ABID HUSSAIN CHA TTHA, J.----The titled Appeal emanates from the decision rendered by the Civil Court, Lahore on the application of the Respondent against the Appellant under Section 20 of the Arbitration Act, 1940 (the "Act").
In this behalf, the Appellant has impugned the Orders dated 01.04.2019 and 22.04.2019, respectively , whereby the Court while accepting the application directed to file the arbitration agreement between the parties in the Court and appointed the arbitrator to resolve the dispute between the parties through arbitration.
2. The brief facts leading to the instan t Appeal are that the Appellant as Employer and the Respondent as Contractor entered into a contract dated 05.09.2015 (the "Contract") with respect to execution of construction works titled "Lahore Orange Line Metro Train Project, Package - I: Construction of Civil Works from Dera Gujran 0 + 60 to Chauburji 14 + 200" (the "Project"). In execution of the Contract, a dispute arose between the parties regarding the claim of the Respondent for additional compensatory payments incurred on account of delay caused due to litigation which claim was rejected by the Engineer . It was alleged in the application under Section 20 of the Act that the responsibility for dealing with litigation and ensuring that no delay was caused due to litigation vested with the Appellant under the Contract. It was averred that the delay was caused due to a stay Order passed by the Honorable Lahore High Court, Lahore on 28.01.2016, whereby , all the construction works within a distance of 200 feet from 11 selected monuments of which 8 were located along the route assigned to the Respondent, were directed to be stopped. The said stay Order was vacated by the Honorable Supreme Court of Pakistan on 08.12.2017. Accordingly , 22 months and 11 days of delay was caused in execution of the Project. During this period, all construction works at approxim ately 3 K.M. out of the 13.6 K.M. route entrusted to the Respondent came to a halt. Consequently , the Respondent suffered heavy financial loss on account of, inter alia, idled standby of equipment, working of manpower for additional period and increase in cost of construction material. The Respondent vide letter No. HCS/LOL/1747 dated 08.12.2016 put forward a claim of Rs. 551,488,065/- to the Engineer in terms of the Contract for additional payment regarding the suffered losses up to 31.07.2016. This interim claim was rejected by the Engineer vide letter No. PD-I/LOLMTP/LDA/28 dated 25.01.2017. Thereafter , the Respondent vide letter No. HCS/LOL/PI/2957 dated 13.12.2017 submitted its claim for additional payment of Rs.
1,981,771,047/- till 08.12.2017 i.e. the date of vacation of stay Order by the Honorable Supreme Court of Pakistan.
The reference to the Engineer was made pursuant to sib-clause 67.1 (Engineer's Decision) of Part-I of the General Conditions of the Contract. The Enginee r vide letter No. PD/LOLMTP/PCK-1/689 dated 06.03.2018 rejected the said claim of the Respondent. The Respondent vide letter No. HCS/LOM/3196 dated 17.03.2018 issued a notice to the Appellant under clause 67.1 of the General Conditions of the Contract expressing its intention to commence arbitration. The Appellant did not respond to the said notice and the Respondent vide letter No. HCS/LOM/3228 dated 04.04.2018 was constrained to request the Appellant to agree to immediate initiation of arbitration proceedings who declined the said request vide letter No. CE/LDA/PS/458 dated 18.04.2018. It was further submitted that thereafter , the Appellant had either rejected or not responded to all reasonable requests for an amicable settlement of the Respondent's just and lawful claim for additional compensatory demands, hence, there was no alternative but to enforce arbitration by filing the application under Section 20 of the Act.
3. The application was duly resisted by the Appellant by filing detailed reply raising number of legal and factual issues therein.
4. Learned counsel for the Appellant submitted that the Court failed to address the basic question with respect to the existence of alleged 'dispute' raised by the Respondent. The Appellant considers that there was no dispute whatsoever between the parties. As such, the mandatory condition stipulated in Section 20 of the Act that there must be a dispute between the parties was not fulfilled. Therefore, the Court could not have assumed jurisdiction under Section 20 of the Act and ought to have dismissed, the application of the Respondent. The Respondent did not categorize the dispute and failed to inform the Appellant with respect to his claim. The raising of the dispute with the Appellant was sine qua non to trigger the dispute resolution mechanism under clause 67.1 of the Contract.
The failure of the Respondent to categorize the dispute with the Appellant meant that there was no `dispute' between the parties. The Respondent directly brought the alleged dispute before the Engineer . As such, the Appellant never acknowledged the existence of any dispute with the Respondent. The Engineer rejected the claim of the Respondent which proved that there was no dispute between the parties. The suspension of work on the Project on account of litigation was also acknowledged by the Respondent. Hence, the Respondent was barred to raise any dispute on this count. Without prejudice to the above, the procedure for lodging the claim as stipulated in the Contract was not adhered to by the Respondent. He argued that it is settled law that application under Section 20 of the Act is not maintainable where the conditions precedent envisaged under the Contract were not fulfilled.
More specifically , the mandatory notice envisaged under clause 53.1 of the Contract was not given within the prescribed time. Therefore, the claim of the Respondent was barred by time. The Respondent should have given notice on or before 28.02,2016, however , the notice was served on 30.03.2016 with the delay of about thirty (30) days. The consequence of not giving timely notice is listed in clause 53.4 of the Contract and the same was also not considered by the Court. The act of the Respondent of directly raising the dispute with the Engineer without intimating the Appellant was in violation of clause 67.1 of the Contract. Moreover , the act of the Respondent of issuing notice regarding its intention to commence arbitration before invoking the jurisdiction of the Court under Section 20 of the Act meant that the Respondent practically invoked the provisions of Chapter 2 (Sections 3 to 19 of the Act) which deal with arbitration without the intervention of the Court. Therefore, there existed a bar for the Respondent to file an application under Section 20 of the Act. It was further subm itted that the rejection of interim claim by the Engineer was not separately challenged by the Respondent, hence, the decision of the Engineer attained finality . Therefore, the Court has erroneously concluded that the conditions ,stipulated in Section 20 of the Act have been fulfilled Based on the aforesaid contentions, learned counsel for the Appellant insisted that since there was no 'dispute' requiring reference to arbitration, therefore, the Court erred in granting the application and referring the alleged dispute to arbitration . Reliance was placed on the cases reported as, "Industrial Fabrication Company through M.D. v. Managing Director , Pak American Fertilizer Limited" (PLD 2015 SC 154); "Pakistan Insulations (Pvt.) Ltd. Messrs Ranhill Engineers and Constructors DDFC Group of Companies through General Pakistan Operations Manager and 2 others" ( 2009 CLD 1077 ); "Modern T raders v . Province of Sindh through Secretary Works and Communication Sindh Section Building, Karachi and 2 others"
(1985 MLD 402); "Oil and Gas Development Company Ltd. v. Agha Muhammad and Brothers and others"
(2015 MLD 1821 ); "Federation of Pakistan through D.G. National Training Bureau v. Messrs James Construction Company (Pvt.) Ltd." (PLD 2018 Islamabad 01); "Messrs Abdul Rauf Muhammad Hanif (Pvt.)
Ltd. through Chief Executive v. WAPDA through Chairman and another" (PLD 2007 Lahore 335); "Muhammad Umar v. Yar Muhammad through Legal Heirs and others" (2009 CLD 305); "Mujtaba Hussain Siddiqui v. Sultan Ahmed" (2005 YLR 2709 );"A.J. Corporation through Managing Partner v. Fauji Fertilizer Bin Qasim Limited through Chief Executive Officer" (2013 CLD 636); "Pakistan through Ministry of Defence v. Ch. Fazal Muhammad and others" (2005 YLR 2896 ); and "Malik Muhammad Mumtaz v. Malik. Abdul Rauf through Legal Heirs" ( 2002 YLR 2238 ).
5. Learned counsel for the Respondent submitted that the Respondent approache d the Appellant for redressal of his grievance by way of issuing various notices (inclusive of reminders) for the Engineer's decision contemplated under clause 67 of the Contract. The Appellant first did not respond to the claim of the Respondent and after consistent reminders, the Appellant through the decision of its Engineer rejected the claim of the Respondent. The Respondent invoked clause 67.2 of the General Conditions of the Contract after rejection of its claims including the request for amicable settlement of the dispute which was also declined by the Appellant. The Respondent was constrained to initiate arbitration proceedings and accordingly filed an application under Section 20 of the Act before the Civil Court having jurisdiction over the subject-matter under the Act. The trial Court accepted the application of the Respondent in accordance with law .
6. Before proceeding further , it will be advantageous to reproduce the applicable clause 67 of the Contract regarding dispute resolution mechanism incorporated in the Contract. The said clause reads as under:- "67.1 (Engineer's Decision)
If a dispute of any kind whatsoever arises between the Employer and the Contrac tor in connection with, or arising out of, the Contract or the execution of the Works, whether during the execution of the Works or after their completion and whether before or after repudiation or other termination of the Contract, including any dispute as to any opinion, instruction, determination, certificate or valuation of the Engineer , the matter in dispute shall, in the first place, be referred in writing to the Engineer , with a copy to the other party . Such reference shall state that it is made pursuant to this Clause. No later than the eighty-fourth day after the day on which he received such reference, the Engineer shall give notice of his decision to the Employer and the Contractor . Such decision shall state that it is made pursuant to this. Clause.
Unless the Contract has already been repudiated or terminated, the Contractor shall, in every case, continue to proceed with the Works with all due diligence and the Contractor and the Employer shall give effect forthwith to every such decision of the Engineer unless and until the same shall be revised, as hereinafter provided, in an amicable settlement or an arbitral award.
If either the Employer or the Contractor be dissatisfied with any decision of the Engineer , or if the Engineer fails to give notice of his decision on or before the eighty-fourth day after the day on which he received the reference, then either the Employer or the Contractor may, on or before the seventieth day after the day on which he received notice of such decision, or on or before the seventieth day after the day on which the said period of 84 days expired, as the case may be give notice to the ether party , with a copy for information to the Engineer , of his intention to commence arbitration, as hereinafter provided as to the matter in dispute. Such notice shall establish the entitlement of the party giving the same to commence arbitration, as hereinafter provided, as to such dispute and, subject to Sub-Clause 67.4, no arbitration in respect thereof may be commenced unless such notice is given.
If the Engineer has given notice of his decision as to a matter in dispute to the Employer and the Contractor and no notification of intention to commence arbitration as to such dispute has been given by either the Employer or the Contractor on or before the seventieth day after the day on which the parties received notice as to such decision from the Engineer , the said decision shall become final and binding upon the Employer and the Contractor .
67.2 (Amicable Settlement)
Whether notice of intention to commence arbitration as to a dispute has been given in accordance with Sub-Clause 67.1, arbitration of such dispute shall not be commenced unless an attempt has first been made by the parties to settle such dispute amicably . Provided that, unless the parties otherwise agree, arbitration may be commenced on or after the fifty-sixth day after the day on which notice of intention to commence arbitration of such dispute was given, whether or not any attempt at amicable settlement thereof has been made.
67.3 (Arbitration)
Any dispute in respect of which:
(a) The decision, if any , of the Engineer has not become final and binding pursuant to Sub-Clause 671, and
(b) Amicable settlement has not been reached within the period stated in Sub-Clause 67.2 shall be finally settled, under the provisions of the Arbitration Act, 1940 (Act No. X of 1940) as amended or any statutory modification or re-enactment thereof for the time being in force. The said arbitrator/s shall have full power to open up, review and revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer related to the dispute.
Neither party shall be limited in the proceedings before such arbitrator/s to the evidence or arguments put before the Engineer for the purpose of obtaining his said decision pursuant to Sub-Clause 67.1. No such decision shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrator/s on any matter whatsoever relevant to the dispute.
Arbitration may be commenced prior to or after completion of the works, provided that the obligations of the Employer , the Engineer and the Contractor shall not be altered by reason of the arbitration being conducted during the progress of the Works.
67.4 (Failure to Comply with Engineer's Decision)
Where neither the Employer nor the Contractor has given notice of intention to commence arbitration of a dispute within the period stated in Sub-Clause 67.1 and the related decision has become final and binding, either party may, if the other party fails to comply with such decision, and without prejudice to any other rights it may have, refer the failure to arbitration in accordance with Sub-Clause 67.3. The provisions of Sub-Clause 67.1 and 67.2 shall not apply to any such references"
7. The case revolves around the scope and mandate of Section 20 of the Act in the light of the arbitration clause of the Contract. Section 20 of the Act is reproduced below for ready reference: - "(I) 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 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 plaintiff or plaintiffs and the remainder as defendant or defendants, if the application has been presented by all the parties, or, if otherwise, between the applicant as plaintiff 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 arbitrator shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable."
8. The scope and mandate of Section 20 of the Act has been extensively dealt with by the superior courts' of the country . It underlines the sanctity of an arbitration agreement and reinforces the basic principle that where the parties to an agreement have undertaken to resolve their inter se disputes through arbitration, the intention of the parties ought to be respected and given effect. Section 20 fundamentally is limited to the determination of existence of a real and alive dispute between the parties in a summary procedure. The Court is only required to prima facie satisfy itself regarding the existence of the dispute measured with the yardstick of 'suf ficient cause'.
9. In case titled, "Muhammad Abdul Latif Faruqi v. Nisa r Ahmad and another" (PLD 1959 (W. P.) Karachi 465), it was emphasized that the scope or powe r conferred under Section 20 of the Act is merely limited to determination of factum of a real dispute and no more.
10. In another case titled, "Messrs Jamia Industries Ltd. v. Messrs Pakistan Refinery Ltd., Karachi" (PLD 1976 Karachi 644), the Honorable Sindh High Court opined that where the dispute has arisen amon g the parties, then reference has to be made to arbitration proceedings. The Court stressed upon the need to give effect or respect to the intention of the parties at the time of entering into an agreement subject to the existence of a real dispute between the parties. Explaining as to what the dispute is, it was held in paragra ph No. 12 of the Judgment as under: "There can be no cavil against the propo sition of law that the existence of a difference or dispute is an essential condition for making a reference to the arbitrator , for, that constitutes a cause of action for an application under section 20, Arbitration Act. The Court, has, therefore, to be satisfied that a real question of difference has arisen before compelling the parties to submit to arbitration. A dispute implies an assertion of a right by one party and repudiation thereof by another . In other words, materials for a lis as such must be shown to exist. Unless a dispute has developed which requires adjudication, there be nothing to refer to arbitration. Further , the dispute must be real as the court will not leave a mere pretence of dispute to arbitrator for decision. However , the scope of the power conferred on the Court under section 20 is merely limited to determination of the factum of real dispute and no more. It is not for the Court to go into the questions pertaining to the disputes raised or suggest the manner ,of decision thereof. For that would amount to usurping the jurisdiction of the domestic tribunal constituted under the arbitration agreement."
In the above noted case, the parties entered into a contract regarding fuel oil sales. Subsequently , number of disputes arose in relation to fulfillment of obligations among the parties. However , the real bone of contention or in other words, the main dispute was regarding the encashment of bank guarantee. The court rejected the argument of one of the parties that no dispute exists and referred the matter to arbitration whilst allowing the application filed under Section 20 of the Act.
11. In a squarely relevant case titled, "Messrs Quality Builders Ltd. v. Messrs National Insurance Corporation, Karachi" (PLD 1994 Karachi 407), the issue involved the execution of a construction contract which was required to be completed in two phases; however , the work could not be completed within time and thus, the time period was extended in respect to both the phases. The case of the contractor was that it suffered losses due to escalation in overall cost of construction and overhead expenses on account of longevity of completion period. The contractor invoked the arbitration clause which was objected by the employer stating that no dispute exists. The contractor filed an application under Section 20 of the Act which was allowed by the Court in the following terms: "...The disputes raised in the case cannot be said to be mere pretence. The defendant is a statutory corporation.
But for clause 7(a) of the contract, the applicability of the aforesaid memorandum not being disputed, the issues stated above and other questions that arise are to be adjudicated in the light of the provisions of the contract and the memorandum and exposition thereof. Interpretation of the said provisions by the Court will amount to usurpation of the jurisdiction vested in the domestic tribunal constituted under the agreement..."
12. Importantly and interestingly , both the learned counsel vehemently relied upon the landmark judgment of the Honorable Supreme Court of Pakistan in the Industrial Fabrication case (supra) to advance their respective stance. In the aforesaid case, there was a contract between the parties and the dispute arose between them regarding the quantum of payment: The issue stood resolved through a letter dated 17.01.2000, wherein, the payments were received by one party from the other party which was admitted and not disputed by either of the parties. It was in this context that the apex Court concluded that there was no "sufficient cause" within the contemplation of Section 20 of the Act owing to the fact that the dispute was subsequently settled between the parties, through the aforesaid letter . Henc e, initiation of arbitration in accordance with the provisions of the Act was not warranted. Paragraphs Nos. 22 and 25 of the judgment are relevant and are reproduced below:- "22. An overview of the aforesaid Judicial pronouncements reveals that an existing dispute relating to a matter falling within the ambit of the Arbitration Agreement is a sine qua non for invoking the jurisdiction of the court under section 20 of the Act of 1940 and the absence thereof would be a "sufficient cause" in terms of subsection (4) of section 20 of the Act of 1940 for declining to direct filing of Arbitration Agreement. Where a claim is raised and finally settled through accord and satisfaction by payment or adjustment there would be no "existing dispute" requiring resolution through Arbitration. If the original contract is substituted throug h novation, lawful rescission or alteration the arbitration clause therein may also perish thereby precluding a reference to the Arbitrators.
However , the factum of such final settlement may be disputed. Furthermore, the settlement being a sub-species of contract, its validity may be contested on the ground of having been obtained through exercise of undue influence or coercion, or on any other ground available under the law. The acceptance of the settlement may be equivocal or "without prejudice" or substantial questions as to its true import meaning or effect may be raised by the opposite side. In such eventualities, a dispute arising from the contract would exist requiring adjudication by the forum chosen by the parties i.e. Arbitrators and appropriate orders in this behalf may be passed under section 20 of Act of 1940, provided such dispute has been raised and is before the Court seized of an application under section 20 ibid.
25. A perusal of letter dated 17.01.2000 reveals that the appellant had quantified the final value of the work under the Contract and a full and final claim including for additional works was made. The settlement offered by the Appellant was clear and unambiguous, without any reservation and was not "withou t prejudice". Its authenticity was acknowledged and admitted before the learned High Court as is evident from the judgment impugned. The amount as identified was admittedly paid to and received by the appellant. Thus, the claim raised by the appellant was fully and finally settled by the respondent leaving no existing dispute."
13. In case titled, "Poineer Builders through Managing Partner v. Additional Deputy Commissioner (G) and 2 others" (PLD 2007 Lahore 280), the parties executed a construction contract which contained an arbitration clause. The Additional Deputy Commissioner vide order dated 26.01.1988 whilst implementing the directions of the Deputy Commissioner rescinded the contract. Being aggrieved of the order , the contractor filed an application under Section 20 of the Act which was dismissed by the Civil Court as non-maintainable on the ground that under the contract it was necessary to first approach the respondent authorities. However , this Court whilst allowing the revision held that to re-approach the authority , who has already given opinion by rescinding the contract is illusionary and against the very object of the stipulation. It was held that the application under Section 20 of the Act was maintainable and the matter was remanded to the Civil Court with a direction to decide the same in accordance with law .
14. From the above discussion, it follows that the superior courts have consistently held that where an agreement contains an arbitration clause and any dispute has arisen in respect of the agreement among the parties, resort should be made to arbitration. In the instant case admittedly there exists an arbitration agreement between the parties and proceedings have been commenced by a party to the arbitration agreement. There are disputes about the existence of the dispute itself and upon the merits of the claim, however , there is no dispute with regard to the existence of an arbitration clause in the Contract. The disputes admittedly originate from the Contract in execution of the Project to which the arbitration clause is applicable. No proceedings under Chapter II of the Act were pending before the filing of the application under Section 20 of the Act before the Cour t. There is no challenge to the application under Section 20 of the Act to have been preferred beyond limitation. Therefore, the core issue is to determine as to whether there exists a dispute between the parties which requires resort to arbitration.
15. The dispute raised by the Respondent was essentially regarding its entitlement for additional compensatory payments resulting from, inter alia, idled standby of equipment, working of manpower for additional period and increase in cost of construction material incurred due to delay caused on account of litigation. The dispute arose from the execution of the Project and requires to be resolved or settled under the terms and conditions of the Contract. All the pre-requisites stipulated under Section 20 of the Act were met by the Respondent. Admittedly , an arbitration agreement incorporated in the Contract was agreed as dispute resolution mechanism under the Contract between the parties. The dispute was raised by the Respondent under clause 67.1 with the Engineer with a copy to the Appellant. The step was taken by the Respondent, notwithstanding that the Engineer was not a neutral forum but an employee of the Appellant and recourse to the Engineer was illusionary . The purpose of referring the dispute to the Engineer was meant to merely provide an opportunity to the parties to resolve their differences before invoking the formal arbitration. Hence, the assertion that the Respondent ought to have raised the dispute directly with the Appellant before raising it with the Engineer is without substance. After the rejection of the claim by the Engineer , the Respondent issued notice to the Appellant regarding its intention to commence arbitration. Such notice issued in compliance with the arbitration clause of the Contract cannot be termed as initiation of arbitration proceedings under Sections 3 to 19 of the Act prior to the institution of the application under Section 20 of the 'Act when such notice was declined or not respondent to by the Appellant. There is nothing on record to suggest that arbitration proceedings were pending under Chapter 2 of the Act before the invoking of Section 20 of the Act by the Respondent. All steps taken by the Respondent thereafter for amicable settlement of the dispute as per the arbitration clause of the Contract were brushed aside by the Appellant who till today has taken the stance that there is no dispute at all, although the existence of the dispute between the parties is evident from the record and is based on admitted facts. This was duly established through communications placed on record including the letters No. HCS/LOL/1747 dated 08.12.2016, PD/I/LOLMTP/LDA/28 dated 25.01.2017, HCS/LOL/PI/2957 dated 13.12.2017, HCS/LOM/3196 dated 17.03.2018 and CE/LDA/PS/458 dated 18.04.2018.
16. The question as to whether the dispute or claim raised by the Respondent is legitimate or not shall be determined through arbitration and squarely falls within the prerogative and domain of the arbitrator . Mere bald and general denial by the Appellant by simply stating that no dispute exists does not mean that there is no dispute, whereas, the Respondent is strenuously advocating the existence of the dispute since the filing of the application on 24.04.2018. The claim of additional compensatory costs on account of litigatio n is prima facie a dispute which requires resolution within the parameters of the Contract. It is not the assertion of the Appellant that the claim so raised by the Respondent has been settled or resolved or waived by the Respondent as was the case in the Industrial Fabrication case (supra) . Likewise, the cases relied upon by the Appellant are distinguishable as the facts and circumstances therein are dif ferent from the instant case.
17. The issues raised by the Appellant in defense of the application under Section 20 of the Act are in fact issues which are to be raised in the arbitration proceedings to be decided by the arbitrator and are beyond the mandate of the Court under Section 20 of the Act. The determination of such issues by the Court would amount to usurping the mandate and jurisdiction of the arbitrator . The contention of the Appellant that the claim was barred by time in terms of clause 53.1 of the Contract was repelled by the Respondent on the score that the claim was continuing in nature and the interim claim merged into the final claim and that the arbitration clause was indepen dent in character which was not dependent upon the referred clause of the Contract. Similarly , the issue as to whether rejection of the interim claim by the Engineer had attained finality also arises from the Contract and requires to be decided by the arbitrator . It therefore, follows that all questions or differences between the parties flowing out from various provisions of the Contract fall within the domain of the arbitrator . Any finding on such issues may prejudice the cause of the parties before the arbitrator . The scope of Section 20 of the Act restricts the Court to give findings on issues emanating from an agreement itself regarding which the parties have agreed to resolve through arbitration. The Court is only required to satisfy itself regarding the existence of a real and alive dispute between the parties. The rationale of the same is that reference to arbitration cannot be a futile exercise, hence, the Court may not blindly refer a non- existent dispute to arbitration but is required to satisfy itself that there is a tangible prima facie dispute between the parties which requires resolution through arbitration as agreed by the parties. The Court, however , is empowered to determine if the application under Section 20 of the Act itself was barred by time or not which of course is not an issue before the Court in the instant case . As such, the trial Court rightly conclude d that all the controversies inter se the parties fell within the ambit of arbitration under clause 67.3 of the Contrac t which clearly stipulates that in case of any controversy between the parties, the matter shall be referred to arbitration. The facts and circumstances of the case unequivocally lead to irresistible conclusion that the Respondent was left with no option but to invoke the jurisdiction of the Court under Section 20 of the Act.
18. Therefore, the impugned orders have been passed in consonance with law within the scope, mandate and purposes of Section 20 of the Act and are in line with the principles enunciated by the superior courts of the country . There exists no sufficient cause within the contemplation of Section 20(4) of the Act to refuse the application filed under Section 20 of the Act and making an order of reference to the arbitrator . However , it is clarified that the observations made herei n shall not influence the arbitrator or cause prejudice to any of the parties and the matter shall be decided on its own merits. For the reasons recorded as aforesaid, the instant appeal being devoid of any merit is dismissed with no order as to costs.