' This order will dispose of petition under section 20 of the Arbitration Act, 1940 (to be referred as the Act hereinafter) filed by Pakistan Development Corporation (Pvt.) Ltd. (hereinafter referred to as the Plaintiff or the Contractor). The Court has been prayed for an order directing Ministry of Defence, Government of Pakistan through Director Works and Chief Engineer (Navy), Islamabad (hereinafter referred to as "the Employer" or the defendant) to file Arbitration Agreement, namely "Conditions of Contract" which contains an arbitration clause. A further prayer is to refer the various disputes between the parties to arbitration in accordance with the said Arbitration Agreement.
2. The short background of the present application, appearing from the narration of facts, reveals that: "(a) The plaintiff is a construction concern, duly pre-qualified by the Ministry of Defence, Government of Pakistan.
(b) The employer awarded the work of proposed refurnishment of Naval berths 1-4 at P.N. Dockyard Karachi (to be called "the Project") to the plaintiff as the bid of the plaintiff was the lowest being Rs,21.90 crore as compared to three other bidders.
(c) The commencement of work on the project was stipulated as 6-7-1989 and the project had to be completed by or before 5th May, 1991. Thus the project, according to the conditions of the contract (hereinafter referred to as the contract) had to be completed within 22 months but, unfortunately 15 months (approximately 68% of the stipulated contract period) were swallowed by the erupted disputes between several agencies in providing certain areas to the contractor to be used for the purpose of the project. The importance of this project can be easily estimated from the facts that several other firms such as M/s. Foundation Engineering (Pvt.) Limited, M/s. Dywidage Systems International GmbH, Germany and Designing Engineers (London) had to perform certain roles in the completion of this project. Considerable delay also took place in opening of L/C for importing anchors and other material.
(d) Keeping all these circumstances into consideration, stipulated time of completion of work was extended from May 5, 1991 to July 5, 1992.
(e) Delay in progress of work aggravated the disputes and the employer sent a letter dated 16-5- 1992 to the plaintiff wherein it was alleged that the plaintiff had abandoned the site. The defendant treated the alleged conduct to be an indication that the contractors were not interested to complete the work and to fulfil their contractual obligation. It was also stated in para. 5 of the letter that: ' I, as employer, therefore, give you this FINAL NOTICE as per Clause 63 (b) (vi) of Condition of Contract, amended todate, to resume the work immediately and mobilize all your resources to complete this operational work by scheduled time. Please note that if you fail to resume the work and do not show appreciable progress by 29th May, 1992 the department shall be constrained to cancel the contract on account of your default under Clause 63 (b) of contract agreement and the left over defective work shall be completed at your risk and expenses through another agency under the provision of the contract agreement'.
(f) The contractors replied the said letter/notice on May 26, 1992 by accentuating the facts and repudiating the accusation levelled by the defendant. Besides the said reply, an application under section 20 of the Act bearing Suit No, 387/92 was filed before this Court. This application was rejected by the Court on 2-12-1992. The last lines of the rejection order read as under: `I would therefore reject this application and direct the plaintiff t, first approach the Engineer for the decision of dispute which should be put to him in clear terms and only if the Engineer does not give his decision within the stipulated time or gives a decision which is not acceptable to the Rain tiff he can come before the Court under Clause 67 of the Conditions of the Contract.'
' According to Clause 1(c) of Part I of the Contract an Engineer means:- ' the Engineer designated as such in Part II, or other the Engineer appointed from time to time by the employer and notified in writing to the contractor to act as Engineer for the purpose of the contract in place of the Engineer so designated.'
' The Engineer designated in Clause 1(c) of Part II of the Contract, means: `Garrison Engineer (Navy) Project III, Karachi'.
' In the light of above definition of Engineer, the plaintiff, therefore, dispatched the Reference of Dispute under Clause 67 of the Contract to the Garrison Engineer. The Garrison Engineer gave his decision on 17-3-1993 on the reference, which is stated to be dated 17-12-1992 and received by him on 19-12-1992.
(h) Being dissatisfied with the decision of the Engineer, the plaintiff called upon the defendant to refer the various disputes to arbitration by suggesting three names of retired Judges of the Supreme Court so that the defendant could select anyone of the three suggested names to work as sole arbitrator. Getting no response from the defendant, present application under section 20 of the Act was filed on 22-51993."
3. Perusal of the record clearly shows that the disputes between the parties is encircled by certain recitals of Clause 67 of the Contract. Relevant portion of the said Clause, which is the bone of contention, between the parties runs as under:-- "If any dispute or difference of any kind whatsoever shall arise between the Employer and the Contractor or the Engineer and the Contractor in connection with, or arising out of the Contract, or the execution 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 shall, within a period of ninety days after being requested by either narty to do so, give written notice of his decision to the Employer and the Contractor. Subject to arbitration, as hereinafter provided, such decision in respect of every matter so referred shall be final and binding upon the Employer and the Contractor and shall forthwith be given effect to by the Employer and by the Contractor, who shall proceed with the execution of the Works with all due diligence whether he or the Employer required arbitration, as hereinafter provided or not. If the Engineer has given written notice of his decision to the Employer and the Contractor and no claim to arbitration has been communicated to him by either the Employer or the Contractor within a period of ninety days from recei t of such notice the said decision shall remain final and bindin upon the Employer and the Contractor... .... ...."
4. A bare reading of the above quoted lines of Clause 67 of the Contract leaves no ambiguity that all kinds of dispute arising between parties have to be solved by adopting the following procedure: "(a) Dispute or difference shall in the first place. Be referred to and settled by the Engineer who shall, within a period of ninety days after requested by either party to do so, give written notice of his decision to the Employer and the Contractor. ... ..."
' The words "shall in the first instance" make it imperative that the dispute between the parties cannot be brought before the Court in the first instance but it would be referred to the Engineer. As the plaintiff, instead of referring the dispute to the Engineer, had rushed to the Court by filing an application under section 20 of the Act, therefore the same was properly contested on behalf of the defendant on the above-mentioned ground and the same was rejected by this Court as stated in para 2 (f) above.
5. In this second round of moving the present application under section 20 of the Act, both the learned advocates for the parties, have contested on behalf of their parties by interpreting the next recital of clause 67 in different manners. The contention of the learned advocate for the plaintiff was based upon the last lines of the order passed by this Court on 2-12-1992 which was reproduced in para. 2(f) above but this contention was controverted by the learned Advocate for the defendant by averring that the referred order of the High Court was not meant to pass through a formality of moving dispute before the Engineer and then to come before this Court. The intention of the order was to act according to the true spirit of clause 67 of the Contract. It was contended that the previous application under section 20 of the Act was in violation of Clause 67 of the Act because the plaintiff had not moved the reference of disputes before the Engineer in the first instance which was imperative, therefore, the said application was rejected. It was further urged by the learned counsel that the plaintiff has committed the same mistake before approaching this Court by filing the present application in violation of clause 67 of the Contract. The contentions of the learned advocate for the defendant, which this Court could gather, can be summarized as under:-- "When the Engineer gives written notice of his decision to the Employer and the Contractor, then either party or the parties should communicate to him, within a period of ninety days from such notice that he/they are dissatisfied with the decision, therefore the dispute be referred by him to arbitration.
' According to the learned counsel the word 'to him' used in the clause makes it imperative that dissatisfaction felt by any party be communicated to the same person, who gave decision as an Engineer plus arbitrator and only the said person can refer the dispute to arbitration and not by any party of the Contract."
6(a). The stand taken by the learned Advocate for the defendant appears to be based on the following lines on the relevant portion of clause 67 of the Contract as referred in para. 3 above: "If the Engineer has given written notice of his decision to the Employer and the Contractor and no claim to arbitration has been communicated to him by either the Employer or the Contractor within a period of ninety days from receipt of such notice, the said decision shall remain final and binding upon the Employer and the Contractor."
(b) I have underlined few sentences, as the same are the pivot to decide the present application.
However, before I touch these sentences, I would like to refer the assertions advanced by both the learned advocates about this portion of clause 67 of the Contract. According to Mr. Khalil-ur- Rehman, the learned counsel for the defendant, nothing was communicated by the plaintiff to the Engineer within a period of ninety days from the receipt of such notice, hence the decision of the Engineer has become final and binding upon the parties. It was also pointed out by the learned counsel that if any letter or communication was sent by the plaintiff after that decision within a period of ninety days to anybody other than the Engineer, it would not be treated to have been sent to a proper person because the same falls out of the ambit of the words "to him" used in the said clause of arbitration.
(c) On the other hand, Mr. Bilal Ahmed Khawaja, the learned counsel for the plaintiff has submitted that he had sent a letter to Director Works and Chief Engineer (Navy), Islamabad on 27-3-1993 and called upon him, with reference to the Engineer's decision dated 17-3-1993, to refer the various disputes to arbitration to any of the persons to serve as sole arbitrator by suggesting the names of
(i) Mr. Justice (Retired) Dorab F. Patel, (ii) Mr. Justice (Retired) Fakhruddin G. Ebrahim and (iii) Mr. Justice (Retd.) Zafar Hussain Mirza, all retired Judges of the Supreme Court. Hence this letter was nothing but the communication as required by clause 67 of the Contract. It was further contended that filing of present application under section 20 of the Act within 90 days of the Engineer's decision before this Court is itself a communication, if the said letter dated 27-3-1993 cannot be treated as a notice as urged by the learned Advocate for the defendant.
7. It is, thus, evident that interpretation of the underlined sentences reproduced in para. 6 above are the only source to reach a correct conclusion for deciding the present application under section 20 of the Act.
8. Having regards for the contentions advanced by the learned Advocates for the parties, I am of the opinion that whole scheme of the Arbitration Act, 1940 seems nothing but to curtail litigation in regular Courts to get the disputes settled by avoiding all types of technicalities of procedural law but within the four corners of substantive law.
9 In the light of the abovementioned facts and background, it can be safely said that nothing can be adjudicated upon this application unless the true interpretation of the reproduced underlined sentences of clause 67 of the Contract is ascertained. But, for the purpose of interpretation, this Court, feels itself tied with the chains of 'Code of Conduct' prescribed by the "Supreme Judicial Council" which has to be observed by every Judge of the Superior Courts observed by the Honourable Judges of the Supreme Court in an unreported case of Sikandar A. Karim v. The State 1995 SCMR 387 by releasing certain observations about this Bench on an order passed by this Court and reported in PLD 1995 Karachi 73 (Incidentally I was the Judge of the Bench). Hence, notwithstanding to the observations made in para. 10 of a case-law reported in PLD 1994 SC 885, I would like to confine myself in the grip of bars and fetters of the traditional requirements of the said Code which says that 'The oath of a Judge implies complete submission to the constitution and under the constitution to the law although the constitution, by declaring that all authority exercisable by the people is a sacred trust from Almighty Allah, makes it plain that the justice is of Divine origin. It connotes full implementation of the high principles which are woven into the constitution as well as the universal requirements of natural justice". Hence I have tried to imprison the interpretation of the sentences in dispute within the four walls of the Act.
10. By keeping the observations as guidelines and walking on the traditional path of interpretation as required by the Code of Conduct it is necessary for this Court to find out the real interpretation of the concerned lines of the Code by taking into consideration, the real scope of different chapters and the sections of the Act with reference to the jurisdiction of this Court. Different kinds of disputes can be referred under different Chapters of the Act to arbitrators under different circumstances. For example Chapter IV of the Act deals with the cases to be referred to arbitration when any suit is pending between the parties. Admittedly Chapter IV is not attracted in the present case because no suit is pending between the parties. As there is arbitration agreement between the parties, therefore, arbitration clause 67 of the Act would be attracted by Chapter II or Chapter III or by both Chapters of the Act. A bare perusal of the said clause clearly shows that both these Chapters are attracted by the said clause in the case of present contesting parties. In the first instance, an aggrieved party is bound to seek arbitration by referring the dispute to the Engineer without intervention of a Court. The plaintiff had committed mistake by submitting an application under section 20 of the Act before the Court instead of sending the reference to the Engineer in the first instance, hence the said application was rejected by the High Court on 2-12-1992 as detailed in para. 2(b) above. As the order of the Court was not attracting section 39 of he Act, therefore, no appeal could be filed against that order (AIR 1965 All. 269, PLD 1980 Lahore 305) but a revision could be filed against that order (AIR 1943 Lahore 295). It is admitted by the parties that no revision was filed against the order of the High Court passed on 2-12-1992. It shows that the plaintiff not only admitted his mistake but treated the stand of the defendant to be correct to the extent of referring the dispute to the Engineer in the first instance.
11. It may be advantageous to reproduce the relevant lines of clause 67 of the Contract which need interpretation for the disposal of present application: ' If the Engineer has given written notice of his decision to the Employer and the Contractor and no claim to arbitrator has been communicated to him by either the Employer or the Contractor within a period of ninety days from receipt of such notice, the said decision shall remain final...............................
' If the contention of the learned advocate for the defendant as stated in para. 6 above, is accepted to be correct, then the disputes may never be referred to arbitration with intervention of a Court under Chapter III of the Act and no application under section 20 of the Act would ever be maintainable. Any such interpretation of clause 67 of the Contract would not be acceptable by any sensible person. Besides the above no such stand was taken by the learned advocate for the defendant when the first application of the plaintiff was argued and disposed of by this Court on 2- 12-1992.
12. The second point stressed by the learned counsel for the defendant revolves around the word 'to him' according to which the same Engineer be communicated by the party who is dissatisfied with his decision. I am of the view that when a dispute exists between two establishments or institutions, then individuals possess secondary position. The dispute between the parties in the present case is not a dispute between the plaintiff and any specific individual, as can be ascertained from the definition of Engineer given in clause 1(c), Part I read with clause 1(c) of Part II of the Contract as mentioned in para. 2(3) above. Support on this point can be obtained from a case reported in PLD 1977 Karachi 21 where the application had been brought in the name of the firm and not against all the partners. Even otherwise, the purpose of communication to the Engineer can be nothing but to inform the defendant through him because an engineer can be an employee of the defendant to perform certain duties. Main stress in the said portion of clause 67 of the contract appears to be on 90 days for the purpose of communication. Therefore, if an application under section 20 of the Act has been filed before the Court within 90 days of the decision of the Engineer, it meets the requirement of the said clause even if the notice sent by the plaintiff on 27-3-1993, as referred in para. 6(c) above, be not treated as the required notice.
13. I am also of the opinion that the referred lines of clause 67 of the Contract stress upon the finality of the decision. If nothing is communicated to the defendant, either through the engineer or through any other concerned authority, by sending any notice or by filing an application under section 20 of the Act before the Court, then the decision of the Engineer would be final. Moreover, the cited lines of clause 67 of the Contract do not specifically put any condition for sending any notice or communication to the defendant before filing an application under section 20 of the Act. I am of the considered opinion that an application under section 20 of the Act can be filed without giving any notice to the defendant, hence the present application is maintainable on this score alone. Reliance can be placed on a case reported in AIR 1957 J & K 27 (DB).
14. Last but not least, with reference to the object of Arbitration Act, it can be safely said that the purpose of Arbitration Act is to curtail litigations between the parties to provide a domestic forum for speedy disposal of disputes. If the history of litigation between the parties is traced in this case, it reveals that the contract between them took place in 1989. The contest between the parties, in the Court, started in 1992. The present application was filed on 22-5-1992 and is being disposed of today after about 21 months from the date of its filing. Hence, even after the expiry of five years the dispute between the parties still remains undecided. It has shattered the whole purpose of Arbitration clause contained in the Contract which is shocking for every citizen especially when the same is related to a Ministry responsible for the Defence of this Country. I am of the considered opinion that whenever the parties in dispute have no controversy over the existence of an Arbitration agreement or the contract containing Arbitration Clause, then the Courts must limit themselves to determine whether a dispute in reality exists or not. If the Court reaches a conclusion that a real dispute exists, then the Court must be inclined to allow application under section 20 of the Act instead of probing into the details of the dispute between the parties because such an attitude would amount to usurping the jurisdiction of domestic tribunal to be constituted in accordance to the Arbitration Agreement. Refusal to grant such application must be in exceptional cases where sufficient cause is shown by the defendant not to allow the same as is the spirit of section 20(4) of the Act.
15. Resultantly, the plaintiff's application under section 20 of the Arbitration Act, 1940 stands allowed because the contentions, individually or collectively, averred by the learned Advocate for the defendant are not forceful to demolish the stand of the plaintiff and no sufficient cause has been shown to reject this application. Similarly, the existence of disputes has not been denied in principle on factual aspects of the case. I, therefore, order that:
(a) Arbitration agreement be filed by the defendant so that the dispute could be referred to Arbitration for adjudication;
(b) The parties are allowed one month time from today to submit the name of the arbitrator by consent for the said purpose;
(c) The matter will come up for hearing after expiry of five weeks from today for appointment of an arbitrator by Court if the parties are unable to agree on the appointment of an arbitrator by consent.
' In the circumstances of the case, there will be no order as to costs.