This award has been filed in pursuance of arbitration proceedings arising out of Suit No,733 of 1991 between the parties in which the reference was made to the Arbitrator by this Court vide notice dated 22-3-1993.
2. Briefly stated, the facts relevant for the disposal of this suit are that after the award of contract, a contract agreement was signed between the respondent No,1 through the Director-General, National Highway Board and Adamji Construction Company, the claimant, for construction, completion and maintenance of the works of the Hyderabad Bypass Project near Hyderabad city on the terms and conditions incorporated in detail in the contract document. National Highway Board was an unincorporated body, prior to the date of execution of the contract set up by the Ministry of Communication, however, subsequently defendant No,2 was constituted as a statutory corporation under the National Highway Authority Act, 1991 (Act XI of 1991). By virtue of section 27 of the said Act, all assets, liabilities, rights and obligations of the National Highway Board stood transferred to the Authority.
3. It is the case of the claimant/plaintiff that right from the inception of the contract, defendant No,1 as well as the 'erstwhile National Highway Board committed repeated: breaches of the contract and in view of other circumstances beyond the control of the claimant, the latter was entitled to extension of time schedule and damages, as well as escalation in rates and prices of work or compensation. As a result the claimant was prevented from timely performance of the contract.
Accordingly the claimant pleaded certain breaches of the contract on the part of the defendant as enumerated in the plaint as well as in the award.
4. On the basis of alleged defaults, the breaches of contract, impediments, illegal actions taken by the defendants Nos. 1 and 2 or their employees, the plaintiff/claimant claimed a total amount of Rs,16,20,70,909.86 against them detailed hereunder:---
(i) increae in overheads and superintendence costs Rs.9,72,56,723
(ii) Plaint idle cost Rs.3,72,92,500
(iii) Additional labour cost Rs.1,88,99,755 Total: Rs.15,34,48,978 Rupees one hundred and fifty-three million, four hundred forty-eight thousand and nine hundred seventy-eight as Extra Cost vide Annexure I with claim. In addition claimant claimed for construction material which remained at the site of work at the time of takeover vide Annexure II with claim at Rs,27,53,740. Further an amount at the rate of Rs,10,65,500 per month with effect from 4-6-1991 has been claimed as compensation for use of plant, machinery and equipment till it is returned to the claimant.
5. Defendant No,1 did not file any written statement in reply to the claims of the claimant.
Defendants No,2 and 3 have filed written statements and have contested the claim of the claimant.
6. The defendants denied the allegations of the claimant/plaintiff to the effect that the defendants failed to comply with various terms and conditions of the contract and that claimant was entitled to claim damages. It was also denied that claimant was not provided land in accordance with the time schedule agreed upon. It was pleaded that the claimant/plaintiff failed to adhere to the time schedules. The allegations of hindrances were also denied, so also the delay in payment of running bills. It was pleaded that the claimant due to his own fault stopped the work nevertheless the contract was never cancelled. It was pleaded that necessary assistance and cooperation was always provided to the claimant by the officers and employees of the defendants. The action taken by the defendants under clause 16-1(iii) by defendant No,3 was justified to be lawful, valid and proper in the circumstances of the case with full authority under the law. Apart from denying the claim of the plaintiff/claimant, the defendants also set up a counter-claim for recovery of the following sums of money from the claimant:-
(i) Rs,34.404 million as liquidated damages under Clause 9.8 of GCC on account of delay in completing the work within the contract period vide Clause 9.9 of GCC.
(ii) Encashment of Performance Bond in the sum of Rs,34,500,000.
(iii) Encashment of Retention Moneys Guarantee, amounting to Rs,25,322,140.
(iv) Recovery of all expenses incurred by respondent/defendant towards execution of remaining unexecuted work (Cost and Risk Account).
7. From the controversies emanating from the pleadings of the parties, learned sole arbitrator framed the following consent issues:--
(i) Is defendant No,2 (National Highway Authority) the lawful transferee of all assets and liabilities, and all the rights and obligations of the National Highways Board and Director-General, National Highways, by virtue of section 27 of the National Highways Authority Ordinance, 1991 and the National Highways Authority Act, 1991? If yes, what is the effect?
(ii) Whether the National Highways Board was a statutory Corporate Body, or a legal entity ? If it is not so, its effect?
(iii) Did defendant No,3 have authority and power to act as the 'employer' qua the contract in question? If not, what is the effect?
(iv) Is the plaintiff estopped by word and conduct from denying the status and authority of defendants Nos. 2 and 3 to act in regard to the contract in question?
(v) Did defendant No,1 commit breach of contract by doing or failing to do the various acts as alleged in para. 8(a) to (d) of the Statement of Claim?
(vi)Whether delay, if any, in completion of the works was due to any acts or neglect of the plaintiff/claimant or was it beyond the control of the plaintiff/claimant and/or due to default/breaches on part of the defendants/employer?
(vii) Was the action of defendants Nos.2 and 3 under clause 16.1 (iii) of the General Conditions of Contract mala fide, invalid and not in accordance with law and the terms of the contract and/or without lawful authority?
(viii) Are the defendants Nos.2 and 3 successors of defendant No,1 as employer under the contract in question? If not, what is the effect?
(ix)Were the defendants. Nos.2 and 3 entitled to expel the plaintiff and his sub-contractors from the contract works, and seize their equipment and/or use the same. If yes (a) did the defendants take measurements of the work already executed by the plaintiff? (b) have the defendants awarded the contract for the balance work yet to be executed, at highly enhanced price/rates?
(x) Are any of the defendants legally entitled to encash the securities attaching to the Contract, namely, Performance Bond, Mobilization Advance Bond, Retention Money Guarantee Bond?
(xi)Is the plaintiff entitled to compensation in the aggregate sum of Rs,153,448,978 as claimed in para. 20(A), Rs,8,621,623.12 in para.20(B) and Rs,1,065,500 in para.20(C) of the Statement of Claim?
(xii) Are the defendants in law and on facts of the case entitled to damages as claimed in their counter-claim and whether their claim can be arbitrated upon by the Hon'ble Arbitrator?
(xiii) What should the award be?
8. It seems that the parties led their evidence and on the basis of the evidence so adduced by the parties, the learned sole arbitrator came to the conclusion that the defendants were the defaulting patty, therefore, he was of the view that the defendants have no right to claim liquidated damages for the alleged delay. He further observed that they were also not entitled to recovery of Mobilization Advance, Performance Bond as well as Retention Monies Bond. The counter-claim of the defendants was accordingly rejected being untenable. Learned sole arbitrator, however, awarded claim of the plaintiff in the following manner vide his Award dated 28-9-2001:--
(1) Increase in overheads and Superintendence costsRs. 66,16,1 10
(2) Plant Idle Cost Rs.1,00,00,000
(3) Return of the Plant and Machinery taken over by the respondentRespondents shall return Plant and Machinery to the claimants as per details given in para. 67 of the Award.
9. Since the defendants failed to file Objections within the stipulated period, as such, their application under section 148, C.P.C. For extension of time was dismissed vide order dated 18-9- 2002.
10. I have heard Mr. Iqbal Bawany, learned counsel for the plaintiff and Mr. Sarwar Muhammad Khan, learned counsel appearing for he defendants No,2 and 3 and have carefully perused the Award.
11. It was mainly contended by the learned counsel for the plaintiff that this Court while examining the validity of the Award does not act as a Court of Appeal and, therefore, cannot undertake reappraisal of evidence recorded by the learned sole arbitrator in order to discover an error. It was next contended that in case the Objections to the Award are not filed within time, the Award is to be made the rule of the Court. It was further contended that the law leans in favour to upholding the Award and not vitiating the same. In support of his contentions., learned counsel has relied upon: (i) PLD 1996 SC 108: (ii) 1999 SCMR 121: (iii) 1983 SCMR 716: (iv) PLD 1998 Lah. 132: (v) 1997 CLC 546: (vi) PLD 1998 Kar. 79'?(vii) 1999 MLD 2617: (viii) 2002 CLC 353.
12. Conversely, it was contended by the learned counsel for the defendants Nos.2 and 3 that this Court has inherent powers to modify or remit the award if it is satisfied that it suffers from any patent illegality. Learned counsel argued that the findings were contradictory in respect of Issue No,11.
13. The arguments rendered by the learned counsel have been considered and the Award has been examined.
14. There is no cavil with the proposition that this Court while examining the validity of an Award does not at as a Court of Appeal and is not vested with the powers to undertake reappraisal of the evidence in order to discover any error or infirmity in the Award. The authorities relied upon by the learned counsel for the plaintiff are fully applicable to that extent. However, it needs no emphasis that the role Of the Courts in the scheme of the Arbitration Act, 1940 is of supervisory character.
' In view of the above, it hardly needs any argument that before making an award rule of the Court and pronouncing judgment in the terms of c the award, it is the duty of the Court to see that there was no cause to remit the award for reconsideration or set it aside. This power can even be exercised suo motu. In Ashfaq Ali Qureshi v. Municipal Corporation, Multan and others (1985 SCMR 597), it was observed by the Honourable Supreme Court that the Court cannot act blindly on an Award and mere absence of objection will not altogether absolve the Court from its responsibility of deciding whether the award was valid on the face of it. While making the aforesaid observation, the provisions of sections 16 and 30 of the Arbitration Act, 1940 were noticed by the Honourable Court. Section 16 of the Arbitration Act, 1940 gives enough powers to this Court to remit the award to the arbitrator for reconsideration on the basis of certain conditions as enumerated in section 16 itself.
' It will be appropriate to reproduce hereinbelow the provisions contained in sections 16 and 17 of the Arbitration Act:-- "16. Power to remit award.--(1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit--
(a) where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or
(b) where the award is so indefinite as to be incapable of execution; or
(c) where an objection to the legality of the award is apparent upon the facts of it.
(2) Where an award is remitted under subsection (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court: Provided that any time so fixed may be extended by subsequent order of the Court.
(3) An award remitted under subsection (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed."
"17. Judgment in terms of award.--Where the Court seems no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award." .
15. From the perusal of the provisions of section 17 ibid, it is glaringly evident and clear that the award is to be made rule of the Court only if Court sees no reason to set aside or remit the award.
The plain reading of this section shows that the Court shall satisfy itself that the award does not suffer from patent illegality or defect necessitating either setting aside of the award or its remission to the Arbitrator. Failure of filing objections within the prescribed time does not absolve the Court of its responsibility to decide whether or not the award was valid on the face of it. The decision of Dacca High Court in Abdul Khaliq v. Province of East Pakistan and another (PLD 1964 Dacca 166) supports this view. Similar view was expressed by the Balochistan High Court in Province of Balochistan v. M/s. Tribal Friends Company, Loralai (PLD 1986 Quetta 321).
16. Adverting to the contents of the award, it may be stated that Issue No,11 which relates to the entitlement of the plaintiff to compensation as claimed by him in para. 20(a), para. 20(b) and para. 20(c) of the statement of claim, has been discussed in paras. Nos.57 to 67 of the Award. While discussing this claim in para. 61, the learned sole arbitrator, inter alia, observed as under:-- "The next item of claim in exhibit is plant idle cost and a total sum of Rs,37,292,500 has been claimed on the basis of operational cost per day per unit of the plant in relation to the total market value of the same and its life span. There is no evidence on record of the market value or how operational cost per day per unit or for that matter of its life span, was determined. I am therefore at a loss to assess the validity of this item of claim for want of tangible evidence. The claim in arguments is totally speculative. No witness was produced to explain the method of calculation and formula adopted so that this evidence could be scrutinized and challenged in cross- examination."
17. However, strangely enough, in para. 62 while dealing with the same item under the head of "Plant Idle Cost", it was observed as under:-- "No witness of the contractor has explained how and on what basis this amount has been calculated. Contractor's witness No,2 has only produced paper calculation without elucidating the basic factors on which the calculations were made. Nor was any cross-examination directed against the claim. The above sum is claimed for 35 months. But as I have already held that the delay attributable to the Employer was 15 months. Therefore the contractor would be entitled to Rs,1,48,06,875 at the rate of Rs,9,87,125.00 per month as claimed. However, I feel that a sum of Rs,1,00,00,000 would meet the ends of justice considering all the circumstances of the case."
18. The bare perusal of the discussion made under the above two paras. Reveals that the observations made therein are inconsistent and in conflict with each other. Apparently the findings whereby the claimant/contractor was held to be entitled to a sum of Rs,1,00,00,000 are devoid of foundation rather imaginary, more particularly, while the learned arbitrator himself was constrained to admit in para. 61 in clear terms that he was "at loss to assess the validity of this item of claim for want of tangible evidence" (Emphasis laid for convenience) on the ground that "No witness was produced to explain the method of calculation, and formula adopted", and further that there was no evidence ' on record of the market value or that how the operational cost was determined.
19. In my view, this is a defect apparent on the face of the award which cannot be overlooked. In view of this patent anomaly, the award cannot be made rule of the Court. In the circumstances, this is a fit case in which the award should be remitted to the learned sole arbitrator there being good cause for the same.
20. Accordingly, the award is remitted to the learned sole arbitrator for reconsideration of Issue No,11. The learned sole arbitrator shall resubmit the decision with definite findings within a period of six months after affording full opportunity of hearing to the parties concerned.
Award remitted.