2019 C L C 1685
Arbitrator was appointed who submitted his award in the court wherein principal amount with markup on the same was granted till payment---Objections raised against the award were rejected and it was made Rule of the court ---Validity---court while examining the validity of award could not act as a court of Appeal and make reappraisal of evidence recorded by the arbitrator in order to discover the error or infirmity in the award unless such error or infirmity was on the record
2019 C L C 1685
[Balochistan]
Before Muhammad Ejaz Swati and Naeem Akhtar Afghan, JJ
BALOCHISTAN UNIVERSITY OF INFORMATION AND TECHNOLOGY AND MANAGEMENT SCIENCES, QUETTA----Appellant
Versus
NAWAB BROTHER (PVT.) LIMITED----Respondent
R.F.A. No. 56 of 2018, decided on 13th May, 2019.
Arbitration Act (X of 1940)---
----Ss. 20, 29, 30 & 33---Arbitration agreement---Award---Objection---Arbitrator was appointed who submitted his award in the Court wherein principal amount with markup on the same was granted till payment---Objections raised against the award were rejected and it was made Rule of the Court---Validity---Court while examining the validity of award could not act as a Court of Appeal and make reappraisal of evidence recorded by the arbitrator in order to discover the error or infirmity in the award unless such error or infirmity was on the record---Award, in the present case, was based on documentary evidence which did not require reappraisal of evidence---No infirmity had been pointed out in the impugned award---Nothing was on record with regard to misconduct of arbitrator---Arbitrator had no authority to grant any markup on the principal amount from the date of award till payment---Markup with effect from the date of award till realization of principal amount awarded by the arbitrator was without competence---Appeal was dismissed, accordingly.
PLD 2011 SC 506; PLD 2003 SC 301; 2002 SCMR 366; 1983 SCMR 718 and 1981 CLC 311 ref.
PLD 1996 SC 108 and Ghulam Abbas v. Trustees of the Port of Karachi PLD 1987 SC 393 rel.
Akram Shah for Appellant.
Ghulam Hussain for Respondent.
Date of hearing: 13th April, 2019.
JUDGMENT
MUHAMMAD EJAZ SWATI, J.---The respondent/applicant filed an application under section 20 of the Arbitration Act, 1940 (the Act, 1940) and prayed to direct the appellant/respondent to file their agreement before the Court and referred the dispute between the parties to the arbitrator annexed therewith.
2. The appellant/respondent contested the application by way of filing rejoinder to the application, however, on 24th April 2013, both the parties with their mutual consent appointed Mr. Hadi Shakeel Ahmed, Advocate as Arbitrator and the matter was referred to the learned Arbitrator along with the original case. The learned Arbitrator after recording evidence and hearing the parties made an award dated 26th December 2017 granting sum of Rs.48,185,276/- with markup at the rate of 8% per annum from the date of award up to the date of final payment by the appellant to the contractor, and a sum of Rs.500,000/-was also awarded towards the cost of the proceedings. The counter claim of the appellant was rejected.
3. The respondent raised no objection on the award, however, the appellant raised objection by way of filing application under section 33 of the Act, 1940.
4. The learned Civil Judge-I, Quetta (hereinafter the "trial Court") while rejecting the objections vide order/decree dated 8th May, 2018 (hereinafter the "impugned order/decree") made the award rule of the Court.
5. Learned counsel for the appellant contended that during arbitration proceedings, besides counter claim, the evidence/documents produced by the appellant have also not been considered by the Arbitrator; that the report of Contract Managing Committee with regard to defective work done by the contractor, assessment of counter claim and rectification has also not been considered.
The learned counsel for the respondent contended that the appellant has filed objections to the award under section 33 of the Act, 1940 claimed counter claim, which was beyond the scope of section 30 of the Act, 1940; that the appellant raised question of misreading and non-reading of evidence on the part of the Arbitrator, but failed to point out the same. He placed reliance on the judgments reported in PLD 2011 SC 506, PLD 1996 SC 108, PLD 2003 SC 301, 2002 SCMR 366, 1983 SCMR 718 and 1981 CLC 311.
6. We have heard the learned counsel for the parties and perused the record. Section 30 of Arbitration Act, 1940 (the Act, 1940) provides that award can be set aside on the ground (1) that an arbitrator or empire has misconduct himself (2) that the arbitrator or empire has misconducted the proceedings, (3) that an award is made after the arbitration is superseded (4) that award is made after the proceedings become invalid under section 35, (6) that the award is improperly proceeded and (7) that award is otherwise invalid.
7. In the instant case, the arbitrator was appointed with the consent of both the parties, whose authority was not questioned or objected to at any stage by any of the parties. It is pertinent to note that no allegation whatsoever nature has been attributed to the conduct of the learned arbitrator, or any bias has been alleged against him. From perusal of award it has transpired that during the process of completion of the award, both the parties were provided an opportunity to present their case including evidence. The claims or counter claim, which were not substantiated through evidence by the parties are not admissible in fact and law, hence discarded by the learned arbitrator. The respondent in five construction work claimed total amount of Rs.88,960,317.67/- while the appellant preferred counter claim of Rs.89.572 million. The arbitrator on the basis of evidence/documents produced by the parties declined the counter claim of the appellant on the ground that "the position adopted in the reply is clearly an afterthought, which is not supported by any document. While the total claim of the respondent/applicant was Rs.88,960,317.67/-, but he was awarded total amount of Rs.48,185,276.00/- on the following observation:
"Out of the above various item of the claim I am disallowing the originally claimed cost of idling of resources amounting to Rs.30,000,000 (Main Academic building) and Rs.30,600,000 (Iqbal Hostel) - Total Rs.33,600,000 which is not supported by any provision in the contract though the claimant had been notifying the respondent of its intention to claim these amounts."
8. The learned counsel for the appellant has not been able to point out as to which of the financial claim of the respondent with reference to particular heed has been incorrectly allowed in the arbitration nor any material has been produced. It can safely be concluded that a Court while examining the validity of an award does not act a Court of appeal, therefore, the Court having the objection to the award cannot make reappraisal of evidence considered by the arbitrator in order to discover the error or infirmity in the award unless such error or infirmity appears on the face of the award. The Hon'ble Supreme Court in the case of Messrs. Joint Venture KG/Rist through D.P. Giesler G.M., Bongard Strasse 3,4000, Dusseldorf-30, Federal Republic of Germany, C/o 15-Shah Charagh Chambers, Lahore and 2 others v. Federation of Pakistan, through Secretary Food, Agricultural and Coop: and another PLD 1996 SC 108, observed as under:
"We may mention here that the Court while examining the validity of an award does not act a Court of appeal. Therefore, a Court hearing the objection to the award cannot undertake reappraisal of evidence recorded by the arbitrator in order to discover the error or infirmity in the award. The error or infirmity in the award which rendered the award invalid must appear on the face of the award and should be discoverable by reading the award itself. Where reasons recorded by the arbitrator are challenged as perverse, the perversity in the reasoning has to be established with reference to the material considered by the arbitrator in the award. Keeping in view these legal principles, we asked the learned counsel for the Borrowers to point out the error in the above reasoning recorded by the arbitrator in support of his award but he was unable to point out any such infirmity or error committed by the learned arbitrator in interpreting the provisions of section 6.06 of the agreement, which rendered the award invalid."
10. The award, in the instant case, is based on almost documentary evidence, which does not require reappraisal and the appellant has failed to refute the same. No infirmity in the award has been pointed out by the learned counsel for the appellant. Record does not reveal of any misconduct of the Arbitrator.
11. In so far awarding markup against claim awarded in favour of the respondent by the arbitrator at the rate of Rs.8% per annum is concerned, it would be advantageous to refer to the provision of section 29 of the Arbitration Act, 1940, which deals with the interest of on awards as under:
"Interest on awards. Where and in so far as an award is for the payment of money the Court may in the decree order interest, from the date of the decree at such rate as the Court deems reasonable, to be paid on the principal sum as adjusted by the award and confirmed by the decree."
12. Learned arbitrator in view of the above provision had no right to grant any markup on the principal amount from the date of award till payment, as it is the prerogative of the, Court to grant or otherwise in terms of above provision. Reliance is placed on case titled Ghulam Abbas v. Trustees of the Port of Karachi, PLD 1987 SC 393, wherein, the Hon'ble Supreme Court observed as under:
"As far as the grant of interest from the date of the award until the payment of the principal sum it may be observed that he Arbitrator can under no circumstances award interest for the period beyond the passing of the decree by the Court on the award for the simple reason that the statutory provisions contained in section 29 of the Arbitration Act take over and it is the Court within whose discretion lies the power to order interest from the date of the decree at such rate as the Court deemed reasonable, to be paid on the principal sum as adjudged by the award and confirmed by the decree. From this it necessarily follows that future interest with effect from the date of the decree could not legally be awarded by the Arbitrator. However, the facts are that the award was made the rule of the Court by the learned Single Judge with the result that the part of the award granting interest beyond the date of the decree until payment was also incorporated in the decree passed by the Court. As held in Sheikh Mahboob Alam v. Sheikh Mumtaz Ahmed (PLD 1956 Lahore 276), although, the court could set aside this part of the award, it was open to it to exercise its own power under section 29 of the Arbitration Act and grant interest. Therefore, in making this portion of the award a part of the decree the court must be deemed to have adopted it in the exercise of its own power under section 29. However, in his statement of claim the appellant had claimed interest only upto 3rd October, 1973. The issues were framed by the learned Arbitrator on the pleadings of the parties and therefore, interest beyond 3rd October, 1973, was not the subject matter of reference for adjudication before the Arbitrator. The Arbitrator, therefore, exceeded his authority, in any case, to have awarded future interest for the period between the date of the award and the date of the decree on any basis."
13. In the instant case, while passing the decree the trial court has not adopted the portion of the award regarding markup in the exercise of its own powers under section 29 of the Arbitration Act, 1940, therefore, the future markup with effect from the date of award till its realization awarded by the arbitrator is without competence and declared as such.
After above modification of Award, the appeal is dismissed.
ZC/35/Bal. Appeal dismissed
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