ZAKAULLAH KHAN vs GOVERNMENT OF PAKISTAN through Secretary, Buildings

' MIAN ALLAH NAWAZ, J.--Vide order dated 13-8-1956, Zaka Ullah/Contractor/Appellant herein was allotted work order for construction of roads and footpaths in Wandat Colony, Lahore which was being built with unusual speed in order to provide accommodation to incoming civil servants from different provinces/merged into one Province known as One Unit. At that time, appellant was assured that necessary formalities, with regard to allotted work, will be completed as quickly as possible. In order to complete necessary requirements, tenders were invited on 13-9-1956 and agreements were executed thereafter. The appellant, however, was directed to complete the work on or before 31-10-1956. On its completion, appellant submitted the final bills with rates in respect of non-scheduled items. The Engineer at site however recommended different rates, than the claimed by the appellant, to Superintending Engineer/final authority. The said authority did not agree with the rates proposed by Engineer at site, reduced them and ordered that the payment be made to Contractor subject to a condition that appellant would withdraw the notice served by him and would make no further claim. This occurred on 9-4-1958. Appellant received the payment and executed the necessary note. However, he thereafter claimed that he was entitled to receive payment for work done on the basis of rates quoted by him and so he invoked clause 12 of the agreement. The dispute between the parties was so referred to decision of Syed Mehdi Shah, an Arbitrator. The aforesaid Arbitrator rendered the award on 24-11-1960.

2. Against the aforesaid award, an application under section 30 of the Arbitration Act, was filed which was allowed by learned Civil Judge and the case was remanded to Mr. Abdullah Qureshi, the then Superintending Engineer (WAPDA), Lahore for fresh decision. The Arbitrator, so appointed, gave the award on 16-3-1964/holding that contractor was entitled to payment on the basis of rates suggested by the Engineer at site; that the receipt of payment at the relevant time by him was "under forced circumstances"; that contractor was not bound by his undertaking which had been given by him under coercion. Feeling aggrieved, employer moved objections under section 30 of the Arbitration Act which were rejected by the Civil Judge on 5-3-1965. Resultantly, the award was made a rule of the Court on 5-3-1965. Against this decision, respondent preferred an appeal which was allowed by the Appellate Court on 12-5-1967/holding that the award was not vitiated by the question of limitation. However, it was held that the undertaking given by the contractor, at the time of the payment, amounted to estoppel on the part of Arbitrator and so the Arbitrator had no authority to accept his claim. Feeling uncontented, the appellant filed Letters Patent Appeal No,210 of 1967 which was allowed by Division Bench of this Court comprising one of us (Mian Allah Nawaz, J.) and his lordship Mr. Justice Fazal Karim, J. (as he then was) on 26-11-1990. Against this decision the employer filed an appeal No,163 of 1991 which was allowed by the Hon'able Supreme Court in the following terms:- "We have heard the learned counsel for the appellant and are of the view that this appeal is liable to be accepted on the short ground that it appears to be based on the assumption that the learned counsel for the respondent had appeared to contest the appeal and had been fully heard before accepting the appeal of the respondent. However, the memorandum of appearance clearly shows that nemo represented the Provincial Government at the time of hearing. The assumption that its learned counsel was heard at length before the appeal was disposed of is, therefore, misconceived.

' We would accordingly, set aside the impugned judgment of the High Court dated 26-11-1990 and remand the case to the High Court for decision afresh, after hearing both the parties."

' This is how this Letters Patent Appeal has come to this Court.

5. Learned counsel for appellant almost reiterated the points which had been earlier urged before us. The points urged by him can be conveniently summarised as below:-- "Firstly; that the scope of appeal under section 39 of the Arbitration Act (referred to as "Act") is limited to the grounds embodied in section 30 of the Act. It was canvassed that the Appellate Court under section 39 of the Act had no authority to set aside the arbitration award unless and until it was shown that it suffered from an error of fact or error of law apparent on the face of award.

' Secondly; that the learned Single Judge had no reason to set aside the findings of Arbitrator to the effect that undertaking given by the contractor was "under forced circumstances" and so was not binding upon him. This finding, according to learned counsel was finding of fact and could not be interfered with by Appellate Court in exercise of its authority under section 39. Of Act.

6. We have heard the learned counsel for the parties at some length, gone through the record carefully and have also perused the award rendered by the Arbitrator, the decision rendered by the learned first Court and by the learned Appellate Court. Before we proceed further to deal with the contentions of the parties, we find it necessary to reiterate two settled propositions of law:-- ' Firstly; It is settled that arbitration is a settlement of controversies/disputes by one or more persons chosen by the parties themselves. The Judges so chosen are known as Arbitrator/Arbitrators/Umpires. The object of arbitration proceedings is to curtail period of litigation; to encourage resolution of conflict through Judges of their own choice; that Arbitrators are not strictly bound by rules of technicalities embodied in Procedural Laws as well as Qanun- eShahadat/Evidence Act; that the Courts are given role to see that these Judges decide causes strictly in accordance with law, in exercise of their supervisory power contained in sections 14 to 17, and sections 30 and 33 of the Act. Thus, it is clear that the role of the Courts, in the scheme of Arbitration Act, is of supervisory character and is not akin to appellate power under the Code of Civil Procedure. In this connection we are tempted to quote a relevant passage from Champsey Bhara & Company v. Jivrajh Balloo Spinning and Weaving Company Ltd. (AIR 1923 PC 66), it was held:-- "Where a cause of matters in difference is referred to an arbitrator , whether a lawyer or a layman, he is constituted the sole and final Judge of all questions both of law and of fact. The only exceptions to that rule are cases where the award is the result of corruption or fraud, and one other, which though it is to be regretted is now, firmly established, viz. Where the question of law necessarily arises on the face of the award or upon some paper accompanying and forming part of the award.

' An error in law on the face of the award means that you can find in the award or a document actually incorporated thereto as for instance, a note appended by the arbitrator stating the reasons for his judgment some legal proposition which is the basis of the award and which you can then say is erroneous."

' This view was re-affirmed in The Firm of Saleh Mahmood Dossal v. Seth Nathoomal (AIR 1927 PC 164). This view was again followed in Suleman Haji Muhammad & Co. v. State Bank of Pakistan (PLD 1960 (W.P.) Karachi 78) and Ashfaq Ali Qureshi v. Municipal Corporation, Multan and another (1985 SCM R 597): Secondly; that law leans in favour of the upholding the award and not vitiating it. This rule was enunciated in Ashfaq Ali Qureshi v. Municipal Corporation, Multan and another (1985 SCM R 597).

Speaking for the Bench, Mr. Justice M.S.H. Qureshi (as he then was) held that:-- "It is a well-established rule of law that where a dispute is referred to an arbitrator of the choice of the parties and he makes an award, it becomes the duty of the Court to give every reasonable intendment in favour of the award and lean towards upholding it rather than vitiating it. In this connection I may usefully reproduce the dictum of Koy, L.J., In re: Heihley Maxsted & Co. And Durant & Co. (1893) 1 QB 405 at page 414: 'The Courts have always been exceedingly cautious in dealing with awards. Prima facie an award is final and not subject to appeal; the arbitrator is chosen by the parties who presumably prefer a domestic tribunal which is not bound rigidly by the rules of evidence: and a mistake of law or fact is not, per se, a ground for sending back the award of such a tribunal."

' A similar view was expressed in Abdul Rauf v. Muhammad Saeed Akhtar (PLD 1958 (W.P.) Kar. 145) in the following words: "A well-settled rule of construction of the award is that the award should be construed liberally and in accordance with common sense, it should be so read that it can be given effect to and not so that it would nullify the efforts of the arbitrator appointed by the parties themselves."

' The arbitrator is the Judge of all matters arising in the dispute whether of fact or of law and the Court is not to act as a Court of appeal sitting in judgment over the award. Nor is it proper for the Court to proceed to scrutinize the award in order only to discover an error for the purpose of setting it aside. The error must be apparent on the face of the award and not latent such as can be discovered only after a scrutiny of the material beyond the award. See M.A. Ali Mian v. Green & Co.

White Ltd. (PLD 1964 Dacca 527). The approach of the High Court, we may say so with respect, has not been consistent with these well-accepted principles relating to awards. The award in the present case did not, in our view, suffer from any patent infirmity for which it ought to have been remitted or set aside".

7. Applying these principles to facts and circumstances of the case in hand we find that the arbitrator had held that undertaking given by contractor/appellant at the relevant time was "under forced circumstances". This finding was exclusively relatable to the domain of facts. This point had been duly raised and examined by the Arbitrator. On the basis of material available on record, the arbitrator had come to the conclusion that appellant had given the certificate "under forced circumstances". This expression, in our view was a layyman's way of saying that the certificate had been given as a result of coercion or undue influence as embodied in sections 15 and 16 of the Contract Act, 1872. This had clear reference to events which had happened at the relevant time.

The appellant had been asked to commence the work without the signing of agreement; was asked to complete the project within a specific time in hurry; that rates quoted by him in his bill related to non-scheduled items; that the Engineer at site had recommended different rates than which were claimed by the appellant; that the Superintending Engineer had allowed the payment on different rates subject to condition that he will not only withdraw his claim but he will have to give a clearance certificate. The finding of the arbitrator was clearly based upon above circumstances. As the arbitrator was the Judge of fact as well as of law referred to him, we find no warrant for the contention that this Court had jurisdiction to give a finding that he has misconducted himself in coming to conclusion that the undertaking given by contractor was "under forced circumstances".

8. For the above reasons, we find merit in this appeal which is allowed. Resultantly, the judgment of Single Judge dated 12-5-1967 is hereby set aside and order of learned Civil Judge dated 5-3-1965 is hereby restored. The respondent shall bear the costs of proceedings throughout.

9. As regard C.M.No,1-C of 1997, we are not inclined to examine this application at this stage. Suffice it to say that the respondents will bear the costs of litigations throughout.