In the earlier Suit (No,90 of 1983) which was a petition under section 20 of the Arbitration Act, 1940, by consent of the parties Mr. Justice (Retd.) Durab F. Patel was appointed sole arbitrator in respect of dispute pertaining to the increase in cost of the construction material which were to be supplied by the plaintiff to the defendant at three different places, namely, Vehari, Bahawalpur and Arifwala.
Mr. Justice (Retd.) Durab F. Patel has forwarded his Award, dated 18th August, 1987, under section 14(2) of the Arbitration Act, 1940, read with Rule 282 of Sindh Chief Court Rules, (O.S.) for its consideration.
2. Plaintiff has filed objections to this award while defendant is supporting the same. Plaintiff has filed his claim before the arbitrator which reads as follows:-- ... The increased rates were claimed as per agreement on the basis of distance from crushing plant to projects. The details of distance is as follows:-- From To Kilometres Stone Crushing Machines SargodhaVehari 300 K.M. -do- Bahawalpur site 250 " -do- Arifwala site 250 "
Sand from Sakhi SarwarVehari site 250 "
" D.G. Khan Bahawalpur site 200 " -do- Arifwala site 200 "
The first increase in fuel prices was announced by the Government on 25-5-1980. The claimant during the period commencing from 26-5-1980 to 4-10-1980 supplied following quantity of sand and stone crush at Bahawalpur and Vehari sites as per bills Nos. 52 to 68:-- Vehari site Qty. in cft..Bahawalpur site Qty. cft.Total cft. Addl. rate claimedAmount Rs, 2,09,204 (for material sand) 14097 2,23,301 0.50 1,11,650.50 2,87,250 (for material stone crushed).67250 3,54,500 1,77,250.00 2,88,900.50 Similarly, the second increase in fuel prices was announced by the Government on 28-10-1980. The claimant during the period commencing from 4-11-1980 to 20-8-1981, at various sites as bills Nos.69 to 113:-- Vehari siteBahawalpur siteArifwala siteTotal supplyAddl. rate claimedAmount Rs, 43,097 (For material sand) 3,24,047 3,04,7706,79,914Re.0.50 + Re.0.50 Re.1 6,71,914 1,01,250 (For material stone crushed). 2,23,500 2,51,000 5,75,750 -do- 5 75 750 Total 12,47,664 First increase in amount = Rs,2,88,900.50 Second increase in amount =Rs,12,47,664.00 Rs,15,36,564.50"
3. The above claim of the plaintiff Was not admitted by the defendants who had specifically denied the same through its written statement filed before the Arbitrator in the following manner:-- "... It is the case of the defendant that it was not obligatory upon the defendant to 'increase' the rates with every 'increase' in fuel costs but only to 'review' the rates to see whether any case for increase was made out or not. This obligation under the agreement the defendants have always fulfilled whenever the fuel price increase the same were 'reviewed'. That in so far as the supplies at Vehari and Bahawalpur were concerned only two POL price increases were relevant i,e, increase on 25-5-1980 and 28-10-1980 for the reason that the supplies commenced and concluded at these Project sites as follows:- Supplies commencedSupplies concluded Vehari 15-5-1980 2-4-1981 Bahawalpur 7-8-1980 20-8-1981 Consequently, the defendants agreed after "review" to increase only the sand price from Rs,5 per cft. to Rs,6.25 per cft. for supplies at Bahawalpur w,e,f, 20-8-1981 and the plaintiffs submitted one Bill at the increase rate and were paid Rs,8,148 extra. After "review" of the rates upon first increase in fuel prices the defendants were of the opinion that impact of the increase on the rates of building materials was minimal and absorbable in the current rates. However, after the second fuel increase the defendants accommodated the plaintiff by increasing not only rates of building material at Bahawalpur as aforesaid but increased the rates for supplies at Arifwala in order to the increase in rates, the defendant also assumed liability for the payment of Octroi, the price increase at Arifwala was as follows:-- 3/4" Crush Rs,5.75 cft. to Rs, 6.25 cft.
Total increase paid Rs .8750 Liability of Octroi taken over by the defendant = Rs. 20,592 Grand total Rs. 29,340 The distances given in the statement of claim are denied being wrong. The correct distances are as follows:-- A. Crush Stone (i) Vehari 255 K.M. (ii)
Bahawalpur141 K.M. (iii) Arifwala 250 K.M.
B. Sand (i) Vehari 188 K.M. (ii)
Bahawalpur141 K.M. (iii) Arifwala 217 K.M.
The increased claims were wholly unjustified and unrelated to facts and hence denied as wrong.
The plaintiffs are not at all entitled to any further or more payment that already effected. They are not entitled to the amount claimed. In any case they have raised the claim of increased after the contract had been executed and paid for in full and, thus, is liable to be rejected on this ground, inter alia, also. The figure of quantities supplied is also not correct and are disputed. It is stated by the defendant that what has not been accepted specifically hereinabove from para. No,7 of the statement of claim is denied..."
4. On behalf of the plaintiff one Shaikh Abdul Ghani and on behalf of the defendant Noor H. Bhatti, and M. Ayub Shah were examined. As a result of parties pleading the learned Arbitrator has framed the following three issues after obtaining consent of the parties:
(1) In the facts and circumstances and under the terms of the contract between the parties, dated 28-4-1980 is the claimant/plaintiff entitled to the amount claimed or any other amount;
(2) Interest and cost;
(3) What should the award be.
5. I have heard Mr. Amir Hani Muslim, for the plaintiff and Mr. Ikram Ahmed Ansari for defendant. It was argued by Mr. Amir Hani that there is a clear misinterpretation and misconstruction of the clause (iii) of the Contract, dated 28th April, 1980 on the part of the learned Arbitrator. It was further argued that the calculation made and considered by the learned Arbitrator in respect of plaintiff's claim were neither proper nor correct. Lastly, it was argued that the learned Arbitrator committed judicial misconduct by arriving at inconsistent conclusion. To further elaborate this argument, he has referred to para.19 of the reasoning of the award which according to learned counsel is contrary to the contents of Exhs.P.l, P.2 and P.3. In support of his first contention he has referred to the case Messrs Khanzada Muhammad Abdul Haq Khan Khattak & Co. v. WAPDA through Chairman WAPDA and another 1991 SCMR 1436 and argued that while interpreting the contract it is the intention of the parties which is to be looked into. He has also referred to the definition of "review" and "revision" in different dictionaries and contended that it was obligatory on the defendant to increase the price of construction material after the rise in the fuel charges. He has also referred to the following cases:--
(i) Nasrullah Jan v. Rastbar Khan 1996 SCMR 108,
(ii) Messrs Aslam Saeed & Co. v. Messrs Trading Corporation of Pakistan Ltd. PLD 1985 SC 69 (iii)K.P. Poulose v. State of Kerala and another AIR 1975 SC 1259.
6. It was argued by Mr. Ikram Ahmed Ansari that an award is liable to be set aside only on the grounds mentioned in sections 30 and 33 of the Arbitration Act, 1940 and that the scope of the proceedings under section 14(2) of the Act, 1940 is very limited. In other words what he means to say is that this Court does not act as Court of Appeal while hearing an award. He has placed reliance on the following cases:--
(a) Messrs Joint Venture KG./Rist and 2 others v. Federation of Pakistan through Secretary Food, Agricultural and Cooperation and another PLD 1996 SC 108,
(b) Ghulam Abbas v. Trustees of the Port of Karachi PLD 1987 SC 393,
(c) Information Design Associates (Pvt.) Ltd. v. Bahria Foundation 1991 CLC 1023,
(d) Safia Bai and others v. Karachi Cooperative Housing Societies Union Ltd. PLD 1967 Kar. 598,
(e) Messrs Khan Brothers and Associates v. Director-General Food, Government of Pakistan 1998 CLC 1671
(f) Zakaullah Khan v. Government of Pakistan through Secretary, Buildings and Roads, Department, Lahore PLD 1998 Lah. 132.
7. There is no cavil to the proposition that the Court is competent to interfere with an award when there is an error apparent on the face of it and in order to find such an error it is not permissible to go through the evidence produced before the Arbitrator. It is equally correct to say that the construction of document is to be made in a manner which is in consonance with intention of the parties and language of the contract. Learned Arbitrator has considered the evidence of both the parties and the implication of clause (3) of the contract and came to the conclusion that the plaintiff's claim is liable to be rejected under the following circumstances:-- "19. ... I now turn the interpretation of the said clause. That is the central issue in case. I quoted it earlier, and I pointed out the plaintiff had clearly stated in its letter of 6-4-1980 that the rates quoted it 'were liable to change if the Government impose new taxes'. Yet it signed a clause which authorized the defendant alone to review prices on account of increases in Government taxes.
Obviously the plaintiff had abandoned position which it had taken in its letter of the 6th April, because according to the Oxford Dictionary, the word 'review' means 'view again'. According to a dictionary produced by Mr. Pesh Imam, it means reconsideration'. Therefore, the defendant's only obligation under the said clause was to reconsider the contract prices if Government taxes went up. This did not mean that the defendant was under an obligation to increase the contract prices because fuel went up or to increase contract prices in order to reimburse the plaintiff for the increase in the fuel costs.
20. Mr. Pesh Imam then stated that the said clause was one-sided. Of course it is, so is the clause which preceded it. Obviously the contract was one in which the defendant retained all powers to itself. Mr. Pesh Imam, therefore, thought that I had some power so to interpret the word review as to do justice and equity. In the first place, I have no power to modify the meaning of words in the name of equity, secondly bearing in mind also the pleadings, the plaintiff has failed even to show prima facie that the defendant has acted inequitably. This conclusion is not affected by the fact that the contract is, as the learned counsel called it, one-sided. The plaintiff knew that when it signed the contract. In my opinion, it signed it because the contract prices contained sufficient cushioning for some rise in fuel prices. But it may have signed it in order to retain the defendant's goodwill, or in the hope of getting further contracts of the defendant. Whatever be its intentions or motives in signing the contract, there is no ambiguity about the said clause, and the plaintiff is bound by it. Accordingly on this short ground, its claim must be rejected.
21. Finally, even if it is assumed for the sake of argument that the defendant was under an obligation to increase contract prices, as rightly submitted by Mr. Rafi, the plaintiff had to prove its claim, but even at the stage of arguments, it was not clear about its own claim. At one stage its submission was that it was entitled to reimbursement under the said clause for the increase in the fuel prices. But Mr. Pesh Imam also stated that whenever petrol prices have gone up in Pakistan, all other prices have gone up, and therefore, the plaintiff was entitled to the market prices of sand and crush after the increase in fuel prices of 28th April and 28th October, 1980. In the first place there is absolutely no evidence before me of these market prices at the relevant dates secondly the market price of a commodity not dependent only on transport costs. Prices can rise because of an increase in demand or a reduction in supplies; therefore, the plaintiff's claim on the basis of the market price of crush and sand is totally misconceived. But as to the first limb of Mr. Pesh Imam's submission, on the assumption that the plaintiff is entitled to reimbursement for fuel costs, it had to prove the amount by which transport costs had gone up on account of the two increases in the price of petrol. As I pointed out, the statement of claim was vague, but after an observation by me, the plaintiff filed an amended statement which was more detailed. This statement gives the details of the quantities of the material sold to the defendant and the amounts paid by it to the plaintiff. It also gives the distances of the sources of supply of the crush and sand to the construction sites at Vehari, Bahawalpur and Arifwala. I will assume that these figures are correct. But merely from these figures and the increases in petrol, it is not possible to calculate the reimbursement to which the plaintiff would be entitled if its interpretation of the said clause were correct. This difficulty had been pointed out by the Site Manager in his evidence, which I quoted earlier. It may be that it is very difficult for the plaintiff to give evidence for example of trucks it had to hire for the transport of the building materials, but as rightly submitted by Mr. Rafi the burden of proof is on the plaintiff and the plaintiff has failed, in the instant case, to produce evidence essential for the calculation of its claim for reimbursement of the rise in fuel costs. Accordingly on this ground also its claim has to be rejected...."
8. The nature of the dispute in the instant suit relates to the contractual obligation and is embodied in the interpretation of clause (3) of the contract, dated 28th April, 1980 Exh.P.2 which reads as follows:-- ... The second party agrees to review the rates quoted above on the written requests of the first party in case the Government increases fuel costs or levies additional tax/duties/royalties on these trade...."
9. The word "review" used in the clause (3) of the contract is to be considered as defined in the ordinary English dictionaries. Mr.Hani has referred to the two books on words and phrases which have defined review strictly in reference to U.S.A. Codes and Canadian Codes and, therefore, the definition given would not apply in the instant case. The word "review" has been defined in Chamber's 20th Century Dictionary as "looking back; reconsideration; revision; critical examination; to see; or examine again". In Black's Law Dictionary (West Publishing Co., 1998) "review" has been defined as "to re-examine judicially or administratively; reconsideration; second view or examination; revision; consideration for purposes of correction". By virtue of the definition of review as given above it could be said that by using the word "review" in clause (3) it was the duty on the part of the defendant to reconsider the rates agreed earlier. But, at the same time it also makes it discretionary for the defendant to increase or not to increase the prices. This I am saying while keeping in view contents of the Exh.P.1 wherein it was suggested from the plaintiffs' side that they shall be entitled to increase the price after increase of fuel charges and Government dues but the same language was not incorporated in clause (3) of the contract which only create discretion in the defendant to agree or not to agree for enhancement in the prices. This shows that the proposal of the plaintiff that they will be entitled to increase the price of the construction material was not acceded to by the defendant at the time of execution of the above contract which resulted in drawing of clause (3). It is settled law that while interpreting the terms of the contract the Court has to first ascertain the intention of the parties. In the case of House Building Finance Corporation v.
Shahnishah Humayun Cooperative House Building Society and others 1992 SCMR 19 at 27, the Honourable Supreme Court has laid down the principle of construction of an agreement in the following manner:-- "....
10. The contract has to be construed strictly and literally without deviating or implying anything which is not supported by the intention of the parties and the language of the document. It is a salutary principle of consideration of document that nothing can be implied in a contract which is inconsistent with its expressed terms. In West Pakistan Industrial Development Corporation, Karachi v. Aziz Qureshi PLD 1973 SC 222, it was held that a stipulation not expressed in a written contract should not be implied merely because the Court thinks that it would be a reasonable thing to imply it. Such an implication can be made only on consideration of the terms of the contract in a reasonable manner and if the Court is satisfied that it should necessarily have been intended by the parties when the contract was made. In documents of contracts where terms and conditions have been exhaustively specified dealing with all possible future and foreseeable contingencies but if certain fundamental contingencies have been left out which necessarily in the context, facts and circumstances of the case should have been incorporated and can be spelt out, then the Court may imply such conditions. Reference can be made to Paragadas Mathuredes v. Jeewan Lal (1928) Ltd. PLD 1948 PC 162."
10. The above clause of the contract lays down three conditions for review of the rates earlier agreed by the parties in the said contract. The first condition is that there should be an increase in the taxes, duties or royalties on those trades which were subject-matter of the contract; the second condition is that there should be a written request from the side of first party namely, the plaintiff. After completion of these two conditions, the second party was required to "review" the rates agreed in the contract. It is the word "review" used in this clause which according to learned counsel for the plaintiff makes it obligatory on the defendant to enhance/increase the agreed rates after increase in the fuel charges or the Government levies. According to Mr. Amir Hani Muslim Exh.P.2 is to be read in the background of Exh.P.1, which is a letter, dated 16th April, 1980 written by the plaintiff to the defendant which is not in dispute. In that letter, vide para.3 it was mentioned by the plaintiff that the rates quoted by them are liable to change, if the Government imposes new taxes, duty, royalty on the material transported and fuel needed. To some extent spirit of plaintiff's letter Exh.P.1 was incorporated in clause (3) of the contract but still it does not reflect that it was obligatory on the part of the defendant to increase agreed price of the construction material. All these aspects of evidence of the both parties were looked into by the learned Arbitrator including the aspect of negotiation agreed between the parties.
11. It is an admitted position that the plaintiff has supplied construction material at three different sites namely, Vehari, Bahawalpur and Arifwala. The dispute pertains to two sites namely, Vehari and Bahawalpur. On these two sites the supply commenced in the months of May and August, 1980, respectively, and ended on 2-4-1981 and 20-8-1981 respectively, at the sites Vehari and Bahawalpur. It is the case of defendant that for the first time written request was made by the plaintiff for increase in price vide letter, dated 23-10-1980, which has been denied by the defendant, but still plaintiff continued supplying material without waiting for the defendants to review the rates. It is the case of the defendant that oral request of the defendant was considered and the price was increased which fact has been admitted by the plaintiff that there was certain increase in the agreed price during the currency of the contract. After going through the detailed reasoning given by the learned Arbitrator in support of his award and after going through the above case- law, I am of the considered view that there is no error apparent on the face of award and that the objections filed by the plaintiff are liable to be dismissed.
12. As a result of the above discussion the award, dated 11th April, 1987, given by Mr. Justice (Retd.)
Durab F. Patel is made rule of the Court.