' By an agreement, dated 26th October, 1977, the defendant--Corporation awarded to the plaintiff Shabbir Ali Khan contract for water-proofing of the roofs of go down at TPX Karachi on the terms and conditions annexed thereto. The plaintiff understood execution of the work and preferred four running bills and received payments. According to the plaintiff, the contractual work was carried out and final bill was lodged with the defendant. This final bill was not settled. The plaintiff invoked clause 68 of the agreement, reproduced herein below, and called upon the defendant-Corporation to refer the matter to Arbitration.
"If any dispute or difference of any kind whatsoever shall arise between the Employer or the Engineer and the contractor in connection with or arising out of the contract of carrying out of the works (whether during the progress of the work or after their completion and whether before or after the determination, abandonment or breach .Of the contract) it shall be referred to and settled by the Engineer who within a period of 90 days after being requested by either party to do so shall give written notice of his decision to the Employer or the Contractor. Save as hereinafter provided such decision in respect of every matter so referred shall be final and binding upon the Employer and the Contractor until the completion of the work and shall forthwith be given effect to by the Contractor who shall proceed with the works with all due diligence."
' The defendant-Corporation did not agree to refer the matter for arbitration. The plaintiff has, therefore, filed this suit under section 20 of the Arbitration Act, 1940 for filing in Court the arbitration agreement and referring the matter for arbitration in terms of the arbitration clause in the agreement reproduced above. The suit has been resisted on behalf of the defendant-Corporation mainly on the ground that the clause 68 in the agreement, pressed in aid by the plaintiff, does not provide for arbitration proceedings.
2. The learned counsel for the plaintiff has urged that the defendant-Corporation has not settled the plaintiff's final bill for Rs, 9,56,948.57 and that they have refused to give effect to the arbitration clause 68 in the agreement. He has further urged that the clause 68 of the agreement reproduced above does provide for reference to arbitration of any dispute or difference of any kind whatsoever arising between the corporation and the contractor and the Court may pass orders for referring the dispute to the arbitration. He has placed reliance on the following cases:-
(i) The Province of the Punjab v. MessRS,' Wan & Co. PLD 1956 Lah.
442.
(ii) Governor-General in Council v. Simla Banking and Industrial Co. Ltd., New Delhi and another AIR 1947 Lah.
215.
(iii) Messrs Jamia Industries Ltd. v. Messrs Pakistan Refinery Ltd. Karachi PLD 1976 Kar.
644.
(iv) Anwarul Hasan Khan and others v. Ali Muhammad and others AIR 1961 All.
558.
3. On the other hand, the learned counsel for the defendant-Corporation has contended that the plaintiff's final bill has been settled and there is no dispute between the parties and there is no cause of action for filing the suit. He has next contended that, in any case, the clause 68 of the agreement, relied upon by the learned counsel for the plaintiff, does not contemplate reference of dispute to arbitration and provisions of section 20 of the Arbitration Act 1940 are not attracted.
According to him, clause 68 of the agreement provides for settlement of disputes or differences in respect of execution of works and their determination by the Engineer of the defendant- Corporation. He has relied upon the following cases:-
(i) Ch. Muhammad Saleem v. Muhammad Akram and others and Mien Muhammad Akram and others v. Ch. Muhammad Saleem PLD 1971 SC 516.
(ii) Province of West Pakistan v. Mustafa R.C. Pipe Works, Karachi PLD 1977 Kar.
397.
(iii) Messrs Electric and Radio Corporation v. Messrs Pakistan Steel Mill Corporation 1981 CLC 1679.
(iv) Board of Trustees of Port of Karachi v. Messrs National Construction Company and another PLD 1981, Kar. 37?.
(v) Das Ram v. Secretary of State AIR 1936 Sind 201.
(vi) Charles and others v. Cordiff Collieries Limited XLIX Times Law Reports p.
448.
(vii) Messrs Teamco Private Ltd v. T.M.S. Mani AIR 1967 Cal.
168.
(viii) The Chief Administrator, Dandakaranya Project, Koraput, Orissa and another v. Messrs Prabartak Commercial Corportion Ltd. Calcutta AIR 1975 Mad. Para. 152.
4. The determination of the question involved in this suit rests on the scope and interpretation of clause 68 of the agreement reproduced above. The important expressions in the aforesaid clause to be noted are:- "If any dispute or difference of any kind whatsoever shall arise in connection with or arising out of the contract or carrying out of the works" it shall be referred to and settled by the Engineer who within a period of 90 days after being requested by either party to do so shall give written notice of his decision to the Employer or the contractor such decision in respect of every matter so referred shall be final and binding upon the Employer and the Contractor until the completion of the work and shall forthwith be given effect to by the contractor who shall proceed with the works.
It is pertinent to note that there is no express reference in the aforesaid clause 68 of the agreement for reference of any dispute or difference to an Arbitrator. However, there is provision for making reference to the Engineer of any dispute or difference in respect of the carrying out of the works for his decision within the specified period of 90 days. It has to be determined whether this provision envisages reference of any dispute or difference to arbitration by the Engineer.
5. Similar clauses in different agreements were considered in some of the cases relied upon by the learned counsel for the parties. The first case that may be referred to is that of Des Ram v.
Secretary of State, reported in AIR 1936 Sind 201. It was a case of contract wherein one of the clauses of the agreement/contract (clause 25) read as under:- "Except where otherwise specified in the contract, the decision of the Superintending Engineer of the Division for the time being shall be final, conclusive and binding on all parties to the contract upon all questions relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of, or relating to the contract, designs, drawings, specifications, estimates, instructions, orders, or these conditions, or otherwise concerning the works, or the execution or failure to execute the same, whether arising, during the progress of the work, or after the completion or abandonment thereof, or the contract by the contractor, shall be final, conclusive and binding on the contractor."
' Mr. Justice Rupchand, Bilaram, Actg.J.C. (as he then was), made the following observations and held as under:- "It is well-settled that a mere agreement between two persons to be concluded by the decision of a third does not by itself constitute such third person should determine the disputes in a quasi- judicial manner: 28 S L R 223(1) at p.
227. What is the intention of the parties in any particular case must necessarily depend upon the true construction of the agreement between them. In a series of cases it has been held that where an architect or other technical expert in the service of one of the parties to a contract is clothed with authority to settle disputes between the parties which he is required to decide merely by the exercise of his own skill and judgment, such architect or expert is not an arbitrator. The Superintending Engineer was the Officer representing the Secretary of State in the contracts, which were signed by him on behalf of the Secretary of State. He was competent to decide the disputes "by the use of his eyes, his knowledge and his skill", to use the words of Lord Esher, M.R. In 15 Q B D 426(2), and there is nothing either in clause 25, or in the rest of the contract form, to suggest that the Superintending Engineer was required to give his decision in a quasi-judicial manner. Not only that, but it is abundantly clear from the correspondence carried on by the applicant up to the time of making an application in the High Court of Bombay under section 8, Arbitration Act, he himself did not interpret clause 25 as a clause providing for submission of disputes to the arbitration of the Superintending Engineer.
' And lastly whatever might be said in favour of the view that clause 25 was intended to vest the Superintending Engineer with powers of an arbitrator, there is no scope for the contention that it was intended to substitute another person as arbitrator in the place of the Superintending Engineer in the event of his refusing or failing to act. For all these reasons this application fails and is dismissed with costs."
' Reference in the aforesaid case was made to a case reported in 28 SLR 223(1) AIR 1934 Sind 200.
6. The next case is that of Governor-General in Council v. Simla Banking and Industrial Co. Ltd. New Delhi and another cited as AIR 1947 Lah.
215. In that case, one of the clauses of the agreement (clause 25) considered by a Division Bench of the Lahore High Court read as under:- "Except where otherwise specified in the contract the decision of the Superintending Engineer of the circle for the time being shall be final, conclusive and binding on all parties to the contract upon all questions relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned, and as to the quality of workmanship, or material used on the work, or as to any other question, claim, right, matter or thing whatsoever, in any way arising out of or relating to the contract designs, drawings, specifications, estimates, instructions, orders, or these conditions, or otherwise concerning the words or the execution or failure to execute the same, whether arising during the progress of the work, or after the completion or abandonment thereof."
' Their Lordships made the following observations on the findings of the learned subordinate Judge that the works "arbitration", "arbitrator" or "arbitration agreement" did not appear in the clause and there was nothing to suggest in it that the parties had agreed to submit their differences to arbitration and the agreement contained in clause 25 did not indicate any animus arbitrandi:- "It is true that the words "arbitration", arbitrator" or "arbitration agreement" do not appear in the clause but that is, in my view, immaterial as long as the parties can be found to have agreed to allow the matter to be decided by a person of their own selection whose decision was to be final, conclusive and binding on them. A perusal of the clause would show that not only the questions as the "quality or workmanship or materials used on the work" were left to be decided by "the Superintending Engineer of the Circle for the time being "but" any other question, claim, right, matter, or thing whatsoever, in any way arising out of, or relating to the contract" etc, were, after they had arisen between the parties, also agreed to be left to him for his decision."
' In that case the aforesaid cases reported in AIR 1934 Sind 200; 28S L R 223 and AIR 1936 Sind 201 were referred to and they were distinguished on the ground that it was assumed in those cases that the manner in which the matter was intended to be determined by the persons referred to was neither judicial nor quasi-judicial.
7. In the case, the Province of Punjab v. Messrs Irfan & Co. PLD 1956 Lah. 442, a clause in a contract "any dispute under this contract will be referred to the Secretary to Government, Punjab Civil Supplies Department, whose decision will be final and binding on the parties" was considered and it was held that the clause was not bad as arbitration clause for mere want of express mention that the Secretary, Civil Supplies would act as an arbitrator as the Secretary Civil Supplies was to act as an arbitrator if a dispute arose under the contract and the clause was not vitiated on that ground. However, the arbitration clause was held to have stood vitiated on account of uncertainty of the arbitrator appointed by designation which was of undeterminable nature.
8. In the case Anwarul Hassan Khan and others v. All Muhammad and others AIR 1961 All. 588, it was held that in a case where the existence of an arbitration agreement is denied, the Court has to enter into question and give a definite finding whether the agreement does or does not exist.
9. In the case Messrs Teamco Private Ltd. v. T.M.S. Mani AIR 1967 Cal. 168, it was held that in case where an arbitration agreement is vague and uncertain and is not capable of being made certain there is no agreement in law and question of filing it in Court under section 20 or enforcing such agreement cannot arise.
10. In the case, the Chief Administrator, Dandakarana Project, Koraput, Orissa and another v.
MessRS,' Prabartak Commercial Corporation Ltd. Cal. AIR 1975 Mad. Pra. 152, connotation of "arbitration agreement" as defined in section 2(a) of the Arbitration Act 1940, was considered and certain clauses in the agreement, particularly in the cases of building and Engineering Contracts, were examined in great detail and it was observed that the intention of the contracting party may be deducted from the relevant clauses of the agreement. As regards arbitration clause, an observation was made that one of the essential ingredients of submission to an arbitration is that the parties should agree that the dispute, intended to be referred should be determined in a quasi- judicial manner.
11. In the case, Province of West Pakistan v. Mustafa R.C.C. Pipe Works, Karachi, reported in PLD 1977 Kar. 397, the following arbitration clause (clause 30) in two agreements for the works of laying two pipe lines was examined:- "Except where otherwise specified in the contract and subject to the power delegated to him by Government under the Code Rules then in force, the decision of the Superintending Engineer of the Circle for the time being shall be final, conclusive and binding on all parties to the contract upon all questions relating to the meaning of the specifications, designs, drawings, and instructions.
Hereinbefore mentioned and as to the quality of .Workmanship or materials as used on the work, or -as to tiny Other question, claim, right, matter or thing whatsoever, in any way arising out of, ' or relating to the contract, designs, drawings, specifications, estimate, instructions, orders or these conditions, or otherwise concerning the works, or the execution or failure to execute the same, whether arising during the progress of the work, or after the completion or abandonment thereof."
' In the light of several cases on the point decided earlier, including the cases, reported in AIR 1934 Sind 200, AIR 1936 Sind 201 and AIR 1947 Lah. 215 and it was held that the decision of. The Superintending Engineer of the Circle referred to in the arbitration clause did not amount to an award under the Arbitration Act.
12. In the case of Board of Trustees of Port of Karachi v. Messrs National Construction Co. (Pakistan)
Ltd. And another, reported in PLD 1981 Kar., 377, an arbitration clause identical to clause 68 in the instant case, nature. In a building contract reproduced below, was examined:- "(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. 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.
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 full and binding upon the Contractor. If the Engineer shall fail 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 decision, then the Contractor may within 90 days after receiving 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 matters in dispute be referred to arbitration as hereinafter provided.
' All 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. 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 or arguments put before the Engineer for the purpose of obtaining his said decision."
' But the matter was decided on a different question as to whether the stage had reached where the arbitration clause in the agreement could be invoked. It may, however, be mentioned that the disputed arbitration clause in the agreement involved in the instant case is complete as the second part of such clause as incorporated in the arbitration clause in the above case cited stands omitted.
13. In the case MessRS,' Electric and Radio Corporation v. MessRS,' Pakistan Steel Mill Corporation 1981 CLC 1679 an arbitration clause similar to that in the case reported in PLD 1981 Kar. 377, was considered and it was disposed of likewise that the stage for invoking the arbitration clause had not reached.
14. It follows that there has been almost consistent view that nature of a clause contained in contractual agreement, regarding settlement of disputes arising in giving effect thereto, generally, supposed to be arbitration clause, may be visualized from the intention of the contracting parties deducible from the text of the clause and the nature of the dispute. The consensus of the view adopted in the cases referred to above seems to be that submission of a dispute to arbitration pre-supposes its decision in quasi-judicial manner. In the instant case, the supposed arbitration clause reproduced in the opening paragraph provides for reference of a dispute or difference of any kind whatsoever arising between the employer or the Engineer and the contractor in connection with or arising out of the contract carrying out of the works. It further provides that the Engineer had to pronounce his decision within 90 days of the request made to him by either party to give his decision on the dispute or difference and his decision had binding force upon the employer and the contractor until the completion of the work and it had to be given effect to by the contractor who had to proceed with the work with all due diligence unless provided otherwise in the agreement. Reading the clause as a whole, it appears that the dispute or difference that "dispute or difference of any kind whatsoever" has reference to the dispute or difference arising in carrying out of the contractual work and not to a dispute or difference of any other nature like the one arising between the parties. No doubt, the supposed arbitration clause does mention "dispute or difference of any kind whatsoever" for making reference to the Engineer for his decision but it is laid down in the latter part of the clause that the Engineer's decision was final and binding upon the parties only until the completion of the work and his decision was to be given effect to only by the contractor. It follows that the dispute or differences provided for in the supposed arbitration clause as have reference to dispute or differences arising in carrying out the contractual works and such dispute or differences was/were to be referred to the Engineer whose decision was final for completing the works. The dispute between the parties herein had arisen after the completion of the work and it is not a dispute or difference in carrying out the execution of the work in accordance with the terms and condition of the agreement. The aforesaid clause 68 of the agreement does not expressly provide for reference to arbitration of any dispute arising out of the contract or carrying out of the works. It follows that the dispute of the nature having arisen between the parties in respect of payment of the final bill does not stand covered by clause 68 of the agreement pressed in aid by the plaintiff. Accordingly, the dispute between the parties falls out of the clause 68 of the agreement and the provisions of section 20 of the Arbitration Act are not attracted therein. Consequently, the application is not maintainable and the suit is dismissed with no order as to costs.