' MAMOON KAZI, J.---This appeal is directed against the judgment passed by a learned Single Judge of this Court, dated 22-4-1981 making an award given by the arbitrator in the case a rule of the Court.
2. The facts giving rise to this appeal are that the appellants, Trustees of Port of Karachi, invited tenders for construction of first floor of K.P.T. Hospital situated in Keamari. The respondents M/s. Iftikhar Brothers, gave their tender dated 22-2-1972 which was accepted by the appellants. The total estimated cost of work involved under the tender was Rs,7,68,118.57 and it was a rate contract.
According to the terms of the contract, the work was to be completed within nine months commencing from 19-6-1972. It is not in dispute that the respondent was unable to finish the work within the stipulated time and four extensions were obtained by it from the appellants from time to time for completion of the work, the last extension expiring on 4-11-1973. However, the work was completed by the respondent on the said date. It may be pointed out that on 28-3-1973 the respondent wrote to the appellants for return of its additional security deposit. However, after completion of the work, the respondent demanded a sum of Rs,2,43,590 by way of escalation charges and a sum of Rs,58,600 on account of damages and losses suffered by it. As the demand made by the respondent was not met by the appellants it called upon the latter through its counsel's letter dated 10-2-1975 for appointment of an Arbitrator in terms of the contract. In response to the said notice the appellants Chairman appointed Mr. Shaikh Muhammad Akram, Managing Director, Airport Development Agency, Karachi, as sole Arbitrator to settle the dispute. A copy of the letter appointing the Arbitrator in the dispute was also endorsed to the respondent's counsel with reference to his letter dated 102-1975 and the appointment was described in the said letter to be in pursuance of clause No,60 of the general conditions of the contract. The Arbitrator, thereafter, gave his award dated 11-12-1974 in favour of the respondent. Objections to the award were filed by the appellants before the learned Single Judge which were dismissed and as pointed out earlier, the award was made rule of the Court and hence the present appeal.
3. We have heard Mr. Abbas Ahmad, learned counsel for the appellants and Mr. S.E. Hussaini, learned counsel for the respondent.
4. The main contention of Mr. Abbas Ahmad before us was that the award was given by the Arbitrator in excess of his authority. Reference in this respect was made to the said clause 60 which contemplates reference of dispute between the parties to arbitration. The contention of the learned counsel was that clause 60 of the contract did not admit of reference of any dispute to arbitration in connection with a demand for payment of escalation charges raised by the respondent. Consequently, according to the learned counsel reference of the dispute to arbitration was invalid as not governed by the terms of clause 60.
5. Since the controversy mainly revolves around clause 60 of the Contract, the same is reproduced as follows:- "60. Any dispute regarding the qualify 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.
' 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 any one 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 thereunder shall be deemed to apply to and be incorporated in this contract.
' 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 considered this necessary."
' It may he pointed out that a similar argument was advanced before the learned Single Judge but the same was repelled by him with the following observations:-- "After reading the aforesaid clauses 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 60 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 Ahmad, 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 contract has not impressed me. Sub-clause (2) of clause 60 of the general conditions of the contract which provide for reference of dispute to arbitrator is very widely worded. It embraces for references to arbitrator all other disputes of whatsoever 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 documents. The claim of the 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 Department Escalation Committee mentioned in the Government Circular relied by the plaintiff to consider and decide the claim of escalation 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 Rs,25 thousand, will be a relevant document for interpretation within the meaning of clause 60 of General Conditions of Contract by the arbitrator."
6. Mr. Abbas Ahmad has, however, made a two-fold contention in regard to the above observations. Firstly, according to him, the learned Single Judge has completely overlooked the words "arising under this contract" appearing in the second paragraph of clause 60 and consequently, according to him, reference to the relevant documents in the said paragraph would mean reference to only such documents as are mentioned in the agreement, dated 27-6-1972. It may be pointed out in this regard that although the second paragraph of clause 60 refers to "any dispute of whatsoever nature....Arising under this contract" but the words appearing in the brackets, viz., "including interpretation of this or any other relevant document" appear to be having the effect of enlarging the scope of the arbitrator's authority under the said clause. In this regard we may once again refer to the observations made by the learned Single Judge in his judgment that "any Government instructions affecting tenders or a contract involving an expenditure exceeding Rs,Twenty-five thousand would be a relevant document for interpretation within the meaning of clause 60 of the contract". In any case, the argument appears to be devoid of force because as appointed out earlier, the dispute was referred to by the Chairman of the appellants themselves to Mr. Shaikh Muhammad Akram for arbitration. The appellants having themselves nominated the arbitrator while invoking clause 60 of the Contract arc now estopped from raising an objection in this regard. In fact, this aspect of the matter has been considered by the learned Single Judge and it has been rightly observed by him that in case the dispute was not covered under the terms of the contract there was nothing in law to prevent the appellants from referring the dispute raised by the respondent to arbitration and such reference could be treated as a fresh agreement to refer the dispute to arbitration. The second contention of Mr. Abbas Ahmad that such arbitration would be hit by subsection (8) of section 18 of the K.P.T. Act was also rightly repelled by the learned Judge as the said subsection made no reference to arbitration agreement.
7. The learned Single Judge also repelled the contention raised on behalf of the appellants before him that the learned arbitrator could not base his award on the instructions issued by the Government in regard to determination of claims on account of escalation, as according to him, the award was not based on such instructions. In any case, according to the learned Judge, the error was to be pointed out from the award itself as 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. Reference in this respect was made by the learned Judge to the case of Company Bhara and Company (AIR 1923 PC 66) and A.Z. Company (PLO 1965 SC 505).
8. We find that the judgment of the learned Single Judge is not open to any exception. All the material aspects of the case have already been considered by him and we fully agree with his findings. We, therefore, find no force in this appeal and for such reasons it was dismissed by a short order for reasons to be recorded. There are the reasons for our short order. The parties are left to bear their own costs.