' This is an appeal against the order, dated 29th May, 1980 of the learned Civil Judge, Lahore, whereby he declined to order the filing of the arbitration agreement.
2. The facts of the case as gleaned from pleadings and documents placed on the record by the parties before the trial Judge and those produced in this Court by the learned counsel for the appellant, are that the respondent called for tenders for construction of a Boys Hostel at the Second Campus of the University College of Engineering at Taxila (2nd phase) on 17th July, 1977. At that time design of hostel was available. Tender was submitted by the appellant Firm alongwith deposit at call of the amount of Rs, 27,300 as earnest money which sum in case of acceptance was act as security for work allotted to the firm. This tender of appellant firm was accepted by the Construction Committee of University of Engineering and Technology, Lahore and said acceptance was communicated to the appellant Firm by letter, dated 10th September, 1977 of the Project Director. On this, the work was started by the appellant Firm immediately. However, when the work was in progress, its further execution was stopped by the Executive Engineer vide his letter, dated 8th October, 1977, till the supply of the structural design by the Project Director. The respondent was informed by letter of the same date that further work had been stopped and that appellant Firm was suffering financial losses as a result of the same and it was requested that design be given so that work may start in full swing. It is stated that the said design was made available vide letter, dated 8th, 12th November, 1977 and by letter, dated 30th November, 1977, the work was ordered to be re-started within three days. The design of the proposed structure having been changed the appellant Firm requested vide its letter, dated 10th December, 1977 that enhanced premium of 55% on the schedule rate of 1974 be allowed but no answer was vouchsafed. Instead on 19th December, 1977, the Executive Engineer sent a letter directing the appellant Firm to start the work immediately as per changed design, otherwise action will be taken against appellant Firm under the Conditions and Terms of the Agreement. Subsequently, the scheme was abandoned and decision was made not to carry out the work of Phase II. A notice, dated 18th February, 1978, was served by the appellant Firm on the Project Director informing him of the different claims of the appellant Firm on account of the work actually done and losses suffered due to change of design and subsequent abandonment of the construction scheme and termination of the contract. The details of claims as made in the said letter are given as below in the precise words used in that letter :-
(a) The work already executed be entered in the measurement book and paid for.
(b) We have collected the material according to the design that was available at the time when the tenders were invited and brought a part of the said material at site which may either be taken over by the University or else it may be measured and we may be allowed to remove it from site and we shall claim the charges which will include the difference in cost at which it is sold apart from the carriage expenses from either side.
(c) Other material though purchased in order to save ourselves from rise of price is lying with the firms for which advances had already been paid. We shall try our best that the advances are returned but in case it is not possible, we shall claim the loss of said advances.
(d) We spent Rs, 100 in the purchase of the tender form and furnished security of Rs, 27,300 with our tender in the form of earnest money which was not encashed by the University in July, 1977. Since the work has been abandoned, we have been deprived of the legitimate use of our money and accordingly we claim interest at the rate of 12% per annum from 1st August, 1977 till the amount is actually released to us.
(e) That we brought the shuttering material at the site of work which remained unused. We shall claim not only the hire charges but also carriage expenses from our godown at Faisalabad to the site of work and back.
' The matter was placed before the Campus Construction Committee of the University and the decision of the Committee made on 23rd February, 1978, was that the earnest money may be refunded to the contractor only if he does not make any claim and gives an undertaking in writing to that effect. This decision posed a serious situation for the appellant-Firm. According to the learned counsel for the appellant, it could not afford to keep blocked a huge sum of Rs, 27,300 which constituted its work capital and if released, could be utilized by it in business in fresh contracts. Therefore, the appellant-Firm made an application on 11th March, 1978, in writing to the Project Director for refund of the said security of Rs, 27,300 and gave an undertaking in the said application. However, the actual words used by the appellant-Firm in this undertaking were that it would not prefer any claim for the work done by it in Taxila for the said University. As a result of the undertaking in the said application, the said sum of earnest money was refunded to the appellant.
In the meantime the work done by the appellant-Firm during this period had been measured and entered in the measurement book by the staff of the XEN on 9th June, 1978. Appellant-Firm did not give up its claims and continued to press the same and on non-receipt of any reply to notice, dated 18th February, 1978, sent a reminder, dated 19th March, 1978 to Project Director for seeking the decision thereon reminding him at the same time that delay in the finalization of the matter from his end was resulting in mounting of losses.
3. In the original agreement entered into between the parties, there was an arbitration clause in which it was provided that in case of dispute, the Project Director will appoint a sole arbitrator for decision of the differences between the parties. The appellant invoked the said arbitration clause in respect of his claims submitted vide letter, dated 18th February, 1978 and requested the Project Director by notice, dated 24th September, 1978 to appoint an arbitrator and suggested three names for the same. The Project Director by its letter, dated 5th October, 1978, informed the appellant that it had been paid back earnest money on the express undertaking that it had no claim whatsoever against the University and, therefore, the question of any outstanding claim against this work does not arise for which arbitration might be needed. In reply to Project Director's said letter, dated 5th October, 1978, a letter, dated 10th October, 1978 was sent by appellant Firm to the said Project Director informing him that coercion and undue influence had been exercised in the shape of non-release of earnest money and submission of a no claim certificate was made a condition precedent for release of said earnest money and in giving the said undertaking, the appellant had done what every prudent contractor would have done in the said circumstance and dispute was there and needed to be resolved and requested that in the circumstance under the arbitration clause an arbitrator be appointed. Later a legal notice, dated 12th December, 1978 given by appellant to the Project Director through Fazal Karim Qureshi, Advocate (later also the counsel for the appellant). Upon that the Project Director ultimately by his letter, dated 6th February, 1979, refused to accept the prayer for arbitration by intimating the appellant that an undertaking having been given by the appellant-Firm that it would not ,claim anything other than the security which had already been released, it has no outstanding claim from the University and there was no case for arbitration.
4. Thereupon on 5th January, 1980, the appellant-Firm filed an application under section 20 of the Arbitration Act requesting the Court to direct the respondent-Firm to file the agreement in the Court and appoint the arbitrator for adjudication of the following claims of the appellant-Firm in connection with the work in question :
(i) Payment of Rs, 3,231 for the work done and entered in the measurement book.
(ii) Loss sustained in the purchase and disposal of material including carriage from the site of work.
(iii) Carriage charges of shuttering material from godown to the site of work and back.
(iv) Loss of advances to labourers and for material.
(v) Refund of Rs, 100 representing the cost of the tender which ordinarily would have been covered if the work would have been allowed to be executed.
(vi) Interest on the amount illegally withheld at the rate of 14% per annum from 19th December, 1977 to the date the amount is actually released to the appellant.
' The learned Civil Judge directed a notice of this application to be given to the respondent requiring it to show cause as to why the agreement should not be filed. The respondent appeared and filed a written reply on 24th March, 1980 in which it denied the liability to file the arbitration agreement on the ground that the appellant-Firm had given an express undertaking on 11th March, 1978, to the effect that it would have no claim whatsoever if the earnest money amounting to Rs, 27,300 is released to it and the issue, therefore, stood closed. It was further submitted that appellant had no cause of action to file the said application under section 20 of Arbitration Act and no arbitration was called for due to the said undertaking.
5. The learned Civil Judge after perusal of the documents submitted by the appellant-Firm alongwith the application of the appellant-Firm and the reply of the respondent rejected the application of the appellant-Firm on 29th May, 1980 on the ground that the appellant-Firm should have either continued with the work and should not have withdrawn the earnest money or shoald not have claimed for the same and it cannot be said that the undertaking was obtained under duress,. He further held that there was no haste in withdrawing the said money and reiterated that petitioner should have continued with the work or before withdrawing the earnest money, it should have sought the intervention of the Court for reference to arbitration and that appellant-Firm had exercised its own choice and preferred to withdraw the earnest money after furnishing the undertaking of its own accord and, therefore, no coercion could be said to have been exerted upon it for giving the said undertaking. He further held that after having given the said undertaking and after its having withdrawn the earnest money voluntarily as a result of the same, there was no dispute between the parties left to be resolved through arbitration. It is against this order of the learned Civil Judge, dated 29th May, 1980 that this appeal under section 39 of the Arbitration Act, 1940 had been filed.
6. Mr. Fazal Karim Quereshi, learned counsel for the appellant-Firm had in support of this appeal submitted that when no alternative is given to a party by the dominant party and only option given is to accept one and the same course of conduct, refusal to accept which would result in irreparable loss and irreversible injury to the party, the said acceptance must be considered to be one under coercion and that in the circumstances of the present case, on the face of it, the undertaking obtained was under coercion and duress and, therefore, the said undertaking could not stand in the way of the appellant-Firm getting the adjudication of the dispute in respect of its dues in arbitration as the question as to legal validity of the undertaking on account of alleged coercion is itself a dispute covered by the arbitration clause in the agreement and can be looked into an adjudicated upon by the arbitrator and that the learned Civil Judge had in view of the matter, erred in holding that the application was not maintainable on account of the said undertaking. He referred to the decision made on 14th October, 1980 by the Supreme Court of Pakistan in Civil Appeal No, 35 of 1977, wherein it was held that the effect of an alleged admission by the contractor that he had no outstanding dues in respect of the work done can very well be examined by the arbitrator in the arbitration proceedings. He also brought to my notice Punjab Financial Handbook No, 3 of Departmental Financial Rules relating to the Public Works and Forest Department wherein, under para. 7.32, it is stated in Note No, 1 that the undertaking given by the contractor to the Government at the time of final payment on a running account, that it is in full settlement of all demands, does not preclude the disbursing officer from entertaining a further bona fide claim which may have been omitted from the final bill by mistake or through inadvertance and that if despite this explanation, the character objects to the addition of the words in question, the payment should be tendered unconditionally.
7. On the other hand Mr. Sajjad Hussain, learned counsel for the respondent had contended that after submission of the said undertaking there was no dispute left between the parties to be resolved through arbitration. He relied upon Messrs Friends Trading Co. v. Messrs Muhammad Usman Maula Bur (1) for that proposition. He has further contended that there was no sufficient cause for making an order for filing the agreement as the appellant-Firm had received the payment of Rs, 27,300 waiving its right to make any claim in respect of work done by it and as such it had no right to make application under section 20 of Arbitration Act. He further subbiits that assuming that the act of the University was wrong, even then the appellant-Firm could only have filed a suit for declaration and consequential relief for cancellation of said undertaking on the ground of coercion or duress having been exercised upon it and this having not been done, no relief could be granted to it in appeal, especially when it had slept over the said undertaking, dated 11th March, 1978 and had not challenged the same at any time in any Court. He further argued that the appellant-Firm had received the earnest money/security amount, without protest and thus it was estopped by its conduct to challenge the same. He further argued that the arbitrator could give award in terms of money and could not give any decree of coercion or duress. He stated that according to clause 25-A o the Agreement, the question as to whether the undertaking had been given under coercion and duress cannot be referred to arbitration. The dispute did not fall within arbitration clause so as to warrant its reference to the arbitrator and for that, civil Court was the only forum available to the appellant to which the appellant-Firm had not resorted so far. Further, in reply to the submission of the learned counsel for the appellant-Firm, he submitted that the University was created by Provincial Act V of 1974, as a statutory body and the Financial Rules of the Government were not applicable to it and, therefore, no reliance could be placed upon the note at the end of para. 7.32 of Departmental Financial Rules.
8. On 1st March, 1983 without dictating any order, I had announced the decision in this case accepting the appeal. However, when I sat down to write the judgment, I was faced with considerable difficulty as none of the two counsel had in his arguments given me the test to determine which circumstances was amenable to arbitration and which barred the same. I, therefore, fixed the case for re-hearing. In rehearing, instead of Mr. Fazal Karim Qureshi, Advocate (who had by that time expired) Mr. Riaz Kari Qureshi, Advocate appeared for the appellant while Mr. Sajjad Hussain Advocate appeared for the respondent. Mr. Riaz Karim Qureshi ha argued that arbitrator is not only a judge of facts but also of law applicable and, therefore, dispute in respect of liability on legal plane of the Universit to make payment to the appellant in spite of the said undertaking was amenable to arbitration as the arbitrator could decide in respect of lega validity of the said undertaking and effect, it had on the claim of the appellant against the University. He has relied upon Safia Bibi and others v. Karach Co-operative Housing Societies Union Ltd. (2) and Karachi Shipyard an
(1) PLD 1954 Kar. 56 (2) PLD 1967 Kar. 598 ' Engineering Works Ltd. v. Muhammad Aslam Khan (1) at p.
640. In latter case, it was held that the question whether arbitration is barred by time or not is itself to be decided by the arbitrator as admittedly he is judge not only of the facts but also of the law applicable. He vehemently submitted that the said undertaking was at any rate confined to work done and did not embrace within its ambit, the entirety of the claim of appellant which included in it the losses suffered by it in consequence of orders of stoppage of work and subsequent relinquishment of the scheme and termination of the contract.
9. As against the above, Mr. Sajjad Hussain, learned counsel for the respondent has reiterated his previous arguments and has produced Godhu Mall v. Sm. Ganga Hasso Mall lndnani (2) to contend in the alternative that submission of the said undertaking had the effect of frustration/repudiation of the entire contract with the result that contract was brought to an end including submission to arbitration and, therefore, the arbitrator had no jurisdiction left to decide the matter.
10. I have given my serious consideration to arguments of learned counsel for the parties. The crucial question involved in the case is as to whether the undertaking given by the appellant at the time of getting the security released was a circumstance which barred the arbitration for which the civil Court had the jurisdiction to make adjudication or whether effect of the said undertaking was amenable to arbitration and was one which would be looked into and adjudicated upon by the arbitrator alone. I think that subsection (1) and subsection (4) of section 20 of the Arbitration Act which are relevant provisions in that behalf provide reply to this quesion. I will first deal with the matter in the light of subsection (1) of section 20. According to said subsection before a person can make an applicaion under that provision for a prayer that an agreement be filed in the Court, following 4 conditions have to be satisfied :-
(i) That there is an agreement between the parties containing arbitration clause.
(ii) That the agreement had been entered into before institution of the suit with respect to the subject-matter of the agreement.
(iii) That a difference has arisen between the parties to which the agree met applies.
(iv) That the Court to which application is made has jurisdiction in the matter to which the agreement relates.
' I appears that if anyone of these conditions is absent, no one can file application under that section. Further, when these conditions are no atisfied, civil Court cannot pass an order to the effect that agreement bled in Court and matter be referred to arbitration.
11. I will now look into the present case on the basis of the conclusion have arrived at above. In the present case the parties do not appear to be t variance on the first two conditions nor on the 4th condition. The contest, however, is in respect of condition No, (iii) which is as to whether there s a difference between the parties to which the agreement applies. The question, therefore, is whether on account of the said undertaking, there is between the parties a dispute which is covered by the agreement. The
(1) PLD 1979 Kar. 635 (2) AIR 1958,A11. 26 ' dispute implies an assertion of right by one party and repudiation thereof by another. The appellant claims the value of the work done by it and losses suffered by it. The respondent University, however, denies the liability to make any payment on the ground that at the time of getting the security released, the appellant had given the University an undertaking that it would not prefer any claim for work done by it at Taxila for the said University. It is clear, therefore, that there was assertion of claim by the appellant repudiation thereof by respondent University and thus a dispute) had arisen between the parties.
12. I have gone through Messrs Friends Trading Company v. Messrs Muhammad fUsman-Moula Bux which lays down that when a claim is admitted and proved to be settled between the parties there is nothing to refer to the arbitration and consequently in such a case agreement should not be ordered to be filed. However, that case is distinguishable from the present case. In that case, the application under section 20 for reference to arbitration was in respect of claim for recovery of a sum of Rs, 13,680 which had been shown as loss on account of delayed delivery of the goods. The opposite party had admitted the claim but had in their defence before the Civil Judge stated that this sum of Rs, 13,680 had already been paid by way of adjustment of said sum in other transactions. The affidavits in that respect were filed before the Court but no counter-affidavit was filed in respect of said sum having not been paid by way of adjustment and it was proved to the satisfaction of the Court that the said sum had already been paid to the applicant in that case and the matter had already been settled and that there being no dispute left, the application under section 20 was liable to be dismissed. The question of non-existence of any dispute between parties in the circumstances of that case was a matter capable of being decided by the civil Court, as, existence of dispute between parties was a condition precedent for filing an application under section 20 and nonexistence of said dispute between the parties was a sufficient ground for the Court not to make an order for filing the agreement: In the present case, however, the position is totally different. It had never been alleged in the reply to the application under section 20 that any payment had ever been made. On the other hand, undertaking not to demand any amount for work done was pleaded while praying for dismissal of the application under section 20. However, on the opposite side, the legal validity of this undertaking was itself being contested by the appellant-Firm. There was, therefore, clearly a dispute existing between the parties. Accordingly the conclusion arrived at in the said Karachi case cannot be applied to the present case to hold that there was no dispute left between the parties.
13. The learned Civil Judge has observed in his judgment that after giving the undertaking and receiving the earnest money, there was no dispute left between parties. This, however, is only an assertion without any basis inasmuch as the dispute exists even upto this day between the parties.
The appellant firm has not washed off its hand of the money spent by it on the work done by it and the losses suffered by it and is still claiming the same. It is, therefore, idle to say that no dispute exists between the parties. The said undertaking was only the basic reason for the dispute ; a bone of contention, as it were, between the parties and could not be put forward to plead absence of any dispute between the parties. I am, therefore, constrained to come to the conclusion that the dispute existed and still exists' c between the parties to the contract.
14. The next question involved is as to whether agreement applies to the said dispute or not or in other words whether the said dispute stood covered by the arbitration clause of contract between the parties. The said arbitration clause which is clause 25-A in the contract between the parties in so far as it is relevant for our purpose reads as follows :- "If any question, difference or objection whatsoever shall arise connected with or arising out of this instrument---the rights, duties or liabilities of either party----every such matter including whether contract has been rightly terminated or as regards the rights and obligation of the parties as a result of such termination shall be referred for arbitration to such person as may be appointed in this behalf by the Project Director, University of Engineering and Technology, Lahore and his decision shall be final and binding and where the matter involves a claim for or the payment or recovery or deduction of money, only the amount, if any, awarded in such arbitration shall be recoverable in respect of the matter so referred."
' The claim of the appellant for the work done by it in pursuance of the contract and losses suffered by it due to stoppage of the work and later abandonment of the scheme and the plea of University that appellant was not entitled to any amount of money due to the undertaking given by it is clearly a difference or dispute in respect of rights, duties and liabilities of the parties to the contract and rights, obligations, duties and liabilities of parties as a result of termination of the contract and on the face of it falls within the ambit of the said arbitration clause. It is, therefore, clear that D there exists such a dispute between parties to the contract as is covered by the arbitration clause.
15. Having come to the conclusion that there was a dispute between the parties which was covered by arbitration clause of the contract, the next question to be seen is as to whether there is sufficient cause within the meaning of subsection (4) of section .20 of the Arbitration Act for not making an order for filing of the agreement and referring the matter to arbitration or in other words in the context of the present case whether said undertaking which is the sheet anchor of the case of the respondent University was such a sufficient cause as debarred the Court from making such an order. I have given my anxious thought to the said question and have come to the conclusion that the said undertaking does not constitute such a sufficient cause as would warrant an order declining to make such a direction. My first reason for coming to that view is that a dispute in an arbitration is in the nature of a cause of action in a civil suit. The question in the civil suit as to whether the plaint of the said suit discloses a cause of action is decided by reference to the averments in the plaint and not on the basic of any plea raised by the opposite party in the written statement. Similar is the position in a dispute which arises between parties regarding a contract containing an arbitration clause and request for resolution of the said dispute through arbitration cannot be refused on the mere ground that the party applying for arbitration had given an undertaking not to make any further claim, inasmuch as, the plea in relation to such an undertakin constitutes only a defense while the claim for the sums of money due from the other party constitutes an averment in the plaint and the plea that the undertaking given by the appellant that he would not ask for any money for the work done by him was procured through duress and coercion is an averment in the replication of the plaintiff. The Civil Judge could not, therefore, have stopped the matter at the very threshold, burked the enquiry through arbitration and dismissed the application on the ground that there was an undertaking by the appellant on account of which parties had been left with no dispute to be resolved.
16. My second reason for coming to the said conclusion is that in claims for arbitration, questions relating to original contract are not within the jurisdiction of the civil Court but are matters which can be decided by the arbitrator alone, as by virtue of the relevant clause of the contract, they are by mutual consensus, committed to the judgment of the arbitrator. In the case in hand, the alleged undertaking which had been put forward to avoid arbitration pre-supposed an assertion on the part of the appellant-Firm that it had rights against respondent University under the contract and further visualized a relinquishment or waiver of said rights. The said under taking, therefore, essentially deals with the contract itself. It is clear, therefore, that the question of nature and meaning of the undertaking given is a matter within the exclusive jurisdiction of the arbitrator who is the sole judge of facts of the case. Furthermore, there is a counter-allegation by the appellant- Firm that the submission of the said undertaking by the appellant-Firm was not voluntary but under duress, as, it had been obtained in a situation in which, only course available to the appellant-Firm was to give the said undertaking. This question which was one in regard to the lega effect of said undertaking and relinquishment and waiver of rights under the contract on that account too was clearly a question 'relating to the original contract between the parties and on the face of it could not be decided by the civil Court and was one which could be adjudicated upon by the arbitrator alone. As arbitrator is not only the judge of the facts but also of law applicable and it is he who can go into the legal validity of the said undertaking and the effect it had on the claim of appellant-Firm. For this reason too, the learned Civil Judge had no jurisdiction to hold on the basis of the said undertaking that there was no dispute left between the parties.
17. I have also considered the argument of the learned counsel for the respondent that the submission of the undertaking in question was tantamount to frustration or repudiation of the contract and on that arbitrator had no jurisdiction to decide the matter. I am not persuaded to the view that the submission of the said undertaking was calculated to frustrate or repudiate the contract inasmuch as, at worst, the said undertaking constituted a waiver of rights under an existing contract and did not negate the very G existence or legal efficacy of the said contract.
There is, therefore, nothing to show that this plea of learned counsel for the respondent is correct. In any way even in cases of repudiation or frustration of contract, it was held by House of Lords in Hey Man and another v. Darwins Ltd. (1) that whether there had been frustration of the contract was also to be decided by the arbitrator because frustration or repudiation was said to be of the very con- tract which contained the arbitration clause. The point raised by learned counsel for the respondent has, therefore, no substance in it and the same is repelled.
18. In the view that I have taken regarding arbitrator being the sole judge of the nature and effect of the said undertaking and civil Court
(1) 1942 A C 356 ' having no jurisdiction to decide the same, I am fortified by the law laid -down by the Supreme Court of Pakistan in the said unreported judgment, dated 14th October, 1980 in Civil Appeal No, 35/77 wherein it was held that the effect of an alleged admission made by the contractor that he had no out standing dues in respect of the work done can be examined by the arbitrator/ in arbitration proceedings. In that case, the contractor or his attorney had made an endorsement on the final bill that he had no further claim in respect of said bill and had signed the same but had later claimed arbitration on the ground that the payment made to him was muchless than his real entitlement. Before the Civil Judge he had accepted all the said circumstances, but had further stated that said writing had been made in order to get his bill passed while the actual position was absolutely different and claimed that if no such writing had been made on the final bill, the final bill would not have been prepared even. The learned Civil Judge dismissed the application under section 20 in that on the ground that there was no need for arbitration proceedings as it was admitted by the plaintiff in writing made on the final bill that he had no claim due against the department. In appeal against that order, the Additional District Judge reversed the said decision on the ground that the plaintiff contractor had not made an unqualified statement and in the later portion of the said statement he had stated that these words had been written to see through the passing of the bill but these were against facts and unless the formality of the said endorsement had been completed, the final bill would not have been prepared. He held that these explanations were plausible and according to section 31 of the Evidence Act, an admission is not a conclusive proof of the matter admitted but may operate as estoppel under certain conditions. He further held that it was settled law that a party making an admission can always show that it was mistaken or had been made under misapprehension of true circumstances. On these grounds he remanded the case to the Civil Judge under Order XLI, rule 23, C.P.C. Revision (C.R. 777/1970) was taken against this order and Mr. Justice Muhammad Akram (who later on was elevated as Judge of the Supreme Court) by his judgment, dated 9th July, 1971 dismissed the said revision and maintained the order of the Additional District Judge on the ground that the view of the learned Additional District Judge that the admission of the plaintiff-contractor in this behalf was not conclusive was correct and that the question of effect of the admission of the contractor that he had no further claim against the Government on the said final bill could itself be examined by the arbitrator during the course of enquiry before him. As already shown above the Supreme Court of Pakistan endorsed the said view of the High Court by holding that the effect of the alleged admission by the contractor could very well be examined by the arbitrator in arbitration proceedings.
19. It is true that in the present case, there is no admission and no question of application of section 31 of the Evidence Act but, there is, I the present case, the question of relinquishment or waiver on the basis of alleged undertaking which is on an equal footing. It is clear under the general law that a party can under the provisions of Contract Act show that the said undertaking was vitiated by duress or coercion and did not b arbitration, as it did not make the original dispute in respect of claim of the petitioner cease to remain covered by the arbitration clause nor it constituted a sufficient cause within the meaning of subsection (4) of section 20 of Arbitration Act for the Civil Judge to refuse- to make a reference to the arbitration. It was clearly a matter within the jurisdiction of the arbitrator. He being a judge both of fact and law could adjudicate upon the mixed question of law and fact as to whether said undertaking was or was not vitiated by coercion or duress and was or was not of any legal consequence. This job could not be performed by the learned Civil Judge, as the question of undertaking did not fall within the 4 conditions laid down in earlier part of section 20 nor did it constitute sufficient cause within the meaning of subsection (4) of section 20 to enable him to decline the request made in the application. In view of the above said Civil Judge clearly erred in not referring the dispute to the arbitration.
20. It is pertinent to point out that Civil Judge had failed to apply his full judicial mind to the case in hand because while making the impugned order, he had completely ignored that the undertaking given was only in respect of the actual work done by the appellant. Although this matter too is to be decided by the arbitrator, the said undertaking was on the face of it not for such sums of money spent by the appellant-Firm as had gone waste and other losses suffered by the appellant-Firm on account of stoppage of construction work and abandonment of entire scheme, relinquishment of the project in question by the University. Claim in respect of said losses etc. Having not ex facie been covered by the said undertaking, there was no escape for the learned Civil Judge from making an order to the respondent-University to file the agreement and from referring the matter to the arbitrator.
21. The judgment of the Civil Judge is in further disregard of the circumstance that appellant firm was forced to stop the work due to abandonment of the scheme and decision of the authorities of the University not to carry out the work of phase II for which contract had been given to appellant- Firm. The learned Civil Judge had observed that appellant-Firm should have continued with the work and should not have claimed for or withdrawn the earnest money as there was no haste in doing so. These observations are based on the misapprehension that appellant could continue .With the work. It is, however, clear that appellant-Firm had been forced to stop the work as the entire scheme had been abandoned and it had been decided not to carry on the work of phase II.
Therefore, conclusion drawn by the learned Civil Judge from the said observation that appellant Firm had exercised its own choice and had preferred to withdraw the earnest money after furnishing the undertaking of its own accord and no coercion had been exerted upon it stands wholly vitiated. This is apart from the fact that he had no jurisdiction to adjudicate upon the said question.
22. I have also considered the objection of the learned counsel for the respondent that the appellant should have filed civil suit to get rid of the undertaking. This contention cannot be accepted for the simple reason that in the contract there was an arbitration clause which covers the dispute. In such a circumstance, resort to the civil suit is by the policy of law excluded. It is settled law that all matters which form the subject-matter of civil litigation affecting private rights or in other words all disputes between the parties relating to private rights or obligations of which civil Court may take cognizance under 'section 9 of the C. P. C. May be referred to arbitration. There is, therefore, no substance in this point of the learned counsel for the respondent and the same is also, therefore, repelled.
23. There now remains the point raised by the learned counsel for the respondent that the appellant was estopped from claiming money on the ' ground that he had after the undertaking given by him on 11th March, 1978 slept over it till June, 1978 when he filed application in question and the further question that the appellant after giving the said undertaking was estopped from claiming any money from the University when he had received the sum of the security without any protest. I have considered these points too and am of the view that none of these questions bar arbitration and arbitrator can competently look into these matters.
24. For the foregoing reasons, I allow this appeal with costs, set aside the impugned order of the Civil Judge, Lahore and accept the application under section 20 of the Arbitration Act filed by the appellant-Firm and order that the agreement be filed in the Court and matter be referred to the arbitrator. I, therefore, remand the case to the Civil Judge directing him to proceed further in the matter in accordance with law.