S. ALI ASLAM JAFRI, J.-- The dispute between the parties in respect of the construction of a factory building on the premises situated at SITE, Karachi, owned by M/s. S.G. Rayon (Pvt.) Limited (hereinafter referred as claimant) and M/s. Fida Hussain & Associates, Consulting Engineering and Architects (hereinafter referred as respondents) was referred to Mr. Justice (Rtd.) Zaffar Hussain Mirza as a sole Arbitrator by the parties on 7th February, 1993.
2. The facts in brief relating to the dispute are that the construction work was awarded by the claimants to the contractor M/s. Gulf Construction (Pvt.) Limited and the respondents were engaged as "Consultant" to design the said project and supervising its construction work by the Contractor. Such consultancy agreement was executed between the claimant and the consultant.
The total area to be constructed was 46,680 Sq. Ft. For net contract value of Rs. 10,899.809.00. The commencement date of the work was stipulated as 15th August, 1990 and the contractor was obliged to follow the completion schedule.
3. It is the case of the claimants that contractor failed in completing the work as per schedule and as such, he rendered himself liable to the payment of damages for non-completion as provided in Clause 26 of the Contract Agreement dated 22nd January, 1991 at the rate of Rs. 0.25% of the value, of the contract for each day's delay, subject to a maximum of 10% of the said value. It was obligatory, according to the claimants for the consultant to issue a certificate in writing certifying the sum which could be recovered by the owners/claimants from the contractor as liquidated damages.
4. The case of the respondents is that by letter dated 28th January, 1992 the respondents certified "Substantial Completion" of the project in dispute by the contractor, although there is no such term used in the contract documents and, in fact, the consultant was required to issue "Certificate of Virtual Completion" upon completion of the work in view of Clause 22 of the Contract Documents.
5. The claimants have further made a grievance that such certificate was to be accompanied by a punch list itemizing all outstanding items of work including repairs and rectification items which the contractor is obliged to undertake during the period of maintenance. The claimants further alleged that there were considerable items of work which had either not be executed or which required repairs/rectification at the time the so-called Substantial Certificate was issued by the respondents. The claimants alleged male fides and collusion between the respondents and contractor and further stated that the acts of omission deprived the claimants of their right to recover liquidated damages amounting to Rs. 225.194.00 from the contractor.
6. It was also alleged that the final bill for a sum of Rs. 12,565,286.41 was not verified as per usual practice and the work was over certified to the tune of Rs. 236,749.90 and that the claimants had referred the matter to Mr. Rafi Jamaluddin, Consulting Engineer. In order to check the position of the work as prevailing at the site for evaluation and comments. The said Consulting Engineer found that the work done by the contractor was of the net value of Rs. 30,775.19. Quality of work of few items was unsatisfactory/below standard resulting in over payment in terms of agreed rebate of Rs. 198,612.03. The report also identified various other items f the work which were altogether not done and the net value whereof comes to Rs. 1,241,310,00. According to the claimants in view of the aforesaid circumstances they were compelled to terminate the engagement of respondents as consultant to the project vide letter dated 27th August, 1992. Since the justification of termination was disputed by the respondents hence the claimants served a notice on the respondents to refer various disputes to arbitration. In view of the alleged breaches of the agreement and failure on the part of respondents to render services in accordance with the terms of the counteract and as per established norms of the Civil Engineering Industry the claimants claimed by way of damages the following items of compensation:--
(i) Loss suffered on account of loss of production during the period of delay in the completion of work viz for 30 days Rs 2,230,617.00 (ii)Liquidated damages which are jointly and severally recoverable from the Contractor as well as the Consultant.Rs 225,194.00 (iii)The cost of repairs/rectification work executed by the other agency/contractor(s) which should have been required to be executed by the original contractorRs 370,311.00
(iv) Extra cost of execution of items of work not executed by the original contractorRs 584,618.00
(v) General damages being claimed by the Claimant against the respondent on account of negligence.
Motivated and male fide performance of the various obligations by the Respondent as highlighted hereinabove.Rs 1,000,000.00
7. Written reply was filed by the respondents. Execution of the consultancy agreement was admitted. However, it was asserted that the terms and condition incorporated in the said agreement only are binding on the parties excluding any alleged usage and practice prevailing in the construction industry as relied upon by the claimants. Allegations of mala fide were denied and it was stated that the respondents acted to the best of their ability in terms of agreement in a bona fide manner. It was denied that delay in completion of the work was on the part of contractor and that lot of additional work was required to be done which needed more time. Furthermore, the delay was condoned by the claimants. There was no occasion' for respondents to issue any certificate for delay.
8. So far issuance of certificate of Substantial Completion. It was admitted to have been issued by respondents on 28th January, 1992 but it was asserted that it was the same a Certificate of Virtual Completion. It was, however, stated that the said certificate was granted at the instance of claimants to enable them to enter the newly constructed premises for carrying out the work of installation of machinery and equipment for carrying out air-conditioning work. It was also denied that suitable items of. Work were not executed or that such items required reprise and rectification.
It was denied that certificate was required to be accompanied by a punch list. Any liability on their part for alleged prevention of the claimants from recovering any liquidated damages from the contractor was also denied. Certification of the final bill being unjustified, irregular or ma/a fide was denied and it was further stated that an arrangement was arrived at between the parties to verify the actual work done but the claimants failed to cooperate and avoided the reverification. Report of Mr. Rafi Jamaluddin was denied for want of knowledge, so also the notice to them for physical inspection allegedly carried out was also denied. The respondents further stated that the claimants in order to get a cover to their on default and to avoid payment of the balance fee due to the respondents filed a false and malicious claim against the respondents. In order to vindicate their honour the respondents claimed nominal damages of Rs. 5,000/- by way of counter claim apart from balance of their fee amounting to Rs. 279.170.00 with interest thereon at the rate of 15% per annum from 2nd August, 1992 until payment.
9. The counter-claim of the respondents was denied by the claimants. All other allegations of the respondents were also denied. As regards of balance of the fee outstanding. The claimants denied the entitlement of the respondents for the same, for the reasons and circumstances mentioned in their claim statement.
10. In view of the contentions/claims and counter-claims filed by the parties before learned Sole Arbitrator the following consent issues were framed:--
(1) Were the respondents, in the performance of their contractual duties and functions as consultants, besides being governed by the terms of written contract between the parties, also bound by any usage and practice prevailing in the construction industry? If yes, what are the prevalent usages and practices applicable in this case?
(2) Did the contractor fail to complete the work on the project in question, in accordance with the stipulated schedule for completion of work?
(3) If the answer to issue No. 2 is in the affirmative, was the Contractor liable to pay damages as provided by clause 26? If yes, was it the duty of the respondents to issue a certificate for the ,sum due as liquidated damages?
(4) Did the claimants condone the delay? If yes, what is its effect?
(5) Was the substantial completion certificate dated 28.1.1992 issued by the respondents collusively with the contractor although some items of work either remained to be executed or required repairs/rectification?
(6) Where the respondents obliged to issue the substantial completion certificate by accompanying it with a punch list itemizing all the outstanding items of work including repairs Wand rectification items to be attended to by contractor during period of maintenance?
(7) If the answer to issue No. 6 is in the affirmative, was the claimant's right to recover the liquidated damages from the contractor in the sum of Rs. 225,194.00 lost due to such conduct on the part of the respondents?
(-8) Did the respondents issue the certificate of substantial completion at the instance of the claimant for the reasons mentioned in paragraph 5 of the Written Statement of respondents?
(9) Was the verification of Final Bill of the Contractor, by the respondents unjustified, irregular or male fide?
(10) Was the Final Bill over certified for a sum of Rs. 236,749.90.
(11) Have the claimants suffered loss due to any breach of contract on the part of respondents as consultancy? If yes, what is the amount by way of damages payable to the claimants by the respondents as compensation?
COUNTER-CLAIMS:-
(12) Have the claimants committed defamation of the respondents by making false and malicious allegations affecting their professional integrity? It yes, are the respondents entitled to nominal damages in the sum of Rs. 5,000,00?
(13) Are the claimants liable to pay to the respondents balance of fees in the sum of Rs. 279,172.00 with interest?
(14) What should the award be?
The learned Sole Arbitrator after hearing the learned counsel for the parties, Examining the material placed before him and after sifting the evidence on record as adduced by the parties, by a very elaborative and detailed judgment/award came to the conclusion that the various claim set-up by the claimants were not proved except the claim relating to drainage. While dealing with Issue No. 11 the claimants were found entitled to Rs. 30,000/- on that count. So far other claims of the claimants are concerned the learned Sole Arbitrator came the conclusion that the claimants failed to prove the same. While dealing with the counter-claims of the respondents the learned Sold Arbitrators came to the conclusion that the claimants are bound to pay sum of Rs. 279,170.00 to the respondents towards the balance of their fee and after deducting the amount of Rs. 30,000/- due to the claimants from the respondents as per finding under Issue No. 11. The respondents were found entitled to be paid Rs. 249,170.00 by the claimants as balance of the professional fee of the respondents . However the parties were left to bear their on costs.
11. Award was filed in Court on 29.12.1996 and was registered as Suit No. 132/97. Notices were issued to the parties to file their objections, if any. On 17.3.1997 objections were filed on behalf of the plaintiffs/claimants. Counter-affidavit to the said objections have been filed on behalf of the respondents. However. The respondents on their on did not file any objection to the award and prayed that the objections by the claimants are liable to be dismissed.
12. The learned counsel for the plaintiffs/claimants has raised following preliminary objections apart from disputing the findings as recorded by the learned Sole Arbitrator on various issues framed by him with the consent of the parties:--
(i) The Award is based upon no evidence and on conjecture and surmises and is therefore liable to be set aside.
(ii) There are serval errors and resultant illegalities apparent on the face of the Award and the same is therefore bad in law.
(i.e) The learned Sole Arbitrator has been guilty of judicial misconduct in making the Award and the same is thus liable to be interfered with and set aside by this Hon'ble Court.
13. Before taking up various objections filed by the claimants, I would like to discuss the .Powers of this Court while dealing with the objections to challenge an award. In the case of M/s. Joint Venture GG/Rist Vs. Federation of Pakistan (PLD 1996 SC 108) it was held that while examining the validity of an award. The Court does not act as Court of Appeal. A Court hearing the objections to the award cannot undertaken reappraisal in order discover the error or infirmity in the award. Such error or infirmity must appear on the face of the award and should be discoverable by reading the award itself. Where reasons recorded by Arbitrator are challenged as perverse, perversity in the reasoning has to be established with reference to the material considered by the Arbitrator in the award. In the case of K.F. Development Corporation Limited Vs. M/s. Dawood Cotton Mills Limited (1999 M LD 2953) it was held that findings recorded by the Arbitrator cannot be disturbed on this basis that a different conclusion was possible. It was further held that valid objection to an award is that the same is based on no evidence or is glaring to the contrary to the evidence led by the parties. Again in the case of M/s. Abdullah Traders Vs. Trading Corporation of Pakistan Limited (1999 CLC 2047) it was held that the Court while examining legality or otherwise of an award as provided under Sections 30 & 33 of Arbitration Act, 1940 was not required to act as a Court of Appeal and could not substitute its on findings on appreciation of evidence. However, any legal defect or infirmity is a relevant factor. In the case of Government of Pakistan Vs. M/s. Overseas Interprises (PTE) Limited (1992 CLC 1138) it was observed that error of law and facts must be pointed out in order to seek a relief for setting aside the award. In the case of Province of Sindh and others Vs. Waseem Construction Company (1991 CLC 66) the rule has been laid down by a Division Bench of this Court that no interference by Court was required where the award was based on evidence and was a result of proper appreciation of evidence.
14. Keeping in view the above-referred well-settled principles of law, I would take-up the objections to the award raised by the learned counsel for the plaintiffs/claimants. A careful perusal of objections shows that the same are not based on any substantial material. The learned Sole Arbitrator has recorded the evidence of the parties as adduced/before him and thereafter proceeded to decide the case issue were. A look at the issues framed by the learned Sole Arbitrator and the findings recorded there referring to the various pieces of evidence leave no room for any doubt that evidence has been mis-read or the same was not taken into consideration. There are weighty reasons in support of each issue. The contention of learned counsel for the claimants/plaintiffs with reference to para-33 of the award that the learned Sole Arbitrator has erred in law while holding that the delay was waived by the plaintiffs despite the being no evidence on record is totally incorrect and against the record: In fact, the discussion made by the learned Arbitrator in paragraphs-34 to 38 shows that findings on Issue No. 4 regarding condoning of delay has been dealt with and decided in accordance with law, facts and material on record. The allegation that the learned Sole Arbitrator was guilty of being hypertechnical is also without any substance. The reasoning given by the learned Sole Arbitrator is quite convincing and it does not appear to be perverse. The objection with regard to para 37 of the award is also vague and without any substance as already observed above. Objection with reference to para 40 of the award has also no legs to stand. There appears no error apparent to have been committed by the Arbitrator.
So also para-46 of the award is est based on appreciation of the evidence and material available on the record. The objections in respect of Issues Nos. 9, 10 and 11 with reference to paras 54 to 56 of the award are also not tenable under the law.
15. I have examined the various findings recorded by the learned Sole Arbitrator on all the issues framed by him in respect of the controversy between the parties and I see no reason to differ with the said findings or to take another view of the matter, which even otherwise is not permissible.Under the law. Each and every finding is well-reasoned based on material available on record and there appear no error of law and facts. The contention that other view could be taken cannot be given any weight because this Court is not hearing an appeal against the award. If an award is to be scrutinised while applying the yard-stick of an appeal, the very purpose of referring the matter for Arbitration shall become frustrated. Some technical defects or infirmity in an award do not make the same inadmissible. However, I may reiterate here that the award in the present case which is based on appreciation of law and facts does not suffer from any illegality or infirmity calling for any interference by this Court. In result, the objections are over-ruled and award is made Rule of the Court, however, with no orders as to costs.