' The plaintiff was awarded a building contract by the defendant in pursuance of a tender submitted by the plaintiff. An agreement embodying the terms and conditions of the contract was executed between the parties on 12-6-196. Clause 28 of the aforesaid agreement provided for the arbitration of the dispute; between the parties in the following terms : "All questions and disputes between the parties to the contract, other than those in which the decision certificate and/or opinion of any person is expressed by the contract to be final and conclusive shall be referred to an Arbitrator, to be appointed by the Chief Accountant of the State Bank of Pakistan whose award shall be final, conclusive and binding on the parties.
' Unless the the State Bank otherwise agrees, such reference shall not take place until after the completion or abdandonment of the works."
2. It is not disputed that the plaintiff undertook and completed the execution of the work under the contract on 29-10-1970 and submitted his final bill Part I on 15-11-1971 which was settled and the payment was made. The final bill Part II was submitted by the plaintiff on 10-1-1972 for Rs, 8,66,746.13. According to the allegations of the plaintiff this bill was accepted by the defendant for scrutiny but was subsequently repudiated by the defendant without consideration. As a result of the correspondence between the parties the plaintiff submitted certain further details in support of the claim contained in the final bill Part II. Nevertheless, by its letter dated 11-3-1974 the defendant finally rejected Part II of the final bill preferred by the plaintiff. The plaintiff ultimately by letter dated 2-5-1975 called upon the defendant through its Chief Accountant to refer the dispute arising between the parties to the nominee of the Chief Accountant in terms of the arbitration clause contained in the contract as set out above. However, the defendant by its letter dated 7-6-1975 declined to appoint the arbitrator and refused to go to arbitration. Hence the plaintiff brought the present suit under section 20 of the Arbitration Act on 27-12-1975.
3. The defendant has filed counter affidavit and has resisted the prayer sought by the plaintiff for reference of the dispute to arbitration on a number of grounds. It was first contended by Mr. M. Y.
Nizami, learned counsel appearing for the defendant that as the office of the Chief Accountant designated in the arbitration agreement has been abolished from the establishment of the defendant the arbitration agreement is no longer enforceable and is accordingly frustrated. In this connection it will be advantageous to refer to section 4 of the Arbitration Act which reads as under : "The parties to arbitration agreement may agree that any reference thereunder shall be to an arbitrator or arbitrators to be appointed by a person designated in the agreement either by name or as the holder for the time being of any office or appointment."
' In support of his contention counsel placed reliance on Abdul Aziz Cotton Ginning Factory v. All Muhammad Abdullah & Co. (1) in which the arbitration agreement provided for reference of the disputes between the parties to two members from the panel of arbitrators maintained by the Sind Cotton Ginners Association. At the time of reference the said Association had become defunct as the Government had withdrawn its recognition and was succeeded by the Pakistan Cotton Ginners Association, with its own panel of arbitrators, constitution, bye-laws and rules which were, however, almost the same as those of the defunct Association. Qadeeruddin, J. (as he then vas), held that the dispute could not be referred to the newly established Pakistan Association as it was an entirely new entity and further for the reason that the Court is is not competent to substitute the original agreement of the parties by an entirely new agreement of its own choice. Reference was also made to the case of Oil & Gas Development Corporation v. Karachi Builders (2) in which the arbitration clause provided for reference of disputes to the Production Manager of the petitioner- Corporation, but the arbitration proceedings were taken up by the Deputy Chief Engineer of the Corporation who was said to be performing the duties for the time being, attached to the Office of the Production Manager. In the High Court the award passed by the Deputy Chief Engineer was set aside on the ground that he was not competent to be the arbitrator in terms of the arbitration agreement. The view of the High Court was upheld by the Supreme Court and it was held that the arbitration had to be done by the Production Macager of the Corporation and not by any other officer performing the duties of that office. On the factual plain the case of the defendant is that the post of the Chief Accountant of the State Bank, who was designated to appoint the arbitrator was no more in existence as by virtue of Administrative Circular No, 42, the State Bank of Pakistan with the approval of the Government has amended the State Bank of Pakistan (Staff) Regulations whereby in the aforesaid Regulations for the expression, inter alia, "Chief Accountant", the expension "Director Accounts" was substituted. The question that arises, therefore, is whether by a unilateral change of Service Regulations changing the designation of the post of Chief Accountant, the defendant can be allowed to frustrate the contract by its own act.
4. Now the object underlying the provisions of Arbitration Act is t. Give effect to and enforce an arbitration agreement entered into by the parties. In ultimate analysis it is the intention of the parties as reflected by the language employed in the arbitration agreement which, in my opinion, will deter mine the question whether the supervening events have the effect of frustratin: the agreement. A party, therefore, cannot be allowed to defeat the arbitration agreement to his own advantage by merely changing the nomenclature of a post on his establishment. It is clear from the amendment made in the Regulations that the functions and powers of the Chief Accountant remained unaltered by the amending regulation and only the designation was changed to be known as "Director Accounts". Clearly, the object of the parties in mentioning the expression "Chief Accountant" of the Corporation was to designate a senior officer concerned with the Accounts to make the appointment of the arbitrator and no material effect would, therefore, be make on the operation of the arbitration agreement. In Muhammad Saghir Bhatti & Sons v. Federation of Pakistan (3) the arbitration agreement provided that Quarte
(1) PLD 1966 Kar. 197 (2) 1978 SCM R 278
(3) PLD 1958 SC (Pak.) 221 Master-General Pakistan will appoint an arbitrator, but at relevant time when the disputes arose between the parties the Acting Quarter Master General made the appointment. The Supreme Court repelled the contention that the appointment was illegal and held that "the intention obviously was that the person holding that office whether permanently or temporarily should make the appointment" and further that the expression. The Quarter Master General' in the agreement included the Acting Quarter Master General. Additionally the plaintiff has placed on record letter dated 2-5-1975 addressed to the Chief Accountant, State Bank of Pakistan invocking the Arbitration clause for reference of the difference between the parties and requesting him to appoint the arbitration for the purpose. In reply, the Director, Accounts Department by his letter dated 7-6-1975 declined the request repudiating the claim made by the plaintiff, but did not take any objection on the ground that with the abolition of the designation of the post of Chief Accountant the arbitration agreement had been frustrated. For these reasons, I find no force in the first contention advanced on behalf of the defendant. The two judgments relied upon and referred to above are distinguishable inasmuch as in the first case the designated authority for the purpose of appointment of arbitrators, namely, the Sind Cotton Ginner Association had been dissolved and did not survive as an entity. In the second case the question was of the identity of the arbitrator appointed by designation to which section 4 of the Arbitration Act was not attracted and in any case the question of frustration of the arbitration agreement was not raised.
5. It was next contended on behalf of the defendant that the application under section 20 was barred by time under Article 181 of the First Schedule to the Limitation Act. In M. Imam-ud-Din v. Thal Development Authority (1) it was held that an application under section 20 of the Arbitration Act, 1940 has to be filed within 3 years as prescribed under Article 181 computed from B the point of time at which "a difference has arisen". As to when difference can be said to arise between the parties it was observed that "the difference arises when one party does not agree with the other on any particular question covered by the arbitration agreement." In the case before their Lordships it was found that the difference arose when the Autority refused to pay the bill of the contractor in full and, therefore, it was held that the dates of the payment made under the two contracts determined the Terminus a Quo for the period of limitation. Relying on this judgment it was contended on behalf of the defendant that as the claim for the additional payment by the plaintiff was rejected by the defendant on 13-10-1972 the present application under section 20 was clearly barred by limitation.
6. In order to meet the plea of limitation raised by the defendant, the plaintiff has placed on record photo-copies of the correspondence exchanged between the parties from 20-4-1970 up to 13-8- 1974. I have perused these documents. It is no doubt true that by its letter dated 13-10-1972 (Annexure 'Y') the defendant rejected the claim of the plaintiff and assigned detailed reasons as to each item of claim preferred by, the plaintiff. However, the plaintiff by letter dated 20-1-1973 (Annexure A/13) reiterated the justification for its claim repudiating the reasons assigned by the defendant in its letter of rejection. It appears that the plaintiff kept on urging the defendant to reconsider its decision of rejection and by letter dated 15-5-1973 (Annexure A/21) the defendant wrote to the plaintiff saying that the matter is receiving active consideration and the reply would be sent shortly. Again by letter dated 6-2-1974 (Annexure A/22) the defendant called upon the plaintiff to depute
(1) PLD 1972 SC 123 its representative for signing the measurement books and the final bills. Uultimately, the defendant by its letter dated 11-3-1974 (Annexure A/24) finally rejected the claim of the plaintiff and gave detailed replies to the further reasons assigned by the plaintiff in justification of the claim. It would, therefore, appear that defendant willingly reconsidered its decision and re-opened the matter for fresh examination and final decision. If the limitation period is computed with effect from the aforesaid date the application is well within time. The moot question to consider in the light of the aforesaid facts is as to when difference between the parties as postulated by the Supreme Court arose. In my opinion, it is idle to argue that even if the defendant was willing further to consider the settlement of the claim of the plaintiff after 13-10-1972 the plaintiff was required to invoke the arbitration clause. As soon as the defendant showed its willingness to reconsider its decision to reject the claim, there was no question of any difference arising between the parties at that stage, for, the test laid down by the Supreme Court is that the difference arises when one party does not agree with the other on any particular question covered by the arbitration agreement. Therefore, even when the defendant rejected the claim of the plaintiff at an earlier stage no disagreement had finally arisen between the parties as the defendant willingly entered into further negotiations for reconsidering its decision. There is, therefore, no force in the contention that the application under section 20 is barred by limitation.
7. It was then urged on behalf of the defendant that the claim sought to be referred to the arbitration was itself barred by limitation under Article 56 of the Limitation Act as the work for which the payment was claimed was completed on 30-10-1970. Column 1 of Article 56 pertaining to the description of the suit to which the Article applies states as under :- "For the price of work done by the plaintiff for the defendant at his request, where no time has been fixed for payment."
' The perusal of the contract between the parties shows that the payment was to be made by submission of bills for the work done periodically during the course of work after the bills are checked by the Engineer incharge and approved and passed by the Director of Engineering subject to final settlement and adjustment of accounts. The final bill was required to be submitted by the contractor within one month of the date fixed for completion of the work. Therefore, in terms of -the contract the time of the payment and the method for the approval of the bills is expressly provided for. Article 56 of the Limitation Act, therefore, does not seems to be applicable to the present case.
8. It was finally urged on behalf of the defentant that the claim of the plaintiff is covered by clause 14 (A) of the contract agreement and is accordingly outside the scope of the arbitration clause.
Clause 14 (A) of the agreement may be reproduced as under :- "No deviation from specification stipulated in the contract nor any additional items of work shall be carried out by the contractor unless the rates of the substituted, altered or additional items have been approved in writing by the Director of Engineering failing which the the State Bank will be bound to entertain any claim on his account."
' Having regard to be language of the arbitration clause reproduced in the foregoing part of this judgment, the contention is wholly misconceived. The arbitration clause is coached in very wide terms to include all questions and disputes between the parties to the contract and only matters excepted from its ambit are those in which the decision certificate and/ or opinion of any person is expressed by the contract to be final and conclusive. There is nothing in clause 14 (A) as reproduced above to provide that in the matters mentioned therein the decision or opinion of any person would be final and binding on such matter. I, therefore, find no substance in the objection raised.
9. No other argument was advanced on behalf of the defendant.
10. In the result, I allow the prayer of the plaintiff and order that the arbitration agreement shall be filed and a reference shall be made to the arbitrator appointed by the Director of Account of the State Bank of Pakistan failing which further orders shall be passed by the Court for appointment of an arbitrator. The case shall come up on a date to be fixed by the office after a fortnight for filing the name and address of the arbitrator appointed by the Director of Accounts, if any, and for further orders. The suit is disposed o' as above with costs.