting to Rs.2,31,122. The perusal of the award will show that when the Directorate of Industries took respondent No.3, the Clearing Agent, responsible for demurrage after exonerating the petitioner it aggrieved respondent No.3 and compelled it to apply to the Secretary, Industries for arbitration. The arbitrator specifically entered into arbitration on the subject "Arbitration award for demurrage Work" Rs.2.31,122 against Contract No.A/1418/YC/1108, dated 12-7-1980 (15 packages) under Clause 13 of the Agreement executed between the Directorate of Industries and M/s. Faiz and Sons. The arbitrator in his award has clearly mentioned that when the Directorate of Industries took Faiz and Sons on the job and held them responsible for payment of demurrage instead of M/s. Shahnawaz Limited it aggrieved M/s. Faiz and Sons who made an application to the Secretary, Industries for arbitration. Such being the case it is evident from what has been stated above that neither there was any arbitration agreement to which the petitioner and respondent No.2 were parties nor petitioner was a party to the reference. The reference, if any, was confined to a dispute between respondents 2 and 3. The dispute referred to arbitration being between respondents 2 and 3 the petitioner was simply asked to produce the relevant document which had perevailed with respondent No.2 in exonerating the petitioner so that to strengthen their case for fixing liability for payment of demurrage, apparently, on the Clearing Agent. Admittedly no notice as required under the law was served on the petitioner for entering into arbitration. Furthermore the petitioner was never served as a party in the proceedings. It therefore, cannot be said on the fact of the record that the petitioner was ever a party to the dispute referred to arbitration. Moreso petitioner was not a party to the agreement entered into between respondents 2 and 3 as is mentioned in the award. In the circumstances, the award given on such reference is not binding on the petitioner. Reliance can be placed on Abdul Ghani v. Sirajuddin (A.I.R.1939 Lahore page 154).
6. On consideration of the fact that the petitioner has been exonerated by the competent authority of his liability to pay demurrage, after prolonged correspondence which had ensued between the parties, on the question, and the fact that the petitioner was not party to the reference the award given against the petitioner was invalid and respondents 1 and 2 have got no authority to compel the petitioner for payment of the amount in pursuance thereof.
34. As the writ petitioner succeeds on the aforementioned grounds, we therefore, are not inclined to deal with the other points raised before us. Accordingly this writ petition is allowed and in consequence the arbitration award holding the petitioner liable for payment of the amount is declared to be illegal, without lawful authority and of no legal effect.