1. ' This appeal under section 39 of Pakistan Arbitration Act (X of 1940) by Province of Punjab, is directed against the judgment and decree passed by the learned Civil Judge, 1st Class, Faisalabad, dated 25-2-1991, whereby he dismissed the objections-petition filed by the appellant and made the award rendered by the Arbitrators dated 25-5-1990 as rule of the Court and passed the decree according to it.
2. The material facts are: That M/s. Abdul Waheed and Muhammad Ilyas & Company/a registered partnership (hereinafter called as the contractor-firm) was awarded work by Government of Punjab (hereinafter called as the employer) to construct link road from Nalka-Kohala on Sargodha Road to Crescent Sugar Mills, via Chak No,117/JB, and Chak No,199/JB. The contracted amount was Rs,14,56,737. The period of the contract was 10 months commencing from 23-11-1978 to 22-9-1979.
2. As the contractor-firm was not able to complete the work within the time specified in the contract, it was granted number of extensions by competent authorities to complete the work. It was on 30- 6-1982 when the contractor-firm completed the work, submitted the final bill and received final payment on 11-11-1982.
3. The contractor-firm, during the progress of work, informed the Engineer-in-charge that the owners of lands situated in adjoining areas had declined to allow it to lift the earth/fill material from their respective lands and it was, therefore, not possible for it to carry on the work. It was prayed that firm be permitted to lift the earth from the area beyond the limits prescribed in the contract. The Superintending Engineer (called as S.E.) Highways Circle, Sargodha, vide an order No,SDF-41/767-G, dated 31-1-1979 permitted the firm to lift the earth from anywhere as recommended by the Executive Engineer Highway, Faisalabad Division and complete the work.
3. Pursuant to this order, the firm continued the work and carted the soil/earth from distant areas in order to finish the work. The firm, however, was ordered by the S.E. Not to lift the earth along the road beyond 300 feet. Meanwhile the contractor-firm had carted the entire quantity of the earth needed for completion of the project from the areas which were 3 to 5 miles away from the venue of work and so incurred extra expenses on these operations. In these circumstances, the contractor-firm laid claim for extra payment in respect of carting of earth from distant areas to the place of work. This claim of firm, surprisingly enough, was accepted to the extent of a lead of one mile but was rejected with respect to the remaining. The firm was, accordingly, paid for transporting 1,88,800 Cft. Of earth from area of one mile away from the place of work only. Feeling dissatisfied, the contractor-firm lodged claim before the S.E. Who rejected it on 31-1-1982. The contractor-firm, was thereafter constrained to invoke arbitration clause by submitting an application under section 20 of the Arbitration Act 1940 (Act X of 1940) in the Court of learned Civil Judge, Ist Class, Faisalabad for referring the disputes to the arbitrators. This applicationwas allowed and disputes between the firm and employer were referred to a panel of arbitrators namely Mahmood Mukhtar Matyal, S.E. As nominee of the Highway Department and Mr. Muhammad Ashraf Khan, S.E. As nominee of the contractor-firm. The arbitrators entered the reference and called upon the contractor-firm to submit its claim vide letter dated 31-12-1986.
4. Pursuant to this letter, the contractor-firm submitted its claim, the employer filed reply controverting the allegations contained in the claim. The parties led their oral as well as documentary evidence in support of their respective claims. Upon the survey of the material brought on record by the parties, the arbitrators came to the conclusion that the contractor-firm was required to arrange with its own cost the borrow area for obtaining suitable fill-material for embankment and sub-grading to the satisfaction of Engineer; that it was laid down in Condition No,14 of the contract that borrow area would be located at least 300 feet away from the boundary of the Highway Department's land; that S.E. Highway Circle, Sargodha had permitted the contractor-firm to arrange for fill material beyond the lead area; that the contractor-firm had transported 6,53,650 Cft. From the lead of one mile through mechanical means and 11,41,689 Cft.
5. Earth beyond one mile. On these findings, the learned arbitrators held that the contractor-firm was entitled to payment of expenses incurred by it on transporting the fill material from the places which were situated at a distance of more than one mile from the venue of work. On this, the arbitrators decreed the claim No,1 of contractor-firm. The remaining claims, however, were rejected. This happened vide an award dated 25-5-1990.
6. ' Feeling aggrieved from the above award, the employer filed objection petition in pursuance of the notice of Civil Judge, Ist Class, Faisalabad in whose Court the award was filed by the arbitrators.
7. The objection petition was contested. The learned Civil Judge, Faisalabad, by means of decision dated 25-2-1991, rejected the objection petition filed by employer and made the award as rule of Court under section 17 of the Arbitration Act. This is how this first appeal has come to this Court.
8. ' Learned counsel for the appellant/employer assailed the validity of above referred to decisions on two grounds. Firstly, that under clause 14 of the contract, the contractor was bound to arrange for borrow area for obtaining fill material at his own expenses and was furthermore required to collect earth/fill-material for work from the area beyond 300 feet away from the boundary of the Highway land. From this very clause, according to the learned counsel, it was clear that no lead area whatsoever was prescribed in the contract and, therefore, the contractor-firm was not entitled to recover the expenses incurred on labour in transporting the fill-material from the place from where it collected it in order to carry it to the venue of work. Continuing, he contended that the contracted amount as well as quantity of earth work was described specifically in the contract and contractor-firm was paid according to 'rites embodied in the schedule. On the strength of these clauses, it was contended that the contractor-firm was not entitled to receive the amount claimed at S.No,1 and the learned arbitrators had erred in law while accepting this claim. On the same premises, it was urged that the learned Civil Judge, Ist Class, Faisalabad was not competent to make such illegal award as rule of Court. Secondly, that the award filed by the arbitrators was beyond the statutory period and it was, therefore, nullity in the eye of law. When confronted with the question that employer-appellant had participated in arbitration proceedings without any demur or protest and so he was precluded to raise this question on the principle of acquiescence, he had no satisfactory reply.
9. ' On the contrary, learned counsel for the contractor-firm raised following points, in reply: ' Firstly, that the lead area was specifically mentioned in items No,411.1 to 411.13 in Part 1 of Schedule to the contract. According to the learned counsel, this item clearly indicated that the soil/fill- material was to be lifted for embankment, lead upto 500 feet and lift upto 5 feet. On the basis of this clause, it was contended that the contractor-firm had to collect the earth from this area and was entitled to claim extra payment if fill material was transported from area which was beyond the lead area of 500 feet. Interpretation of this clause, by arbitrators, according to the learned counsel, was clearly correct and did not suffer from any error of law and could not be interfered with under section 30 of the Arbitration Act. Reliance was placed on Trading Corporation of Pakistan v. Aslam Saeed & Co. PLD 1973 Kar. 65; Waseem Construction Co. v. Government of Sindh PLD 1987 Kar. 575; L.D.A. v. Khalid Javed & Co. 1983 SCM R 718 and Ashfaq Ali Qureshi v. Municipal Corporation, Multan and another 1985 SCM R 597.
10. ' Secondly, that the award was rendered by the arbitrators who were selected by the contractor- firm as well as employer and this Court was obliged under the law to give every intendment to it rather, than setting it aside.
11. ' Thirdly, that the appellant/employer had participated in the proceedings before arbitrators without lodging any protest regarding the question of limitation and so was precluded on the principle of acquiescence to raise this question.
12. ' From the foregoing narration, the following questions arise for determination:-
(i) Whether the contractor-firm is entitled to claim payment of expenses incurred by it on transporting earth/fill-material from areas situated at a distance of one/more than one mile from the venue of the work under contract?
(ii) Whether the construction of clause 14 of the contract by the arbitrators is wholly violative of the contract and so is contrary to law?
13. ' Before I proceed to answer the above questions, I fmd it necessary to reiterate three well- entrenched propositions of law having decisive bearing on this case. Firstly, that each contract is to be interpreted according to intention of the parties; that the construction of the contract must be reasonable, liberal and with a spirit to save rather than destroying it; that the ordinary sense of the word is to be followed; that the whole of the contract is to be looked at in order to gather the intention of the parties (See Chitty on Contracts, 17th Edn., Chap. V). Secondly, in case where the contract is to complete a whole work, and the work has to be completed, not for a lump sum, but at scheduled rates for the different items of work, the contractor is in a different position as to payment. For a while he is under an obligation to complete the whole, he can B recover payment for all the work that he has done in order to complete the whole, at the scheduled rates, if they are applicable, or at fair and reasonable rates if they are not: Re: Walton-on-the-Naze U.D.C. And Moran, 4th Edition, Vol. II, p.376. See Ill., ante. p.194.
14. ' Work indispensably necessary to complete the whole is, however, not extra, nor is it variation, and the sole difference between the case of a contract to construct a complete work for a lump sum and a contract to complete the same work at scheduled rates is caused by the difference in the methods by which the contracted price is to be ascertained. No extra or variation order would be required or could be properly given in respect of work indispensably necessary to complete the entire work, but the price for such work, not being fixed by a lump sum, it must be ascertained at the scheduled rates. (See Building and Engineering Contracts by AA. Hudson, Fifth Edition, pp.337- 338). Thirdly, that in arbitration matter if specific questions of law are referred to the arbitrators, then their decisions on such questions are final and binding on the parties who are precluded to challenge such conclusions under section 30 read with section 33 of the Arbitration Act. This rule, is however subject to exception, that if the arbitrator/arbitrators arrive at a conclusion on questions of law which arise incidentally out of the dispute referred to him/them, such questions are referred to arbitrator/arbitrators, then such conclusions are open to scrutiny by the Court within the ambit of circumstances embodied in section 30 of the Arbitration Act. Reference be made to the Federation of Pakistan v. M/s. Joint Venture Kocks KG/Rist 1993 M LD 1863.
15. ' Bearing the above principles in mind, I now turn to examine the relevant/applicable clauses of the contract. These are: Item No,1 in Schedule to the contract, clause 14 in additional conditions, clauses 12, 25 and 27 of the contract. Item No,1 in the Schedule to the contract is as follows:- {{TABLE}} No.Pay Item No.Item of work Quantity Unit/Rate Remarks 411.1 to411.13Earth work in all typesof soils except rock for embankment lead up to 500 feet and lift up to 5 feet including, ploughing mixing and compaction by mechanical means complete.2735 (Two thousand seven hundred thirty-five).Rs.150 % OCR. (Rs. one hundred and fifty only per thousand cubic feet).2% (Two per cent below).
16. ' A plain look at this item indicates that contractor was covenanted to do the earth work at the rate of 150% OCft. He undertook to transport earth at the site 2735% Cft. For embankment and Sub- Grading. The rate specified for this work was 150% OCft which was 2% below the rates given in the Schedule of 1965. From the perusal of this item, it is also clear that the rock was excepted from the earth work, lead area given in item pertains to rock and not earth. From the reading of this item, I have no doubt in my mind that no borrow area for earth work was committed by the employer in this item. It is a settled rule of construction that excepting clause excludes the excepted item from the operation of main clause. It actually limits the operation of the principal clause while reiterating its operation. Following this principle, I hold that for earth work, this item did not provide an; borrow area or any lead. Having examined item No,1, I turn to clause 14 of additional conditions which were signed by the employer as well as contractor-firm. It specifically postulates that the contractor shall arrange at his own cost borrow area for obtaining suitable fill material for embankment and Sub-Grade to the approval of Engineer. It further states that borrow area shall not be located within the right of way of the road and it shall be at least 300 feet away from the boundary of the Highway land. This clause is neither ambiguous nor uncertain. It makes absolutely clear that the contractor- firm was under duty to arrange borrow area at his own expense and was to pay for expenses incurred on transportation of earth/fill material to venue of work. To my mind, this clause is amalgam of negative and positive covenant. It positively prescribes that contractor shall arrange borrow area for obtaining suitable fill material at his own costs and to the satisfaction of Fngineer.
17. It further provides that borrow area shall be at least 300 feet away from the boundary of the Highway land. It, in negative terms, lays down that borrow area shall not be located within the right of way of land and shall be at least 300 feet away from the boundary of the Highway land. This is the only limitation upon the contractor. He is neither restrained nor mandated to have a borrow area within a specific distance from the venue of the work.
18. ' From the above narration of this clause, I am clear in my mind that employer, while signing the contract did not prescribe any area for the purpose of obtaining earth/fill material needed for the execution of the work. I, now, deal with the clauses 25 and 27 of the contract which are as follows:- "Clause 25.---No claims for payment of an extraordinary nature, such as claims for a bonus for extra labour employed in completing the work before the expiry of the contractual period at the request of the Engineer-in-charge or claims for compensation where work has been temporarily brought to a standstill through no fault of the contractor, shall be allowed unless and to the extent that the same shall have been expressly sanctioned by the Punjab Government under the signatures of one of its Secretaries.
19. Clause 27.---When the estimate on which a tender is made, includes lump sums in respect of parts of the work, the contractor shall be entitled to payment in respect of the items of work involved or the part of the work in question at the same rates as are payable under, this contract for such items or if the part of the work in question is, not, in the opinion of the Engineer-in-charge capable of measurement, the Engineer-in-charge may at his discretion pay the lump sum amount entered in the estimate, and the certificate in writing of the Engineer-in-charge shall be final and conclusive against the contractor with regard to any sum or sums payable to him under the provisions of this clause."
20. ' From the study of the former clause, it emerges that neither Engineer nor the Engineer-in-charge has a power to make payment for the work of extraordinary nature such as claim for bonus or for extra labour employed in completing the work. The contractor is entitled to receive the contracted amount and if he makes any claim for extra payment, with the sanction of the Government under the signatures of its concerned Secretary. Similarly clause 27 shows that the contractor is entitled to payment in respect of items of work involved or the part of the work at the same rates as are payable under the contract, last but least clause of some relevance is clause twelve. Learned counsel for the respondent-firm heavily relied upon this clause to contend that Engineer-in-charge had the power to make any alteration in, omission from, addition to or substitution for the original specifications, drawings, designs, and instructions, and that the contractor-firm was entitled to claim extra payment for additional work done by it. I am afraid, this argument is wholly without force. A close study of this clause, in fact, demolishes the claim of the contractor-firm. Under this clause, the Engineer-in-charge is invested with the power to alter, omit from or add to the original specifications, drawings and designs of the work if he finds necessary to do so. This is subject to the condition that the contractor shall be entitled to do such work on the rate specified in the schedule of rates annexed to the contract and if no rate is mentioned in the schedule, the contractor is entitled to payment at the rates enumerated in the schedule of works applicable to district where the work is being done. This clause further states that if the altered additional work is not specified in the schedule of rates of the District, the contractor-firm shall within seven days of the date of receipt of the order inform the Engineer-incharge of the rate on which he intends to do the work and if the Engineer does not agree to this rate, he shall be at liberty to cancel the work by a notice in writing. The above analysis of the clause 12 makes it abundantly clear that the contractor-firm is not entitled to receive payment for altered, additional or substituted work except within the orbit of above clause.
21. ' As a result of above analysis, I have no difficulty in coming to the conclusion that the contract between employer and contractor-firm was a lump sum contract in which the work was to be carried out at the rates given in the schedule; that the rate of earth work was 150% Cft., that no borrow area was specifically committed in the contract and the fundamental condition of the contract was that contractor-firm was to arrange its borrow area at its own expense and was to transport the earth work/fill material from the borrow area of its choice, regardless of its distance from the venue of work, to the place of work and had to complete the work in its entirety. In view of this contractor-firm was not entitled to claim any extra payment for transporting the fill material to the venue of the work. This being the construction of agreement, the arbitrators were completely in error in allowing the claim No,1 of the Cotractor-firm. This was neither admissible on the plain construction of the contract nor under any provisions of law nor on any equitable ground. I have, therefore, no hesitation in concluding that the award rendered by the arbitrators suffered from invalidity apparent on the face of award and cannot be sustained.
22. ' In the light of whatever has been stated above, this appeal succeeds, the judgment and decree passed by the learned Civil Judge, 1st Class, Faisalabad dated 25-2-1991 is hereby set aside, the award rendered by the arbitrators is also hereby set aside and the Claim No,1 of the contractor- firm is accordingly rejected. In view of the peculiar features of this case, there shall be no order as to costs.