' The relevant facts for the decision of this appeal are that the respondent-Firm was awarded contract for construction of District Headquarter Hospital, Khanewal through tender dated 25-4- 1993. The agreement was executed between the appellant No, 3 and the respondent. There was dispute between the parties to the agreement. The respondent, as per clause (65) moved appellant No, 2 for appointment of arbitrator for resolution of the dispute. The appellant failed to appoint the arbitrators. Thereafter, the respondent filed an application under sections 8 and 20 of the Arbitration Act, 1940 for appointment of the arbitrator for resolution of the dispute between the parties. The appellants were arrayed as respondents in this application. They, after receipt of notice from the Trial Court, proceeded to move application under Order VII, rule 10 read with section 20, C.P.C. And section 41 of the Arbitration Act for returning the plaint for presentation in proper Court.
The respondent resisted this application. The Trial Court after hearing the arguments dismissed the same vide order dated 24-5-1995, which has been assailed through this appeal, which came up for limine hearing on 3-8-1995 when pre-admission notice was issued to the respondent, who has appeared through Mr. Riaz Karim Qureshi, Advocate and contested the appeal.
2. The learned counsel for the appellants argued that the agreement between the parties was signed at Khanewal. The work was also to be executed at Khanewal. The office of the appellant No, 3, who is the party to the agreement, is also at Khanewal, therefore, Civil Court at Lahore has no jurisdiction. It is added that Explanation II to section 20, C.P.C.. Is not relevant in cases against the Government. In this behalf, the learned counsel has referred to Mian Fazal Muhammad Nizam-ud- Din Baig & Co. v. The Province of West Pakistan and others (PLD 1969 Lahore 453) and Agha Mahbbob Shah v. Balochistan through the Secretary to Government and others (PLD 1982 Quetta 84).
3. On the other hand, the learned counsel for the respondent argued that as per clause (65) of the agreement the arbitrator was to be appointed by appellant No,
2. The respondent accordingly served him with a notice as required under section 8 of the Arbitration Act but he failed to perform his duty under the agreement, therefore, the respondent was constrained to move the Civil Court at Lahore for appointment of the arbitrator. It is added that this way the part of cause of action accrued at Lahore, therefore, the Civil Court at Lahore has the jurisdiction. The learned counsel, in this behalf, has referred to Province of Punjab v. Hameed Ahmad (1988 CLC 1764) and Fauji Foundation and others v. Yousuf (1985 CLC 2799).
4. I have given my anxious consideration to the arguments of the learned counsel for the parties, gone through the record and precedents. Before proceeding any further it is relevant to refer to clause 65 of the agreement between the parties. The relevant portion of clause (65) of the agreement reads as under:-- "Settlement of disputes..................
Clause 65:
(a) .......
(b) .......................
(c) In the event of any dispute arising in accordance with the limitations provided in sub-clause
(a) of this clause, the same shall be referred to the decisions of a sole arbitrator to be appointed by the Chief Engineer Incharge of the region, from among the officers of the department not below the rank of Superintending Engineer, and other than the Superintending Engineer, Incharge of the work.
In case the claim preferred is for an amount up to Half a Million Rupees, the decision of the sole arbitrator in such cases shall be final and binding on the parties concerned."
' The respondent in pursuance of the above clause requested appellant No, 2 to appoint arbitrator but he failed to discharge his obligation under the agreement. Thereafter, the respondent filed application under sections 8 and 20 of the Arbitration Act requesting the Court to appoint the arbitrator. It is relevant to refer to clause (c) of subsection (1) of section 8 of the Arbitration Act. The same reads as under:-- "(c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him;"
The respondent took up the position that part of the cause of action accrued at Lahore when the appellant No, 2 failed to appoint the arbitrator. There is no cavil with the legal proposition that Government does not carry on any business in its normal functioning and it does not reside at any place nor does it personally work for gains. These terms have been used with reference to natural persons, -therefore, clauses (a) and (b) of section 20 are not applicable to the cases against the Government. I am fortified in my view by the judgments reported as Dominion of India v. Gopal Chandra Tapadar and others (AIR (38) 1951 Calcutta 37), Pakistan v. Waliullah Sufyani (PLD 1965 SC 310), Fushraj Thanmull v. Union of India (AIR 1960 Calcutta 458), R.J. Wyllie & Co. v. Secretary of State (AIR 1930 Lahore 818), Azizuddin & Co. v. Union of India (AIR 1955 Madras 345), Mian Fazal Muhammad Nizam-udDin Baig & Co. (supra) and Muhammad Saeed v. Federation of Pakistan (PLD 1954 Sindh 117). The application under sections 8 and 20 of the Arbitration Act would be governed by subsection (c) of section 20. The only question is whether failure of appellant No, 2 to appoint arbitrator would form part of cause of action for filing the petition by the respondent or not? The words 'cause of action' have not been defined in the C.P.C. These have been interpreted to mean all material facts, which are necessary for the plaintiff to allege and prove in order to succeed. In this behalf, reference can be made to Dominion of India (supra), Mian Niaz Hussain and another v. Imdad Hussain (PLD 1965 (W.P.) Lahore 172), Abdul Hakim and 2 others v. Saadullah Khan and 2 others (PLD 1970 SC 63) and Abdul Rahman v. Wahid Bakhsh and 9 others (PLD 1977 Lahore 1243). I am conscious of the fact that every allegation does not form part of cause of action unless the plaintiff has to prove the same in order to succeed in the suit. This is the test for determination whether allegation forms part of the cause of action or not. I am fortified in my view by the judgments in the cases of Muhammad Khalil Khan and others v. Mahboob Ali Mian and others (AIR
(36) 1949 Privy Council 78), Debendra Nath Mandal v. Sakhilal Kar and others (AIR (37) 1950 Calcutta 526) Dominion of India and Fushraj Thanmull (supra).
5. The appointment of Arbitrator, as per section 8 of Act 1940, if not made within 15 clear days after service of notice then the Court on the application of the party, who gave the notice, may make the appointment of the arbitrator or arbitrators or umpire as the case may be. It is clear from this provision of law that service of notice for appointment under the agreement between the parties is necessary. The petition if moved without service of such notice would be liable to be dismissed as premature or in other words for want of cause of action. Therefore, it is clear that part of cause of action accrued to the respondent at Lahore on the failure of appellant No, 2 to make the appointment of the arbitrator so the Civil Court at Lahore has the jurisdiction to entertain and decide the petition under sections 8 and 20 of the Arbitration Act filed by the respondent.
6. The upshot of the above discussion is that there is no merit in this appeal. The same is dismissed in limine.