1. ' The plaintiff in this suit filed under section 14 read with section 17 of the Arbitration Act has prayed that the award given by the sole Arbitrator on 11th December, 1979, be- made rule of the Court. The award is objected to by the defendant. Mr. Abbas Ahmed, the learned counsel for the defendant has urged the following objections against the award:
(1) That the dispute referred to the arbitrator was beyond the scope of the contract and as such the arbitrator acted in excess of his authority in giving the impugned award.
2. ' That clause 60 of the contract did not admit or contemplate a reference to the arbitrator of a dispute with regard to the payment of escalation raised by the plaintiff and as such the reference was invalid and consequently the award of the arbitrator.
3. ' Before examining the above contentions of the learned counsel I would like to state here some of the material facts which are necessary for examination of the above contentions. The defendant invited tenders for construction of first floor of KPT' Hospital situated in Keamari. The plaintiff in response to the invitation gave a tender on 22nd of February, 1972 which was accepted by the defendant. The total estimated cost of work involved under the above tender was Rs, 7,68,118.57 and it was a rate contract. It is not in dispute that the time reserved in the tender for completion of the work was nine months commencing from 19-6-1972 and the site was handed over to the plaintiff on 17-6-1972. It is also an admitted position that the plaintiff was unable to finish the work within the time reserved in the tender and as many as 4 extensions were granted 'to plaintiff from time to time to complete the work. The last extension granted to plaintiff expired on 4-11,-1973. This date is also admitted to be the date of completion of the work awarded to the plaintiff. It appears that before completion of the work the plaintiff wrote to the defendant on 28th March, 1973, for return of his additional security deposit and after completion of the work, on 13th December, 1973, he demanded escalation in respect of the work completed by him. On 4-1-1974 the plaintiff raised a further demand for payment for the additional work executed by him in connection with the contract. Finally the plaintiff demanded a sum of Rs, 2,43;590 by way of escalation and a sum of Rs, 58,600 on account of damages and losses suffered by him. As the above demand made by the plaintiff was not met by the defendant, he called upon the defendant through his counsel's letter dated 10-2-1975, to appoint an Arbitrator in terms of the contract. In response to the above notice of plaintiff, the Chairman of defendant appointed Mr. Shaikh Muhammad Akram, Managing Director, Airport Development Agency, Karachi, as the sole arbitrator to settle the dispute raised by: the plaintiff. A copy of the letter appointing the arbitrator in the dispute was endorsed to the counsel of plaintiff with reference to his letter dated 10-2-1975. The appointment of arbitrator was described in the letter of defendant as under clause 60 of the general conditions of the contract. In these admitted circumstances the argument of the learned counsel solely rests on the interpretation of clause 60 of the general conditions annexed to the contract executed between the parties. It will therefore be necessary to produce here in extenso clause 60 of the general conditions in Order to appreciate the contention. The clause is in the following terms:- "60. Any dispute regarding the quality of materials or workmanship or accuracy of measurements or reasonableness of the rate for any item or any other question of an Engineering or Technical nature shall be decided by the Engineer and his decision shall be final and binding on all the parties.
4. ' Any other dispute of whatsoever nature (including the interpretation of this or any other relevant document) arising under this Contract (except as to any matters, the decision of which is specially provided for by these conditions) shall be referred to a sole arbitrator to be appointed by, the- Chairman, Karachi Port Trust, who shall have absolute discretion either to appoint an officer of the KPT or anyone else as the sole arbitrator. The decision of such sole arbitrator shall be final and conclusive and shall be . Binding on all the parties to the contract and the provisions of the Arbitration Act, 1940 and any statutory modification thereof and the rules framed there under shall be deemed to apply to and be incorporated in this contract.
5. ' The Contractor shall not stop the work during the pendency of the arbitration proceedings, but he shall continue to execute the work with full speed. However, the Chief Engineer shall have the power to ask the contractor in writing to stop the work, in full or in part if he considers this necessary."
6. ' Mr. Abbas Ahmed, the learned counsel for the defendant has firstly argued with reference to the above 'clause that even if the dispute was covered under the contract, it was excluded from the jurisdiction of arbitrator under sub-clause (1) of clause 60 as the claim for escalation depended upon the determination of reasonableness or otherwise of the rates which was within the exclusive jurisdiction of the Engineers of the KPT to decide. It is accordingly contended that the arbitrator while determining the payment of escalation to the plaintiff in his award acted in excess of the authority available to him under the arbitration clause and as such the award is liable to be set aside. The learned counsel further submitted that even the second part of clause 60 of the contract which conferred jurisdiction on the arbitrator to decide a dispute under the contract, also excepted front cognizance of such disputes by the arbitrator. Alternatively, it is argued by the learned counsel that the dispute with regard to payment of escalation being totally foreign to the terms of contract executed between the parties, the reference of such a dispute was not possible under the contract in terms of clause 60 of general conditions of contract and therefore the award given by the arbitrator was invalid. The learned counsel for the plaintiff in reply to the above submissions contended that "Reasonableness of rates" for any item mentioned in the first part of clause 60 of general conditions of contract has no reference to the escalation demanded by the plaintiff but has specific reference to the terms of clauses 42 and 43 of the general conditions of the contract wherein the Engineer of KPT has been given powers to make any variation of the term, quality or quantity of work and has also been given powers to determine the amount to be added or deducted from the sum named in the tender in respect of any additional or extra work done or omitted by his order and if the contract does not contain rates applicable for the extra work, the Engineer may fix reasonable prices for the same. It is, therefore, contended by the learned counsel that the claim for escalation made by the plaintiff was not determinable by the Engineer of KPT under the 1st part of clause 60 of general conditions of contract as contended by the learned counsel for the, defendant. After reading the aforeasid clause I am inclined to agree with the learned counsel for the plaintiff that the expression "reasonableness of the rates" employed in the first part of clause l0 has reference and relation only to clauses 42 and 43 of the general conditions of the contract and therefore a claim for payment of escalation made by the contractor would not fall for determination by the Engineer of the KPT. The alternate contention of Mr. Abbas Ahmed, that the claim of escalation having not been specifically provided for in the contract was not covered by clause 60 of the general conditions of the contract has not impressed me. Sub-clause (2) of clause 60 of the general conditions of the contract which provides for reference of dispute to arbitrator is very widely worded. It embraces for references to arbitrator all other disputes of whatsoever in nature other than the dispute specified in the first part of clause 60, but including the interpretation of the general conditions of contract or any other relevant document. The claim of escalation by the plaintiff was made in pursuance of general instructions issued by the Government which also contained the guideline for deciding such claims. It is admitted by Mr. Abbas, that the defendant like all other Government departments, at the relevant time had constituted a Departmental Escalation Committee mentioned in the Government Circular relied by the plaintiff to consider and decide the claim of escalations made by the Contractors. It is mentioned in the minutes of the meeting of Board of Trustees of .KPT (defendant) dated 4-1-1975, which was produced before the arbitrator that the Departmental Escalation Committee constituted under the relevant Government instructions, had considered the claim of plaintiff for escalation and had recommended a payment of 16.29% as against 36.75% claimed by him but the Board did not agree with those recommendations. It is an admitted position that all contracts involving an expenditure exceeding rupees twenty-five thousand required approval of Government under section 18 of K.P.T. Act. In this view of the matter any Government instruction issued which would affect tenders or a contract involving an expenditure exceeding 25 thousand, will be a relevant document for interpretation within the meaning of clause 60 of General Conditions of Contract by the arbitrator. In the present case, the dispute related to a contract which admittedly involved expenditure of the value of over Rs,7 lacs nd therefore on this plane also the arbitrator was entitled to interpret the Government instructions relating to contract while considering the claim of plaintiff for escalation. Mr. Abbas Ahmed has urged that the "relevant document" mentioned in clause 60 refers to only those documents which are mentioned in the agreement dated 27-6-1972 executed between the plaintiff and defendant and no other. A similar contention raised by the learned counsel in the case of Sindh Construction Co. v. K.P.T. (Suit No, 672/72 decided on 27-10- 1980) was repelled by my learned brother Nasir Aslam Zahid, J., in that case. I am in agreement with the reasoning given by the learned Single Judge. Apart from the above, there are other considerations which come in the way of defendant to challenge: the validity of the reference to the arbitrator. It cannot be disputed that the dispute regarding payment of escalation raised .By the plaintiff was not only in the notice of defendant but was' actually considered and rejected by the Board of Trustees at the time the reference to arbitrator was made by the Chairman of defendant in terms of clause 60 of General Conditions of Contract. The plaintiff while invoking the arbitration clause and calling upon the defendant's Chairman to nominate the arbitrator had clearly and specifically set out the dispute& It is quite clear that in spite of having notice of the dispute in clear terms the power to nominate the arbitrator was exercised in terms of clause 60 of the contract by the defendant without any qualification and reservation. A copy of the letter issued by the defendant appointing the' arbitrator in the dispute has been placed by Mr. Abbas Ahmed, during the course of the hearing and after going through the same I could not find anything in that letter which could indicate that the submission to the arbitrator was qualified or was made subject to any reservation as to the power of arbitrator to go into the dispute. I may also mention here that at no stage the defendant even challenged the authority of the Chairman of defendant to refer the dispute to arbitrator. Now assuming for the sake of argument that the dispute was not covered under the terms of the Contract, there was nothing in law to prevent the defendant to refer the dispute raised by the plaintiff to arbitrator and such reference could be treated as a fresh agreement to refer the dispute to arbitrator. Mr.. Abbas Ahmed contended that if it was a fresh agreement to refer the dispute to the arbitrator it was hit by subsection (8) of section 18 of K.P.T. Act which provides that every contract entered into by or on behalf of the Board other than a contract to which subsection (7) applies shall be in writing and shall be signed by the Chairman and two other trustees, and shall be sealed with common seal' of the Board. I have already stated that the defendant at no stage challenged or disputed the authority of its Chairman to make a reference of the disputes to the arbitrator. Now Mr. Abbas has contended that if it is treated as a fresh reference it was invalid under subsection (8) of section 18 of the K.P.T. Act as the reference was made by the Chairman alone. But the learned counsel clearly overlooked that subsection (8) does not apply to a contract which falls under subsection (7) of sections 18 of K.P.T. Act. Subsection (7) of section 18 of K.P.T. Act says 'that in cases of contract not otherwise provided for in the preceding subsections of this section, only the sanction of the Chairman is required. The preceding subsection of section 18.
7. Of K.P.T. Act namely subsections (2) to, (6) deal with leases of immovable property exceeding twenty-five years;: contract involving expenditure exceeding twenty-five thousand rupees; contract in respect of any new work the estimated cost of which exceeds 1' lac; lease for a period exceeding one year, contracts which involve expenditure notcovered, by budgetary grant; and sale and purchases of movable properties belonging to Board of the value in excess of Rs, 1 lac. It will be seen that an, agreement to refer a dispute to Arbitrators is not specifically provided for in any of these A subsections and therefore in my view such an agreement will be covered under subsection
(7) of section 18 of K.P.T. Act, and therefore the Chairman was competent to make the same.
8. ' Mr. Abbas Ahmed, lastly contended that even if it be accepted that the arbitrator was competent to decide the dispute, even then he was guilty of misconduct inasmuch as the basis of the claim of the plaintiff before was the instructions issued by the Government with regard 10 the determination of the claim of escalation made by the contractors. The contention of the learned counsel is that not only these instructions were misconstrued but the directive contained therein was violated by the arbitrator while assessing the escalation payable to contractor. I have seen the claim filed by the plaintiff before the arbitrator. It is true that in support of his claim for escalation the plaintiff had referred in his claim before the arbitrator the instructions issued by the Government in that behalf but the arbitrator has not based his award on these instructions. Neither these instructions are referred or mentioned in the award, nor it appears from the award that it is based on these instructions. In the absence of a reference in the award of the instructions I cannot consider these to discover the error in the award. The award is absolutely a non-speaking and no reasons are given by the arbitrator in support of the award. Mr.. Abbas Ahmed the learned counsel for the defendant relied upon the case of Pakistan, through Secretary, Ministry of Industries v. M/s. Asian Associated Agencies (PLD 1974 Karachi 155) to contend that where misconduct is alleged the Court is entitled to look into other evidence to find out the misconduct of the Arbitrator. This case was considered by a later D.B. Of this Court in the case of Prime Insurance Co. v. Ejaz Ahmed Khawaja (reported in 1981 CLC 311) of, which I was a member and we had held that the rule laid down in PLD 1974 Karachi 155 is not different from the rule laid down in the leading case of Champsy Bhara and Company (AIR 1923 P.C. 66) and A.Z. Company (PLD 1965 SC 505) so that in order to entitle a Court hearing objections to the award, to consider the error in the award the error must be pointed out from the award itself and that the Court cannot first look into the material used by the arbitrator and then compare it with the reasoning given in the award in order to discover the error in the award. In the present case, as earlier pointed out by me, the award discloses no reasons for awarding the sum named therein and as such I cannot assume that the award is based on the instructions referred by the learned counsel for the defendant. No other point was raised.
9. ' In view of the above discussion I reject the objections of the defendant against the award. The award is confirmed and made the rule of the Court. Decree to follow accordingly. There will however, be no order as to costs in so far this proceeding is concerned.