This first appeal is directed against judgment/order dated 9.2.1994 passed by Civil Judge, Lahore, whereby an award dated 7.6.1985 was made rule of the Court.
2. Precisely, facts relevant for disposal of the instant appeal are that respondent was granted by the appellant a contract to construct Water Supply Chambers and Equipment Installations, as detailed in the tender documents, after acceptance of which, Contract No, 202-WASA dated 1.3.1979 was executed between the parties for carrying out the work in question. This contract was for a sum of Rs, 65,10,668.10. Respondent was to install 20 tube-wells, 12 Sui gas engines and 16 sub- merciable pumps to be supplied by the appellant along construction of 32 Chambers, 4 well centers and boundary walls. The entire work was to be completed within a period of eleven months till 31.1.1980.
3. According to the case of the respondent, appellant did not discharge its obligations under the contract, as it did not provide turbine pumps and Sui gas engines on account of which the work could not be completed within stipulated time. According to the respondent's assertion Sui gas engines could not be installed, without the installation of turbine pumps, which were to be supplied by the appellant. Appellant itself had been changing the designs and drawings for construction work, on account of these changes as well, terms of the tender could not be fulfilled within time.
Appellant at the same time did not provide possession of vacant spaces for the construction and due to many other defects, which were to be cleared by the appellant, contractor requested the appellant to extend time for performance of the agreement, which according to the respondent, was delayed due to omission of the appellant itself. Appellant, instead of extending period of contract, issued a show-cause notice on 3.6.1980 requiring the respondent as to why the contract should not be cancelled. The entire position, as detailed above, was explained by the respondent and it was pleaded that the delay was not on their part but inspite of it contract in question was cancelled, at the costs and risk of the respondent on 15.7.1980. Respondent filed a petition under Section 20 of the Arbitration Act, 1940 and since the parties were unanimous on the point of execution of contract between them containing arbitration Clause (D-43), Court concerned directed the parties to produce the agreement in Court vide its order dated 25.7.1981. Respondent filed a list of arbitrators and consequently, matter was referred to the arbitrator, where parties filed their respective claims. Arbitrator framed four issues to resolve the point of controversy between them. First issue related to respondent as to whether it has defaulted in performance of its obligations under the contract in accordance with the terms thereof. Second issue was as to whether rescission, of contract by the appellant is justified. Third issue related to entitlement of the respondent to claim amount or any part thereof. Last and fourth issue was as to whether the appellant was entitled to counter claim, made by it, or any part thereof.
4. Arbitrator after recording evidence of both the parties and in result of its appraisal, announced his award on 7.6.1985, which was filed in Court on 24.7.1985 in presence of the parties. Trial Court directed the parties to file their objections, if any; within 30 days. Appellant filed objections on 1.9.1985, which were replied by the respondent. The appellant raised an objection of legal misconduct by the arbitrator, whereunder it was asserted that the award is conjectural and is result of wrong appraisal of evidence. The appellant also asserted misreading and non-reading of evidence by the arbitrator. On these objections, trial Court framed two issues:--
1. Whether the arbitrator has misconducted himself during the proceedings? If so its effect? OPR.
2. Relief.
Parties produced evidence in support of their respective stances. Learned Civil Judge, who was seized of the matter, after appraisal of evidence of the parties, vide his judgment/order dated 9.2.1994 found that objection by the appellant of misconduct is without any substance and thus made the award rule of the Court in the sum of Rs, 24,51,219.74 with return/interest on Rs, 17.62 lacs at the rate of 15% per annum from 15.7.1980 till the date of payment by the appellant.
5. Appellant aggrieved of the decision of the learned Civil Judge dated 9.2.1994 making award rule of the Court, has come up in appeal before this Court for setting aside the said order. Learned counsel for the appellant has attacked the order of the trial Court on multiple grounds, including that interest could not have been allowed, as it was neither included in the reference nor was determined by the arbitrator. He also asserted that work was not done by the respondent within the stipulated period, inspite of repeated notices by the appellant. He also complains that contractor did not join measurement by the department, which was done at their back and according to department's measurements, only an amount of Rs, 3,12,862/-was payable for the work done by them. Learned counsel for the appellant further elaborated his arguments by saying that findings of the arbitrator are conjectural because there was no evidence before him regarding work done.
He submits that respondents only undertook 27% of the work, whereas a contrary view taken by the arbitrator should have been struck down by the Court below. Learned counsel for the appellant further urged that arbitrator misconducted the proceedings and thus his award should not have been made rule of the Court.
6. Conversely, learned counsel for the respondent have not only supported the judgment of the trial Court but have also refuted the submissions of the appellant and urged that trial Court or the Court of appeal cannot substitute its own viewpoint in place of the one taken by the arbitrator after due appraisal of evidence. They in support of their argument relied on the judgments reported in the cases of Messrs Waheed Brothers (Pakistan) Ltd. Lahore through Chief Executive vs. Messrs Izhar (Put.) Ltd:, Lahore through 'Managing Director (2002 SCM R 366), Messrs Tribal Friends Co. us.
Province of Balochistan (2002 SCM R 1903) and S.G. Rayon Mills (Pvt.) Limited vs. Fida Hussain & Associates (2002 CLC 353). Learned counsel for the respondent have also contended that there is no misconduct on part of the arbitrator who provided full opportunity to the parties to substantiate their stances by production of evidence. Appellant itself did not produce evidence in support of the alleged misconduct of the arbitrator or the failure of the respondent to complete the work within the stipulated period.
7. I have anxiously considered the arguments of the learned counsel for the parties and have examined the record. Both the arbitrator and the trial Court have minutely examined the evidence of the parties and have returned findings concurrently that respondent did not make any default in performance of the contract. Appellant itself did not discharge its obligation under the contract by providing the required machinery in form of turbine pumps, Sui gas engines and other allied installations to the respondent. It also could not hand over possession of vacant sites where the contractor was to raise constructions besides the fact that the appellant itself had been changing designs and drawings of the work, which consumed a lot of time resulting in non-completion of tender work. Appellant on the request by the respondent, did not advert to its own short comings and non-discharge of obligations under the contract and unilaterally refused extension of time and illegally rescinded the contract, at the costs and risk of the respondent on 15.7.1980, though they were not at fault, as such, rescission of contract by the appellant was absolutely unjustified.
Calculations made by the. arbitrator with regard to work done and amount due to the respondent, would after deducting the amounts already paid by the appellant are not in any manner shown to be incorrect or contrary to record. Matters regarding depreciation of currency, loss of investment or profit etc. which were to be determined according to the principle laid down by the Honourable Supreme Court in the case of Karachi Transport Corporation vs. Karachi Tameerat Limited (PLD 1992 S.C. 479) escaped notice of the arbitrator as well as the trial Court to the advantage of the appellant and thus they should not grumble about the amount awarded against them. Had the principle laid down in the precedent case, above referred, been followed, the liability of the appellant would have inflated many a times than the one awarded. In the instant case contractor rightly claimed overhead expenses as a damage for the delay in execution of the contract, because of the employer. It is evident that the delay in completion of work within the stipulated time was caused by the appellant itself and thus the respondent had to incurred more expenses which can legally be termed as a loss. Similarly, awarding of return/interest at the rate of 15% on only Rs, 17.62 lacs to the contractor is absolutely justified. According to alighted judgment of the Honourable Supreme Court of Pakistan in the case of TERNI S.P.A vs. PECO (Pakistan Engineering 'Company) Ltd. (1992 SCM R 2238), while interpreting Section 1 of the Interest Act, 1839 and Sections 34 and 34-B of the Civil Procedure Code, 1908, it was held that interest can be claimed from the date when such debt or loan becomes payable, from the date specified and if no such date is mentioned, in writing, the claim of interest up to date of suit, is recoverable. Grant or refusal of interest is a discretion vesting in Court exercisable on the basis of known principles for administration of justice. The discretion vesting in the trial Court has judiciously been invoked.
8. Submission of the respondent that the trial Court or the Court of appeal cannot substitute their own viewpoint to the one given by the arbitrator, is also not misplaced. Cases relied by the respondent's counsel are directly applicable to the proposition and thus I respectfully following the view taken by the Honourable Supreme Court of Pakistan in those cases, hold that the view taken by the arbitrator can in no manner be interfered by this Court, as it cannot reappraise the evidence produced before the arbitrator.
9. For what has been discussed above, I find that judgment of the trial Court is absolutely in consonance with the evidence on the file and no interference is called for in this appeal, as the respondents have already been given much less amount, to the one to which they were entitled