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First Appeal from Order No. 113 of 1981, decided on 7th February,1984.

---Ss. 30 to 33--Civil Procedure Code (V of 1908), S.96--Arbitration- Award--Appeal against Award ordering refund of amount pertaining to deduction on account of non-completion of work within agreed extended time--Question of regularization of extension of time stated by arbitrators to be outside scope of dispute referred to arbitration--Penalty awarded and amount of penalty deducted due to non-grant of extension of time, held, could not be ordered to be refunded--Appeal accepted and award set aside in circumstances.

---Ss. 30 to 33--Civil Procedure Code (V of 1908), S.96---Award--Reesons for--Even if arbitrators, at time when award made not required to give reasons for award, they could not, held, act like a despot and award any sum acting on their whim or for mere asking.

Aftab lqbal Chaudhry for Appellants

Syed Sajjad for Respondent.

Date of hearing: 7th February, 1984

This appeal is directed against the judgment dated 23-2-1981 of the learned Civil Judge, Lahore, whereby the objections filed by the appellants were rejected and the award dated 10-1-1976 was made Rule of the Court. The two issues which are relevant for the disposal of this appeal are as under:-

issue No.2,

Whether arbitrator and umpire have mis-conducted the proceedings and themselves O.P.R.

Issue No.3.

Whether award is inconsistent and ambiguous therefore, liable to be cancelled O.P.R.

In the award the learned Arbitrators with reference to the claims relevant for the purposes of these issues awarded as under:-

CLAIM NO. 1.

"We hereby award that this claim is rejected by us because it is outside the scope of the dispute referred to the arbitration."

CLAIM N0.2.

"We hereby award and allow this claim of Rs.58,219.85 Palsas (Rupees fifty-eight thousand two hundred nineteen and paisas eighty-five only) to the claimant /plaintiff."

The objection taken in the pleadings was that according to clause (2) of general provisions of the contract, the government can deduct one-tenth of one per cent. (0.10 per cent) of the total contract sum for each calendar day or portion of a day as liquidated damages for the default out of the contractors' bill. In the present disputed work, the contractors have delayed the completion of the work for 65 days thus a sum of Ks.58,219.85 were deducted as liquidated damages under the said clause. In the main objection petition it was stated that taking into consideration the clear and patent clauses of the agreement the contractor was to be penalised for the delay in the execution of the work. In the evidence produced in support of these objections it was pointed out that the initial date of completion of the contract was 30th of December, 1970 but the said period was extended till 11-3-1971 but the contract was completed on 15-5-1971 i.e. after 65 days of the expiry of the completion period. No further extension was granted after 11-3-1971.

2. The respondent/contractors, however, did not produce any evidence in the trial Court. The learned trial Court recorded findings against the appellants observing that it was incumbent upon the objectors to bring clear evidence respecting the misconduct of the Arbitrators and their proceedings but they have not shown any such thing as is required by law. The award given by the Arbitrators with reference to claims Nos. 1 and 2 has been quoted above.

3. It will be recalled that extension of time, after expiry of extended period on 11-3-1971, was-refused. This refusal was made subject-matter of claim No.l which reads as under:-

"Regularization of the Extension of time limit upto 15-5-1971."

As is apparent from the Award, this claim was rejected though the reason given is that the same was beyond the scope of the dispute referred. Now the claim of refund of Rs.58,219.85 admittedly pertains to the deduction of the said sum made on account of non-completion of the work within the agreed extended time i.e. upto 11-3-1971. If the question of extension of time upto 15-5-1971 was not within the scope of the dispute referred, then how the amount of penalty deducted due to non-grant of extension of time could be ordered to be refunded. This is beyond comprehension. The fact that Rs.58,219.85 is the amount deducted as penalty is apparent from the claims made by the respondent contractors themselves which have been quoted in extenso in the award dated 10-i-1976 of tire Arbitrators. It is true that at the time of making the award it was not necessary for the Arbitrators to give reasons for the award but that does not mean that the Arbitrators H .even at that time had the power to act like a despot or could award 51 Muhammad Nasrullah Khan v. Muhammad Janan Khan any sum acting on their whim or for the mere asking. I am of the considered view that without going into the question of illegality or l arbitrariness of the question of refusal to extend time, the penalty awarded and the amount deducted could not be ordered to be refunded. It will be seen that decision of claim No.2 was dependent on the decision of Claim No.l in favour of the claimant. Claim No.l having been rejected for whatever reason, Claim No.2 could not have been awarded by any person acting reasonably and fairly. This aspect of the matter was completely lost sight of by the learned trial Court. Had the learned trial Court seen the objection in its true perspective, it would have come to the conclusion that the award suffered from legal misconduct.

4. For the reasons given above, I have no hesitation in accepting the objections. Resultantly, accepting this appeal the award is hereby set aside. The parties may now proceed, if they are so advised, in accordance with law. No order as to costs.

M. Y. H.

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