' MUNIB AKHTAR, J.---By means of a short order dated 6-12-2013, I had dismissed C.M.A. 3025/2013, an application filed by the plaintiff seeking interim injunctive relief, while allowing C.M.A. 3670 of 2013, an application filed by the defendant under section 34 of the Arbitration Act, 1940. The following are my reasons for have done so.
2. In its application, the plaintiff sought interim injunctive relief in terms that:-- ... This Hon'ble Court may be pleased to restrain the defendant during the pendency of the suit from taking over possession of the following projects completed by the plaintiff:
(i) Staff Residential Building
(ii) Jama Masjid
(iii) B.O.Q/M.O.Q Accommodation, Staff Residential Building and FFB2 Masjid."
' On this application, ad interim orders had been made on 20-3-2013 in the terms that the defendant was "restrained from taking over the possession of the project completed by the plaintiff".
3. Learned counsel for the plaintiff submitted that the plaintiff was-in the construction industry and well qualified, able and experienced to handle and undertake construction projects of all sorts. It appears that sometime in 2010 the defendant issued tenders, inviting interested parties to bid for undertaking three construction projects for the defendant. As per para 2 of the plaint, one project was the construction of a staff residential building (hereinafter, the "first project"), one was the construction of a mosque (a jama masjid) (hereinafter, the "second project") and the third was described as "External Works--B.O.Q/M.O.Q Accommodation, Staff Residential Building and 1:1:B2 Masjid" (herein after, the "third project"). (I may note that the references as just noted are only for convenience. The projects were not to be undertaken sequentially but concurrently, and this is what happened.) The plaintiff participated in the tenders and was eventually awarded the work for all three projects. Learned counsel submitted that since the contractual terms (as presently relevant) were identical in respect of all three projects, only one contract (that relating to the first project) had been placed on record (as Annexure B to the plaint). It was submitted that reference to this contract would be sufficient and this was not disputed by learned counsel for the defendant.
The applications were therefore heard and decided accordingly.
4. Learned counsel submitted that while the plaintiff was proceeding with the work as planned and contracted for, the defendant suddenly had it stopped on or around 14-2-2011. This was so because of a change in the senior management of the defendant and, in particular, the induction of a new managing director. The plaintiff protested, and eventually work resumed on or around 28-3-2011.
On account of this stoppage the plaintiff suffered certain financial loss. It was also entitled to certain extensions in the respective times of completion for each contract. These were applied for, and granted. The first project was to be completed by 31-8-2012. The second project was in any case completed as per the original schedule and the third project was completed by about 11-6- 2011. It appears that certificates were also issued with respect to all three projects. Learned counsel referred to the completion certificates issued in relation to the second and third projects, and submitted that these were "clean" certificates, i.e,, established that all work in respect thereof had been done. Insofar as the first project was concerned, the certificate' stated that the plaintiff had "substantial[ly] completed" the work as on 31-8-2012. There was a "punch list" with regard to certain work that remained to be done, and learned counsel submitted that the plaintiff subsequently completed all the work to the defendant's satisfaction. It was submitted that the performance guarantee that had been arranged by the plaintiff in respect of the first project was also returned on or about 4-9-2012. Thus there could be no doubt that the plaintiff had duly performed its obligations under the contracts.
5. Learned counsel submitted that the plaintiff had certain claims on account of the escalation in the prices of steel and cement. In this regard, reference was made to the plaintiff's letters, all dated 5-10-2012, along with which the amounts claimed for each project were presented to the defendant. The amounts for each project were, respectively, Rs,37,52,870, Rs,1,82,225 and Rs, 12,75,375. There was also a revised amount claimed for electrical works in relation to the first project, which came to Rs,4,84,000. It was submitted that the defendant's employees had duly verified and confirmed these claims. On this basis, it was contended that there was, and could be, no dispute with regard to these amounts, and the defendant was without any lawful excuse or justification refusing to pay the same. Learned counsel also referred to various other amounts being claimed by the plaintiff, as stated in paras 9 to 11 of the plaint. It is not necessary to give the details of these amounts. It suffices to note that the total amount claimed by the plaintiff in respect of all three projects under the various heads (some of which were being claimed on a continuing, day to day basis, and others which had not yet matured as on the date of the filing of the suit) came to Rs,5,84,91,928 (as on the date of the suit). It was submitted that the defendant had wrongfully failed and refused to pay these amounts, and the plaintiff was entitled to the same.
6. It was in the foregoing circumstances and on the above basis that the present suit came to be filed, and the plaintiff applied for interim injunctive relief by means of CMA 3025/2013. As already noted, an ad interim order was made on 20-3-2013. Learned counsel submitted that all three ingredients for interim relief were in the plaintiff's favour. The defendant had wrongfully failed and refused to pay amounts due to the plaintiff, including those by way of retention monies for which the. Relevant period had expired, and other claims which had been verified and confirmed. The plaintiff was therefore entitled to retain possession of the site till payment. In the alternative, learned counsel prayed that the defendant should, at the very least, be required to deposit the claimed amounts in Court.
7. Learned counsel for the defendant opposed the application for interim relief: It was submitted that the crux of the matter was this: could interim relief as sought be granted in respect of a claim simply for the recovery of money? Learned counsel submitted that the law clearly and emphatically answered this question in the negative. Insofar as the claim for escalation of costs was concerned, learned counsel submitted that this was strong', denied and disputed. Even otherwise, referring to clause 10 of the contract, learned counsel submitted that the plaintiff had failed to comply with its terms and hence was not entitled to the claimed amount. Insofar as the claims having been verified and confirmed by the defendant's employees, learned counsel submitted that the documents being relied upon in this regard were disputed. It was stated that the purported signatures of the defendant's employees were rejected as forgeries. Learned counsel further submitted that the total value of the work done for all three projects came to around Rs, 320 tnillion, as to the payment of which there was no dispute. The claimed escalation came to only around Rs, 5 million. Even the other amounts were being disputed. Learned counsel submitted that none of the ingredients for interim relief lay in favour of the plaintiff. Rather, it was the defendant that was suffering irreparable loss and injury on account of the continued occupation of the plaintiff's property. In any case, there was an arbitration clause in the contract, and the plaintiff ought to have agitated its claim at the forum agreed upon between the parties.
8. In support of the defendant's` application under section 34, Arbitration Act (CMA 3670/2013), learned counsel referred to clause 18 of the contract, which provided as follows:- "Any claim and/or dispute arising out of the CONTRACT shall be settled by mutual agreement. In case the dispute is not resolved, it shall be put up before the Chief Executive & Managing Director of THE COMPANY as sole arbitrator and his decision shall be final and binding upon both the parties."
' Learned counsel submitted that the defendant's application was presented on 3-4-2013, even before the filing of the counter affidavit to the plaintiff's application for interim relief, which was presented on 18-4-2013. No written' statement had been filed. Section 34 was fully applicable and attracted, and hence the suit ought to be stayed.
9. Responding to the submissions made on the defendant's application, and exercising his right of reply in respect of the submissions on the plaintiff's application, learned counsel for the plaintiff reiterated that all three ingredients for interim relief were made out in favour of the latter. It was submitted that the plaintiff had a "lien" on the defendant's property and reliance was placed on Umer v. S.A. Rana and others PLD 1957 Karachi 760 (SB). It was reiterated that even if the plaintiff's application was dismissed and the matter referred to arbitration (which, it was submitted, was relief that ought to be denied) the defendant should at the very least be directed to deposit the undisputed amounts in Court. Insofar as the reference to arbitration was concerned, learned counsel submitted that there had to be a dispute for there to be any such reference. A dispute did not arise simply on the say so of a party. Learned counsel submitted that the plaintiff's claim fell into two parts. One was in respect of the escalation, and there was no dispute there since the amounts claimed had been admitted and accepted by the defendant's employees. The second part was on account of the continued failure and refusal of the defendant to release the retention monies. Since it was an admitted position that the work had been completed in respect of all three projects, there could also be no dispute in respect of the release of these amounts. In this regard, learned counsel referred to clauses 9, 6, 14 and 15 of the contract. Thus, no dispute existed within the meaning of clause 18 as would require a reference to arbitration.
10. Referring to section 34 of the Arbitration Act, learned counsel submitted that the counter affidavit filed by the defendant to the plaintiff's application was, in substance, a written statement, since it was so detailed and comprehensive in nature. Thus, the defendant had taken a "step" in the "proceedings", i.e,, the suit, or at least acquiesced in the Shaheen Construction Company v. Fauji Fertilizer Bin Qasim Ltd. (Munib Akhtar, J) continuation thereof and in the facts and circumstances of the present case, the defendant ought to be regarded as having abandoned any claim/right to have any dispute referred to arbitration. Learned counsel relied on Pakistan International Airlines Corporation v. Pak Saaf Dry Cleaners PLD 1981 SC 553, Uzin Export and Import Enterprises for Foreign Trade v. M. Iftikhar and Co. 1993 SCM R 866 ("Uzin") and Samina Sohail v. Humaid Naseer Al- Owais and others 1989 CLC 1949 (SHC; SB). Learned counsel further submitted that clause 18 required for arbitration before the defendant's managing director as the sole arbitrator. It was submitted that the present incumbent was biased against the plaintiff, since it was at his behest that the work had been suddenly stopped (as noted above). Furthermore, the counter affidavit, though not sworn by the managing director, was so detailed in nature that it could only have been settled with his approval. Thus, in effect, the managing director had already made up his mind with regard to the plaintiff's claim and any reference to him would be an exercise in futility. The application for stay of proceedings ought therefore to be dismissed.
11. After having heard learned counsel as above, and having considered the respective submissions, I was in no doubt that the plaintiff's application ought to be dismissed and that filed by the defendant ought to be allowed. I had therefore made the short order referred to above.
Insofar as the plaintiff's application is concerned, in my view, learned counsel for the defendant correctly identified the key question: could such interim relief be granted in respect of a claim for recovery of money in facts and circumstances of or similar to the present case? In my view, this question can only be answered in the negative. No authority was cited by learned counsel for the plaintiff in support of a different answer. If a person agrees to have his house built by a contractor, and the contractor comes on the plot to do the work, which is completed and paid for as per the contractual terms and rates, but the contractor makes a claim for an additional amount which is denied and disputed, can he continue to retain possession of the plot/house till such time as the dispute is resolved? Surely, the proper answer to this must be in the negative. In principle, there was no difference between the example given and the position of the plaintiff vis-a-vis the defendant. It is of course conceivable that a contractor may have a contractual right with regard to possession or his continued presence on the site but no such provision was shown to me or relied upon by learned counsel for the plaintiff. In terms of the general law, no such right can be said to exist. I am also with respect, unable to agree that the plaintiff had a "lien" on the site. The cited case, Umer v.
S.A. Rana and others PLD 1957 Karachi 760, has no application to the facts and circumstances presently at hand. It involved a dispute relating to certain hired goods (furniture). The matter came to this Court by way of a revision. The applicant, who was the owner of the furniture, had hired it to the first respondent. The third respondent stood surety. After some time, the first respondent moved into a room at a hotel owned/operated by the second respondent, taking the furniture there.
Thereafter, the first respondent left the hotel without paying the outstanding charges, but leaving the furniture behind. The first respondent had also not paid the hire charges for the furniture to the applicant. When he sought the return of his furniture, the applicant discovered that it was lying with the second respondent. A demand for return of the furniture was refused, the second respondent claiming a lien on the furniture until the hotel bill was cleared. The applicant filed a claim in the Small Causes Court against all three respondents, seeking inter alia to have his furniture returned without having to settle the hotel's bill The claim was decreed against the first and third respondents (i.e,, the hirer of the furniture and his surety) but dismissed against the second respondent, i.e, it was held that the furniture could be retained by the second respondent by way of a lien. The applicant filed his revision petition in the foregoing circumstances. After having considered the facts and the case-law cited, the learned single Judge concluded as follows:- "It is my considered view that there is lien of a hotel keeper on the goods whether belonging to the guest or third parties brought in the hotel and it is not discharged until the hotel dues have been paid in full." (pg. 765)
' As is obvious, the facts, legal proposition and conclusion arrived at by the learned single Judge were far removed from the facts and issues at hand.
12. In my view, in the present case the balance of convenience clearly lay in favour of the defendant and against the plaintiff and it was the party that would suffer irreparable loss and injury rather than the plaintiff. It was being deprived of the use of its property by the continued occupation and possession of the plaintiff. The projects clearly involved work done for the defendant (at the very least, the first and third projects) for its ongoing business and commercial activities. It could very easily suffer loss and injury on account of the continued presence of the plaintiff on site in such circumstances. With respect, neither the law nor the facts were in favour of the plaintiff. For the foregoing reasons, I had concluded that there was no warrant for any interim injunctive relief being granted to the plaintiff and had dismissed its application C.M.A. 3025/2013.
13. I turn to the defendant's application under section 34, Arbitration Act. The suit was instituted on 19-3-2013. Along with the plaint, the plaintiff filed its aforementioned application for interim relief.
This came up for hearing on 20-3-2013, when (as noted above) an ad interim order was made. It was directed that notice be issued to the defendant for 4-4-2013. On 3-4-2013, the defendant filed its application under section 34. No written statement has been filed, and the counter affidavit to the plaintiff's application was presented on 18-4-2013. In these circumstances, I had no hesitation in concluding that the section 34 application was filed without taking any "other steps in the proceedings". In my view, the defendant did not at any stage acquiesce in the continuation of the suit or abandon its right/claim to arbitration. On the contrary, the record shows that it asserted this right/claim at the earliest and has continued to do so at all material times. Of course; it was at the same time entitled to oppose the plaintiff's application for interim relief and did so by filing its counter affidavit. Nothing more can be read into the counter affidavit and, with respect, the submission by learned counsel for the plaintiff that it should be regarded as the defendant's written statement cannot be accepted. This would be contrary to established principles. The case cited in this regard, Samina Sohail v. Humaid Naseer Al-Owais and others 1989 CLC 949, provided no assistance to the plaintiff. In that case (a suit for specific performance) the defendants had filed counter affidavits to the plaintiff's application for interim relief, but having failed to file written statements, were debarred from doing so. The question was whether an ex parte decree could be made against the defendants. The learned single Judge, referring to the relevant statutory provisions and certain decided cases, observed with reference to a counter affidavit that "even though it is not formally termed as a Written Statement, may yet be considered in the way of defence or even, if the ends of justice so require, as a Written Statement and at any event, cannot be ignored by a Court of Law, for the objects of such Courts is always to administer justice between the parties and in fairness to all concerned" (pg. 1952). On the facts before him, the learned Judge observed as follows: "The Counter Affidavits in question therefore, qualify for being treated in defence, even though the defendants are absent. I would however, in the context of this case, refrain from treating them as due Written Statements". The suit was decreed ex parte. As is obvious, this case does not have any relevance for present purposes.
14. The other cases relied upon by learned counsel for the plaintiff also did not, with respect, provide any assistance. Pakistan International Airlines Corporation v. Pak Saaf Dry Cleaners PLD 1981 SC 553 is of course the leading authority on section 34, and the passages relied upon are well known. It is to be noted that in the cited case, a learned single Judge of this Court had dismissed a section 34 application on the ground that the defendant (the appellant before the Supreme Court) had applied for extensions in time for filing its written statement, and hence had dis entitled itself to relief in terms of that section. This decision was upheld by a learned Division Bench, but reversed in appeal by the Supreme Court. The Supreme Court observed that the "entire controversy" was whether the applications for extension of time amounted to the taking of "other steps in the proceedings" and concluded that they did not on the facts before it. It was observed that "the true tests for determining whether an act is a step in the proceedings is not so much the question whether the party sought an adjournment for filing the written statement although of course that would be a satisfactory test in many cases but whether taking into consideration the contents of the application as well as the surrounding circumstances that led the party to make the application display an unequivocal intention to proceed with the suit and to give up the right to have the matter disposed of by arbitration" (pg. 564). In the present case of course, there was no application of any sort filed by the defendant at any time prior to the filing of the section 34 application, which was done at the earliest. The cited case, if anything, goes against the plaintiff and not in ifs favour. The second Supreme Court decision relied upon, the Uzin case, also turned on its rather peculiar facts and indeed, the Supreme Court observed in relation to section 34 as follows: "The Court has to satisfy itself that the party applying for stay has not relinquished or abandoned its right of invoking arbitration clause after filing of suit. In coming to such conclusion, the facts and circumstances of each particular case are to be examined in the light of pleas and other steps taken by the parties. Facts and circumstances of two cases may not be alike and may differ" (pg. 872). In the case before it, the Supreme Court did, in fact, stay the court proceedings and directed the parties to arbitration (though at Karachi and not Paris as the arbitration clause provided). In my view, as already noted, there is nothing in the present record as would indicate that the defendant relinquished or abandoned its right to arbitration. Rather, all indications are clearly and unambiguously to the contrary.
15. Insofar as the submission that the arbitrator mentioned in the arbitration clause, i.e,, the defendant's managing director, was biased against the plaintiff, I was not satisfied that a case in this regard had been made out at all. There is no averment (and no such case was sought to be made out) that clause 18, which was part of the contract, was ever challenged or disputed by the plaintiff. It is an arbitration agreement duly entered into between the parties and they must be held to their bargain. Only if a clear case of bias had been made out could it be said that recourse to arbitration may have been regarded a futility. In my view, with respect, not even a prima facie case was made out in this regard. As regards learned counsel's submission that there was, in fact, no dispute to refer to arbitration I could not, with respect, agree. The record clearly showed that there was, prima facie, a dispute with regard to the amounts being claimed by the plaintiff. That is enough to refer the matter to arbitration. To delve deeper or further into the matter would, in effect, require an examination of the dispute on the merits, which is the very thing that the arbitrator must decide. It is also now well established (part of the very vocabulary of arbitration law) that the arbitrators have the competence to decide or rule on their own jurisdiction (the rule usually known as "competence-competence"). There could perhaps be a situation where the objection to a plaintiff's claim is so patently frivolous or vexatious that to send the parties to arbitration would serve no purpose at all and only (as it were) prolong the plaintiff's agony. Whether there is such an exception and if so, what is its extent or scope are questions I expressly leave open to be decided in a suitable case. I am firmly of the view that such is not the situation at hand, nor do the facts and circumstances of the present case disclose any such position. For the foregoing reasons, nothing was shown as to why the parties should not be directed to arbitration and I had therefore allowed the defendant's application in this regard. Finally, as to the alternative prayer made at the bar that if the plaintiff's application was dismissed and/or the defendant's application be allowed, the defendant be directed to deposit the undisputed amounts in Court. This was not the relief sought by the plaintiff in its application. In any event, since I was of the view that there was prima facie a dispute as to the plaintiff's claim, and it ought to be referred to arbitration, I also concluded that the plaintiff was not entitled to any such order.
16. For all the foregoing reasons, I had concluded that the applications heard by me ought to be disposed of as directed by means of the short order.