ࡱ> {~z_ 1dbjbj,E,E HN/N/\/lllll84L #>lll+++Rll++++$*#p+0L+##+#l+++L# 2: IN THE HIGH COURT OF SINDH, KARACHI. HCA No.237 of 2010 Present: Mr. Justice Syed Hasan Azhar Rizvi Mr. Justice Muhammad Junaid Ghaffar Managing Director, Karachi Fish Harbour Authority .. Appellant V e r s u s M/s. Hussain (Pvt) Ltd, .. Respondent J U D G M E N T Date of hearing: 23.01.2014. Date of judgment: 11 .02.2014. Appellant: Through Mr. Shaiq Usmani, Advocate. Respondents: Through Mr. Muhammad Masood Khan, Advocate. Muhammad Junaid Ghaffar, J: Through the instant appeal, the appellant has challenged the order dated 16.09.2010 passed by a learned Single Judge of this Court in Suit No. 606 of 2010, while deciding the objections filed on behalf of the appellant under Section 30 read with 33 of the Arbitration Act, 1940 for setting aside the award dated 12.04.2010 passed by a Sole Arbitrator. 2. Briefly, the relevant facts are that the respondent was awarded a contract by the appellant through competitive bidding for a commercial building consisting of shops and offices on Build, Operate and Transfer (B.O.T) basis on the land situated at Karachi Fish Harbour Authority. For this purpose an agreement was duly executed on 28.02.2005, wherein an Arbitration clause was also incorporated. Thereafter, a dispute arose between the parties and the matter was referred for Arbitration. The respondent nominated its Arbitrator, whereas the appellant failed to appoint or nominate its arbitrator within the stipulated time period. The respondent then requested the Arbitrator to proceed as Sole Arbitrator in terms of Section 9(b) of the Arbitration Act, 1940. The learned Arbitrator after recording of evidence gave its award dated 12.04.2010 in favour of the respondent which was placed before a learned Single Judge for making at it as a rule of the Court. Thereafter the appellant filed its objections against the award, which have been dismissed vide the impugned order and consequently the award has been made rule of the Court. 3. Mr. Shaiq Usmani, learned Counsel appearing on behalf of the appellant contended that the learned Sole Arbitrator was not authorized on the said date i.e. 12.04.2010 to pass any award in the matter as the period of four months as contemplated in clause 3 to the First Schedule (Implied Conditions of Arbitration Agreements) of the Arbitration Act, 1940, had expired. Per learned Counsel at the relevant time when the award was made, the learned Sole Arbitrator was functus officio. It was further contended that in fact the agreement on the basis of which the matter was referred for Arbitration, stood expired, after completion of one year on 26.01.2006 and the Respondent had placed reliance on an extension of agreement through a letter dated 26.09.2006 purportedly issued on behalf of the appellant, was even otherwise issued after the expiry of agreement and without prejudice, the same cannot extend the period of agreement itself. Learned Counsel further contended that the learned Sole Arbitrator framed issues to decide the controversy after recording of the evidence, therefore, such procedure was not in accordance with law and therefore, the learned Single Judge has failed to appreciate the illegalities committed by the learned Sole Arbitrator. Lastly, learned Counsel contended that the Respondent had filed its claim before the learned Sole Arbitrator for an amount of Rs. 89,40,000/- whereas at the time of filing of Affidavit in Evidence before the learned Sole Arbitrator, the amount was increased to Rs. 2,72,33,015/- and per learned Counsel, the learned Sole Arbitrator erred in law by granting the award in favour of the respondent for the entire amount as claimed through the affidavit in evidence instead of the original claim lodged before the learned Sole Arbitrator. Learned Counsel relied upon the case of M/s Design Group of Pakistan VS. Clifton Cantonment Board (NLR 1991 CLJ 555), Messrs Fazal Textile Mills Ltd. Vs. Messrs Sattar Cotton Ginning Factory Ltd (1982 CLC 97), Messrs Ismail Brothers (Karachi) ltd. Karachi Vs. Messrs S.M. Fazil & Co. Karachi (PLD 1958 (W.P) Karachi 158), Ramnath Narendranath VS. Nanjee Shamjee & Co. AIR 1953 Cal 787 and Sh. Mehtabuddin and another Vs. Abdul Sattar and 2 others (1981 CLC 828). 4. Conversely, Mr. Muhammad Masood Khan learned Counsel for the Respondent contended that there is no provision under the Arbitration Act 1940, wherein it can be said that after the expiry of four months period, the Arbitrator ceases to be an Arbitrator. Learned Counsel referred to Section 28 of the Arbitration Act, 1940, and specially sub-section (2) thereof, to contend that in fact the appellant through a written undertaking filed by the Counsel appearing on their behalf before the learned Sole Arbitrator, had agreed for continuation of the arbitration proceedings and therefore the appellant is now estopped by its own conduct to raise the objection of limitation in terms of clause 3 to the First Schedule of the Arbitration Act, 1940. Learned Counsel contended that without prejudice to this submission, even otherwise the conduct of the appellant was the primary reasons for any such delay in conclusion of the arbitration proceedings as they had time and again sought adjournments and kept on changing their advocates. Learned Counsel contended that it was for this reason that the matter proceeded in terms of Section 9(b) of the Arbitration Act, 1940 as they even failed to nominate their Arbitrator as required under the agreement. Learned Counsel further contended that the appellant had failed to avail any remedy under section 5 and 11 of the Arbitration Act, 1940. It was further argued by the learned Counsel for the respondent that the Arbitrator is not bound to follow any procedure as contemplated under the Civil Procedure Code and can regulate the proceedings on its own. Per learned Counsel, the appellant had led its evidence on all the issues so framed by the learned Sole Arbitrator and therefore, raising this objection at this stage was completely unjustified. Learned Counsel further submitted that the appellant has a very limited scope under Section 39 of the Arbitration Act, 1940 and cannot challenge the merits of the case in the instant appeal as it would amount to reappraisal of the evidence on record. Learned Counsel submitted that the only requirement for the learned Sole Arbitrator was to answer the controversy with reasoning, which has been done in the instant award. With regard to the objection as to the filing of additional claims, learned Counsel submitted that the original claim filed before the learned Sole Arbitrator initially was upto the date on which the claim was filed, and thereafter a considerable time has elapsed in between, therefore, at the time of filing of affidavit in evidence, the additional claim pertaining to the period in between, was filed by the respondent and the appellant had even cross-examined the witness of the respondent on this issued. Learned Counsel relied upon the case of WAPDA v/s Khanzada Muhammad Abdul Haque Khan Khattak and Company (PLD 1990 SC 359), Syed Mukhtar Hussain v/s Mst. Hajani Zubeda and another reported as (2003 YLR 3289), Fazal Textile Mills Ltd., Vs Sattar Cotton Ginning Factory Limited (1982 CLC 97). 5. We have heard both the learned counsel and have perused the record and the case law relied upon by them. Vide order dated 20.01.2011 it was directed that the matter will be finally disposed of at Katcha peshi stage. 6. It appears that admittedly there was a dispute between the appellant and the respondent with regard to the construction of the said project as referred to above. Thereafter both the parties agreed to refer the matter for Arbitration. Since the appellant failed to nominate its Arbitrator, the Arbitrator appointed by the respondent then proceeded with the matter as a Sole Arbitrator and vide his award dated 12.04.2010 has accepted the claim of the respondent. The award was then forwarded by the Sole Arbitrator pursuant to Section 14(2) of the Arbitration Act 1940, read with Rule 282 of the Sindh Chief Court Rule (OS) and was accordingly numbered as Suit No. 606 of 2010 by the office in terms of sub rule (3) of Rule 282 ibid for making the award as Rule of the Court against which the appellant filed its objection under Section 30 read with Section 33 of the Arbitration Act, 1940 for setting aside of the award. Such objections have been dismissed by the learned Single Judge vide the impugned order and the claim of the respondent has been accepted and the award of the arbitrator has been made rule of the Court. 7. The precise objections raised by the learned counsel for the appellant were, that the Sole Arbitrator at the time of making the award was functus officio; that issues were framed by the learned Sole Arbitrator after the evidence; the purported letter dated 26.09.2006 on the basis of which the learned Sole Arbitrator came to the conclusion that there was an extension in the life of the agreement has been misread; and finally the claimed amount was enhanced on the basis of affidavit-in-evidence without any proper application and such acceptance by the learned Sole Arbitrator was unlawful and not permissible under the Arbitration Act, 1940. 8. We have noticed that though some of the objections, but not all, were also taken before the learned Single Judge at the time of filing of the objections against the award, and the learned Single Judge has answered all such objections, after a detailed discussion and considering the relevant case law. It is a settled proposition of law that while hearing objections to the award, the Court, (i.e. the learned Single Judge as well as the Appellate Court), could not sit in appeal on the award which has been passed after recording of evidence lead by both the parties with reasons thereon. It is not the case of the appellant before us that the learned Sole Arbitrator has failed to record reasons for granting the award in favour of the respondent. We have gone through the award as well as the impugned Order and in our opinion the issues raised by the appellant hereinabove have been dealt eloquently and we are not inclined to upset the findings of the learned Single Judge as recorded in the impugned order. We are fortified in this regard by the following observations of the Honble Supreme Court in the case reported in PLD 2011 SC 506 (Federation of Pakistan through Secretary, Ministry of Food, Islamabad and others vs. Messrs Joint Venture Kocks K.G/Rist) Heard. While considering the objections under sections 30 & 33 of the Arbitration Act, 1940 the court is not supposed to sit as a court of appeal and fish for the latent errors in the arbitration proceedings or the award. The arbitration is a forum of the parties own choice and is competent to resolve the issues of law and the fact between them, which opinion/decision should not be lightly interfered by the court while deciding the objection thereto, until a clear and definite case within the purview of the section noted above is made out, inasmuch as the error of law or fact in relation to the proceedings or the award is floating on the surface, which cannot be ignored and if left outstanding shall cause grave injustice or violate any express provision of law or the law laid down by the superior courts, or that the arbitrator has misconducted thereof. Obviously if there is a blatant and grave error of fact such as misreading and non-reading or clear violation of law, the interference may be justified by the courts. But for the appraisal and appreciation of the evidence, the courts should not indulge into rowing probe to dig out an error and interfere in the award on the reasoning that a different conclusion of fact could possibly be drawn. (See Premier Insurance Company and others v. Attock Textile Mills Ltd. PLD 2006 Lahore 534) 9. Similarly a learned Single Judge of this Court while dealing with the same issue as to whether the award of an Arbitrator can be upset by a Court while hearing the objections filed under sections 30 and 33 of the Arbitration Act 1940, in the case reported as 1999 YLR 1213 (Haji Abdul Hameed & Co. Vs. Insurance Company of North America) has observed that in so far as the law on the subject is concerned, it is now well settled that the Court in which the award is filed ought not to launch into an exercise of re-appraisement of the evidence or to set itself up as an Appellant Court and that it should only interfere with the award when there is an error on the face of award. The learned Single Judge after having fortified itself with the law laid down by the Honble Supreme Court in the case of Joint Venture KG/RIST V/s Federation of Pakistan reported as PLD 1996 SC 108 went a step further and observed as follows:- It may be added here that invariably the parties after arbitration ends embroil themselves in protracted litigation mostly at the instance of the one against whom the award is given usually to avoid payment. Consequently, the entire purpose of arbitration is lost which is to give opportunity to the parties to settle their disputes quickly in a commercial manner without being hamstrung due to intricacies of Court procedures. Consequently, in my view it is incumbent upon the Courts to strictly follow the rule laid down in the above Supreme Court judgment and interfere with the award only in case the error is apparent on the face of the award. To illustrate, I would go to the extent of saying that the error in the award should be so manifest that a person with even a rudimentary knowledge of law should be able to perceive it, since arbitration ought to be essentially commercial in nature. In so far as this case is concerned I find that let alone there being any error on the face of award I find that the award is well-reasoned and the deductions arrived at by the learned umpire are logical and, hence ought to be endorsed. I, therefore, find no merit in the objections raised by the plaintiff and, therefore, direct that this award dated 28.01.1994 be made rule of the Court and accordingly this is disposed of alongwith the application under Section 33 read with section 30 of the Arbitration Act. 10. However, as a matter of indulgence we have even examined the contentions raised on the merits of the case by the learned counsel for the appellant and would like to observe that it is also a settled law that once a party has chosen to participate in the proceedings before the Arbitrator, even though the time stipulated under clause-3 of the First Schedule to the Arbitration Act 1940, has lapsed, but by the conduct of the parties such time frame is extended ipso-facto. We have noticed that while participating in the arbitration proceedings no such objections was ever raised in so far as the question of limitation is concerned or whether as to the learned Arbitrator had become functus officio at the relevant time. Rather on the contrary, the advocate appearing on behalf of the appellant had made a categorical statement while seeking adjournments after adjournments before the learned Sole Arbitrator, that if the adjournments are granted, the appellant would not object with regard to the extension of time and further undertook that they will not object if the announcement of the award may go beyond the stipulated time period of four months. Therefore, we are of the view the appellant is estopped by its own conduct to raise such objections at this belated stage which is totally uncalled for and could not be considered by this Court. The Honble Supreme Court in the case of WAPDA (Supra) has made the following observations and those are relevant to the instant case and are as under; Reading section 3, implied Condition No. 3 in the First Schedule to the Arbitration Act and Section 28 thereof together, the position of law appears to be clear that the parties are free to enlarge the time for making the award with their mutual consent as with the consent of all the parties, a term can be incorporated in the arbitration agreement giving powers to the arbitrator to enlarge the time for making the award. By Condition No. 3 in the First Schedule, statutorily an implied term is incorporated in the agreement that the award shall be made within four months after entering upon the reference. By this statutory provision, the term is to be taken as an integral part of the arbitration agreement and is subject to alteration with the consent of the parties like any other term of a contract. If that were not the intention of the legislature, Section 28(2) would not make valid a provision in the arbitration agreement empowering the arbitrator or arbitrators to enlarge the time for making the award with the consent of the parties. If the parties after the expiry of the four months submit themselves to the jurisdiction of the arbitrator and take part in the proceedings enabling him to make an award, it cannot be said that the arbitrator acted without jurisdiction. In such a contingency, the principles of waiver and estopple would apply with full force. It is now well settled that where the party had all along submitted to the proceedings of the arbitrator without any protest, he cannot turn round and object or insist that the award was made out of statutory period. In Province of Balochistan v. Malik Haji Gul Hasan PLD 1982 Quetta 52, M/s. Sind Cotton Exporter v. M/s. A. B. Sadiq Brothers PLD 1955 Sind 268 and M/s. Musa Ismail & Co. v. Amin Agencies Ltd. PLD 1955 Sind 242, it was held by the High Courts of Baluchistan and Sind respectively that the party raising no objection before the award is given and voluntarily acquiescing to arbitrators jurisdiction, such party was debarred from raising objection at later stage. It was also held by a Division Bench of the Lahore High Court in the case of Ghulam Mohiuddin v. Federation of Pakistan PLD 1967 Lahore 204 that if a party takes part in the proceedings even after the expiry of four months without raising any objection, it cannot be allowed to raise such an objection. In this case a large number of cases on the point from Pakistan and other jurisdictions were reviewed and discussed. 11. In so far as the other objections raised by the learned counsel for the appellant are concerned, we are of the view that the learned Sole Arbitrator has the authority to regulate its own procedure, and is not bound to follow any specific procedure, subject to the condition that the parties are allowed to lead their evidence as well as opportunity to contest the claims. It is not the case of the appellant that they have not been provided a proper chance to rebut the claim of the respondent, but they have merely objected to the fact that issues were framed by the learned Sole Arbitrator after recording of the evidence. Even otherwise we have noticed that the issues which have been framed in the award of the Learned Sole Arbitrator, have been done so as a matter of convenience to decide the controversy in hand and to give its findings on all such issues which had arisen and are relatable to the evidence lead by the parties and none of the issues decided, are outside the scope of the evidence so lead by the parties. A Division Bench of this Court in the case reported as 1981 CLC 311 in the case of The Premier Insurance Co. (Pakistan) Ltd. Karachi Vs. Ejaz Ahmed Khawaja & 3 others has held as follows:- The question of appreciation of the evidence by the Umpire was accordingly not open to challenge in the proceedings before the learned Single Judge. A Court while examining the legality of the award under section 33 of the Arbitration Act could not substitute its own finding on appreciation of the evidence, in place of the one given by the Arbitrators or the Umpire, even if the Court had reached a different conclusion on that evidence. The proceedings before the Arbitrators or the Umpire are in the nature of proceedings before a domestic Tribunal and strict compliance of procedural law or the Law of Evidence cannot be insisted upon in such proceedings. We are accordingly of the view that the contention of the learned counsel for the appellant that the award was based on no evidence, has no substance. 12. Finally, the objections that as to how the claim of the respondent was allowed to be enhanced at the time of filing of affidavit-in-evidence, it would suffice to observe that the claim of the respondent was still continuing at the time when the matter was referred to the arbitrator and the respondent while filing its affidavit in evidence has only included the period which in fact had lapsed during the period of filing of the claim and the recording of the evidence. This was also precisely for the reason that the appellant had consumed a lot of time by firstly failing to appoint its Arbitrator, and secondly by seeking numerous adjournments, wherein the cause of action was in continuance in so far as the claim of the respondent is concerned. Therefore we are of the view that such enhancement of the claim was also justified as the appellant had full opportunity to contest such claim which in fact has also been done by them by cross-examining the witness of the respondent on this issue. 13. In so far as the cases relied upon by the learned counsel for appellant are concerned, after examining and going through all, we are of the view that none of them is relevant to the facts of the instant case. The first case relied upon is of M/s Design Group (supra), in which there was a specific objection by one of the parties which was made before the Sole Arbitrator regarding the authority to give an award beyond the prescribed time, which in the instant case is lacking. In the second case of Fazal Textile (supra) similarly one of the parties had objected before the Arbitrator that no award could be given against them because the time had expired and based on this the Court was pleased to uphold such objection. In so far as the case of Ismail Brothers (supra) is concerned, to our understanding the same is in respect of an altogether a different controversy which is not before us. The case of Ramnath Narendranath (supra) is from the Indian jurisdiction and to our understanding, in fact supports the case of the respondent because in that matter the Court came to the conclusion that if the parties fixed the time by agreement amongst themselves therefore the restriction of the time period as stipulated under clause 3 of the First Schedule to the Arbitration Act, 1940 would not be applicable. Since in this matter the appellant had agreed not to object regarding the expiry of the period of for arbitration through a specific undertaking before the learned Sole Arbitrator, therefore this case is also of no assistance. Finally in the case of Mehtabuddin (supra) the Court once again held that if parties agree to extend the time therefore the Award could be extended by the Arbitrator. All these cases relied upon by the learned counsel for appellant are not relevant and hence cannot be considered by this Court. 14. In view of hereinabove, we are of the view that the findings of the learned Single Judge do not require any interference by this Court and consequently this appeal fails and is hereby dismissed with all pending application(s), however with no order as to costs. 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