MUHAMMAD NAEEM ANW AR, J.---The petitioners have assailed the order of the learned Trial Court dated 11.11.2019, passed by the leaned Civil Judge-XX, Peshawar , by which, their application filed under section 33 of the Arbitration Act, 1940, was turned down.
2. Brief facts of the case are that the respondents have filed an application before the civil Court, under Section 20 of the Arbitration Act, 1940 with the following prayer: - a) Order respondents to file Arbitration agreement before this Honourable Court; b) Referring the matters in disputes for decision by the Sole Arbitrator to be appointed by this Honourable Court; c) Costs of the petition be awarded to the petitioner; and d) Any other relief that this Court may deem just and proper be awarded to petitioner .
3. When the petitioners appeared before the learned Trial Court, in response to the notices, issued to them, they submitted an application under section 33 of the Act ibid for dismissal of the application of respondents. The application was contested by them and the learned Trial Court vide order dated 11.11.2019, has dismissed their application, hence, the instant petition.
4. Having heard the arguments, it transpired that a contract was executed between the respondent No.2 and petitioner for the purpose of Restoration of Munda Head works for feeding lower Swat Canal, Dooba Canal and Tangi Lift Irrigation Scheme, District Charsadda, by which, the respondents were required to design, construct, manufacture, supply and to install the requisite equipment for the purpose of restoration of Munda Head Works within five hundred and ten days w.e.f. the date of commencement of the work, which was to be completed before 31st of December , 2014 and during the currency of work, the respondents in accordance with the terms of the contract for his services rendered, subm itted bills/invoices for the payment. The contents further reveals that the respondents executed civil work (excluding road works) to the tune of Rs.81 1,354,836, for which, they have submitted bills, out of which, the bills to the tune of Rs.304,902,631 were verified and a dispute arose for the remaining amount, for which, number of correspondence were made between the parties and in 'order to seek redresssal of their grievance, they have submitted / referred their dispute to the Project Manager/ Engineer/ petitioner No.3 but no heed was paid to it. Thereafter , notices were given to the petitioners to commence the arbitration but the same were not responded, as such, they approached to the civil Court within the provisions of.
Section 20 of the Arbitration Act, 1940, which reads as under: - "20. Application to file in Court arbitration agreement.-(1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in the Court.
(2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintif f or plaintif fs and the remainder as defendant or defendants, if the application has been presented by all the parties, or, if otherwise, between the applicant as plaintif f and the other parties as defendants.
(3) On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants, requiring them to show-cause within the time specified in the notice why the agreement should not be filed.
(4) Where no sufficient cause is shown, the Court shall order the agreement to be filed, and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an arbitrator , to an arbitrator appointed by the Court.
(5) Thereafter the arbitration shall procee d in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable".
5. When the petitioners were put on notices by the learned civil Court, they submitted an application for rejection of the petition, filed under section 20 of the Act ibid. The application was replied, however , the same was turned down.
The petitioners approached to this Court through Civil Revision No.122-P/2018, however , on 23.05.2018, it was disposed of in the following term: "After having argued the petition at a certain length, lastly , the learned AAG states that he would not press the instant petition preferred against the judgment and order dated 14.12.2017 of the learned Civil Judge-XIX, Peshawar whereby the application of the petitioners under Order VII, Rule 11, C.P.C. was dismissed and would rather have recourse to other legal remedies available to the petitioners under the law . Order accordingly".
6. After disposal of the civil revision mentioned above, the petitioners have submitted an application under Section 33 of the Act ibid, for dismissal of the application, filed by the respondents, on the ground that as the project was going to be closed by the end of June, 2015, therefore, respondents were required to submit their final claim, if any.
As the respondents have failed to complete the project activity within the extended period which was ended by 30.06.2016 and that, for resolution of the dispute, a meeting was convened, which was held on .19.06.2015 in order to review the recommendations of the Committee constituted by the Secretary , Irrigation Department regarding the respondents' claim for the project, where, after scrutinizing the matter , it was concluded in the following manner: CSR item No.03-54 "Clearance of shingle, graval including sand, soft soil and silt deposits in channel bed upto 25m" shall be adopted with 68% premium as per Contract Agreement. Survey of Hydrology Division as agreed by the Contractor shall be followed. Actual Remanding where ever applicable and actual lead involved may be decided by the FDRD staff as per site condition".
7. So far as, the dispute pertaining to the basic escalation invoice is concerned, the Committee concluded the matter as under: - Escalation shall be allowed on the original scope of work till completion without freezing its rate on signing of amendment No.1 of the Contract Agreeme nt while for additional work, no escalation shall be allowed for a period of one year, and after one year for the portion unexecuted, escalation shall be admissible as per formula prescribed in the Contract Agreement. Base rate of 30/12/2010 shall be used for making balance escalation payment for original scope of work. Factor of 0.4 and 0.6 shall be used as Non-adjustable and Adjustable factors. The escalation on the original scope of work shall be calculated by the consulta nts on weightages of previously verified escalation IPCs. The FDRD shall refer the escalation claim to the Consultant to recommend weigh tages for the additional scope of work and balance escalation amount".
8. For the foregoing reason, the petitioners have sought the dismissal of application of respondents within the meaning of section 33 of the Arbitration Act, which reads as:- "33. Arbitration agreement or award to be contested by application.- Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the ef fect of either determined shall apply to the Court and the Court shall decide the question on af fidavits: Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also and it may pass such orders for the discovery and particulars as it may do in a suit.
Provided further that no application challenging the existence or validity of an award, or for having its effect diminished, shall be entertained by the Court unless the applicant has deposited in the Court the amount which he is required to pay under the award or has furnished security to the satisfaction or the Court for the payment of such sum or the fulfillment of any other obligation by him under the award".
9. The aforementioned provisions of the Act ibid could be submitted either to challenge the existence of arbitration agreement or validity of the same and the matter shall be determined by the Court. In the instant matter , the existence of the arbitration agreement is not disputed, so far as its validity is conc erned, the petitioners could not challenge the same, as the contract so executed between them, contains an arbitration clause for resolution of disputes as per clause 50.1, which reads as under: - "If a dispute of any kind whatsoever arise s 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 Project Manager/Engineer , the matter in dispute shall, in the first place, be referr ed in writing to the Project Manager/Engineer , with a copy to the other party . Such reference shall state that it is made pursuant to this Clause. No later than the fifty sixth (56) day after the day on which he received such reference, the Project Manager/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".
10. In accordance with clause 50.1, the dispute was to be referred to the Project Manager / Engineer , who would have to give notices of his decision to the employer and contractor , as per the reference made to him but in the instant matter , when the reference was referred to him, he has not concluded or given any decision, regarding which, respondents in their application filed under section 20, in para No.4.1 have categorically mentioned, which fact was denied by the petitioners in their reply . Similarly , the arbitration agreement also provides under clause 50.4 that when the decision of the project manager / engineer either the decision has not become final or amicable settlement has not been started / reached within the period provided in sub-clause 50.3, the matter / dispute would be resolved by the Arbitrator to be appointed under these rules.
11. Admittedly , no one was named in the arbitration agreement, therefore, the respondents were left with no option but to submit application, under section 20 of the Arbitration Act, 1940. It is not disputed that the period of the contract has already been expired, now, there is a dispute, which requires resolution and that resolution could be made, as per provisions of arbitration agreement, within which, the responden ts have submitted their claim / dispute to the Project Manager/Engineer but no fruitful result came out or no decision was made by the Project Manager/Engineer . The points taken by the petitioners in their application under section 33 would be resolved by the learned Trial Court, before which, application under section 20, for the purpose of appointment of Arbitrator is pending.
12. First proviso of section 33 of the Act ibid, is of worth perusal, where the application filed under this section, would be decided after hearing the parties and going through from the record/other evidence. In the instant case, the matter pertaining to the appointment of Arbitrator and the grounds taken by the petitioners in their written reply qua the application under section 20 shall be decided by the learned Trial Court but in no case it could be considered that as the time for completion of the contract has lapsed or certain meetings were held for resolution of the controversy . Admittedly , the controversy / dispute still persists and these dispu tes cannot be resolved without deciding the fate of application under section 20 where the learned Trial Court shall decide as to whether the Arbitrator could be appointed or not and if so, under which terms and conditions. The petitioners through the instant petition and their application under section 33 intended to decide the matter , as the same could not be agitated before any forum. The administration of justice requires the decision between the parties pertaining to the dispute should be decided on merits and after proper application of mind, in accordance with law, rather than to be decided on technical grounds. The petitioners have taken hyper-technical grounds in their application. The application of the petitioners, filed under section 33 shall be decided along with application under section 20 in consonance with the first proviso of section 33.
13. For the reasons discussed above, this petition stands dismissed.