MAULVI ANWARUL HAQ, J.--- A contract bearing No. WASA/S-301 for construction of Trunk Sewer and appurtenance in Shandara Town, Lahore was awarded, to the respondent by the appellants. The contract documents containing the terms and conditions of work were drawn and executed by the parties. Clause D-43 of the agreement provided for reference of disputes arising out of the contract, between the parties, to arbitration in the manner prescribed in the said clause of the contract. The disputes arose between the parties which led to the filing of an application under Section 20 of the Arbitration Act, 1940 by the respondent praying for filing of arbitration agreement in Court and reference of the disputes to arbitration. The application was contested and was ultimately allowed by the learned Trial Court vide order dated 30.6.1983. The parties submitted the names of their respective Arbitrators i.e. Iftikhar Khan, Managing Director (O&M), Wasafor the appellants and Khalifa Shujaat Amin for the respondent. These persons were accordingly appointed Arbitrators vide order dated 13.5.1984 with a direction that they should appoint a Chairman within 15 days. The said Arbitrators, accordingly appointed Mr. S.A. Hamid, D.G. (O&M), WAPDA as Chairman. Proceedings were conducted. Iftikhar Khan, Arbitrator made and published his ward on 14.9.1985. Khalifa Shujaat Amin, Arbitrator did not agree and made and published his on award on 30.12.1985. Mr.. S.A. Hamid, Chairman agreed with the award of Khalifa Shujaat Amin vide note dated 30.12.1985. As per Trial Court's record the award was received in Court and opened on 27.2.1986. The respondent did not but the appellants did file objections on 26.3.1986. The objections were contested. Following issues were framed on 10.7.1986:-
(1) Whether the arbitrators have misconducted the proceedings, therefore, the award is liable to be set aside? OP Objector.
(2) Whether the objections have been filed with a ma/a fide intention? If so its effect? OPR.
(3) Whether the objection petition is not properly valued for the purposes of Court-fee and jurisdiction? If so its effect? OPR.
(4) Whether the objections are neither covered by relevant provision of law nor the same has any legal force? If so its effect? OPR.
(5) Relief.
Evidence was recorded. The learned Trial Court refused to set aside the award vide order dated 18.1.1988 and made the same rule of the Court and a decree followed thereon.
2. The learned Advocate General contends that as per contends of Clause D-43 Mr. S.A. Hamid was an Umpire and the award is bad in law as he had been joining the proceedings and has not given his independent award. It is next contended that the impugned award is bad in law inasmuch as it awards ante /item interest. Thirdly it is contended that the award is bad on merits inasmuch as the respondent failed to complete the work within the stipulated time and was not entitled to the grant of escalation. Mian Nisar Ahmad, learned counsel for the respondent, on the other hand, contends that Mr. S.A. Hamid was not an Umpire but a Chairman and as such was an Arbitrator and the award shall be deemed to be an award by majority. In reply to the second contention of the learned Advocate General, Mian Nisar Ahmad, Advocate contends that in fact interest has not been awarded by the Arbitrators. Regarding the said third contention of the learned Advocate General, learned counsel for the respondent argues that the learned Trial Court or for that matter this Court cannot sit as a Court of appeal over a finding recorded by the Arbitrators on the merits of the case.
3. I have gone through the record of the learned Trial Court including the arbitration clause and the proceedings filed in Court by the Arbitrators, with the assistance of the learned counsel for the parties.
4. Elaborating the said first contention, the learned Advocate General with reference to the case of Chouthmal Jivrajjee Poddar Vs. Ramchandra Jivrajjee Podder and others (AIR 1955 Nagpur 126) argues that an Umpire only acts when there is a difference between the Arbitrators themselves. He may sit with the Arbitrators and watch the proceedings, her the evidence and look into the papers, but he is not supposed to confer with the Arbitrators so as to mould their decision. The precise contention of the learned Advocate General is that according to the note dated 30.12.1985 of Mr. S.A.
Hamid he had taken active part in the proceedings and even recorded the evidence of the parties.
According to the learned Advocate General this act of Mr. S.A. Hamid constitutes interference with the proceedings of the Arbitrators and as such invalidated the reference as held in the said case being relied upon by the learned Advocate-General.
5. I may refer here to Clause D-43 which is arbitration agreement in question. This clause provides that in case of disputes arising between the parties in connection with the contract, they shall make a prompt attempt to settle the same by negotiations and in case the disputes are not settled by negotiations, then the same shall be submitted to the arbitration in accordance with sub- clause (b) of clause D-43. The said Clause is reproduced here:- "b. Pakistani Contractors The demand for arbitration shall be in writing, shall be served on the other party and shall specify the arbitrator chosen by the party making the demand. Within thirty (30) days after receipt of the demand; the other party shall appoint an arbitrator by a written notice served on the party making the demand. The two members of the Arbitration Committee thus appointed shall agree upon a third member to act as Chairman. If agreement on the third member cannot be reached within fifteen (15) days from the date of the appointment of the second arbitrator, the case will be referred to the Civil Court having jurisdiction for the appointment of the third member to act as Chairman.
Arbitration shall be conducted in Pakistan in accordance with the laws of Pakistan. The award of the Arbitration Committee shall be final and binding on all parties."
A reading of the said sub-clause (b) would show that the parties had contemplated reference of disputes to Arbitration Committee. One member each was to be appointed by the parties while the said two members were to appoint the third member as were to appoint the third member as Chairman. There is no cavil that one member each was appointed by the parties while Mr. S.A.
Hamid was appointed as the third member to act as Chairman by the said two members. Thus the Arbitration Committee provided for in the arbitration agreement was constituted. What remains to be seen is as to what was the status of Mr. S.A. Hamid. In the said case of Chouthmal, it was opined that the word "Umpire" is a term of art and has a special meaning in the law relating to arbitration.
Thereafter his functions were stated as contended by the learned Advocate General with reference to the said judgment. Their Lordships then proceeded further to state that a Sarpunch is a Punch who has a position akin to a Chairman. The basis for holding the reference in the said case to be invalid as stated by their Lordships in para 31 of the judgment appearing at page 135 of the report was that the arbitration agreement was vague inasmuch as the position of the person who acted as an Umpire was left so vague so as to leave it open to him to act either as an Umpire or an Arbitration or as a Sarpunch at his sweet will.
6. Mian Nisar Ahmad, Advocate. On the other hand, relies on the cases of Abdul Hamid Vs. M.H.
Qureshi (PLD 1957 SC 145) in support of his contention that Clause D. 43 did not provide for appointment of an Umpire but of a Chairman. In the said case of Abdul Hamid the arbitration clause was somewhat similarly worded providing for appointment of an Arbitrator by each of the parties and for appointment of a Sarpunch by the two Arbitrators. It was held that the intention was to appoint three Arbitrators of whom one was to be Sarpunch or a Chairman. The matter was further brought home in the next judgment relied upon by the learned counsel for the respondent given by the Supreme Court of Pakistan in the case of Abdul Ghani Vs. Inayat Karim and others (PLD 1960 SC 98). Relying upon the said case of Abdul Hamid, while interpreting an arbitration clause which provided for appointment of four Arbitrators and the fifth as a Sarpunch it was held that all the five persons were Arbitrators, the Sarpunch was held to be an Arbitrator/Chairman and not as an Umpire.
7. Having considered the respective submissions of the learned counsel I find no force in the said first contention of the learned Advocate General. To my mind even the said judgment in Chouthmal case relied upon by the learned Advocate General does not wholly support his cause.
Reading Clause D-43 in the light of the said two judgments of the Supreme Court of Pakistan, relied upon by the learned counsel for the respondent I do find that Mr. S.A. Hamid was not an Umpire but was a Chairman and the reference in fact was to three Arbitrators.
8. I have also gone through the objections filed by the appellants on 25.3.1986 and I do not find any allegation that the said Mr. S.A. Hamid had in any manner tried to influence or interfere with the proceedings of the other Arbitrators. This in fact would be evident from the very fact that the two Arbitrators gave their on respective awards. Since Mr. S.A. Hamid was not an cannot be accused of failing to perform the role attributeable to Umpire i.e. He has to decide the matter in the case of difference of opinions between the two Arbitrators. He was the third Arbitrator and ,a Chairman and had agreed with the award of one of the Arbitrators and the reasons stated therein. To my mind, he was not required to record independent reasons of his on. It was thus a majority award and cannot be invalidated on the said objection of the learned Advocate-General.
9. As regards the said second contention of the learned Advocate General as to award of interest is concerned, after examining the claims filed by the respondent, which are available in the file of the arbitration proceedings, I find myself in agreement with the learned counsel for the respondent that all claims pertaining to interest have been disallowed by Khalifa Shujaat Amin, Arbitrator in his award dated 30.12.1985 that has been agreed to by Mr. S.A. Hamid, Chairman.
10. Regarding the said last contention of the learned Advocate General I do find that the same relates to the merits of the award. Khalifa Shujaat Amin, Arbitrator has referred to an amendment whereby the existing Clause D-36 of the contract had been amended. This amendment is provided in the addendum to the contract at pages 279 and 281 of the arbitration proceedings file. I find that the amended clause D-36 does support the findings of the said Arbitrator. I also find that the only objection raised before the Arbitrators by the appellants was that the escalation could not be allowed as according to the existing clause D-36 such an escalanation could he allowed only if the works under the contract were complete. The objection stands negated by the amended clause D-
36. According to this clause the only conditions for applicability of the amended clause are that the execution period of the contract exceeds six months and the value of the contract exceeds rupees one million for Highways and Irrigation Projects and Rs.5,00,000/- for Sewerage works. Both these conditions are met with in the present case. I may also and here that the learned Advocate General attempted to argue that the amendment was applicable only to contracts with foreigners and not with Pakistani contractors. I have gone through the entire addendum appearing in Part J of the contract and I do not find anything therein in support of the said contention of the learned Advocate General.
11. So far as the allegation of non-completion of the work within the stipulated time is concerned, the same also pertains to the merits of the case and since nothing has been pointed out on record that the findings to the contrary are bad in law, I do not feel inclined to upset the said findings of the Arbitrators.
12. The learned Advocate General also argued that the award had not been submitted within the time prescribed by law. The objection is met with by the learned counsel for the respondent with the contention that no objection was raised before the Arbitrators while the proceedings were pending and the appellants kept on joining the proceedings. Relies on the case of Haji Ghu/am Mohyuddin Vs. Federation of Pakistan (PLD 1967 Lahore 204) in support of the said contention. The record does not show any objection by the appellants to the continuance of arbitration proceedings after four months. In fact I find the objection petition as well to be silent as to the said aspect of the case. The contention being without any force is accordingly rejected.
13. As a result of the above discussion this F.A.O. Is found to be without any force and is accordingly dismissed leaving the parties to bear their on costs.