WORLD CIRCLE LTD. Versus STATE CEMENT CORPORATION OF PAKISTAN LTD.

On 25‑6‑1981 Mr. Ali Ahmed Fazeel, Arbitrator, who is also Senior Advocate of the Supreme Court of Pakistan, delivered the award in respect to the several disputes pending between the parties. Following is the operative portion of the said Award:

"(A) State Cement Corporation of Pakistan are awarded:

(i) Rs.5,77,643 equivalent to L29,622.71 as despatch at load part (after deduction of L3,190 demurrage for MV Link Faith).

(ii) Rs.11,59,287.87 equivalent to US $.117,828.98 towards their claim for despatch at disport. against World Circle Ltd.

(B) I award Rs.3,36,613.20 equivalent to US $34,214.57 to World Circle Ltd. towards their claim for Tally Charges against State Cement Corporation of Pakistan Ltd.

(C) Claim of State Cement Corporation of Pakistan Ltd. for freight reduction in respect of MV Link Harmony in the sum of Rs.118,903.11, being equivalent to US. $.12,085 is rejected.

(D) Claim of State Cement Corporation of Pakistan Ltd. for damages for non‑delivery in respect of Link Harmony for Rs.74,861.63 equivalent to US $.7,608.740 is rejected as the same was neither pressed nor proved.

(E) The parties shall be entitled to interest at 15 % per annum on the respective amounts awarded to them with effect from the date of Award.

Each of the parties has paid me Rs.25,000 as Arbitration fee. It may be mentioned that the Court had ordered that the parties will bear the costs of arbitration in equal shares."

2. For last more than 14 years this matter is being adjourned on one or the other pretext. Since morning this case was called several times but none has appeared on behalf of the plaintiff. I have heard Mr. Zamiruddin, Advocate for the defendant and have gone through the objections filed by the plaintiff on 7‑10‑1981. Mr. Zamiruddin, Advocate has fully supported this Award and contended that it is well‑reasoned and that the learned Arbitrator has dealt with each and every issue in detail, particularly with reference to the evidence available on record.

3. In the objections filed by the plaintiffs, several objections are raised including question whether there was novation of contract; what is the validity of Bank guarantee, calculation of the conversion from Pound Sterling to Pak. rupees and the question of payment of demurrages. The learned Arbitrator has dealt wit4 all these issues in detail and I am in respectful agreement with the reasoning given in favour of Award.

4. It is settled law that while examining the validity of an Award, the Court does not act as Court of Appeal. Recently in the case of M/s. Joint Venture KG/Rist v. Federation of Pakistan and another PLD 1996 Supreme Court 108), the Award was challenged and contested on the merits when it was held by the Hon'ble Supreme Court as follows:

"We may mention here that the Court while examining the validity of an award does not act as 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."

(For further reference see the case of Province of Sindh and 4 others v: Waseem Construction Co. (1991 CLC 66), Trading Corporation of Pakistan Ltd., Karachi v. Messrs Aslam Saeed & Co. and 3 others PLD 1973 Karachi 65 and S.M Fazail & Co. v. Messrs Overseas Cotton Co. (PLD 1959 (W.P.) Karachi 320).

5. I have read the entire reasoning given in favour of Award with the assistance of Mr. Zamiruddin Ahmad. I am unable to find any error or infirmity apparent on the face of the Award. In support of his findings he has referred several reported judgments. The learned arbitrator has also awarded interest at the rate of 15 % per annum on the respective amounts awarded to parties with effect from the date of Award. In this connection, it is pertinent to note that on 9‑4‑1981 when this matter was referred to the arbitrator under sections 21, 22 and 23 of the Arbitration Act, 1940 by consent of the parties, the reference was for deciding all matters in difference arising out of the contract of Affreightment, dated 21‑3‑1979. Neither in the said agreement nor in the reference, any authority was conferred upon the Arbitrator to award interest. Therefore, in my view the interest awarded by the learned Arbitrator is not legal and up to this extent the Award is liable to be modified. I am fortified in my view by the case of Messrs Hassan Brothers & Company v. Messrs Maqbool Cotton Ginning & Pressing Factory and another (PLD 1986 Karachi 21) and the case of Muhammad Saleem Butt v. Messrs Trading Corporation of Pakistan, Karachi (1986 CLC 254). In the first case (M/s. Hassan Brothers) it was held by this Court that an Arbitrator cannot award interest beyond the date of the decree, unless the reference includes such term. In the last reported case, a learned Single Judge of this Court Mr. Naeemuddin, J. (as he then was) answered the question of imposing interest by the arbitrator in the following words:

"However, I find that the umpire has awarded interest at 12 per cent. per annum till full and final payment by the defendant. This he could not have done in view of the provisions of section 29 of the Arbitration Act, 1940, for he could award interest only up to the date of the decree that may be passed by the Court on the award. If any authority is needed reference may be had to Union of India v. Bungo Steel Furniture (Pvt.) Ltd. AIR 1963 Cal.

70. Although this objection has not been taken in the objections filed by the defendant but the Court is entitled to go into this question in accordance with the provisions of section 17 of the Arbitration Act, 1940. "

(For further reference please see Mahboob Alam v. Mumtaz Ahmad, PLD 1960 Lahore 601 and Pash Behari v. Anad Sarup Bhargava AIR 1962 Punjab 51).

6. In view of the above discussion, the award is accordingly modified to the extent that the parties shall be entitled to interest at 15 % per annum from the date of decree till its realisation.

7. At this stage, Mr. I. H. Zaidi, Advocate for plaintiff has appeared and has stated that he has left a chit with the Reader of this Court that he is busy before another Bench and. therefore, was not able to reach earlier in this Court. In my view, learned counsel should have given preference to this case as the award pertains to the year 1981 and is pending for last more than 15 years. The purpose for enacting the Arbitration Act, 1940, amongst others, was to cut short the period of litigation and to enable the parties to resolve their dispute outside the Court through arbitration without suffering the agony and pain of the protracted litigation. But in the instant case, the said purpose was not achieved. Therefore, I was constrained to proceed with the case at the later hours of the day and in absence of Mr. I.H. Zaidi, Advocate. However, I have fully considered all the objections raised by him. I do not see any compelling reason to interfere with the reasonings and the Award.

With the above modification that parties shall be entitled to the proportionate costs and 15 % interest per annum from the date of decree till its realisation, the Award, dated 25‑6‑1981 is made rule of the Court. Decree to follow.

A. A./W‑10/K ???????????????????????????????????????????????????????????????????????? Suit decreed: