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Suit No.380 of 1984, decided on 30th November, 1986.

---Ss.15, 16 & 30--Award--Objection to findings of sole arbitrator- Where sole arbitrator after hearing parties and after disallowing counter-claim had come to conclusion that disputed amount was due and payable to plaintiffs by defendant, Court on application for making award rule of the Court, held, could not substitute its findings for findings of an arbitrator when Court had neither means nor material to disagree with findings of sole arbitrator.

---S.30--Sale of Goods Act (III of 1930), S.64-A--Award of amount paid for customs duty and sales tax enhanced subsequent to contract between parties--Objection to--Customs duty and sale tax on material contracted to be used by plaintiff /contractor was enhanced by Government subsequent to conclusion of contract between parties and plaintiff had to pay to Government excess amount due to such enhancement--Sole arbitrator awarded to plaintiff /contractor amount which he paid in excess to contractual amount; finding that payment to Government in excess to contractual amount was responsibility of owner and not of contractor--Finding of sole arbitrator being supported by statutory provisions of S.64-A of Sale of Goods .Act, 1930, objection to such award was rejected and award made rule of the Court in circumstances.

A I R 1933 Sind 403

S. Nasiruddin Advocate, Sole Arbitrator.

Moinuddin Ahmad for Plaintiffs.

Sadruddin Huda for Defendant.

This award, dated 19-4-1984 has been given in a dispute arising out of a contract for installation of two lifts in the building of the defendants. This award has been given on remission of the first award, dated 15-11-1980.

By a contract, dated 8-1-1977, the plaintiffs agreed to install two lifts in the building of the defendants. Under this contract the disputes of the parties were to be referred to a single Arbitrator mutually agreed by the parties. It is not clear how the parties approached the Arbitrator, but from the papers available on-the record, it can be gathered that the award was filed in J.M. No.52 of 1979 in this Court. The Sole Arbitrator Nr. S. Nasiruddin had given the following award:-

"I award that the respondent do pay Rs.30,000 plus Rs.20,520 total Rs.50,520 only (Rupees fifty thousand five hundred and twenty) only to the plaintiffs."

The above award was filed in Court and objections to the award were filed by the defendants These objections were heard by a learned Single Judge of this Court and were rejected. The award was confirmed and made rule of the Court by a judgment, dated 15-11-1980 and the decree followed in terms of the judgment.

Against this decree High Court Appeal No.73 of 1981 was filed and by a judgment, dated 13-12-1983 a Division Bench of this Court remitted the award to the Arbitrator for stating reasons in support of the findings in the award.

The present award, dated 19-4-1984 are the reasons for the award which was remitted to the Sole Arbitrator. The learned Arbitrator has discussed in details the dispute between the parties the claims and counter-claims raised by each party against the other. He has rejected the counter-claims of the defendants and also rejected some of the claims of the plaintiffs. He has allowed only two amounts Rs.30,000 plus Rs.20,520 total Rs.50,520. Under this award the Arbitrator has decreed the claim of the plaintiff for the out-standing amount remaining unpaid to the plaintiffs by the defendants under the contract and a further amount of Rs.21,473 which is the additional amount of sales tax and customs duty levied on the two lifts after the agreement between the parties.

So far as the question of Rs.30,000 is concerned, the Arbitrator seems to have found that out of the contractual amount of Rs.4,10,900, the defendants have failed to pay this amount to the plaintiffs. Learned counsel for the defendants /objector has not been able to show how this finding of the learned Sole Arbitrator in the award is open to question. It was for the Arbitrator to examine whether were was any justification for the defendants to withhold this amount. The Arbitrator, after hearing the parties and after disallowing the counter-claims has come to the conclusion that this amount is due and payable to the plaintiffs by the defendants.

I cannot substitute my finding for, the finding of the Arbitrator, because I have neither the means nor he material to dis-agree with this finding of the Sole Arbitrator. A half-hearted attempt was made by the learned counsel for the defendants that this amount has not been awarded to the plaintiff in the second award which has now been submitted after the remission.

I was inclined to again remit this award for further clarification, but on a second thought I have come to the conclusion that no purpose would be served to send it back again, because the following lines in the present award read with the first award unmistakeably show that the Sole Arbitrator has awarded this amount of Rs.30,000 to the plaintiffs. This finding may be reproduced in his own words which are as follows:-

"My findings on the contentions of the parties are that the property and the goods have not passed from the plaintiffs to the defendants because the balance of contracted price stood unpaid."

The only fault which can be attributed to this finding is that the figure of Rs.30,000 has not been specifically mentioned in the above para. But if this finding is read with the narration of facts on P.5 it would be evident that the Arbitrator has awarded this amount after considering the statement of P.W.1, S.S.A. Moeed and after perusal of the documents Annexures 'D' and 'E' which were produced before him and are mentioned in this para. I would, therefore, not interfere with this finding.

The Sole Arbitrator has further awarded to the plaintiffs a sum of Rs.20,520 being the amount of enhanced customs duty and sales tax on the two lifts. In this connection it may be mentioned that the contract between the parties was concluded on 8-1-1977 and the duty was enhanced in July, 1977. On account of this new rate of duty prescribed by the Government on the import of lifts the plaintiffs had to pay additional duty in the sum of Rs.23,520 to the Government which they are now demanding from the defendants.

It is admitted position in the case that the lifts were imported by the plaintiffs some time in early November, 1977 and as such the new rates of duty were applied. It is not denied that this duty was not payable or was not paid. The only dispute is that this was a turn key contract and according to the defendants the plaintiffs had agreed to accept a total amount of Rs.4,10,000 and provide the lifts in operational condition. Whether the- duty is enhanced or reduced, is none of the concern of the defendants, it is so contended. But the question arises whether this objection can be sustained under section 30 of Arbitration Act.

Assuming for the sake of arguments that the award can be attacked on this ground then it must be shown that the Arbitrator has exceeded his authority by giving this award. The defendants would have to show that this approach of the Arbitrator is contrary to the statutory provisions and the award suffers from illegality. Not only that the learned counsel for the defendants has failed to show any such provisions, the statutory provisions support the view which has been taken by the Arbitrator. Section 64-A of the Sale of Goods Act may be read in support of this view. It may be reproduced for ready reference:

-In the event of any duty of customs or excise or tax on any goods being imposed, increased, decreased or remitted after the making of contract for the sale of such goods without stipulation as to the payment of duty or tax where duty or tax was not chargeable at the time of the making of the contract, for the sale of such goods duty paid or tax paid where duty or tax was chargeable at that time."

The learned counsel for the defendants contended that this section would be applicable if there is no agreement to the contrary and he relied on the words "without stipulation" occurring in the first paragraph of the section.

Even if I interpret the words "without stipulation" to mean without any contract to the contrary, then such contrary contract must be clearly proved. In the present case no such contract seems to have taken place. It is just and ordinary contract and merely the use of the words "turn key" would not show that the parties had visualised the event of enhancement of customs duty and have specifically agreed that it should be the liability of the plaintiffs. The words "turn key" have been used in the ordinary sense and they merely indicate that the plaintiff was to fully complete and accomplish the job without any further demand or additional payments on account of fluctuation in prices or increase in labour charges.

So far as customs duty or excise duty is concerned, the plaintiff was not pocketting this amount, he has merely to pass it on to the Government and obviously this payment to the Government in excess to the contractual amount would be the responsibility of the owner and not the contractor.

Learned counsel for the plaintiff has also relied on a case reported in A I R 1933 Sind 403 in which a Division Bench of this Court has taken the same view. In this case section 10 of the Tariff Act (1894) has been considered. Few lines from the judgment would be helpful and not without interest which are as follows:-

"There are however, exceptions to this general rule. One of them is that contained in section 10, Tariffs Act. This section is intended on the one hand to prevent a party, prejudicially affected in consequence of a change in the duty on goods levied by the Crown whether such duty is customs duty on imported goods or excise duty on goods produced in the country, should not suffer by the act of the Crown, and on the other to make the party who stands to benefit by such change to account to the party prejudicially affected to the extent of the increase or decrease of taxation as the case be. It goes without saying that where a tax is increased decreased it affects the price of goods Imported or produced as the case may be after the duty is altered. All that the section requires the claimant to prove is that the goods tendered against his contract should have paid the altered duty and not that he has paid it as such."

This objection of the learned counsel also fails.

The award is, therefore, made a rule of the court and decree should follow in terms of the award. The plaintiff is entitled to a sum of Rs.50,520 which was awarded by the Sole Arbitrator in his earlier award, dated 15-11-1980 and for which by the supplementary award reasons have been furnished after the award was remitted to the Sole Arbitrator.

H.B.T./S-20/K. Award made rule of Court.

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