1. ' The plaintiff invited tenders through a tender' notice for the supply of 27367 numbers equal to 141,205.50 Cft. Of hardwood special size crossing and bridge timbers The Defendant participated in the tender through their local agents Messrs Muhammadi Sons, Karachi, vide their offer letter dated 23-9-1980. This offer of the Defendant was accepted by the plaintiff and a provisional order was placed upon them for the supply of 27,367 numbers of sleepers equal to 141,205.50 Cft. Bridge and crossing timbers on C&F Karachi basis on 17-1-1991 for a total C&F value of S32,219,750,46 as per the rate given in their quotation. The defendant through its local agent acknowledged the provisional order dated 17-1-1981 and a bank guarantee dated 3-2-1981 for a sum of S. $.110,987.50 being 5% of the total value of the order was provided to serve as a Performance Bond. In continuation of the Provisional Order the plaintiff placed a firm order on Defendants on C&F Karachi delivery basis on price, terms and conditions embodied in the contract agreement in pursuance whereof, the plaintiff established an irrevocable letter of credit in favour of the Defendant for 99% C&F value i,e.
2. S.$219,755.96, dated 30-3-1981. On arrival in Pakistan the sleepers supplied by the Defendant were found to be defective, therefore, the Minister for Railways, Pakistan on 12-3-1982 ordered that the sleepers should be inspected and a report submitted in the matter. Consequently, four reports were prepared. Inspection was also carried out and a report prepared by the Director of the National Logistic Cell. A sample of the sleepers supplied was also sent to Pakistan Forest Research Institute, Peshawar. On August 10, 1982, the Plaintiff vide the letter informed the Defendant that 71% of the sleepers supplied were found to be defective according to the inspection carried out in Pakistan and i,e., of the total of 27367 sleepers supplied by the Defendant 19,140 sleepers were defective and were to be replaced by the Defendant. In spite of numerous reminders the Defendant failed to replace the defective 19,140 timbers to which the Plaintiff were legally entitled.
3. The Plaintiff were, therefore, left with no choice but to invoke the arbitration clause and refer their dispute to the Sole Arbitrator for the settlement of their claim. The Defendant in their offer of 22-9- 1980 had made it clear that final inspection of the timber will have to be carried out in Malaysia/Singapore before shipment. Accordingly, the Contract Agreement. Provided that the Plaintiff will appoint the Inspector for inspection of consignment in Singapore/Malaysia before shipment to Karachi. The Contract Agreement also provided that the Defendant shall be paid 99% of the full value of the contract on inspection and certification by the plaintiff's Inspector in Malaysia and on submission of the shipping documents to the designated Bankers of the Plaintiff in Malaysia/Singapore. An L/C was established by the Plaintiff in favour of the Defendant with National Bank of Pakistan, Singapore, for this purpose. The Defendant after getting the timbers inspected by the Inspectors appointed by the Plaintiff commenced shipment of the consignment from Singapore with effect from 3-10-1981. The shipment of the entire quantity of 27,367 numbers (Crossing and Bridge timbers) was completed by 31-3-1982 in various lost. The consignment started arriving at Karachi from 15-10-1981 and the entire. Delivery and unloading was completed at Karachi Port on 13-4-1981 As her the terms of the Contract 99% of the value of the consignment was required to be paid through the L.C. Established by the Plaintiff in Singapore on submission of inspection certificates and shipping documents to the nominated Bank of the Plaintiff. Accordingly, when the inspection certificates of the Inspectors appointed by the Plaintiff were submitted to the nominated Bank together with the shipping documents, payment of 99% of the value of the Contract, in foreign exchange, was released to the Defendant. The balance 1% in Pakistani rupees was required to be paid to the Defendant's agent in Pakistan, Messrs Muhammad All Sons, and this amount has been withheld by the Plaintiff. After the consignment was received in Pakistan a reinsertion of the timbers was carried out unilaterally by Plaintiff's Departmental Officers in conjunction with the Directorate of National Logistic Cell, Karachi. These inspections continued from March, 1982 to June, 1982. It was reported that out of the 27,267 timbers supplied by the Defendant as many as 19,140 were defective. In other words 71 per cent of the timbers were reported to be defective. On 10-8-1982, a letter was addressed by the Plaintiff to the Defendant, through their local agents M/s. Muhammad All Sone, informing them that 19,140 timbers had been found to be defective on inspection in Pakistan and that the Defendant was liable to replace these timbers free of cost on C & F basis. Through this letter the Plaintiff also informed the Defendant that they had encashed the 10% Bank Guarantees on account of the reported defective supply of timbers As regards the 5% Perfomance Bond, the Plaintiff informed the Defendant that they would instruct the Bank to withdraw their instructions for encashment and that the Bond will be returned to the Defendant after settlement of the case. The Defendant by their letter of 18-9-1982 repudiated the allegation of the defective supply of timbers and the claim for replacement made by the plaintiff, pointing out that the reported reinsertion was without any notice to the Defendant, and denying any liability under Clause 14 of the Contract Agreement.
4. As the disputes arose between them, the Plaintiff decided to invoke the Arbitration Clause of the Contract Agreement and appointed Mr. M.MA. Farooki, retired Chief Engineer/Survey & Construction/Pakistan Railways as Sole Arbitrator in terms of Clause 16 of the Contract. The Plaintiff has claimed:- "(a) C & F cost of 19'140 Nos. Defective timber plus 15% interest charges. S.$ 19,19,782.70 or its equivalent in local currency.
(b) Custom Duty, Inspection charges, storage charges and interest upto 24-9-1983. Plus storage charges at rate of Rs,1,006.176 per day from 25-9-1983 till the removal of defective timbeRs, by the defendant, and interest at 15% from 25-9-1983 till the claim is settled."Rs, 41,51496.46 ' The defendant while repudiating the claim of the plaintiff pointed out that timbers had been supplied by the defendant after due inspection in Malaysia/Singapore by the inspectors appointed by the plaintifs, as provided under the Contract, and that the timbeRs, were certified to be of good quality, as per Contract specifications. The defendant's contention was that they have, therefore, fulfilled their obligations under the contract, and as such encashment of the 10% Bank guarantees by the plaintiff and withholding payment of 5% Performance Bond was wrong and illegal, and that the plaintiff was liable to refund the said amounts with interest at the rate of 14% per annum to the defendant. The itemwise details of defendant's Counter-claim are:- "(a) Refund of Bank Guarantee amount. S. $ 2,19,755.29
(b) Interest on above at 14% per annum for period 10-8-1982 to 29-10-1983. S $ 36520.09
(c) Refund of Performance Bond' amount. S.$ 1,10,987. 50
(d) Interest on above at 14% per annum for period from 26-14982 to 29-10-1983. S.$ 25,989.57
(e) Loss suffered by plaintiff due to delay in appointment of InspectoRs, by plaintiff and consequent delay in shipment of timber. SS.$ Total S.$ 4,27935.45 Plus interest at 14% per annum till date of payment"
5. ' The following issues were framed by the learned Arbitrator in consultation with the parties:- "(1) Whether the goods supplied were in accordance with the specifications stipulated in the Contract Agreement?
(2) Whether the plaintiff failed to appoint promptly InspectoRs, for inspection of the timber before shipment, resulting in delay in commencing shipment and extension of L.C.?
(3) Whether timber duly inspected before shipment was found not in accordance with the specifications?
(4) Whether under the terms of contract the SupplieRs, on shipment of inspected timber fulfilled their obligations under the Contract?
(5) Whether out of 27,367 timber supplied by the defendants to the plaintiffs, 19,140 were defective, if so, what is the result?
(6) Whether the defendants were bound under the Contract and they failed to replace the defective timbeRs, if so, what is its effect?
(7) Whether on arrival of timber at Karachi the plaintiffs, were contractually obliged to and took proper steps to properly treat and store it?
(8) What is the effect of the Warranty Clause?
6. Whether the plaintiffs carried out any inspection of timber on unloading. If so, when and where such inspection was carried out and by whom?
(10) Whether the alleged inspections carried out by the plaintiffs without notice and in the absence of the defendants is binding on them?
(11) Whether the defendants were bound under the Contract to accept the joint inspection offered by the the plaintiffs and, if so, its effect?
(12) Whether the plaintiffs under the Contract were entitled to encash the guarantees given by the defendants?
(13) Whether the plaintiffs have a claim against the defendants and, if so, to what amount?
(14) Whether the Defendants have a claim against the plaintiffs and, if so, to what amount?
(15) What should the award be?"
7. The learned Arbitrator on the basis of evidence adduced before him-rejected the claim of the plaintiff against the defendant for the following reasons:- "(1) The Contract documents provide for inspection of timbeRs, before shipment by the plaintiffs'
8. Inspector. The timbeRs, were duly inspected before shipment, and only those that were accepted by the Inspector were shipped.
(2) The Contract documents stipulate that the timbeRs, shall be of the best quality and workmanship and shall comply with the specificat4ons. The only reason for appointing an Inspector is to ensure that the goods supplied and passed are of good quality and comply with the specifications. Out of the timbeRs, offered for inspection, the Inspector has accepted 27,367 timbeRs, and rejected 1,209 timbeRs,; because these were not of good quality and not in accordance with the specifications. This shows that the accepted and shipped timbeRs, were of good quality and complied with the specifications. The Inspector had examined the timbeRs, before shipment and no defects were revealed in the accepted timbeRs,
(3) As already detailed under Issue No,4 (para 8), the defendant fulfilled all his contractual obligations on shipment of the inspected. TimbeRs,
(4) No inspection was carried out by the Consignee (District Controller of Stores) immediately on arrival. The fiRs,t consignment was received at Karachi Port on 15-10-1981. Inspections were commenced only after receipt of ordeRs, from the Ministry of Railways on 13-3-1982. These inspections were continued till June, 1982, without any notice to the defendant and, as such, were unilateral and arbitrary, and the defendant was not bound to accept the results of these inspections, when there was no provision in the Contract for such 100% reinspections, and specially when these were done in a unilateral and arbitrary manner without notice to the defendant.
(5) There is no provision in the Contract for a joint inspection, and the defendant was not bound to accept such a suggestion specially when it was made by the plaintiff after all inspections at Karachi and Haripur Bund had been completed unilaterally.
(6) The plaintiff failed to take steps to properly store and protect the timbeRs, from the effect of weather conditions, and to promptly despatch the timbeRs, to Haripur Bund for creosoting."
9. ' With regard to the defendant's claim it was partly allowed for the following reasons: ' The Contract Agreement under its Clause 4 (iv) provides for unconditional Bank Guarantee for 10% C&F value of the Contract in favour of the President of Islamic Republic of Pakistan as a cover for defective workmanship and/or bad material, valid for a period of 12 months from the date the timber is delivered.
10. ' The Contract stipulated that the defendant shall supply the contracted quantity of timber complying with the specifications attached with the Contract and duly inspected and accepted by the Inspector appointed by the plaintiff before shipment of the timber. Then contractual obligations have duly been observed and complied with by the defendant as proved by the Inspection Reports of M/s. Perdana Services, the Inspector appointed by the plaintiff, and the shipping documents sent to the plaintiff, It was on the basis of these documents that 99 C&F cost of the timbeRs, was released to the defendant from the L.C.P established by the plaintiff. As the contractual obligations were fulfilled by the defendant, the encashment of Bank Guarantee was in order. As regards the reinsertion of sleepeRs, in Pakistan there is no provision for it in the Contract. Moreover, the inspections were carried out in an unilateral manner without notice to the defendant, and the defendant was not bound to accept the results of such inspections. The claim of the defendant for refund of the amount of Guarantee Bond alongwith interest is accepted.
11. ' As the defendant has fulfilled the Contract and has supplied the contracted quantity of timber duly accepted by the plaintiffs Inspector, and as such, has faithfully discharged his obligations under the Agreement, the withholding of 5% performance Bond by the plaintiff is not in order. The claim of the defendant for refund of the Performance Bond alongwith interest is accepted.
12. ' The Provisional Order for supply of timber was placed on the defendant on 17-1-1981. The defendant was informed on 13-4-1981 that M/s. Trident Penang will carry out the inspection in Malaysia/Singapore. As M/s. Trident were not prepared to take up the assignment, another Inspector namely, M/s. Perdana Services were assigned the job of inspection on 7-7-1981. The defendant, however, has not produced any document or proof in support of the loss sustained by them due to delay in appointment of Inspector, nor have they given the break up of the amount of loss.
13. ' In the absence of any documents in support of the loss or any evidence to prove it, the claim of the defendant for alleged loss sustained by them due to delay in appointment of Inspector is rejected."
14. ' As a result the learned Arbitrator accepted the claim of refund of Bank Guarantee made by the defendant for S.$219,755.29 plus interest therein @ 14% per annum from 10-8-1982 to 29-10-1983 amounting to for S.$36,520.09. The claim of refund of performance Bond for S.$110,987.50 was also accepted alongwith 14% interest from 24-1-1982 to 29-10-1983. The claim for compensation to defendant against loss of delay in appointment of Inspector amount to S.$34,683 was rejected.
15. Thus an award for S.$393.252 (Singapore dollaRs, three lacs ninety-three thousand and two hundred fifty-two only) was awarded in favour of the defendant to be paid within three months from the date of award. The learned Arbitrator further allowed interest at 14% per annum on the said amount from 29-10-1983 till the date of payment of the amount by the plaintiff.
16. ' On 15-5-1985, Mr. M.MA. Farooqi, the learned Sole Arbitrator filed the award in the Court against which the plaintiff filed their application/objections under sections 30 and 33 of the Arbitration Act, 1940. The defendant filed their counter-affidavit opposing the contentions raised by the plaintiff inter alia on the grounds that the application was not filed by the duly authorised officer of the plaintiff and the plaintiff cannot be allowed to reopen the issues decided by the Arbitrator.
17. ' At the outset it was urged by Mr. Makhdoom Ali Khan learned counsel for the plaintiff that the arbitrator failed to make a definite finding on the most important question as to whether the 71% of the timber was found to be defective was already defective at the time of inspection/shipment in Singapore, or whether these defects developed because of the alleged Comission to take protective measures and on accounts of its being dumped in open in Karachi.
18. ' Secondly, it was contended that the learned Arbitrator divided the warranty clause in the contract agreement into two parts. The fiRs,t is that the timbeRs, shall be in accordance with the specification and free from defects in quality and workmanship. The second is that the seller shall arrange for replacement C&F Karachi free of costs, any part of the material which under normal use and maintenance proves defective in quality or workmanship or fails to comply with the performance laid down in the specification within 12 months from the date of its delivery at Karachi Port. Now as to the fiRs,t part of the clause the learned Arbitrator found that the timbeRs, shipped and received at Karachi Port under the relevant contract were all inspected and accepted by the Inspector appointed by the plaintiff in Singapore/Malaysia. From this the arbitrator inferred that the sleepeRs, were in accordance with the specifications attached with the tender documents and free from defects in quality and workmanship. Thus he decided the case on the basis of no evidence but only on unsubstantiated assumptions. With regard to the second part of the clause, the learned arbitrator found that the question of these timbeRs, proving defective or failing to comply with the performance laid down in the specification under "normal use and maintenance" did not arise because the 19,140 defective sleepeRs, in question were not used within 12 months after receipt and the defendants were, therefore, not bound to replace them after "re-inspection" in Pakistan, was again contrary to evidence and erroneous.
19. ' It was argued by the learned counsel for the plaintiff that the InspectoRs, had no power to accept the goods which were only to be ultimately accepted or rejected by the buyer The InspectoRs,' duty was merely to inspect the goods before shipment to see their apparent condition. This is proved by the nine certificates of Inspection issued by the InspectoRs, and produced by the buyeRs, before the learned Arbitrator as Annexures R-1 to R-9 in its reply to the selleRs,' counter-claim, All these nine certificates categorically and clearly state that the inspection of sleepeRs, carried out by the InspectoRs, was "superficial" and upon such superficial inspection they found the timber to be "apparently supplied in accordance with the contract". SelleRs,' No,1 witness So. Lip Hong also confirmed in his evidence that this inspection was visual. At the end of each of the nine certificates the InspectoRs, clearly endoRs,ed the words:- ' THIS REPORT REPRESENTS OUR FINDINGS FROM VISUAL INSPECTION AT THE TIME AND PLACE OF ATTENDANCE ONLY AND DOES NOT RELIEVE THE SELLER WHATSOEVER OF HIS CONTRACTUAL OBLIGATIONS."
20. ' It was submitted that from the above documents it is impossible to infer or derive that the goods supplied were in accordance with the specifications stipulated in the contract. The inspection certificates would not absolve the selleRs, of their contractual obligations as the certificates on the face of it were based on a visual and superficial inspection and nothing was stated therein about the inherent defects or latent flaws of the timber. The learned arbitrator has in effect held that irrespective of any such latent or inherent flaws and irrespective of the contents of the certificates the mere fact that the InspectoRs, had inspected the timbeRs, was sufficient proof of both the acceptance of the timber and also of the fact that the goods supplied were in accordance with the contract specifications. The finding is based on no evidence or at best on a gross misreading of evidence, patently erroneous in law and contrary to the provisions of sections 15 and 16 of the Sale of Goods Act, 1930 which reads as follows:- "15 "Sale by description: Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description; and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description."
21. "16 "Implied conditions as or quality or fitness: Subject to the provisions of this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:-
(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the couRs,e of the Seller's business to supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose: ' Provided that, in the case of a contract for the sale of specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose.
(2) Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality: Provided that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed.
(3) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.
(4) An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith."
22. ' In support of his contention learned counsel placed reliance on Fairland Export v. Bengal Oil Mills, F L D 1970 Kar. 125 in which it is held:- "... The combined effect of these two conditions (Sections 15 & 16 of the Sale of Goods Act is that the goods must answer the specified description in its "commercial sense" goods of specified description must not only answer the description but must also be saleable or merchantable under that description."
23. ' In Jones v. Just (1868) 3 QB 197 at 204 the observation of the Court was:- "In general on the sale of goods by a particular description, whether the vendee is able to inspect them or not, a is an implied term of the contract that they shall reasonably answer such description and if they do not it is necessary to put any other question to the Jury"
24. ' Similarly in Ahmed Corporation v. The International Food PLD 1973 Kar. 361 at 373, it was held:- "The mere fact that a buyer may have deputed a peRs,on to inspect the goods before delivery will not absolve the seller of responsibility to supply goods in accordance with the warranty."
25. ' With regard to the finding of the Arbitrator that the delay in shipment was caused by the BuyeRs,' failure to "take prompt action in finalising inspection arrangements" it was urged by Mr. Makhdoom Ali Khan that this finding is perveRs,e, contrary to the facts on record and based on no evidence.
26. According to him there is no controveRs,y that Letter of Credit was extended on the request of the SelleRs, defendants so also there is no dispute that the plaintiff had honoured their obligations under the contract and promptly appointed an Inspector. The Inspector for reasons beyond the plaintiff's control declined to carry out the inspection. The plaintiff on being thus informed immediately took steps to appoint a new Inspector and informed the defendant of new appointment on 7-7-1981 but the fiRs,t consignment was offered for inspection by the defendant on 13-9-1981 and shipped on 3-10-1981. This will clearly demonstrate that for all practical purposes there was no delay on the part of the plaintiff as the sleepeRs, were not ready with the defendant and the InspectoRs, had to wait for a considerably long period of time before they were called upon to inspect the sleepeRs, Notice in terms of clause 8 of the Contract was given by the defendant as late as 13-9-1981 long after the BuyeRs, had appointed the new InspectoRs, Thus this finding is based on no evidence and the Arbitrator has clearly committed misconduct.
27. ' Next it was argued that the finding of the Arbitrator on issue No,3 that "it cannot be said that the timbeRs, duly inspected before shipment were found not in accordance with the specification" is erroneous on facts and law and ignores all the evidence on record. By no stretch of imagination can the pre-shipment inspection be described as acceptance of the goods and take away the Buyer's right to reject when later found defective en examination. The arbitrator has not even cared to refer to anyone of the seven reports of Forest Research Institute which with great clarify explained the defects in the sleepeRs, and established that the sleepeRs, were found not in accordance with the Contract. Further the Arbitrator failed to consider and give any findings on the effect of clause 12 of the Pakistan Railways Standard Conditions and clause 12(a) of the agreement of 1st March 1981 which are referred as under:-- "Clause 12: The Contractor is to be solely responsible for the execution of the Contract in all respects in accordance with the terms and conditions of contract notwithstanding any approval which the inspecting officer may have given in respect of the stores, materials or other parts of the work or of workmanship involved in the contract of the test carried out either by the Contractor or by the inspecting officer. Clause 12(a)--"(a) The timber on order shall be of best quality and workmanship and shall comply with the contracted specifications of the purchaser the seller shall be entirely responsible for the execution of the contract in the most approved business like-manner and in all respects in accordance with the terms and conditions specified in this contract notwithstanding any approval which the Inspector may have given about these timbeRs,"
28. ' Next it was contended that the finding of the Arbitrator that the sleepeRs, were "dumped" in the open is perveRs,e as admittedly, the plaintiff to the full knowledge of the defendant did not have any facilities for storing the sleepeRs, in a covered shed. The sleepeRs, when left their place of origin, put on board the ship and at the time documents were negotiated had a moisture content far in excess of what should be there in a sleeper.
29. ' According to Mr. Makhdoom Ali Khan the finding of the Arbitrator that the seller was obliged to replace under the Warranty clause only those sleepeRs, found defective under "normal use and maintenance" in the sense that the defective sleepeRs, should have been laid on the railways track within 12 months was perveRs,e, illegal and superficial. Reference was made to Government v.
30. Australia Knitting Mills AIR 1936 PC 34 to 40 in which it was observed:- ' Merchantable does not mean that the thing is saleable it looks all right, if is not merchantable in the event if it has defects unfitting it for its only proper use but not apparent on ordinary examination. That is clear from the proviso, which shows that the implied condition only applies to defects not reasonably discoverable to the buyer in such examination as he made or could make."
31. ' Reliance was also placed on Agha Mirza v. Garden Woodroof AIR 1937 Mad. 40 at 44, Canadian Yatch v. MacDonald (1977) 2 Lloys 298, Bristol Tramways v. Fiat MotoRs, (1910) 2 UB 831; ChalmeRs, Sale of Goods 18th Edition, p,130 and Banjamins Sale of Goods, 2nd Edition, p.711. It was further maintained by the learned counsel that the refusal of the SelleRs, to agree to a joint ipspection was a clear proof that the sleepeRs, were defective and an adveRs,e inference should have been drawn against the SelleRs, on this count and also as to their bad faith.
32. ' Next it was contended that the learned Arbitrator acted illegally and mala fide by ordering the plaintiff to return the amount of the 10% Bank Guarantee to the defendant when under the Bank Guarantee the Sole Judge as to its encashment was the plaintiff. As to return of 5% amount of Performance Bond to the defendant, it was pointed out that the Bank refused its encashment and the plaintiff cannot be ordered to refund the amount they never received. Lastly it was argued that the Arbitrator had no jurisdiction to award 14% interest from 10-8-1982 to 29-104983 on the guarantee amount and again 14% interest on performance bond amount from 24-1-1982 to 29-10- 1983.
33. ' It was contended by Mr, A R. Akhtar, learned counsel for the defendant that here was an attempt on the part of the plaintiff to re-argue all issues of facts and of law referred to and decided by the learned Arbitrator. This cannot be permitted as these proceedings are not in appeal and there, scope is very limited as has been held throughout in a large number of reported cases. Plaintiff has not been able to show how the Arbitrator had misconducted himself or the proceedings. The parties led their evidence which was duly.. Evaluated and on its basis the learned Arbitrator had given his award. In order to succeed the plaintiff was required to show that there was an error on the face of award, without reading the evidence or other documents.
34. ' Next it was urged by Mr. A.R. Akhtar that even if there was a legal issue as to the interpretation and construction of contract, the decision of the learned Arbitrator cannot be called in question and is binding on the parties. Reference was made to PLD 1968 Lah.
35. 629.
36. ' In any case it was further argued by the learned counsel for the defendant that a mere erroneous conclusion or inference or a different conclusion on the evidence is no ground to set aside the award. Reference was made to 1981 CLC 379 at page 384, PLD 1981 Kar. 236, 1981 CLC 311. In so far award of interest was concerned it was justifiable under the circumstances of the case. Reliance was placed on PLD 1965 SC 505 and PLD 1987 SC 397. Reliance was placed by him also on A.Z.
37. Company v. S. Moula Bakhsh PLD 1965 SC 505 at page 516 H.
38. ' The bone of contention as appearing from the award and the arguments of the learned counsel, fiRs,tly is, whether upon inspection by the plaintiffs inspectoRs,, the timbeRs, shall be deemed to have been approved by the plaintiff as to quality and workmanship as per specifications under the contract and, secondly, whether a subsequent re-inspection of timbeRs,, by the plaintiff themselves upon arrival was of no consequence and not binding on the defendant. There is no controveRs,y that the contract for sale of the timbeRs, was by description and there is also no dispute that the goods shall correspond with the description. It is also not disputed that the defendant had been dealing with the business of bridge and crossing timbeRs, At the same time both the parties admit that as per the terms of the contract 99% of the value of the consignment was required to be paid by the plaintiff to the defendant through the L/C established by the plaintiff in Singapore on submission of Inspection Certificates and shipping documents to the nominated Bank of the plaintiff. The balance 1% in Pakistan rupees, was to be withheld by the plaintiff.
39. ' Although the plaintiff have claimed cost of 19,140 defective timbeRs,, plus interest, custom duty etc., it is admitted by them that even these defective timbeRs, were duly inspected by their duly appointed. inspectoRs, and approved before shipment to Pakistan, their contention is that such inspection was superfluous and related to patent condition of timbeRs, and the mere fact that the plaintiff's inspector had certified them to be of good quality as per contract specifications will not absolve the defendant of their obligation to the plaintiff and relieve them of their liability under the contract. No doubt the defendant was entitled to profit of 99% of the value of each consignment on issuance of inspection certificate by the plaintiff' inspector and on presentation of valid shipping documents but it cannot be inferred unless expressly provided in the contract that upon issuance of such certificate the defendant shall be relieved of any liability towards the plaintiff or the plaintiff shall be debarred from claiming any amount in respect of various consignments.
40. ' Here it may be pointed out that admittedly each of nine certificates issued by the plaintiffs inspectoRs, contained the following wordings: "This report represents our findings from visual inspection at the time and place of attendance only and does not relieve the seller whatsoever of his contractual obligation."
41. Learned arbitrator nowhere referred to the said nothing or cared to apply his mind to effect of these wording. This condition, if read in conjunction with clause 12. And clause 12(a) of Pakistan Railways Standard Conditions and' sections 15 and 16 of the Sale of Goods Act leaves no doubt that notwithstanding issuance of inspection certificate it shall not have the effect of exonerating the defendant of their liability under the Contract. The learned Arbitrator completely overlooked clause 12 of the Pakistan Railways Standard Conditions and clause 12(a) of the agreement and closed his eyes that each and every inspection certificate which clearly states that it was based on visual inspection at the time and place of attendance only and did not relieve the Seller of his contractual obligation. At no point of time the defendant raised any objection to the plaintiff as to why the inspection certificates contained a condition in violation of Contract. Besides a document cannot be read in part so as to suit a, party but must be read and understood in its entirety, more so; when it is a crucial document, the contents of which go to the very root of a controversy between the parties.
42. ' The finding of the learned Arbitrator is perverse and contrary to record. There is both error of law and of fact on the face of the award. The most vital document viz. Inspection certificate on which the learned Arbitrator has given his award has not been gone into by him or its contents overlooked by him indicating absolute failure of duty amounting to his misconduct. On the basis of his erroneous and fallacious reasoning he not only rejected the entire claim of the plaintiff but awarded the claim of the defendant except in regard to delay in appointment of inspector and delay in shipment. Accordingly I set aside the award, but there will be no order as to costs.
43. Award set aside.