' MUHAMMAD ASLAM ARAIN, J.---This Appeal under section 15 of the Ordinance of 1980 read with section 39 of the Arbitration Act, is directed against the judgment dated 10-9-1987 of a learned Single Judge of this Court in Suit No,396 of 1986, whereby the award filed by the Arbitrator was made rule of the Court and a decree was drawn in pursuance of the judgment.
2. The facts of the case, in brief, are that by an agreement dated 17-5-1980 appellants were given contract for construction of 3 buildings bearing Nos.74, 79 and 80 on Beach Avenue, Clifton, Karachi, by the respondents. The original contract was for Rs,30 lacs plus 120% above M.E.S. Schedule. The contract had to be completed within 9 months i.e. by 18-12-1981. There arose certain disputes between the parties and in pursuance of order of this Court dated 7th February, 1985, in Suit No,506 of 1983, their dispute was referred to the sole arbitrator Brig. (Retd.) Fazle Qadir under terms of the Contract. The parties admittedly did not lead any oral evidence before the arbitrator but put in their respective claims supported by documents. The arbitrator filed his award in Court on 13-12-1985, notice of which was issued to the parties. Appellant filed objections to the award under section 30 of the Arbitration Act disputing certain amounts not allowed to the appellant and to certain amounts allowed to the respondents. An application under section 33 of the Arbitration Act was also filed by appellants. The prayer in the objections as well, as in the application under section 33 of the Act was that this Court may be pleased to set aside the Award in so far as objected to in the petition. No objections were filed to the Award by the respondents although notice was served on them.
3. It is contended by the learned Advocate for the appellants, that the arbitrator in his "summary of comments of claim of the parties", stated in paragraph 2, that the work done till 18-12-1981 (the completion date of contract) was only 25-37 per cent, is an incorrect finding. In their letter dated 19-11-1985 the appellants had informed the arbitrator that most of the work was done, which was to the extent of Rs,90,26,602.58 and that out of the work done the Contractor was entitled to Rs,6,16,602 plus security deposit of Rs,4,51,000 which was the net amount due to the Contractor. It is also contended that even if amount of penalty is deducted, the net amount due to the Contractor would be Rs,8,27,602.58. On this ground alone the award was perverse and should not have been made rule of the Court.
' It is next contended that on the basis of finding by the arbitrator that the employer as well as the contractor were guilty of breach of contract, no penalty could have been imposed on the appellant for the reason that although there was penal clause in the agreement, the same was neither resorted to by respondents nor the contract was cancelled. It is also contended that under para. 4 of the General Conditions of Agreement, a provision is made for compensation for the delay in completion of the work. Since the work left to be completed was hardly worth Rs,6 lacs or so, the employer-respondent was not entitled to any compensation. The next contention of the learned Advocate is that there is an error apparent on the face of the record inasmuch as the respondents have been allowed even those amounts which they never claimed before arbitrator, and in the circumstances award should not have been made rule of the Court. It is also contended that the arbitrator misconducted himself by not correctly appreciating the import of various letters addressed by appellants to respondents, showing that they were guilty of the breach of terms of contract. The learned Advocate has referred to Kh. Ghulam Rasool Lone v. Azad Jammu and Kashmir Government PLD 1971 Azad J&K 127, where a D.B. of that Court elaborately discussed as to what would amount to misconduct in a particular case. This judgment is referred by the learned Advocate as his contention before the learned Single Judge was that the arbitrator had misconducted the proceedings as no diary of the case was kept, no record of evidence led before him was maintained, the arbitrator refused to file the award and unauthorisedly gave original award to the respondent, submitted before the Court only a photo copy of the award, and that arbitrator has not given due and proper reasons in support of the award etc., which are as under:-- - "In my view from the above reply as a logical corollary it must follow that if an employer can point out that there was no failure on his part to make the contribution and in fact one payment was on account of act/omission on the part of the staff of the Institution he will not be liable to pay the amount of increase. In my view the reasonable interpretation of word "fail" used in the aforesaid section of the Ordinance will be that in order to attract the penal provision of the levy of increase, contained in the above section there should be inexcusable neglect or omission on the part of employer to pay contribution on an item of wages/salary on which contribution is payable and there should not be any contributory act/omission on the part of the Institution resulting in the non-payment of the contribution."
' The learned Advocate in this respect contended that the reasons given by the arbitrator were without any basis and the award which was based on no evidence and improper reasons, should not have been made rule of the Court.
' He then referred to M/s. Jaffar Brothers Ltd. v. Islamic Republic of Pakistan and another PLD 1978 Kar. 585, where it was held that where there was error of law apparent on the face of record the award was liable to be set aside. It was further held that where the arbitrator misconstrued contract between the parties and gave his own construction or interpretation of contract as reasons for his award, the Court could examine reasons and set aside award, if error in construction was apparent on the face of the record. He then referred to Sindh Employees Social Security Institution v. Silva Industries Ltd. 1982 PLC 1062 and argued that since respondents failed to pay full amount of running bills and made improper deductions without any just cause, they were not entitled to the award of penalty at 2-1/2% as awarded by the arbitrator.
' He referred to the following observations of above-quoted judgment on page 1068.
' Mr. Raja M. Irshad, learned Advocate for the respondents, supported the impugned judgment and argued that the award could be set aside only on the grounds contained in section 30 of the Arbitration Act but no such grounds were available and the learned Single Judge rightly overruled the objections and made award rule of the Court. According to him, it was alleged that there was contributory negligence and doctrine of peri delicto has been invoked but the said doctrine is not attracted in the instant case. Even if there was contributory negligence on the part of the respondents, the same was a question of fact which was duly considered by the learned Single Judge and his reasons in holding that there was contributory negligence could not be interfered in this appeal.
It is also contended that the arbitrator is the best judge to assess the facts and evidence placed before him and the arbitrator on the basis of record filed before him came to the conclusion that since there was contributory negligence the penalty was reduced by him from 10% to 2-1/2%. As to what is degree of negligence on the part of each party, would be a legal proposition, which cannot be resolved by this Court. In support of his contention, he referred to PLD 1987 SC 393, where at page 407, it was observed as under:--- "The question still remains to be determined whether the Arbitrator was competent to award interest in the circumstances of this case or in other words whether in having awarded interest, an error of law apparent on the face of the award was committed. Now the general rule of law is that an award is final as to both fact and law but there is a rule that an error of law, if it appears on the face of the award, is a ground for setting it aside which is an exception to the general rule as stated. There is a further rider to this rule, namely, that if the parties have specifically referred a question of law to arbitrator then the general rule would apply and the award will be beyond reproach even if such a question is decided erroneously. Before going further it may also be stated that as a general principle the Arbitrator has always been considered to have implied authority to follow the ordinary rules of law. The intentional disregard of the law would, therefore, seem to be such a misconduct on the part of Arbitrator as would justify setting his award 'aside."
' In reply, Mr. Muhammad Sharif, learned Advocate for the appellants, referred to Province of East Pakistan v. M/s. Abdul Halim Nizamuddin PLD 1968 Dacca 837. and referred to a passage reproduced from the judgment reported in AIR 1926 Mad. (sic), which reads as follows:--- "Courts no doubt will not be unreasonable or unduly technical in construing documents drawn up by persons not familiar with law and legal phraseology, but at the same time, the Court must be satisfied by the language used that a matter decided was in truth referred to the arbitrators for decision. It does not matter whether or not the arbitrators genuinely believed that one of the parties had agreed to refer the matter if, as a matter of fact, he had not; and the final decision as to whether the particular matter was referred or whether a particular party had consented to refer it, lies, not with the arbitrators but with the Court."
' He also referred to 1983 CLC 2006 and argued that High Court has same powers as original Court to modify award, to correct errors obvious on face of award and sums found wrongly awarded to. respondent amounts to such errors.
4. We have perused the award, as well as the impugned judgment, whereby award is made rule of the Court. The appellants had claimed various amounts, on account of negligence of respondents, some of which are:---
(a) Delay of running payments;
(b) Delay in payment of Retention Money;
(c) Loss towards fresh business;
(d) Escalation due to 20% deviation;
(e) Loss due to blockage of funds; (f)- Loss due to hold up of payment of certain items; ' but no amount against these was awarded to them. No reason was given by the arbitrator as to why appellants' claim on that account was rejected. We find that the arbitrator held that work was delayed and plaintiff and defendant were both responsible for the delay. This finding of the arbitrator, in the light of various letters and reminders by appellants addressed to respondents, is also not sustainable. Huge amount of running bills of appellants was blocked and deductions made arbitrarily, resulting into suspension of work. As against this, there were threats to contractor to complete the work by due date. There was thus hardly any justification in holding appellants as responsible for the delay. Be that as it may, the arbitrator, although the best judge to assess the facts and evidence placed before him, had to act judiciously and not arbitrarily. He was not justified in directing recovery of following amounts from appellants:
(a) Amount withheld for testing of services
(b) Recovery of 2.5% penalty Rs,14,000.00 Rs,240.592.50 Rs,254.592.50
5. The award to the above extent is modified and appellants shall not be liable to the deduction of this amount from the amount of Rs,7,52,806.82 awarded to them by the arbitrator. With above modification, we maintain the award and the judgment of learned Single Judge, impugned in this Appeal.##TE# ' In the circumstances, there shall be no order as to costs.