' This award, dated 14-7-1993 is forwarded by the Sole Arbitrator, Mr. Iqbal Ahmed Hashmi under section 14(2) of the Arbitration Act, 1940 (hereinafter referred to as the Act, ,1940) read with Rule 282 of Sindh Chief Court Rules (O.S.).
2. In this matter, plaintiff and defendant have filed their separate objections challenging the aforesaid award. However, during hearing of these objections, learned counsel for the plaintiff Mr. Ismail Kassim has stated that he does not press his objections and, therefore, I have heard objections of the defendant only. On 13-91993, the defendant filed its objections through C.M.A.
No,9862 of 1993 and again further objections were filed by the defendants on 17-3-1996 in the shape of an application under Order VII, Rule 11, C.P.C. (C.M.A. No,1509 of 1996). This order will dispose of both these objections. Since now the controversy is shortened to the payment of Watch & Ward and Maintenance charges, I would like to quote the relevant portion of reliefs as awarded by the learned sole arbitrator which reads as follows:-- "The Honourable High Court is requested to consider the award summarised below for issue of necessary decree against the defendants and in favour of the plaintiff.
Summary of the Reliefs Awarded. {{TABLE}}
(1) Watch & Ward Charges =Rs, 3,48,788.85
(2) Maintenance Charges =Rs, 17,62,5191)0
(3) Refund of Security Deposit =Rs, 88,319.00 =Rs,21,99,626.85"
3. I have heard Mr. Anwar Tariq, Advocate for the K.D.A./defendant in support of his objections and Mr. Muhammad Ismail Kassim, Advocate for the plaintiff who has whole-heartedly supported the aforesaid findings/award. During the course of hearing, it was proposed by Mr. Muhammad Anwar Tariq that if the plaintiff foregoes/surrenders his claim for maintenance charges, the defendant will pay him the amount of watch and ward charges which was not accepted by Mr. Ismail Kassim.
However, he has summarised his objections as follows:--
(i) That the instant proceedings is not maintainable in view of the bar contained in Article 131 of K.D.A. Order 1957.
(ii) That the entire proceedings held and conducted before the learned Arbitrator was unauthorised and illegal as the person who agreed on behalf of defendant/KDA for such reference to the sole Arbitrator was neither competent nor authorised.
(iii) That by virtue of promulgation of Karachi Development Authority (Abatement of Arbitration Proceedings) Ordinance, 1965 (Ordinance XXV of 1965) (PLD 1965 W.P. Statutes 296), all agreements entered on behalf of K.D.A. In respect of referring disputes to the arbitration stood abated.
(iv) That the learned Arbitrator has committed misconduct inasmuch as the award granting maintenance charges to the 'plaintiff is based on no evidence.
4. In order to appreciate the abovementioned four objections raised on behalf of K.D.A., it would be relevant to discuss the background leading to the present controversy. It is an admitted fact that the plaintiffs are involved in the business of construction and that some-time in the year 1983, the plaintiff was awarded construction work to raise 65 independent bungalows for overseas Pakistanis which number was increased from time to time and finally the plaintiff was awarded contract to construct 152 bungalows. These bungalows were constructed in three different phases of the project. In this respect, several disputes arose between the parties where after the plaintiff filed a suit in this Court on its original civil jurisdiction which was numbered as Suit No,41 of 1992. On 31-3-1992, the said suit came up before this Court for the purpose of framing of issues when the following order was passed:-- "By consent the issues submitted from the side of the defendant are adopted.
' Learned counsel and the representative of the parties present agree that the disputes in the suit which are covered by the issues adopted today be referred to the Sole Arbitration of Mr. Iqbal Ahmad Hashmi, former Chief Engineer, K.D.A. The fee of the learned arbitrator is tentatively fixed at Rs,20,000 to be paid directly to him by the plaintiff alone. The parties would provide copies of the plaint, the written statement and issues to the learned Arbitrator within two weeks together with such documents on which they base their claim or defence or upon which they seek any reliance in the context of disputes referred to Arbitration where after upon fixation of due date the learned Arbitrator would proceed with this reference and render his award according to law."
5. As a result of above reference, both the parties filed claims and counter-claims and led evidence in support of their cases and in rebuttal to the case of other side. Learned sole Arbitrator in his exhaustive findings comprising 60 pages discussed each and every aspect of the claims and counter-claims. At the time of referring the matter to the sole Arbitrator, this Court framed as much as 12 issues including Issues No,5 and 6 dealing with the. Rights and entitlements of the plaintiff in seeking watch & ward/ maintenance charges. Both these issues are reproduced as follows:-- "(5) Whether the plaintiffs were entitled to recover Watch and Ward charges, maintenance charges and Bealation under the 'Contract', if so, what is its effect?
(6), Whether the Watch and Ward charges,. Maintenance charges which were allowed to the plaintiffs as compensation were financial help to the plaintiff, so that work to be completed in terms of 'Contract' on the Project, and to protect public interest, if so, what is its effect?"
6. Adverting to the first objection of Mr. Muhammad Anwar Tariq, this matter was also tackled by the learned sole Arbitrator as there was Issue No,3 to this effect. Mr. Muhammad Anwar Tariq has relied upon the cases Messrs. National Fibers Ltd. v. Karachi Development Authority and others (1996 MLD 76) and Saleh sons (Pvt.) Ltd. v. Karachi Development Authority (1997 CLC 893). In the first case, the plaint was rejected for non-compliance of Article 131 of K.D.A. Order 1957. In that case, suit was filed for specific performance, declaration and injunction and admittedly before filing the same, the plaintiff failed to serve notice as provided under Article 131 of the K.D.A. Order 1957.
Reference was made to four reported judgments of this Court. Likewise, my learned brother Rana Bhagwandas, J., in the case of Saleh Sons (supra) held that the suit was not maintainable for lack of notice under Article 131. Before proceeding further, it would be advantageous to reproduce the provisions of Article 131 of K.D.A. Order, 1957 which read as follows:-- "131. Notice of suit against Authority, etc.--- (1) No suit shall be instituted against the Authority or any member or any person associated with the A.Uthority or against any servant of the Authority or against any person or persons acting under the direction or authority of the Chairman or of any officer or servant of the Authority, in respect of any act purporting to be done under this Order or the rules or regulations made the under until the expiration of one month from the delivery of a written notice at the Authority office or the place of abode of such member, officer, servant or person, stating the cause of action, the name of place of the intending plaintiff, and the nature of the relief sought.
(2) In every such suit the complaint shall contain a statement that such notice has been so delivered.
(3) Notwithstanding anything in the Limitation Act, 1908 (IX of 1908), no such suit as is described in clause (1) shall, unless it is a suit for the recovery of immovable property or for a declaration of a title thereto, be commenced otherwise than within six months next after the accrual of the cause of action."
7. In so far as the facts of the instant case are concerned, admittedly notice .Under Article 131 was served by the plaintiff prior to filing Suit No,41 of 1992. This fact was noted by the learned Arbitrator.
Now, the question which arises is whether a plaintiff is required to serve a notice under Article 131 of K.D.A. Order, 1957 prior to initiating proceedings as of instant nature. First of all, the present proceedings have been forwarded by the sole Arbitrator under section 14(2) of the Act, 1940. It is not the requirement of Article 131 that an Arbitrator will be liable to issue notice under Article 131 before filing the award. It requires that an intending plaintiff shall disclose the cause of action and nature of relief sought which could not be done in proceedings under section 14(2) of the Act 1940.
Secondly, in my considered view the proceedings arising out of section 14(2) or for that matter under section 20 of the Act, 1940 are not suits in stricto senso. I am fortified in my view by the cases Muhammad Abdul Latif Faruqui v. Nisar Ahmad and another (PLD 1959 Karachi 465 at 468), Hansraj Gupta and others v. Official Liquidators Dehradun (ILR 54 All. 1067) and Messrs. United Cotton Factory Hyderabad v. Ahmad Khan (PLD 1960 Karachi 774 at 785) where it was held by a division bench of this Court that a petition under section 20 of the Act, 1940 was not a suit and that the filing of the agreement in the Court does not fall within the ambit of section 69 of the Partnership Act, 1932. A proceeding under section 14(2) read with Rule 282 of the Sindh Chief Court Rules has a limited scope. It is settled that the Courts do not act as Court of appeal and that any error and irregularity should be apparent on the face of award. Such proceedings could not be termed to be a suit as mentioned in Article 131. With this view, I am inclined to held that in the instant proceedings, issuance of notice under Article 131 of K.D.A. Order, 1957 is not mandatory and that the instant proceeding is not liable to be dismissed on that account. Accordingly, objection No,1 of defendant stands overruled.
8. Then, it was argued by Mr. Muhammad Anwar Tariq that neither Mr. Dasti Muhammad Ibrahim, Advocate then appearing for the K.D.A. Nor Mr. Sultan-ulArfin (resident Engineer of K.D.A.) were competent and authorised to agree to refer the matter for arbitration. According to him, only the Chairman of K.D.A. Is authorised to institute, withdraw- or to refer legal proceedings. He has placed reliance on Articles 4 and 129 of K.D.A. Order, 1957 which read as follows:-- ' Management. ---(1) the general direction and administration of the Authority and its affairs shall vest in the Governing Body which may exercise all powers and do all acts and things which may be exercised or done by the Authority
129. Power of Chairman as to institution composition and others of legal proceedings and obtaining legal advice.-- The Chairman may, subject to the control of the Governing Body.--
(a) institute, defend or withdraw from, any legal proceedings under this Order or the rules made thereunder;
(b) compound any offence against this Order or the rules made thereunder which, under any law for the time being in force, under the said rules may lawfully be compounded;
(c) admit, compromise, or withdraw any claim made under this Order or the rules made thereunder, and
(d) obtain such legal advice and assistance as he may think necessary or expedient to obtain, or as he may be desired by the Authority to obtain, for any purposes referred to in the foregoing sub clauses or for securing the lawful exercise or discharge of any power or ,duty vested in or imposed upon the Authority or any officer or servant of the Authority."
9. It will be seen that the matter was referred to the Arbitrator by the consent of the parties as provided under section 21 of the Act, 1940 and that the proceedings continued there for sixteen months till 14-7-1993 when the award was pronounced. I have asked specifically from Mr. Muhammad Anwar Tariq whether any action was initiated against Mr. Dasti Muhamamd Ibrahim, Advocate or Mr. Sultanul Arfin, former Resident Engineer for making such statement, to which he candidly replied in negative. I am told that Mr. Dasti Muhammad Ibrahim has recently retired after attaining the age of superannuation while Mr. Arfin is still in service. In this background, it was argued by Mr. Ismail Kassim that the instant objection has been raised for the sake of objection and that the K.D.A. Has in fact acquiesced in the acts of those two officers and cannot now take a U-turn challenging proceedings before the Arbitratot. He has also pleaded the principle of indoor management by relying on the cases the Pakistan Employees Cooperative Housing -Societies Ltd.
Karachi v. Anwar Sultana and others (PLD 1969 Karachi 474) and Muhammad Azim v. Pakistan Employees Cooperative Housing Society and 4 others (PLD 1985 Karachi 481). The aforesaid aspect of the case was considered by me in somewhat similar circumstances in the case of Messrs Muhammad Yasin & Co. v. Karachi Development Authority (1998 CLC 1313 .At 1316) where it was pleaded by the then counsel appearing for K.D.A., Mr. Dasti Muhammad Ibrahim, that the earlier Advocate appearing for K.D.A. Was not authorised to concede to an application filed under section 20 of the Act, 1940. It was held by me after reference to several case law that the K.D.A. From its conduct is estopped from challenging the proceedings on the ground that the consent was given by an unauthorised person. This objection was also not taken by defendant in its written objections.
Mr. Ismail Kassim has referred to my decision in Messrs Vaseem Construction Company v. Province of Sindh through the Secretary (1997 MLD 418) where on the point of objection on non-registration of a partnership firm, it was observed that such objection was raised at a belated stage as from 1970 till 1976 the defendant never raised such objection and for the first time it was raised while the award was before this Court fcr its consideration. (For further reference, see Mahabir v. Manohar Singh (API 1924 All. 540), Nidamurthi Karishnamoorty and another v. Garigipatti Ganapathi Lingam (AIR 1917 All. Madras 6561, Porsotam Das v. Jagun Nath and others AIR 1919 All. 381 and Mst. Akhtar Bashir v. Muhammad Bashir and another (1981 CLC 423). As a result of above discussion, I am of the considered view that the second objection of defendant/K.D.A. Is liable to be overruled. Ordered accordingly.
10. Mr. Anwar Tariq, though faintly, has also raised objection about abatement of the arbitration proceedings in view of the Ordinance XXV of 1965. This question was dealt with in detail by me in the case of Messrs. Muhammad Yasin & Co. -(supraJ. It was held, inter alia. In that case that the said Ordinance was promulgated on 16th August, 196-5 and all such agreements which were entered by that time, stood abrogated and annulled. There is no provision in the said entire Ordinance whereby K.D.A. Was restrained or prohibited from entering into any agreement in future for referring a dispute to arbitration. Reference was also made to the preamble of the said Ordinance. With such background, it was held that the said Ordinance was in respect of those arbitration agreements entered by K.D.A. With certain contractor companies prior to promulgation of that Ordinance and will not affect any reference or arbitration agreement executed thereafter. I am not persuaded to take a different view. Even otherwise, an earlier finding on the point of law by a Judge is binding on him in subsequent proceedings. If any Reference is needed, see Muhammad Muzaffar Khan v. Muhammad Yusuf Khan (PLD 1959 SC 8).
I I. This brings me to the last objection of Mr. Muhammad Anwar Tariq which relates to misconduct of learned Arbitrator on the point of awarding maintenance charges. Mr. Anwar Tariq has referred to several case law on this point, but, in my humble view it will not be relevant to discuss them.
Suffice to say that where an award is given contrary to the evidence on record, it sometimes does amount to .Misconduct. But. This is not the case here as perusal of cross examination of Mr. Sultanul Arfin shows that this point was very much under discussion during recording of evidence of the parties. Relevant cross-examination is reproduced as follows:-- ' It is correct that the Contractor through Exh.D/4/42 had submitted an estimate for maintenance charges at Rs,60,400 per bungalow for all the phases It is correct that the Exh.D/4/45 was prepared by K.D.A. On consideration of Exhs.D/4/43 and D/4/44. Through this exhibit the maintenance charges at Rs,44,03,217.00 was recommended to be approved. This Exh. i,e, D/4/45 has been signed by me. It is correct as against the amount recommended in Exh.D/4/45 the K.D.A. Paid to the contractor Rs,3,01,031. It is correct that thereafter K.D.A. Has not paid any amount on this account. It is correct that the Contractor was entitled for maintenance charges under this Exh.D/4/45 for 51 bungalows. It is correct that exhibit D/4/45 was prepared on the inspection of the competent authority. It is correct that the Contractor completed 3 more bungalows out of 64 balance bungalows and delivered possession to the allottees (Under lining is mine).
12. It was then argued by Mr. Muhammad Anwar Tariq that the learned Arbitrator committed misconduct inasmuch as there was no condition in the agreement between . The parties for awarding maintenance/watch and ward charges. He has placed reliance on para. 17-B of general conditions which shows that the contractor shall be responsible for the maintenance and watch and wad of the whole of the work till the delivery of the bungalows to the individual aliottees or to a minimum period of six months whichever occurs earlier. On the other hand, case of the plaintiff is that due to changed and altered circumstances, conditions of this general agreement were also altered and vide Exh.D/4/43, Exh.D/4/44 and Exh.D/4/45, it was agreed that the plaintiff was entitled for payment of watch and ward as well as maintenance charges. It was further argued that this was acted upon inasmuch as an amount of Rs,300.000 was paid by the K.D.A. To the plaintiff against these charges which fact has been admitted by the witness of the defendant. All these facts clearly indicate that there was an agreed change in some of the conditions of the agreement between the parties upon which parties had acted upon. This being a case of novation of contract, as suggested by Mr. Ismail Kassim, he has referred to the cases Messrs. Ismail Brothers (Karachi)
Ltd. v. Messrs. S.M. Fazail & Co. Karachi (PLD 1958 (W.P.) Kar. 158), Mst. Khatoon Begun' v. Mst.
Barkatunnisa Begum and 6 others (PLD 1987 Karachi 132) and. Messrs. Nawab Brothers Ltd., Karachi v. Project Director, Planning and Development Department, Karachi and another (1981 CLC 638).
However., this is not a case of substitution of an earlier contract. Here, only partial modification to some of the terms of the contract took place. Therefore, the last mentioned case, Nawab Brother's
(ibid) is attracted where a learned Judge of this Court, Nasir Aslam Zahid, J. 'as his lordship then was) held, inter alia, after reference to Vishram Arjun v. Irukullah Shahkariam (AIR 1957 Andhra Pradesh 784) that "where the subsequent agreement only relates to some of the terms of the original agreement, both agreements should be read together to form a complete subsisting contract..." As a result Of above discussion, I do not see any error apparent on the face o award to the extent of awarding charges for watch and ward/maintenance as well as for refund of the balance security deposit as awarded by the Arbitrator with interest a 12% per annum from the date of decree till realization
13. Decree to follow.