1. ' SAYED ZAHID HUSSAIN, C.J.---Order of the trial Court, dated 28-3-2008 made on application moved by respondent No. 1 under section 41 of the Arbitration Act, 1940 retraining the encashment of the performance bond is sought to be assailed through this appeal.
2. Ever since the service of respondents Messrs Bilal A. Khawaja and Aurangzeb Mirza, Advocates had been appearing for respondent No.1 but today none of them is present. Mr. A.H. Masood, Advocate initially stood up for representing the said respondent who had Power of Attorney/Wakalat Nama with him from respondent No.1 but when he was asked to argue the matter, he expressed his inability and requested not to be marked as counsel in the matter for respondent No.1. The matter was adjourned on number of dates at the request of respondent No.1 to explore the possibility of some amicable settlement. The learned counsel for the appellant has stated today that no serous attempt was made by the respondent for this purpose and there is no use of adjourning the matter any further. It has been heard accordingly.
3. Since the matter (application under section 20 of the Arbitration Act, 1940) is still pending before the trial Court, I would refrain from going into details and dilating upon the factual aspects of the matter and would like to examine the correctness of the order made by the trial Court i.e. Issuance of restraint order. The contention of the learned counsel- for the appellant that in view of the procedure set down in clause 67 of the Contract, the application of respondent No.1 under section 20 of the Arbitration Act, 1940 was premature and making of such a restraint order was not justified in the facts and circumstances of the case, is not without substance. In this context, the relevant clause of the contract is as follows:--- " 67 . Engineer's Decision If a dispute of any kind whatsoever arises between the Employer and the Contractor in connection with, or arising out of the Contract or the execution of the Works whether during the execution of the Works or after their completion and whether before or after repudiation or other termination of the Contract including any dispute as to any opinion, instruction, determination, certificate, or valuation of the Engineer, the matter in dispute shall, in the first place, be referred in writing to the Engineer, with a copy to the other party. Such reference shall state that it is made pursuant to this Clause. No later than the eighty-fourth day after the day on which he received such reference the Engineer shall give notice of his decision to the Employer and the Contractor. Such decision shall state that it is made pursuant to this clause.
2. ' Unless the Contract has already been repudiated or terminated the Contractor shall, in every case, continue to proceed with the Works with all due diligence and the Contractor and the Employer shall give effect forthwith to every such decision of the engineer unless and until the same shall be revised, as hereinafter provided in an amicable settlement or an arbitral award.
3. ' If either the employer or the Contractor be dissatisfied with any decision of the Engineer or if the Engineer fails to give notice of his decision on or before the eighty-fourth day after the day on which he received the reference, then either the Employer or the Contractor may, on or before the seventieth day after the day on which he received notice of such decision, or on or before the seventieth day after the day on which the said period of 84 days expired, as the case maybe give notice to tlte other party with a copy for information to the engineer of his intention to commence arbitration as hereinafter provided as to the matter in dispute. Such notice shall establish the entitlement of the party giving the same to commence arbitration as hereinafter provided as to such dispute and subject to sub-clause 67.4 no arbitration in respect thereof maybe commenced unless such which notice is given.
4. ' If the Engineer has given notice or his decision as to a matter in dispute to the employer and the Contractor and no notice of intention to commence arbitration as to such dispute has been given by either the Employer or the contractor on or before the seventieth day after the day on which the parties received notice as to such decision from the Engineer the said decision shall become final and binding upon the employer and the contractor.
5. 67.2 Amicable Settlement Where notice of intention to commence arbitration as to a dispute has been given in accordance with sub-clause 67.1 the parties shall attempt to settle such dispute amicably before the commencement of arbitration. Provided that unless the parties otherwise agree arbitration may be commenced on or after the fifty-sixth day after the day on which notice of intention to commence arbitration of such dispute was given even if no attempt at amicable settlement thereof has been made.
6. 67.3 Arbitration ' Any dispute in respect of which:-
(a) the decision, if any, or the Engineer has not become final and binding pursuant to sub-clause 67.1; and
(b) amicable settlement has not been reached within the period stated in sub-clause 67.2. Shall be finally settled under the provisions of the Arbitration Act, 1940 as amended or any statutory modification or reenactment thereof or the time being in force. The said arbitrator/s shall have full power to open up review and revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer relate to the dispute.
7. ' Neither party shall be limited in the proceedings before such arbitrator/s to the evidence or arguments put before the Engineer for the purpose of obtaining his said decision pursuant to sub- clause 67.1. No such decision shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrator/s on any matter whatsoever relevant to the despite.
8. ' The place of arbitration shall be Lahore".
9. The perusal of the above would show that certain specific procedure had been laid down for dispute resolution between the contracting parties which had to be resorted to as provided for before approaching the Court under section 20 of the Arbitration Act, 1940. It is admitted position that indeed respondent No.1 had made a reference to the Engineer as contemplated by Clause 67.1 without awaiting, however, the outcome thereof, he had approached the civil Court. The view taken by the learned trial Judge in the matter does not find support from either the facts and circumstances of the case or the law settled on the subject. In Messrs Ayaz Builders through Attorney v. Board of Trustee of the Karachi Port Trust and another (2008 CLC 726) it was observe that:- "Cause 67.1 of the contract provides that the dispute of any kind between the employer and the contractor in connection or arising out of the contract, whether during the execution of works or after their completion and whether before or after repudiation or termination of the contract, in the first place, be referred in writing to the Engineer. The said clause further provides that either the employer or contractor be dissatisfied with any decision of the Engineer, or if the Engineer fails to give notice of his decision than either of the party give notice to other party of his intention to commence arbitration.
10. ' From the perusal of clause 67.1 the contention of Mr. Salman Talibuddin appears to be correct that the arbitration proceedings provided in terms of the contract cannot be commenced unless the Engineer gives his decision or fails to give his decision."
11. It was a prerequisite for resorting to arbitration proceeding or approaching the civil Court for that matter for which no plausible and cogent justification was made out. A premature course of action was adopted by respondent No.
1. Reference may also be made to Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. (PLD 2003 SC 191), Heavy Mechanical Complex (Pvt.) Ltd. Taxila v. Attock Industrial Products Ltd. Rawalpindi (PLD 2003 SC 295) and Messrs Atlas Cables (Pvt.) Limited through Director v. Water and Power Development Authority through Chairman and 2 others (PLD 2008 Lahore 238). From these precedents it is evident that making of such a restraint order was not warranted. I, therefore, find no justification for the issuance of restraint order by the trial Court. The order impugned, dated 28-3-2008 is, thus, set aside.
12. ' As a result of the above, the appeal is accepted with no order as to costs.