1. SAJJAD ALI SHAH, J.--This High Court Appeal is filed against the judgment dated 20-4-1980 of learned Single Judge whereby application under sections 5, 9, 11 and 33 of the Arbitration Act 194u filled by Board of Trusts-.s of the Port of Karachi, incorporated under Karachi Port Trust Act VI of 1886 of respondent No. 1 before us against Messrs National Construction Company, incorporated in Pakistan, in joint venture with Messrs Christiani and Nielson A/S Copenhagen, Denmark (Jung Bunder Joint Venture)/appellants before us and Mr. Justice (Retd.) Mohammad Yakub Ali calling in question his appointment as a Sole Arbitrator by the appellants, has been disposed of by setting aside the appointment of Mr. Justice (Retd.) Mohammad Yakub Ali as sole arbitrator and allowing respondent No. 1 to nominate their own arbitrator within two weeks' time. It is further held in the impugned judgment that the arbitrators shall enter upon reference only on completion or alleged completion or alleged completion of the entire Works and not before.
2. Shortly stated the relevant facts are that Board of Trusts-respondent No. 1 entered into a contract with the Joint Venture mentioned above (hereinafter to be referred as the Contractors) for construction of four new Shipping Berths and two Transit Sheds at Juna Bunder Karachi and the Works were to be completed by 18-1-1978, and the period was subsequently extended with the consent of the parties. According to the contract the Works were to be designed and supervised on site by Messrs Professor Dr. Lackner and partners. Consulting Engineers of West Germany in association with Messrs Zafar Associates of Pakistan (hereinafter to be referred as the Consulting Engineers). The Contractors submitted various claims from time to time to the Consulting Engineers who examined each claim and gave their decision but the Contractors were not satisfied and on 5-12-1979 sent arbitration notice to the Consulting Engineers K. P. T. Intimating them of their nomination of Mr. Justice (Retd.) Mohammad Yakub Ali as their Arbitrator and called upon respondent No. 1 to nominate their Arbitrator within 15 days from the date of receipt of notice. On 23-12-1979 the Chief Resident Engineer of the Consulting Engineers acknowledging the receipt of notice sent a detailed reply informing the Contractors that under clause 3.67 (2) of the Contractor, Arbitrators, Umpires shall not enter on the reference until after completion of the Works and as such the Arbitration proceedings were uncalled for. On 15-1-1980 the Contractors sent another letter to the Consulting Engineers and K. P. T. Informing them that since the respondent No. 1 had failed to appoint -their Arbitrator hence Mr. Justice (Retd.) Mohammad Yakub Ali, already nominated by the Contractors shall be deemed to be the sole arbitrator for adjudication of the dispute. It is stated that the Chief Resident Engineer and K. P. T. Protested to the Contractors against such unilateral action vide their letters and thereafter they received a notice-from Mr. Justice (Retd.) Muhammad Yakub Ali on 21-1-1980 that he had entered upon arbitration in the said dispute and summoned representatives of the parties to appear before him on 26-1-1980 at 10-30 a.m. At Sind Club Karachi for setting the procedure for conducting the arbitration proceedings. On 26-1- 1980 respondent No. 1 K. P. T. Filed application under the provisions of the Arbitration Act mentioned above in the High Court challenging arbitration proceedings on several grounds such as that the arbitration clause in the contract envisages that the Arbitrators/Umpires shall not enter on the reference until after completion or alleged completion of the Works unless with written consent of the K. P. T. And Contractors and that the Works were still in progress and were not complete and the Contractors were behind schedule. An alternate plea was also taken in the application before the learned Single Judge that if the Court came to the conclusion that the Arbitrators can enter upon reference before completion of Work, the respondent No. 1 be allowed to nominate their own Arbitrator and the delay be condoned.
3. The case of the appellants before the learned Single Judge was that arbitration clause in the agreement is to be read in conjunction with rest of the contract and that the Works relating to four Berths had already been completed and/or substantially the completed, as such reference to arbitration was proper and legal. Works relating to two Transit Sheds which was in progress was separate and different for reasons that time for completion of four Berths is fixed separately from time fixed for completion of Sheds, amount of liquidated damages and bonus for early completion in respect of Berths has been separately prescribed in respect of four Berths from total Works. Bill of quantities for Civil Works for four Berths is distinct and separate from the Bill of Quantities for Civil Works for the two transit Sheds.
4. It was further submitted that Works relating to four Berths had been completed or substantially completed and a request was made for completion certificates. Their claims J. J. V-1 to J. J. V-12 (12 claims) were rejected by the Consulting Engineers in respect of four Berths, as such invocation of arbitration clause in the contract was justifiable and legal.
5. The learned Single Judge after hearing the arguments advanced by the counsel for both the parties has come to the conclusion that the Works on the date of reference were incomplete, as such Arbitrator can not enter upon the reference. Reliance is placed on the definition of word "Works" as provided in clause 3.1 (f ) of the Contract and also in arbitration clause as contemplated by clause 3.67 (2) of tile Contract. In coming to that conclusion the learned Single Judge has endeavoured to construed intention of the parties on the use of word "Works" whether it is used in the sense of works in entirety or individual works and reliance is also placed on two letters dated 24-12-1979 and 19-1-1980 showing that Works were not complete when reference was entered upon.
6. Before us it is submitted on behalf of the appellants that at the time when reference was entered upon by the Arbitrator, Works relating to four Berth was complete or substantially complete or alleged to be complete and works relating to two Sheds was in progress, as such according to the terms of the contract arbitration proceedings were competent because Works in respect of four Berths was complete or alleged to have been complete. It is also submitted that the letter dated 19-1-1980 of which reference is made by the learned Single Judge in his judgment, if read carefully would indicate that it speaks about the completion of Sheds and there is no mention in it of the Works relating to the four Berths which had already been completed by the Contractors. The letter in question is reproduced as under;-- "The General Manager, Planning & Development Karachi Port Trust Karachi.
7. Third Project of Karachi Port Reconstruction of Berth and Sheds Request for Special Advance Payment against Bank Gurantee Dear Sir, In the High level Meeting of December 13, 1979, which was presided over by Major-General Shafique Ahmed, Federal Secretary, Ministry of Works, and attended by the Chairman, K. P. T., it was unanimously agreed that the progress of Work must be expedited on the Project. The completion date for the Shed was discussed that the Shed must be completed by December 31, 1980. However, to enable the completion by this date, the Federal Secretary, Ministry of Works, requested K. P. T, to again help N. C. C./C. N. With further extra---contractual advance, as a special case, for expediting the progress of the Shed. At K. P. T.'s request it was agreed by N. C. C./C. N. That this extra- contractual special advance will be kept in a separate bank account, for the utilization exclusively for the acceleration of the progress of the Shed and will be subject to check by K. P. T. At the time of monthly running bills.
8. Further, to the above, K.1. T. Will examine this matter in consultation with the Finance Department and in compliance with the request from the Secretary, Ministry of Works, K. P. T. Agree to provide extra-contractual special advance of Rs. Forty lacs against Bank Guarantee, exclusively for the utilization of the Shed Work, with a view to expedite the progress. The advance would be deducted from TEN successive running bills in equal instalments.
9. Accordingly, we enclose Bank Guarantee for Rs. Forty lacs as per K. P. T.'s usual draft for approval, with the request for extra---contractual advance to be processed favourably for early payment.
10. Yours faithfully, K. W. HANSEN, Project Manager."
11. It is quite apparent from the reading of this letter that it speaks about acceleration of Works relating to the Sheds only and not to the four Berths which are alleged to have been completed by the similarly letter dated' 24-12-79 shows revised time schedule Contractors in respect of Sheds only. An order to appreciate as to what is the real intention of the parties with regard to use of word "works" it will be necessary to make 'reference to the relevant provisions of the Contract and also to arbitration clause. The Contract entered into by the parties is very voluminous in nature and runs into 5 Volumes and also includes several annexures and letters of correspondence which took place between the parties. Volume III relates to Bill of Quantities for Civil Works of the four Berths.
12. Volume IV relates to the Bill of Quantities for Civil Works of two Transit Sheds. Definition of Works is provided in clause 3.1 (f ) which is contained Volume I It is reproduced as under;-- " `Works' means all supplies and performances, which are to be executed by the Contractor in concurrence with the Contract In so far as to be understood from the wording of the text, Works also means the entirety of all or individual structures, which are to be constructed and maintained within the scope of the Contract."
13. It is clear from the above definition clause that "Works" has been used has been used in the plural sense acrd also there is reference to the entirety of all or individual structures which clearly shows that both interpretations, one relating to entirety of all the Works and the other entirety of each individual structure are permissible. On this premise it was submitted on behalf of the appellants that it can not be said that exclusive intention expressed in the definition clause is that all works in entirety must be completed. This definition clause also permits entirety of all or individual structures which may even mean each structure of our Berths and two Sheds. In this context it was further submitted that the intention of the parties was very clear that two separate Works were intended and one of them was construction of the four Berths and the other was construction ' of two Transit Sheds, for which different time were given and different Bills of Quantities.
14. On this point Mr, Shareefuddin Pirzada learned counsel for the appellants contended before us that when definition of a particular word is given in the Statute there, that definition clause must he deemed to govern the whole Statute unless the context or general weighty reasons show contrary.
15. For this proposition reliance was placed by him on decision AIR 1920 P C 114 which provides as under :- "When the interpretation clause in a Statute says that such and such expression shall include so and so, the Court in constructing a statute is bound to give effect to :he direction unless it can be shown that the context of the particular passage where the expression is used shows clearly that the meaning is not to this place to be given effect to, or unless there can be alleged some general reasons of weight why the interpretation clause to be denied its application." '
16. In this context it was submitted that a definition given in an Act must be substituted for the word defined wherever it occurs in the Act. Reliance has been placed on the case of Jagatchandra N.
17. Faro and another v. The Province of Bombay and others AIR 1950 Bom. 144, wherein the objection was taken that "premises" defined in section 4 (3) of Bombay Land Requisition Act of 1948 was not applicable "any premises" contemplated under section 6 (I) of the said 'wet for the reason that it wasrepugnant to the subject or context of that section. It has been had in the reported decision that the existence of "premises" within the meaning of that definition is, therefore, a condition precedent to the exercise of the power of repetition ; and that condition, in so far as premises intended to be let are concerned, is not capable of subjective determination, nor is there any indication in the Act that it is leftto the subjective determination of the Government.
18. While it would bepertinent to point out certain documents to demon--strate the intention the parties whether the "Works" were intended to be completed in entirety or individually. We have already reproduced above letter dated 19-1-1980 which clearly speaks about the construction of two Sheds separately and also additionally shows that Works in respect of con--struction of four Berths was completed or alleged to have been completed already. Letter dated 24-12-79 also relates to the times schedule in respect of Sheds. Appendix `A' to the form of Tender contained in volume I of the Contract provides at item No. 5 proposed time for completion of Works (30 months or less) vide clause 1.10 and proposed time for completion of four Berths (20 months or less) vide clause 1.10. The same Appendix 'A' further provides at item No. 6 for amount of liquidated damages for late completion, for each calender day or a part thereof, after the completion date determined in accordance with the Contract, payable in both currencies as per clause 3.47. Separate amounts have been shown against Berths and total Works. Similarly at item No. 7 amounts of bonus for early completion of Works and Total Works are separately mentioned. This clearly shows that intention was to separate the Works of Berths from Sheds. As already stated above Volume III of the Contract separately relates to Bill of Quantities for Civil Works of four Berths and Volume IV of the Contract separate deals wit Bill of Quantities for Civil Works of two Sheds.
19. Article 3.62 of the Contract provides that the Contract shall not be considered as completed until a Maintenance Certificate shall have been signed by the Engineer and delivered to the K. P. T., stating that the whole of the Works have been completed and maintained to his satisfaction. The Maintenance Certificate shall be given by the Engineer 28 days after the expiration of the period of Maintenance of the last civil engineering part of the Works or as soon thereafter as any works during such period pursuant to Clauses 3.49 and 3.50 thereof shall have been completed to the satisfaction of the Engineer. Full effect shall be given to this clause, not--withstanding any previous entry on the Works or the taking possession, working or using thereof or any part thereof by the K. P.
20. T. The issue of the Maintenance Certificate shall be a binding condition precedent to payment to the Contractor of the last portion of the Retention Money under Clause 3.60.
21. Article 3.67 of the Contract provides as follows :-
(1) The Contract shall be and be deemed to be a Pakistani contract and shall a9cordingly be governed by and construed according to the laws for the time being in force in Pakistan, should any or more conditions of the Contract be lacking in legal effectiveness on account of ambiguity or for any other reason whatsoever, the same shall not impair the validity of any other conditions or of the Contract as a whole.
22. The Pakistan Courts shall have exclusive jurisdiction to bear and determine all actions and proceedings arising out of the Contract, and the Contractor hereby submits to the jurisdiction of the Pakistani Courts for the purpose of any such actions and proceedings.
(2) If any dispute or difference of any kind whatsoever shall arise between the K. P. T. Or the Engineer and the Contractor in connection with or arising out of the Contract, or the carrying out of the Works (whether during the progress of the Works or after their completion and whether before or after the termination, abandonment or breach of the Contract), it shall in the first place be referred to and settled by the Engineer, who within a period of 90 days after being requested to do so, shall give written notice of his decision to the Contractor.
23. Save as hereinafter provided, such decision in respect of every matter so referred shall be final and binding upon the Contractor until the completion of the Works and shall forthwith be given effect to by the Contractor, who shall proceed with the Works with all due diligence, whether he requires arbitration as hereinafter provided or not.
24. If the Engineer has given written notice of his decision to the Contractor and no claim to arbitration has been communicated to him by the Contractor within a period of 90 days from receipt of such notice, the said decision shall remain final and binding upon the Contractor.
25. If the Engineer shall fall to give notice of his decision as aforesaid within a period of 90 days after being requested as aforesaid, or if the Contractor should be dissatisfied with any such decision, then the Contractor may within 90 days after notice of such decision, or within 90 days after the expiration of the first named period of 90 days (as the case may be) require that the matter in dispute be referred to arbitration as hereinafter provided.
26. This Court of arbitration will be carried out according to the Arbitration Act 1940. It will be held in Karachi in any case. The point at issue will thereby be submitted to two arbitrators, of whom one will be nominated by the K. P. T. And the other by the Contractor, or in case both arbitrators can not agree, turned over to an umpire named by the Arbitrators. The decision of the Arbitrators or the Umpires shall be final and binding for both parties, the K. P. T. And the Contractor.
27. Each such arbitrators' (umpire's award must conform to the legal decrees and provisions, which are applicable for courts of arbitration, and which are in force in Pakistan at that time. The valuation of the costs in connection with the reference or the award shall devolve on the arbitrators, or should they be unable to agree, on the umpire named by them.
28. Ail disputes and differences, for which the eventual decision of the Engineer is not, as aforesaid, final and binding, shall be finally settled by the arbitrators/umpires named under this provision.
29. The said arbitrators/umpires shall have full power to open up, review and revise any decision, opinion, direction, certificate, or valuation of the Engineer. Neither party shall be limited in the proceedings before such courts of arbitration, to the evidence of arguments put before the Engineer for the purpose, of obtaining his said decision. No decision given by the Engineer in accordance with the foregoing provisions, shall disqualify him from being called as a witness and giving evidence before the court of arbitration, on any matter whatsoever relevant to the dispute or difference referred to the court of arbitration as aforesaid.
30. The arbitrators/umpires shall not enter on the reference until after the completion or alleged completion of the Works, unless with written consent of the K. P. T. And the Contractor, provided always--
(a) that such reference may be opened before such completion or alleged completion in respect of the withholding by the Engineer of any certificate, or the withholding , of any portion of the Retention Money to which the Contractor claims in ,accordance with the Conditions set out in this Contract to be entitled, or in respect of the exercise of the Engineer's power to give a certificate under clause 3.63 (1) of these Conditions;
(b) that the giving of a Certificate of Completion under clause 3.48 hereof shall not be a condition prem4ent to the opening of any such reference.
31. Work under this Contract, which has nothing to do with such a dispute, question or difference, shall be continuedwithout any delay during the court of arbitration. The same is valid for the disputed portion of the Works, in so far as the dispute does not extend to essential questions of the technical solution to be selected."
32. From the reading of the Article as reproduced above it becomes apparent that the intention of the parties is as follows :-
(a) That if there is any dispute or difference of any kind between the parties in connection with or arising out of the Contract, or the carrying out of the Works, such dispute in the first place be referred and settled by the Engineer, who shall give his decision within 90 days. Such decision shall be binding upon the Contractor until the completion of Works. It is further provided that if the Engineer has given awritten notice of his decision t, the Contractor and no claim of arbitration has been communicated to him by the Contractor, thedecision shall remain final and binding upon the Contractor. If the Engineer fails to give notice of his decision within 90 days or if the .Contractor is dissatisfied with the decision then the Contractor can refer the matter to the arbitration, Two things are very prominent an one is that such dispute or difference can arise between the parties in connection with or arising out of the Contract or carrying out of the Works. In clause (2) of the said Article after Works it is mention whether during the progress of the Works or after their completion.
33. This clearly shows that the dispute can arise even when the Works are in progress. It also shows that dispute can be of an general nature and can be in connection with or arising out of contract.
34. All these disputes can be referred to the Engineer and as stipulated above can thereafter be referred to the arbitration.
(b) If the language of this Article as reproduced above is read carefully it will appear that not only at one place but at several places in each clause words Arbitrator/ Umpires have been used consistently which clearly shows that there can be more than one arbitration during the pendency of the contract. Now if the intention of the parties was that there would be only one arbitration which would be final and could not take place until after the completion of the Works, then why the words "Arbitrators/ Umpires" have been used at several places---. Even the last portion of clause
(2) of the above Article on which much emphasis is being laid by the learned counsel for the respondent, clearly reads as under "The Arbitrators/ Umpires shall not enter on the reference until after the completion or alleged completion of the Works, unless with written consent of the K. P. T. And the Contractor, provided always . . . . . . .
(c) It is also clear that such reference may be opened before completion or alleged completion in respect of Withholding by the Engineer of any certificate or the withholding of any portion of the Retention Money to which the Contractor claims.
(e) It also appears clear that the Work under the Contract which has nothing to do with such a dispute, question or difference shall be continued without any delay during the court of arbitration.
35. This confirms the intention of the parties that the arbitration proceedings cat take place before the completion of the Work.
36. The case of the appellants is that in or about only 1978. They lodged 12 claims in respect of execution of the Work relating to she four Berth with the Engineer in terms of Article 3.67 of the Contract. The Engineer gave decision on the 12 claims JJV-1 to JJV-12 filed by the appellants. The appellants by their letter dated 5th December 1979 expressed dissatisfaction with the decisions given by the Engineer on their claims and invoked arbitra--tion agreement contained in Article 3.67
(2) of the Contract. The objection raised by the respondent is that arbitration clause could not be invoked at that stage simply for the reason that the entire Works including four Berths and two Transit Sheds were not complete. This certainly does not appear to be intention of the parties as expressed in the relevant clauses of the contract as reproduced above. What at the most the intention appears to be is that Works have been divided into two parts, the first construction of four Berths and then construction of two Transit Sheds for which different times have been provided in the Contract.
37. The contention of Mr. Fazeel the learned counsel for the respondents is that as per the terms of the Contract the intention of the parties is that arbitration clause cart not be invoked until after all the works including four Berths acid two Sheds are finally complete or alleged to be complete. Reliance is placed by him on letter dated 19-1-1980 addressed by Project Manager of the appellants to the General Manager of K. P. T. In which request was made for extension of time.. The, contents of this letter have been discussed above and it is clear that in this letter no doubt request is made for extension of time for completion of the Works but it is only with regard to completion of Sheds and not the four Berths which according to the appellants have been completed or substantially complained and the possession thereof also was taken over by K. P. T, as alleged by the appellants.
38. Mr. Fazeel has also further submitted that in the instant case the Contractor has to wait till the entire works including four- Berths and two Transit Sheds are complete and then ask for arbitration.
39. Reliance is placed by him on the provision in the arbitration clause that the Arbitrators/ Umpires shall not enter on the reference until after completion or alleged completion of the Works unless with the written consent of the. K. P. T. And the Contractor. It is submitted 'by him that neither entire works were complete nor were alleged to be complete and hence arbitration clause could not be invoked and also there was no written consent by the K. P. T. For adopting such course. It was also submitted by the learned counsel that exceptions (a) and (b) provided in the arbitration clause for commencement of arbitration proceedings before completion or alleged completion of the Works will riot apply to the facts of the instant case because there was no with-holding try the Engineer of payment certificate or running bills and also he did not with-hold payment of retention money which is' to be paid after the entire Work is complete. Mr. Fazeel has also submitted that Works includes entirely of all structures, which in the ultimate, analysis requires completion of the entire work for which the contract is made It is further explained by him that provision for liquidated damages or bonus have been made. In the contract in order to ensure early completion of the entire work. It is farther submitted by him that the contract in question in this case is the standard form called R. I. B. A. In which there words "completion or alleged completion of Works" have consistently been used. In order to elucidate this point reliance is placed by him on the famous case of Smith v. Martin(1925) 1 K B 7145, .The facts of the reported case are, that the form of building contract issued by the Royal Institute of British Architects provides, by Condition 31 in the Schedule thereto, that should the building owner not pay the builder any sum certified by the architect within the time limited (1)by the contract, the builder is to be at liberty to determine the contract and recover from the building owner payment for all work executed. Condition 32 thereof provided that in case any difference shall arise between the building owner and the construction of the contract or as to any matter arising thereunder, such difference is to be referred to the arbitration but that "such reference" shall not be opened until after the completion of the works" During the progress of certain works which were being carried out under building contract in the above form the building owner neglected to pay to the builder a sum certified by the architect within the stipulated time and thereupon the builder determined the contract under condition 31 and commenced arbitration proceedings while the contract works were still uncom--pleted and arbitrator made award in favour of the builder. It was held that the words "until after the completion of the works" in condition 32 meant until after completion of the whole of the works contracted for, and not merely until after completion of so much of the works as the builder was under the circumstances bound to perform.
40. Consequently the arbitration was found to be premature it was held that arbitrator had no jurisdiction to make the award.
41. In the instant case also is the impugned judgment reliance is placed by the learned Single Judge upon this reported case and it is observed by the learned Single Judge in the following terms;-- "No doubt in the above cited case the definition of the word "works" is hot stated and it is not known this word was defined in the contract or not."
42. It is, therefore, obvious that the ratio decidendi of the reported case mentioned above is not applicable to tip facts of the case under consideration for the reason that in the instant case the word "Works" is specifically defined in the contract in the definition clause as mentioned above. In this context !t Mr. Shareefuddin Pirzada leas further pointed cut that the facts of the reported case are entirely 4ifferent and even the mode of payment is not mentioned in that case, as s h it will not apply to the facts of the present case particularly when "Woks" is not defined to that case. Mr. Pirzada has also pointed out that in the reported case L. J. Atkin has observed that the builder would not be deprived of all remedy and he would still have his remedy by action for work done an materials provided. It is only the right go to the arbitration that is suspended till after the completion of the whole Works.
43. In any case what is most important is the intention of the parties as expressed in the contract, which is binding on them. In the instant case we have reproduced above the relevant Articles from the contract and also the arbitration clause which clearly show that in the instant case word "Works" has been define in the definition cause does not exclude expressly the interpretation that the "word. "Works" is used in divisible sense. Even in the arbitration clause the language does not show that the intention of t parties is that reference o arbitration can not be made until after the completion of the entire works named in the contract in totality. We are,therefore, favourably included to accept the proposition put forward by Mr. Shareefuddin pirzada that the "Works" in the contract in question t divided into two parts first to cover completion of four Berths and second to cover completion of o Transit Sheds and such intention is amply demonstrated in the contact as well as in the documents produced by the parties and the corespondent held between the parties.
44. According to the appellants the work relating to the construction of four Berths was complete and even the Contractors had applied for issuance of completion certificate on 22-7-1979 on the ground that the work relating to four Berths had been completed or substantially completed.
45. The next important question which came up for discussion before us was whether the Arbitrator can decide the question of his own jurisdiction in the sense whether he can enter upon the reference when the parties are at variance on the question whether the work is complete or not.
46. According to Mr. Fazeel the Arbitrator can not enter upon the reference until the entire work is complete and since this question relates to the jurisdiction whether he can enter upon the reference or not, be can not himself decided this question. Reliance is placed by him on the case of Mr. Mohammad Jamil Asghar v. The Improvement Trust Rawalpindi PLD 1965 SC 698. It is held in this reported case that when order of administrative authority is based on existence of certain circumstances, Court can make on inquiry and declare order of such authority to be void if such circumstances are not found to exist. Special Judicial Tribunals which are not Judges of facts which are foundation of their jurisdiction, civil Courts jurisdiction with respect to male fides can never be taken away. The facts in the reported case are entirely different and relate to the provisions of Displaced persons (Compensation and Rehabili--tation) Act and the powers of the Settlement Authorities in respect of evacuee property. Briefly stated the facts of the reported case are that certain bungalow was allotted to the appellant as a claimant by the Settlement authorities and a P.
47. T. O. Was also issued. Respondent i. e. Improvement Trust Rawalpindi claimed a portion of the land included in that bungalow as having been acquired by the Trust previously. Appellant filed a suit for declaration on the ground that the alleged acquisition by the respondent of the portion of the plot was illegal and void. On 16th July, 1960 order was passed by the Deputy Settlement Commissioner, which formed the foundation of the plea as to lack of jurisdiction in civil Court to deal with that matter. By this order the Deputy Settlement Commissioner amended the previous order of allotment in favour of the appellant with a direction that 6 kanals and 14 marlas of the land had been acquired by the Trust and should not be included in the plot allotted to the appellant. It was clarified in the order that the portion of the land in question had already been acquired by the Trust and should not have been transferred to the appellant earlier. The appellant filed the appeal against this order to the Additional Settlement Commissioner who dismissed the appeal as unnecessary and premature saying that as long as the civil suit of appellant for declaration as to the invalidity of the acquisition was not decided, he was not in a position to interfere with the order of the Deputy Settlement Commissioner. The suit was tried on the original side in the High Court when the learned Single Judge was of the opinion that the Deputy Rehabilitation Commissioner having held in his order that property in dispute had been acquired by the Trust, civil Courts would have no jurisdiction to determine the question of the validity of the transfer to the improvement Trust as long as this order was not set aside in view of sections 22 and 25 of the Displaced Persons (Com--pensation and Rehabilitation) Act which debars any Court from questioning any order made by any officer appointed under the said Act. The Supreme Court held had the jurisdiction of the civil Court to determine the question as to whether the property in dispute was validly acquired by Improvement Trust is not ousted by the finding of the Deputy Settlement Commissioner that the property had been validly acquired by the Trust. It may also be observed that the suit is one for declaration as to the invalidity of a particular acquisition. A bar can be created to such suit only by an order which conclusively determined the invalidity of the acquisition and it can hardly be urged that the Settlement Authorities possess exclusive jurisdiction to determine this matter. In this context it was further observed that there are certain circumstances which go to the root of the jurisdiction of the officer concerned must exist objectively and the remaining circumstances which are needed for the validity of his order are to be determined by the officer himself. The foundation of the jurisdiction of Settlement Officers for transfer of property is that the property should be that which was evacuee property, which has vested in the Central Government and which is liable to be transferred under the Provisions of Displaced Persons Act. If the property be in fact such the Settlement Authorities exercise with respect to it quasi---judicial functions. They determine whether "possession" of a party exists, whether a person is a claimant, that is the date of his possession and so on. With respect of the nature of the property however the Settlement Authorities have no jurisdiction to record a binding determination. If the property was in fact not evacuee property and was not vesting iii the Central Government the Settlement Authorities could not grant to themselves any jurisdiction to deal with it by holding that it was evacuee property.
48. Their orders would always be liable to challenge in an ordinary civil Court on the ground that they had no jurisdiction with respect to the property transferred at all. In the instant case the jurisdiction of the Arbitrator as such is not called in question because it is provided in the contract executed by the parties. The only question which arises for consideration is at what stage the arbitra--tion clause can be invoked. There is in fact dispute between the parties in terms of the contract whether reference for arbitration at this stage is mature or premature. It is contended by Mr. Shareefuddin Pirzada that arbitration clause is to be construed straight as it is. Reliance is placed by him on the case of Union of India v. Messrs D. N. Revri & Co. And others AIR 1976 SC 2257. The relevant paragraph from the reported case is reproduced as under: "It must be remembered that a contract is a commercial document between the parties and it must be interpreted in such a manner as to give efficacy to the contract rather than to invalidate it.
49. It would not be right while interpreting the contract entered into between two lay parties, to apply strict rules of construction which are ordinarily applicable to a conveyance and other formal documents. The meaning of such a contract must be gathered by adopting a commonsense approach and it must not be allowed to be thwarted by a narrow pedantic and legalistic interpretation."
50. It is further contended by Mr. Pirzada that the contract clearly provides .That reference to arbitration can be made in respect of my dispute or difference of any kind whatsoever between the parties in connection with or arising out of the contract and this makes the scope for interpretation very wide when emphasis is laid on the disputes arising out of the contract. Reliance is placed by him on the case of Heman and another v. Darwins Ltd. (1942) 1 All E L R 337, In which it was held that when a dispute between the parties was a dispute within arbitration clause and the appellant's action ought to be stayed. Where there has been a total breach of contract by one party so as to relieve the other of his obligations under it, an arbitration clause, if its terms are wide enough still remains effective. This is so even where the injured party has accepted the repudation, and in such circumstances, either party may reply on the clause. Reliance is also placed by the learned counsel on the case of Government of Gibraltar v. Kenney and another (1956) 3 All E L R 22in whichit is held that in the circumstances when a claim for a quantum meruit and alternative claim in the event of the agreement being adjudged to have been frustrated, were both claims arising out of the agreement within the ambit of arbitration clause and were matters which ought to be determined by the arbitrator and which could conveniently be determined by him, as there was no such clear separation of issues as would put one or more outside the arbitration agreement.
51. Mr. Pirzada further cited the case of Union of India v. E. B. AABY's Federi A/S (L R 1975 A C 797), in which it is held that when the claim for general contri--bution arises solely out of or under the charter party sod that accordingly, if the contract had remained un-varied, it followed from the "Centrocon" clause that since the respondents' arbitrator was not appointed within 12 months of final discharge, the claim for contribution would be absolutely barred and further that the contract which came into existence upon the acceptance of the undertaking of February 23, 1966, was a fresh contract which varied the charter party in that the respondents' claim to any general average contribution due to them was subject to no time limit save such as might be imposed by statute, and that, ,accordingly, in the circumstances the claim was not barred. In the reported case Mr. Pirzada has pointed out on page 814 observation of Lord Dilhorne, which is as follows :- "In Heyman v .Barwins Ltd. 1942 A C 356, 398 Lord Porter said that the words arising out of a contract" have a wider meaning than the words "under a contract" a view which was repeated by Sellers, J. In Government of Gibraltar v. Keemmy (1956) 2 Q B 410, 421. Although the words are different, I must confess my inability to discern any difference in their content."
52. Reference is also made to the case of A. M. & Co. v. Gordhandas Sagarmull AIR 1951 SC 9), in which it is held that where a party has to have recourse to the contract to establish his case, it is a dispute under the contract. Where arbitration clause in a contract provided for reference to arbitration of "all matters, questions disputes, differences and/or claims arising out of and/or concerning . . . . . . . Or relating to this contract" and the question was whether a party to the contract was acting merely as a broker or was the principal bound by the contract, it was held that as the question turned upon the true interpretation of the contract and the parties had to take recourse to the contract to establish the claim, it was a dispute under or arising out of the contract and thus within the jurisdiction of the arbitrators.
53. Mr. Pirzada has also referred to the case of Mohammad Azam Mohammad Fazal & Co. v. Messrs N.
54. A. Industries Karachi (PLD 1977 Kar. 21in which it is held as under :- "Section 33 of the Arbitration Act empowers the Court in law to determine the existence or validity or effect of any arbitration agreement. Similarly under section 20 of the Arbitration Act, the Court can refuse to make a reference only where sufficient cause isshown why the agreement should not be filed and an order of reference be made. The scheme . Of the Arbitration Act very clearly shows that the existence or validity of an arbitration clause may be successfully attacked either on grounds upon which the whole contract can be attacked or only the arbitration clause may be attacked as invalid although the contract of which it forms part is not open to such attack. If the challenge is to the validity of the arbitration clause itself obviously the objection has to be decided by the Court for, in that case the objection goes to the very foundation or the jurisdiction of the arbitrator and he can not decide the question so as to give jurisdiction to himself. However, if the arbitration clause is challenged collaterally along with the challenge to the contract itself of which it forms part, different considerations would arise. If the whole contract is questioned as void or non-existent in law on any ground, such question also effects the validity of the arbitration clause which falls or stands along with the main contract. But if the challenge to the arbitration clause is founded on disputed question ..Of interpretation of other terms of the contractor, the decision of such a question would amount to usurging the jurisdiction of the domestic forum which the parties have chosen for adjudication of their disputes. Both on authority and principle it is proper to leave such question to be adjudicate and decided by the arbitrator."
55. Keeping in view the legal position stated above and also the facts of this case and the terms of the contract we hold that the intention of the parties appears to be that the "Works" named in the contract are divided into two parts one relating to the completion/alleged completion of Berths and the other to the completion/alleged completion of the Transit Sheds and the arbitration clause can be invoked after the completion of the "Works" and in .Such circumstances the invocation of arbitration clause at the stage as done by the appellants, was competent. The question whether the work is complete or alleged to be complete can very well be left to the Arbitrators. Since the learned Single Judge has allowed respondent No. 1 (K. P. T.) to nominate there own Arbitrator and the learned counsel for the appellants stated before us that there was no objection on behalf of the appellants for the appointment of Arbitrator nominated by respondent No. 1, we hold that let both the Arbitrators nominated by the parties enter upon reference now as per the terms of the contract to decide the disputes raised by the parties including the question whether the works with regard to four Berths are complete or not.
56. Before parting with this judgment it may be. Pointed out that after hearing the arguments advanced by the learned counsel on behalf of the parties on 11-3-1981 judgment in this appeal was reserved and thereafter the application under section 151, C. P. C. Has been filed by the learned counsel for respondent No. 1 in which it is mentioned that respondent No. 1 has received a copy of letter addressed by Major-General Mohammad Saadat Ali Chairman, National Construction Company, advising as follows;-- "there will be no arbitration or any other legal action between one public sector company and another ; therefore, there will be no arbitration between N. C. C. (P.) Ltd. And K. P. T. Please send all claims against K. P. T. To me for decision and further action. I have withdrawn arbitration case of N.
57. C. C. (P.) Ltd. Against K. P. T. Please inform all concerned."
58. Notice was issued for hearing of this application to the other side and for the reason that one of us was not available at Karachi, the hearing could not be fixed in the Court and in the meantime summer vacation commenced. This application is supported by the affidavit filed by Project Engineer of K. P. T. And photostat copy of the letter mentioned above is also appended with it.
59. Perusal of application shows that there is no prayer in it for hearing in the Court. At the bottom of this application the relevant paragraph is reproduced as under :- "The above letter was endorsed to the chairman K. P. T., and as would appear from the contents, it has an important bearing on the dispute in appeal and accordingly the same is being placed on the record for consideration of the Court."
60. However, since notice was issued to the other side the appellants party has filed counter affidavit which is on the record. This counter affidavit is filed by Col. (Retd.) S. M. Idris who is Managing Director of the National Construction Company. It is stated in this counter affidavit that after hearing of arguments of the learned counsel appearing for both parties in this appeal the matter was reserved for pronouncement of judgment and in the meantime the application was filed in the Court by the learned counsel for respondent No. 1. It is further stated that the letter m question addressed by Chairman N. C. C. (P.) Ltd. Is an expression to the effect that since both appellants and respondent No. 1 are public sectors there should not be any legal dispute between them and the disputes should be decided amicably. It is further stated in this counter affidavit that the Chairman has undertaken to decided all arbitration claims himself and if this position was acceptable to K. P. T. Then they should have submitted to the offer of the Chairman for determination of such claims by him but that has not been done. It is further stated in the counter- affidavit that legal points are involved in this appeal on which the Court should give judgment.
61. We are of the view that there is no need or hearing this application in the Court for the reason that the original application under the provisions of Arbitration Act has been filed before the learned Single Judge of this Court by board of Trustees of the Port of Karachi against Messrs National Construction Co. In joint venture with Chriastiani & Nielsen A/S, Copanhagen, Denmark. It is, therefore, clear that the party concerned is joint Venture of which there are two components parts one is National Construction Co. And the other Christiani & Nielson A/S. Before us the appeal is filed by Juna Bunder Joint Venture comprising of National Con--struction Co. And Christiani & Nielson A/S. If reference of arbitration is proposed to the withdrawn it is to be withdrawn by Juna Bunder Joint Venture as such and not by one single component. Additionally it may be pointed out that according to the terms of the Contract for the management of the Joint Venture there is Executive Committee.- which is empowered to control the execution and carry out the works and also to submit to arbitra--tion any claim or claim against the employers. It is further provided that decisions of the Executive Committee shall be carried out by the Project Manager which shall be binding upon the Joint Venture. This Executive Committee of the appellants before us authorised the Project Manager by Memorandum of Authority dated 14-11-1979 to give notice of arbitration to K. P. T. As required under Article 3.67 of the Contract and take all such further acts, steps, proceedings for adjudication of the claims against of K. P. T. In arbitration. On the basis of this Memorandum of authority the Project Manager issued notice for arbitration to K. P. T. And now this notice on arbitration given by Project Manager can not unilaterally withdrawn only by the Chairman, N. C. C. (P.) forming only one component of the Joint Venture. This authority to give notice for arbitration can be validly withdrawn only by the Executive Committee. For these reasons we do not find it necessary to have the hearing of this application in the Court particularly when there is no such prayer made in the application by the learned counsel for respondent No. 1. This application stands disposed of as stated above.
62. In the result the appeal is partly allowed to the extent that the finding of the. Learned Single Judge that the Arbitrators nominated by the parties shall enter upon reference only on completion or alleged completion of entire Works and not before, is hereby set aside and instead we hold that both the Arbitrators nominated by both the parties can enter upon reference at this stage, The other finding of the learned Single Judge allowing respondent No. 1 to nominate their own Arbitrator is hereby maintained. The appeal is disposed of accordingly and there will be no order as to costs.