GANDHARA CONSULTANTS (PVT.) LTD. Versus PAKISTAN DEFENCE OFFICER'S HOUSING AUTHORITY, KARACHI

1. KHILJI ARIF HUSSAIN, J.--- The defendant filed objections under sections 30 and 33 of Arbitration Act, 1940 to the award given by the sole arbitrator appointed by the parties.

2. Brief facts of the case are that defendant entered into two agreements with Messrs Gandhara Consultants (Pvt.) Ltd. and Messrs Gandhara Consultants. By an agreement No.DHA/CA/Tech/31/93 dated 14-4-1993, entered into between the defendant and Messrs Gandhara Consultants, a proprietorship concern, for the purpose of consultancy, designing of a proposed hotel at Zulfiqar Street, Phase VIII, Pakistan Defence Officers' Housing Authority, Karachi. The agreement No. DHA/CA/Tech/90/95 dated 16-11-1995, entered into between the defendant and Messrs Gandhara Consultants (Pvt.) Ltd., for construction of Defence Housing Authority residential accommodation at Phase VIII, Defene Housing Authority, Karachi. The dispute arose between the parties in respect of the payment and according to the defendant certain claims reached by the plaintiff were covered under Agreement No.90/95 and the plaintiff is not entitled to claim the same under Agreement No.31/93. The matter was referred to sole arbitrator, who was also engineer by profession. The learned arbitrator after receiving respective claims of the parties and recording the evidence by his award dated 23-7-2001, granted a sum of Rs.37,21,151 in favour of the 'plaintiff No.1 (Gandhara Consultants) in respect of Contract No.31/93 and Rs.6,50,000 under Contract No.90/95 in favour of plaintiff No.2 (Gandhara consultants (Pvt.) Ltd.). The learned arbitrator further granted markup at the rate of 9% on the amount if not paid within' 30 days from the date of award.

3. Aggrieved by the said award, the defendant filed objections under sections 30 and 33 of the Arbitration Act, 1940.

4. Heard Mr. Arif Khan, learned counsel for the defendant and Mr. Naveed Ahmed Khan, learned counsel for the plaintiff.

5. Learned counsel for the defendant objected to the award on various grounds, namely, that the arbitrator has no authority to award interest and that the learned arbitrator has given unsustainable and erroneous findings based on the premises which are not facts and in fact are contrary to the facts. He further argued that the learned arbitrator committed error in failing to take into consideration difference between the work awarded under Agreement No.31/93 and Agreement No.90/95. In support of his contentions, the learned counsel for the defendant relied upon the case' law reported in 2001 YLR 1063 and PLD 1958 SC 221.

6. On the other hand, learned counsel for the plaintiff argued that the learned arbitrator in his well-reasoned award considered the evidence produced by the respective parties, documents before him and after hearing the parties gave a well-reasoned award. He further argued that this Court cannot sit as a Court of appeal against the award, even if there is a possibility of a different opinion to be formed than the common formed by the arbitrator in his award. The learned counsel in support of his contention relied upon the case law reported in AIR 1999 SC 2253 and PLD 1987 SC 393.

7. I have gone through the award, objections filed by the parties and taken into consideration respective arguments of the learned counsel for the parties.

8. In order to appreciate the contention of the learned counsel I would like to reproduce some of the relevant clauses of the agreement hereunder. The Agreement No.31/93 was executed between the plaintiff No.2, a proprietorship concern and the defendant on 14-4-1993 as in a consultancy/designing (including interior designing) of the proposed hotel at Zulfiqar Street, Phase VIII, Defence Housing Authority, Karachi, Clause 2 of the agreement provided in detail scope of service under this agreement which includes investigation and concept design phase, design development phase, construction documents phase, construction phase interior design phase. All these clauses further elaborately describe in detail in the agreement. Clause (iv) of the agreement provides submission, remuneration and mode of payments. I would like to reproduce the same.

9. The Agreement No.90/95 was executed between defendant and plaintiff No.1 Messrs Gandhara Consultants (Pvt.) Ltd. on 6-11-1995, i.e. almost after two years of the first agreement. The name of the work of this agreement has been given as Project Management Services for construction of Defence Housing Authority residential accommodation, Phase VIII, DHA, Clause HI of the agreement provides scope of the service, which reads as under:

10. Clause-III

11. Scope of service

12. Messrs Gandhara Consultants will be responsible for provision of following services:---

13. --- ??????? Monitoring and controls of Time and Progress Schedule of different Contractors works.

14. --- ??????? Supervision and Quality Assurance.

15. --- ??????? Cost Engineering of different works.

16. --- ??????? Certification and Auditing.

17. --- ??????? Coordination/Liaison between different Contractors working on Project and DHA.

18. --- ??????? Preparation of Tender Documents/Drawings, manage design required for completion of Project along with cost estimate and submission to DHA for approval, assist in tendering, evaluation of tenders and accommodations for award of contracts to Contractors.

19. --- ??????? Procurement of Material, equipment including items require to be imported (if any).

20. --- ??????? Finalization of Agreements with different Contractors.

21. --- ??????? Vetting and approval of materials, works and amount.

22. The plaintiff under the Agreement No.90/95 was entitled to a fixed monthly consultancy remuneration only.

23. The dispute between the parties mainly revolves on the interpretation of some of the terms of Agreement No.31/93 and 90/95. According to the learned counsel for the defendant the plaintiff is entitled under Agreement No.31/93 only in respect of the work covered under headings civil work, electric work, plumbing, air-conditioning and interior designing at the respective rates mentioned against these works in Clause-IV of the agreement and is not entitled for the fee at the rate of 3% on the cost of material in respect of these items. He argued that the procurement of material, equipment, including items required to be imported are not covered under Article 3 of Agreement No.90/95.

24. The learned arbitrator in his award discussed both agreements in detail and in fact framed the issue that "Whether the cost of the project for which claimant/plaintiff has billed for consultancy fee is in accordance with the contract agreement?" The learned arbitrator after discussing the evidence gave the award not issue-wise, as framed by him, but discussed the same together.

25. The learned arbitrator after discussing the evidence on record and taking into consideration respective documents filed by the parties held as under:---

26. "49. Defence Housing Authority is therefore, directed to pay to Messrs Gandhara Consultants and Gandhara Consultants (Pvt.) Ltd. a sum of Rs.37,21,151 and Rs.650,000 respectively within 30 days of the pronouncement of this award. The balance 5% fee i.e. Rs.5,71,169 will be paid by Defence Housing Authority within 15 days after submission of completion report by Messrs Gandhara Consultant to Defence Housing Authority as per clause "D" of agreement No.CA/Tech/31/93. This completion report shall be furnished after receipt of 95 fee i.e. Rs.37,21,151 within thirty days of the award.

50. A mark up @ 9% per annum should be paid by Defence Housing Authority on Rs.49,42,320 if not paid within time frame as stated above."

27. So far the award of Rs.6,50,000 in respect of Contract No.90/95 is concerned, the defendant has not objected to the same. The learned arbitrator in his award granted following amounts in favour of the plaintiff under Contract No.31/93: a. Contract No. CA/Tech/31/93

28. Description

29. Project Cost

30. Fee Rate

31. Free Amount

32. Extra Development

33. 1,24,62,390.00

34. 3%

35. 3,7.3,871.70

36. Building Work

37. 13,86,37,929.00

38. 3%

39. 41,59,137.87

40. Furnishing

41. 3,47,90,868.00

42. 7%

43. 24,35,360.76

44. Equipment

45. 5,50,55,109.50

46. 3%

47. 16,51,653.29

48. Electronics

49. 1,97,92,357.00

50. 3%

51. 5,93%770.71

52. Air Conditioning

53. 5,52,15,208.00

54. 3%

55. 16,56,456.24

56. Standby Power

57. 1,84,37,600.00

58. 3%

59. 5,53,128.00

60. Total:

61. 37,43, 91,461.50

62. 1,14,23,378.57

63. 95% of fee allowed

64. 1,08,52,210.00

65. Already paid

66. 71,31,059.00

67. Balance to be paid by DHA

68. 37,21,151.00 b. Contract No.CA/Tech/90/95

69. Amount payable by Defence Housing Authority

70. 6,50,000.00

71. The learned counsel for the defendant while objecting validity of award admitted that so far as the claim pertaining external development work amounting to Rs.3,73,871.70, building work amounting to Rs.41,59,137.87 and furnishing work amounting to Rs.24,35,360.76 are concerned, these items are granted by the arbitrators and are covered by contract No.31/93. He argued that the items pertaining to equipment amounting to Rs.16,51,653.29, electronics amounting to Rs.5,93,770.71 air-conditioning amounting to Rs. 16,56,456.24 and, standby power amounting to Rs.5,53,128.00 are not covered under Contract No.31/93 and the learned arbitrator wrongly granted the same.

72. As regard the case law relied upon by the learned Advocate for the parties, in the case of State of Orissa v. Orient Paper and Industries, AIR 1999 SC 2253, the honourable Supreme Court of India upheld the order of setting aside the award as the learned arbitrator did not advert to other points and gave award on the basis of decision taken by the Chief Conservator of Forests.

73. In the case of Ghulam Abbas v. Trustees of the Port of Karachi, PLD 1987 SC 393, the Honourable Supreme Court held that an Arbitrator is competent to award interest provided claim for such interest is based either on the agreement between the parties or substantive provisions of law applicable thereto or upon an equitable principle impinging thereon. The Honourable Supreme Court further held that Arbitrator can under no circumstances award interest for the period beyond passing of the decree by Court on the award, and only Court has discretion to order interest from date of the decree at such a rate as the Court deemed reasonable.

74. In the case of Umer Din v. Shakila Bibi and 12 others, 2001 YLR 1063, the learned Judge refused to remit the award as arbitrators have given reasons in the award, and award was not without reasons.

75. It appears from the claim before the arbitrator and issues framed by the learned Arbitrator that he was called upon to decide whether the claim of the plaintiff is covered by the terms of Agreement No.31/95 and plaintiff is entitled for the same or not.

76. In my view once if specific question of law is referred to an arbitrator for his decision even if it touches its jurisdiction, the decision of the arbitrator would be binding on both the parties and none of the parties can wriggle out of it by contending that arbitrator cannot clutch at or confer jurisdiction upon himself by misconstruing the agreement.

77. The arbitrator is the final Judge on the law and facts and it is not open to a party to challenge the decision of the arbitrators, if it is otherwise valid. The award cannot be set aside, even on the ground due to wrong interpretation of any terms of agreement or specific findings on each issue has not been given. My view finds support from the case of Pakistan Steel Mills Corporation v. Messrs Mustafa Sons (Pvt.) Ltd, PLD 2003 SC 301.

78. In order to set aside the award illegality must appear on the face of award and so obvious and prominent that one may point- it out by reading the award itself.

79. The Court while examining the award does not act as a Court of appeal, nor will disturb the findings of arbitrator, to whom parties themselves have appointed to decide their dispute and review or reappraise the evidence a fresh.

80. Reverting to objection taken by learned Advocate for the defendant that learned arbitrator committed error of law in awarding the claim of claimant No.2 under Contract No.CA/Tech/31/93, whereas works for which said claim has been made, cover by Contract No.CA/Tech/90/95, and that claimant is entitled for the fee only in respect of services mentioned in Clause-IV of the Agreement.

81. I am afraid that, in view of what I have stated herein above, while hearing the objections to award, I can reappraise the findings given by the arbitrator, who himself by profession is an engineer, held that plaintiff is entitled for the works claimed by him and same are coveted by Contract No.CA/Tech/31/95. The learned Advocate for the defendant failed to point out any material error on the face of award to set aside the same.

82. For the foregoing reasons, application under sections 30 and 33 of Arbitration Act, filed by the defendant, is dismissed and award is made rule of the Court, with modification that defendant is liable to pay interest at the rate of 9% per annum from the date of decree with no order as to costs.

83. M.H./G-3/K ???????????????????????????????????????????????????????????????????????????? Award made rule of Court.