This is a proceeding under section 14(2) of the Arbitration Act, 1940 (hereinafter referred to as the Act, 1940) read with Rule 282 of the Sindh Chief Court Rules (U.S.) for making the Award, dated 20-1- 1997 as rule of the Court.
2. This Award is in favour of the plaintiff who is being represented by Mr. Muhammad Akram Zuberi, who has supported this Award. It is against the Food Department, Government of Sindh, being represented by Mr. Muhammad Saleem, Assistant Advocate-General (hereinafter referred to as the Food Department). It is pertinent to note that none of the defendants including Food Department have filed any objection to this Award. However, keeping in view the provisions of sections 30 and 33 of the Act, 1940 and the rule laid down by the Honourbale Supreme Court in the cases Messrs.
Awan Industries Ltd. v. The Executive Engineer and another 1992 SCMR 65 and Messrs Joint Venture KG/RIST v. Federation of Pakistan PLD 1996 SC 108, Mr. Muhammad Saleem, Asstt. A.-G., was permitted to raise legal objection. Learned counsel appearing for Mehran Sugar Mills and Trading Corporation of Pakistan chose not to oppose the Award as it was not against them. According to Mr. Muhammad Saleem the Award is not a speaking award and is without any reasoning; therefore, it cannot be made rule of the Court. Reliance is placed by him on section 26-A of the Act, 1940 as well as on the cases Messrs Gandhara Industries Ltd. Karachi. v. Government of Pakistan PLD 1982 Kar. 262, Karachi Electric Supply Corporation Ltd. v. Consortium 2000 P.E.C.H. Society Karachi 1985 CLC 1350 and lastly on the case Associated Construction Ltd. v. Karachi Municipal Corporation 1987 CLC 383. Section 26-A of the Arbitration Act, 1940, reads as follows: "26-A. Award to set out reasons.--- (1) The arbitrators or umpire shall state in the award the reasons for the award in sufficient detail to enable the Court to consider any question of law arising out of the award.
(2) Where the award does not state the reasons in sufficient detail, the Court shall remit the award to the arbitrators or umpire and fix the time within which the arbitrator or umpire shall submit the award together with the reasons in sufficient detail: Provided that any time so fixed may be extended by subsequent order of the Court.
(3) An award remitted under subsection (2) shall become void on the failure of the arbitrators or umpire to submit it in accordance with the direction of the Court."
3. After introduction of section 26-A in the year 1981 an arbitrator or umpire is now required to give reasons in support of his award in sufficient detail. The purpose of giving detail is to enable the Court, while making it rule of the Court, to. Consider any question of law arising out of the award.
However, no restriction was imposed on arbitrator or umpire in respect of dealing with the pure question of fact involved in the case. This section 26-A cannot be treated at par with the provisions of sections 30 and 33 of the Arbitration Act. An award cannot be set aside merely on the ground that the arbitrator or the umpire has not given sufficient reasons in support of his award. It will become void only when it is remitted to the arbitrator or umpire, as the case may be, to disclose reasons and to re-submit the same within a specified time and if he fails to submit the same in accordance with the direction of the Court. In the instant case, therefore, only subsection (1) to section 26-A may be made applicable which provides disclosure of sufficient detail in Award. With this view, I have examined the Award.
4. Learned counsel for the plaintiff. Mr. Muhammad Akram Zuberi, strenuously contended that the Award is legal and it does not suffer from any legal or factual infirmities. It was further argued by him that a Court while hearing an objection to an award does not act as a Court of appeal.
Reliance is placed on the case National Construction Company v. WAPDA PLD 1987 SC 461. Indeed, it is a settled law that the Court while hearing award under the instant proceedings are not required to act as a Court of appeal, but at the same time it is provided under several provisions of the Arbitration Act, 1940, that it is still the duty of the Court to see, even in absence of any objection, whether the award suffers from any legal defect or infirmity. With this in view, I have permitted learned A.A.-G. Sindh to make his submissions on the legal defects and infirmity, if any, in the Award. (For further reference see Muhammad Tayab v. Akbaf Hussain 1995 SCMR 73). I am fortified in my view by the rule laid down by the Honourable Supreme Court in the case of Awan Industries Ltd. (supra) where it was held as under:-- "(17) But in his submission, he ignored the provisions of section 17 of the Arbitration Act, which imposes a duty on Courts to see that there is no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award. This can be done by the Court suo motu, apart from the application which a party may make for either remission of the award or its reversal. Where, therefore, an award is found to be nullity because of the invalidity of the arbitration agreement or, for any other reason, or the award is prima facie illegal and not fit to be maintained, the Court has power under section 17 of the Act to set it aside without waiting for an objection to award being filed or without considering any application for setting it aside, if there be any, and irrespective of the question whether or not any objection to the award was filed or whether the objection, if filed, was not within time. In such cases section 30, clause (c) of the Act is also attracted. Another example can be where a party appoints a sole arbitrator without prior notice to the other party, the award would be prima facie illegal and may be set aside. See Abdul Khaleq v. Province of East Pakistan and another PLD, 1964 Dacca 166 and Messrs S.M. Fazail & Company. v. Messrs Overseas Cotton PLD 1959 Kar. 739."
5. In the case of K.E.S.C. (supra) and Gandhara Industries Ltd. (supra) it was held, inter alia, by the two Division Benches of this Court, while interpreting section 26-A of the Act, 1940 that an arbitrator, or, as the case may be, an umpire, is required to state in the award, in sufficient details, reasons for the award to enable the court to consider any question of law arising out of such award. It was further held that where no sufficient details were stated in the reasoning for the award, the Court shall remit the same to the arbitrator or umpire and fix time within which the award together with reasons and sufficient details shall be re-submitted to the Court. Mr. Muhammad Saleem, learned A.A.-G., has vehemently contended that in paras. 29 and 30 of the Award, while granting damages no reasoning was given by the arbitrator and, therefore, in the absence of any detail, such award is not entitled to be maintained. I have gone through the reasonings as well as through the evidence brought on record during arbitration proceedings on the request of the learned Assistant Advocate-General. I am conscious of the rule that the Court is not competent to undertake such exercise but in order to show that justice has been done, I have seen the record. The reasoning given in the Award, dated 20-1-1997 is spread over 16 pages. In para. 8 of the Award, the Arbitrator has disclosed the entire claim lodged by the Plaintiff/claimant. As much as seven (7) issues were framed and the parties were permitted to lead evidence. In paras. 16 and 17 of the award, the learned Arbitrator has dealt with the proceedings conducted before him through which it appears that the Food Department, Government of Sindh, was not represented by any counsel and the proceedings were being attended by the departmental officials; that the parties were permitted to file their affidavits in evidence with the right to cross-examine; and that plaintiff filed his affidavit- in-evidence but he was not cross-examined by the Trading Corporation of Pakistan (T.C.P.).
However, despite several opportunities granted to the Food Department they failed to file their affidavit-in-evidence. The case before the Arbitrator was poorly and negligently conducted on behalf of the Food Department for which Provincial Government, if it chooses so, may take some appropriate steps against the officers concerned.
6. I have examined the case file of the arbitration proceedings with the assistance of both the Advocates. I have also considered the documents brought on record by the parties during the arbitration proceedings which now form part of evidence. I have also heard Mr. Muhammad Akram Zuberi for the plaintiff and Mr. Muhammad Saleem Samo, Assistant Advocate-General for Sindh who has vehemently opposed this Award. Messrs Irfanullah Khan and Nasrullah Awan, Advocates, have not made any submission as the award is neither in their favour nor against them. In the affidavit-in-evidence filed by one Mukhtar Ahmed on behalf of the plaintiff/claimant, namely Abdullah & Bros. it is stated that the respondent created various hurdles/obstructions/problems in the way of lifting of sugar by the plaintiff/claimant. It is further alleged, that the quality of sugar supplied to the plaintiff was totally bad and was not fit for human consumption; that the quantity of the sugar supplied was less in weight than the agreed quantity; that the several letters/communications addressed to the Food Department trained unanswered which resulted in filing petition under section 20 of the Act, 1940. It is further claimed in the said affidavit-in-evidence that the plaintiff has suffered pecuniary loss of Rs,3,500 per Truck per day. It is also claimed that the plaintiff has suffered a further loss of Rs,45,45,544 and, therefore, prayed for an award in sum of the said amount. Following is the claim of the plaintiff which was filed before the Arbitrator and which was incorporated in para. 6 of the Award:-- "(a) Contracted sugar to be lifted by the claimant vide agreement, dated 7-5-1986 i,e, 588.700 M.Ton-@ Rs,8,261 per M.Ton.
(b)Contracted sugar to be lifted by the claimant vide Agreement, dated 7-5-1987 from Consolidated Sugar Mills i,e, 70.00 M.Ton @ Rs,8,071 M.Ton.
Earnest Money deposited under the above agreement. Rs,97,315 100% cost of 588.70 M.Ton. Rs,48,63,251 14% carrying charges Rs,13 058 Total Deposit. Rs,49.73 624
(c) Loss of profit expected on the contracted sugar of Larkana Sugar Mills @ Paisas 40 per kg. i,e, Rs,400 per M.Ton.Rs,2,35,480
(d) Interest @ 16% on the amount of Rs,49,73,624 with effect from 20-5-1986 upto 4-6-1987 as no goods were supplied to claimant.Rs,8,62,095
(e) Loss of reputation, goodwill for not fulfilling the commitments.Rs,20,00,000
(f) Loss in Trade as the claimant could not do any business commitment due to blockade of Rs,50 lac for 14 monthsRs,50,00,000 Total. Rs,80,97,575
7. As a result of the pleadings filed by the parties the learned Arbitrator framed the following issues which were discussed separately with reference to the evidence brought on record.
(1) Whether the plaintiff paid 100% price of the contracted sugar well within time?
(2) Whether the plaintiff was given delivery order by the defendant No,2 to lift the sugar from premises of the defendant No,3?
(3) Whether the defendants Nos.1 and 2 delivered the contracted sugar to the plaintiff?
(4) Whether the plaintiff Mukhtar Ahmed had also entered into agreement with the defendants Nos.1 and 2 with regard to the contracts in Suits Nos.986 of 1989, 988 of 149 and 989 of 1989?
(5) Who breached the contracts?
(6) Whether the plaintiff suffered any loss due to the breach by defendants Nos.2 and 3, if so, to what extent?
(7) Whether the plaintiff requested the defendant Nos.1 and 2 to adjust the payment in other contracts in Suits Nos.986 of 1989, 988 of 1989 and 989 of 1989?
8. In respect of issue No,1 the finding are in favour of the plaintiff/claimant. It was held that the plaintiff had promptly paid 100% of contracted sugar on 20-5-1986. Evidence of the plaintiff was found to be more relevant and consistent Issues Nos.2 and 3 were jointly discussed where it was held that the plaintiff was not given delivery order by the Food Department Issues Nos.6 and 7 were also answered in favour of the plaintiff on the preponderance of evidence. Under Issue No,5 it was held that no quantity of sugar was delivered despite receipt of 100% consideration. Issue No,6 was considered in the following manner where after the award was also made which all read as follows:- - "28. It may also be noted that the learned Counsel for Larkana Sugar Mills Mr. S.A.A.A. Rizvi did not file any affidavit-in-evidence not cross-examined the claimant. On perusal of the cross- examination referred above it is clear that there is no rebuttal to the main grievance of the claimant. Further on perusal of the written arguments filed by the Food Department it appears that the Department. tried to avoid its liability by saving that the contracted sugar was not delivered and that the claimant demanded refund of his deposit and on the basis of a subsequent agreement. On perusal of record it appears that the Department nowhere alleged that the claimant was at fault but on the contrary very candidly conceded to refund of amount. The contents of the minutes of the Sugar Disposal Committee dated 24-12-1986 filed with written reply of Food Department are very relevant for the present case as well as other cases in which the T.C.P. and Food Department have in fact admitted the allegation of the claimant. The claimant's request for refund and adjustment was made as far back as on 25-6-1986 vide Exhs.A/20 to A/22 while Food Department did not refund the amount uptil July, 1987 as evident from Food Department letter dated 29-7-1987 addressed to Chairman. TCP filed by Food Department with its written argument.
Further the claimant had stated in writing that the 'Without Prejudice' his deposit be refunded meaning thereby 'Without prejudice to the legal rights. (Reference Exh.A/28, dated 11-8-1986). On perusal of the record and evidence it appears that neither T.C.P. nor Food Department ever showed their anxiety to fulfil the terms of the agreement in hand. The claimant has also exhibited two letters Exhs.A/14 and A/15 wherein the claimant was informed by his dealers that they are unable to honour their advance commitment as they have not received the sugar under the above contract.
The letters are self-explanatory. The Food Department has not disputed these letters."
9. As a result of above findings, following Award was passed by the learned Arbitrator:- "29. In view of the above discussion, I award following amount as damages in favour of the claimant and against the Food Department-- Loss of profit @ paisas 40 per kg. i,e, Rs,2,35,480 Rs,400 per M.Ton on 588.70 M.Ton For determining the loss of reputation and goodwill and loss in trade, I would like to mention that in case the claimant would have received the contracted sugar on the given date i,e, 20-5-1986 he would have certainly earned profit and would have rotated the above amount in other contracts pertaining to Fauji Sugar Mills Khoski and Mehran Sugar Mills from where the major quantity of balance sugar was to be lifted.
(30) On perusal of the record it appears that the claimant was totally helpless as the sugar under the other contracts was bad in quality and short in weight which was forcibly delivered to him and further the entire deposit in this contract amounting to Rs,approx. 50 lac was lying with Food Department since 20-5-1986 for more than 14/15'moths which in fact had totally broken the claimant. I accept the version of the claimant on this account I award a consolidated sum of Rs,28,00,000 (Rupees twenty eight lacs) towards damages, for loss of business, goodwill, reputation, non-fulfilment of the commitment by the claimants etc. against the claim of Rs,10,00,000 and Rs,30,00,000 as claimed by the claimants against the Food Department."
10. It was argued by Mr. Muhammad Akram Zuberi that the Court while considering the legality or otherwise of an award cannot substitute its own finding on appreciation of evidence in place of finding given by an arbitrator. It was further argued that mere wrong basis of assessment of damages by the Arbitrator cannot furnish a good ground for attach on the Award. He has placed reliance upon the cases Messrs Ibad & Company v. Province of Sindh and 2 others PLD 1980 Kar.
207, A. Qutubuddin Khan v. Karachi Electric Supply Corporation Limited 1980 PLC 1977, The Premier Insurance Company Pakistan Limited v. Ejaz Ahmed Khawaja and 3 others 1981 CLC 311 and the case of joint venture KG/RIST (supra); see also 1996 PSC 295). In the case of Messrs. Ibad & Co., (supra) it was held by a learned single Judge of this Court, Ajmal Mian, J. (now Chief Justice of Pakistan) inter alia, that an award cannot be set aside on the ground that the Arbitrator has adopted a wrong basis for purpose of assessing the quantum of damages. Earlier than the case Messrs. Ibad & Co., another distinguished Judge of this Court, A.S. Farooqui, J., (as he then was) in the case Messrs. Pakistan Builders Company, Karachi v. Pakistan PLD 1961 (W.P.) Kar. 365 held, inter alia, that an arbitrator is not bound to give reason for his decision nor he is bound by any technical rule or procedure and that he need not record separate findings on the point on which the parties are at issue. It was finally held that it is no ground for challenging an award that the basis for ascertaining the amount of damages awarded was wrong. In the case Messrs Moosa Oomar & Company, Karachi v. Messrs Haji E. Dossa & Sons and another PLD 1971 Karachi 899 it was held, inter alga, by a Division Bench of this Court while following the rule laid down by the Privy Council in the case of Mohindra Singh v. Ramindar Singh and another AIR 1944 P.P. 83, that even if the Arbitrator had not awarded damages upon the settled principle, still the Award cannot be challenged on the ground of legal misconduct. However, the rule laid down in the abovenoted cases Ibad & Company A. Qutubuddin Khan; and Ejaz Ahmed Khawaja was prior to the introduction of section 26-A in the Arbitration Act, 1940, and therefore, these judgments are of no help to Mr. Zuberi. after introduction of section 26-A, now the Arbitrators are required to give sufficient reasoning or detail supporting their Award. It is clarified that it C will not be necessary that the reasoning's of Award be given in such details as are required in the judgment in civil suits.
11. It is settled law that a Court while examining the legality or otherwise of an Award as provided under sections 30 and 33 of the Arbitration Act, 1940 could not substitute its own finding on appreciation of evidence. It was held in the case of Messrs Joint Venture KG/RIST (supra) that an error or legal infirmity must appear on the face of award in order to warrant interference of the Court. In the instant case, there appears neither any illegality nor any infirmity on the face of record. The contention of Mr. Muhammad Saleem Samo, A.A.-G., that no reason in detail was provided by the Arbitrator in support of his Award is devoid of any fact. All the relevant pieces of evidence and documents were thoroughly discussed in the reasonings by the learned Arbitrator and I see no reason to interfere with the same.
12. As a result of the above discussion, the Award is made rule of the Court to the following extent.
(a) Refund of the amount received by the Food Department from plaintiff for which no sugar was supplied.
(b) Rs,2,35,480 as pecuniary compensation for the loss of profit.
(c) Rs,10,00,000 (ten lacs) as damages.
(d) Interest at the rate of 12% from the date of decree till realisation. Order accordingly.