' YAHYA AFRIDI, J.--- This appeal is directed against the judgment and order dated 16-1-2012 of the Civil Judge-IV, Mansehra, whereby, the application filed by the respondents under section 34 of Arbitration Act, 1940 ("Act") was accepted and the proceedings were stayed, adjourned 'sine die' and the matter referred to the Arbitrator for decision.
2. The brief and essential facts leading to the present appeal are that the bids offered by the present appellant, a registered firm, for construction of 100 drinking water supply and sanitation schemes in Oghi, Mansehra ("Works") was accepted by the respondent-Department vide order dated 30-4-2009. This was followed by an agreement between the parties ("Agreement") However, certain grievances of the present appellant arose and it instituted a suit for recovery of Rs,1,828,000/- against the respondents, disputing therein measurement process of the work done, preparation of wrong bill, deduction of certain due amount and security of the appellant deposited with the respondents in connection with the Works.
3. The respondents, when put to notice, before filing their written statement, filed application under section 34 of the Act, soliciting therein that the matter may be sent to the Arbitrator for carrying arbitration proceedings, in view of clause 25 of the Agreement. The said application was contested by the appellant by filing replication thereto.
4. The learned trial Court after hearing both the parties, allowed the said application vide impugned order dated 16-1-2012. Hence, this appeal.
5. Learned counsel for the appellant argued that the trial Court has wrongly passed the impugned order, as the respondents did not opt to file application for stay of proceedings in the suit at the first instant and sought adjournments for three consecutive dates for filing written statement by the respondents; that the decision had already taken by respondent No,3 and nothing has been left to be decided by the arbitrator. Learned counsel for the appellant sought reliance upon the case-law reported as Pakistan International Airlines Corporation v. Messrs Pak Saaf Dry Cleaners (PLD 1981 SC 553), Muhammad Farooq v. Nazir Ahmad and others (PLD 2006 SC 196) and Government of the N.-W.F.P and others v. Khalid Khan and others (2006 M LD 1897).
6. Conversely, the respondents contended that the application under section 34 of the Act was filed in the first instance on completion of service of the respondents; that the respondents did not make any request seeking time to file written statement; that the appellant was bound to resolve the dispute through arbitration proceedings, as clearly stipulated in clause 25 of the Agreement.
7. It is apparent from the record that the parties had entered into the Agreement, which clearly provides clause 25 for arbitration, which reads as under:--- 'In the event of any disagreement arising out of the contract, the matter shall first be referred to the Superintending Engineer for decision, who shall after making such enquiries as may deem fit, give his decision in writing not later than three months after the reference is made to him. This period for decision of the case by the Superintending Engineer, may however be extended by the Chief Engineer under special conditions according to the circumstance justification available in such case. The contractor shall forthwith give effect and shall proceed with the work diligently whether Arbitration is intended or not.
' If the contractor be dissatisfied with the decision of the Superintending Engineer, or if it is not forthcoming within the stipulated or extended period/periods and desires Arbitration under the arbitration clause as hereinafter provided, he shall give a notice in writing of such mention within a period of 28 days of the receipt of Superintending Engineer's decision, or in case give his decision. The said notice shall contain the cause of action, material facts of the case and relief sought, failing which, the decision of the Superintending Engineer shall become final, conclusive and binding, and the contractor shall be deemed to have forfeited and departed from the claim in excess of that allowed by the Superintending Engineer. No subsequent inflation/increase in the amount of claim once preferred in the said notice shall be allowed nor shall any other claim in respect of the same work be entertained from the contractor at any later stage. A reference for arbitration shall be made by the contractor in writing not later than three months after completion of the work. Failure to make such a reference within this period shall be deemed that contractor has waived all claims in respect of any dispute.
(a) Dispute which may be referred for Arbitration shall be limited to:---
(i) Any question, difference or objection whatsoever which shall arise in any way connected with or arising out of the contract or/and
(ii) The meaning if the operation of any part of the contract, or/and
(iii) The rights duties or liabilities of either party or/and
(iv) Whether the contract should be terminated or has been rightly terminated and as regards the rights and obligations of the parties as the result of such termination: ' Provided these matters for which provision has been made in the contract for final and binding decision by the Superintending Engineer or the Executive Engineer shall be excluded from Arbitration.
(b) The venue of Arbitration shall be in West Pakistan.
(c) In the event of any dispute arising in accordance with the limitation provided in sub-clause
(a) of this clause, the same shall be referred for the decision of a sole Arbitrator to be appointed by the Chief Engineer in charge of the work from among the officers of the department not below the rank of Superintendent Engineer and other than the Superintending Engineer in charge of the contract work. In case of claim referred for an amount up to Rs, I lac only, the dispute shall be referred for the award of two Arbitrators to be appointed from the Superintending Engineers of the Department other than the Superintending Engineer in charge of the work one to be nominated by the Chief Engineer of the region concerned and the other by the contractor in the case of the said two Arbitrators not agreeing the case shall be referred to the award of a Chief Engineer to be an officer of the Department not below the rank of a Chief Engineer to be appointed by the Government in the Administrative Department. The decision of the two Arbitrators umpires as the case may be, shall be final and binding on the parties concerned. Where the matter involved claims for the payment or recovery or reduction of the money, only the amount if any awarded in arbitration shall be recoverable in respect of the matter so referred."
8. Surely, the 'disagreement' or 'dispute' between the parties has arisen out of the Agreement for execution of Works, which under clause 25 was mandated to be referred to Arbitration in the manner and mode provided by the said clause. However, the appellant instead of adopting the said mandatory recourse; resorted to institute a civil suit for recovery of certain amount on the basis of a different stance contrary to the stance of the respondents. The appellant was under obligation to have resorted to the proceedings to be carried out by the Arbitrator for resolution of the controversies, as per clear terms and conditions of clause 25 of the Agreement. Thus, the decision of the learned trial Court, while analyzing in its legal perspective in view of the available record and stances of the parties, would suggest that it has rightly referred the matter to Arbitrator.
9. As far as the argument of the learned counsel for the appellant that the respondents sought adjournments before filing the application for referring the matter to arbitration, the same is not in consonance with the facts of the present case. The record reveals otherwise. One of the respondents, first appeared 'on 27-7-2011, while all respondents/ defendants were finally served on 4-10-2011 and application for arbitration was filed by the respondents on 7-10-2011, Hence, the said application can hardly be said to be delayed.
' In view of the above, the case-law cited by the learned counsel is not relevant to the facts of the present case. Thus, the stance taken by the learned counsel for the appellant is without any legal force and that by the respondents is valid and lawful. Reliance may be placed on Sqd. Ldr. (R.)
Khurram Zaman v. Mrs. Afia Zafar (2008 CLD 662), Muratab Ali v. Liaqat Ali (2004 SCM R 1124) and Dar Okaz Printing and Publishing Limited Liability Company v. Printing Corporation of Pakistan Private Limited (PLD 2003 SC 808).
' No illegality has been committed by the trial Court, warranting interference by this Court in Appellate jurisdiction.
10. Accordingly, for the reasons stated hereinabove, the present appeal being without any merit is dismissed.