C.M.A. 5592/2001 . ZIA PERWEZ, J. -- Adjourned. To be heard after orders on applications at Sr. Nos. 2 and 3 as already ordered on 22.8.2001.
C.M.As. 6203 and 7512 of 2001. By order dated 6.11.2001 the parties were directed to seek instructions with regard to appointment of a sole arbitrator. However, the parties requested for the decision of the applications on merit on 28.11.2001 when CMA 8723/2001 came up for hearing.
2. By these applications moved under Sections 34 and 33 of the Arbitration Mt, 1940 by the defendant and the plaintiff respectively, defendants seek to invoke the arbitration in the case and stay of the suit pending arbitration. Plaintiff seeks to challenge the validity of the arbitration agreement and the effect of the same.
3. Brief facts of the case are that the work of sewerage Stage-I in Phase VIII, Defence Housing Authority at Karachi was awarded by the defendants to plaintiff under a contract dated 25.5.1996.
Certain disputes arose during the execution of the work. The plaintiff after making references to the engineer as provided under the clause 26 of the Arbitration clause contained in the general conditions of the contract forming part of the tender documents got his matter decided through the consultants M/s. S.K. Engineering Associates vide their letter dated 17.3.1999. The consultants recommended for payment of the amount of claim to the plaintiff. The matter was again referred to the consultants,the second time by the defendants, to reconsider their decision. The consultants vide their letter dated 27.5.2000 confirmed their ,earlier decision. As the payment was finally refused in spite of protracted negotiations, plaintiff instituted the present suit for the recovery of amount on 26.3.2001.
4. On 5.3.2001 the case was fixed before the Registrar when four weeks time was allowed to the defendant for filing the written statement after service of summons. Again on 19.9.2001 the case came up before the Additional Registrar who allowed a further two weeks time as a last chance to the defendants to file, their written statement. No appearance was made on behalf of the defendant on both the aforesaid dates of hearing.
5. On 30.7.2001 plaintiff moved an application under Order VIII, Rule 1 read with Order VIII, Rule 10, CPC (CMA 5592/2001). This application came up for hearing before the Court on 10.8.2001 and thereafter on 22.8.2001, when learned counsel for the defendant is stated to have moved the present application (CMA 6203/2001) under Section 34 of the Arbitration Act copy whereof was supplied to the plaintiff in Court. This application was followed by application (CMA No. 7512/2001) moved by the plaintiff under Section 33 of the Arbitration Act, 1940.
6. Before proceeding further it would be relevant to reproduce the clauses referred to by the parties contained in two sets of genera) conditions of the contract one attached to the tendered documents wherein clauses 26 and 27 read as follows:- "26. Matters to be finally determined by consultants . -- 26.1. The decision, opinion, direction, certificate (except for payment) with respect to all or any of the matters under clauses 1, 2, 3, 5, 7, 8, 3, 3.4, 8, 6, 8.10, 8.11, 8.13, 8.15, 8.37, 16.3, 17.4, 17.6, 17.8, 20 and 25.3 hereof (which matters are herein referred to as the expected matters) shall be final and conclusive and binding on the parties hereto and shall be without appeal.
Any other decision, opinion, direction, certificate or valuation of the consultants or any refusal of the consultants to give any of the same shall be subject to the right of Arbitration and review in the same way in all respects (including the provision as to opening the reference) as if it were a decision of the consultants under following clause.
27. Settlement or disputes. All disputes and differences of any kind whatever arising out of or in connection with the contract of the carrying out of the work (whether during the progress of the works or after the completion and whether before or after the determination, abandonment or breach of the contract shall be referred to and settled by the Consultants who shall stated in the preceding clauses. But if either the employer or the contractor be dissatisfied with the decision of the Consultants on any matter, question or dispute of any kind (except any of the excepted matters) or as to the withholding by that consultants of pny certificates to which the contractor may claim to be entitled, then and in any such case either party (the employer or the contractor) may within 28 days after receiving notice of such decision give a written notice to the other party through the consultants requiring that such matter in dispute be arbitrated .Upon. Such written notice shall specify the matters which are in dispute and such disputes or differences of which such written notice has been given, and no other shall be and is hereby referred to the arbitration and final decision of a single arbitrator to be agreed upon and appointed by both the parties or in case of disagreement as to the appointment of a single Arbitrator, to the Arbitration of two Arbitrators shall before taking upon themselves the burden of reference appoint an Umpire.
The Arbitrator, the Arbitrators or the .Umpire shall have power to the open up, review and revise any certificate, opinion, decision, requisition or notice save in regard to the excepted matters referred to in the preceding clauses and to determine all matters in dispute which shall be submitted to him or them and of which notice shall have been given as aforesaid.
Upon every or any such reference the cost of and incidental to the reference and award prospectively shall be in the direction the arbitrator, or arbitrators, or the Umpire who may determine the amount thereof, direct the same to be taxed as between attorneys and client or as between party and. Parties, and shall direct by whom and to whom and in what manner the same shall be borne and paid. This submission shall be deemed to be a submission to Arbitration within the meaning of the Arbitration Act in force or any statutory modification there of. This award of the Arbitrator or Arbitrators or the Umpire shall be final and binding on the parties. Subh reference except as to the withholding by the consultants of any certificates under clauses 25.1(vi) and 25.2 to which the contractor claims to be entitled shall not be opened or entered upon until after the completion or alleged completion of the works or until after the practical cessation of the works arising from any cause unless with the written consent of the Employer and Contractor: Provided' always that the Employer shall not with hold the payment of an interim certificate nor the contractor, except with the consent in writing of the consultant, in any way delay the carrying out of the work by reason of any such matter, question of dispute being referred to Arbitration, but shall proceed with the .Work with all due diligence and shall until the decision of the Arbitrator, or Arbitrators, or the umpire by given abide by the decision of the consultants and no award of the Arbitrator or the Arbitrators of the Umpire shall relieve the Contractor of his obligations to adhere strictly to the Consultants instructions. The Employer and the Contractor hereby also agree that Arbitration under this clause shall be a condition precedent to any right of action under the contract."
7. A subsequent arbitration clause copy whereof is filed alongwith application reads as follows:- " 18, Arbitration. -- All disputes between the parties to this Contract, arising out of the contract, other than those for which decision of the Accepting Officer or any other person is by contract expressed to be final and -conclusive, shall, after written notice by either party to the Contract, be referred to the sole arbitration- of the Arbitrator appointed by the Executive Board, Pakistan Defence Officers Housing Authority, Karachi, Decision of the Arbitrator, so appointed shall be final, binding and conclusive for both the parties."
The plaintiff is present in person. His contention is that in pursuance to the reference made by him to the Engineer under clause 26 of the Arbitration clause followed by the decision of the consultants on 17.3.1997 no action was taken by the defendant to invoke any arbitration in case they had any grievance. On being again referred for reconsideration the consultants who acted as the engineer reconfirmed their earlier decision vide letter dated 27.5.2000. The contention of the plaintiff is that a specific bar of 28 days is provided under the clause for the aggrieved party to invoke the arbitration against the decision of the consultant. As this was not done in the instant case, the decision of the consultant attains finality and is not subject to an arbitration at this stage.
In addition plaintiff has also advanced his arguments that after approval at various levels the case for payment of the claim has been forwarded after approval from one officer/committee to another and he has been made to run from pillar to post. However, at the various stages the claim was approved details whereof are set forth in the plaint until it was finally placed for approval of the board of defendants, where the claim was rejected.
8. Mr. Munawar Malik, Advocate for the defendants, has placed reliance on clause 18 of the general clause of contract forming part of the agreement executed between the parties providing for the manner of appointment of the arbitrator in case of dispute. Learned counsel states that claim of the plaintiff after being considered at various levels was placed for final decision before the board of the defendant and it was turned down at that stage. Learned -counsel has contended that the plaintiff has been fully paid for the work done by him under the condition of the agreement as are applicable to the present case. The preconditions followed by the general conditions of the contract are binding upon the parties and taking these facts into consideration coupled with the fact that no adjournment was sought by the defendant for filing of the written statement, no steps are said to have been taken by the defendant in suit as such the application under Section 34 of the Arbitration Act 1940 competent and application moved by the plaintiff under Section 35 of the Arbitration Act, 1940 is liable to be dismissed. In' support of his contentions learned counsel has placed reliance on Pakistan International Airline Corporation v. Messrs. Pak Saaf Dry Cleaner (PLD 1981 S.C. 553) and B.R. Harman & Motatta Ltd. v. Ghee Corporation of Pakistan Ltd. (PLD 1980 Karachi 40).
9. On perusal of the arguments advanced in this case it appears that the arbitration agreement is contained in the two documents forming the general conditions of contract at various stages of arbitration clauses the first is contained in clauses 26 and 17 of the general conditions of contract while the second is clause 18 of the general conditions or contract both of which already been reproduced as above. By the conduct of the parties. It is clear that they acted in pursuance to clauses 26 and 17 of the general conditions of contract by referring the matter for decision to consultants and obtaining his opinion. Even otherwise clause 18 only provides for the manner of appointment of the arbitrator and that the reference should be to referred to sole arbitrator appointed by the executive board of Pakistan Defence Housing Authority, Karachi. Under Section 2(a) of the Arbitration Act one arbitration agreement is required to be in writing. It may be contained in one or more documents. In the instant case clauses 26 and 27 are Part of the tendered documents are approved while clause 18 of the General Conditions of the contract is also a document signed by the parties. In view of peculiar facts of this case I am of the humble opinion that as there is no contradiction between the clause and the parties have also acted in pursuance of the same these clauses are to be read together and constitute the arbitration agreement which under the Arbitration Act should be in writing. The arbitration agreement may be contained in more than one document. This point came under examination in the case of Ahmed Construction Vs. Neptune. Textile Mills and another (PLD 1990 Karachi 216) wherein it has been held:- "Similar view has been taken in PLD 1978 Lahore 829 (Province of Punjab v. The Industrial Machine 'Pool). The ratio decidendi of this ruling is that though the Arbitration Act requires the Agreement of Arbitration to be in writing, it does not require that it should be contained in a formal document. It may be in any form attributed to the parties whereby their intention to refer their dispute to arbitration is manifestly proved. In accordance with law. Even the correspondence between the parties or a statement made by their counsel and recorded by the Court was considered sufficient to be treated as an Arbitration Agreement."
And before the Hon'ble Supreme Court in case of Mst. Shamim Akhtar v. Najma Baqai and others (1977 SCMR 409) it has been held:- "In Section 2(a) of the Arbitration Act, 1940 "arbitration agreement" in defined to mean a "written agreement" to submit present or future difference to arbitration, whether an arbitrator is named therein or not. In the past there has been a considerable divergence of opinion as to whether this "written agreement" was also required to be signed between the parties. But of late the Courts are unanimous in holding that the written agreement of arbitration need not necessarily be signed by the parties as long as its terms and conditions can be readily ascertained and have been freely agreed to between the parties. On the face of it Section 2(a) of the Act does not lay down and it is not a requirement of the law that the arbitration agreement must also be signed by the parties."
10. In the case of B.A. Harman & Mohatta supra the arbitration was subject to precondition of reference to the board of directors of the purchasers. However, no bar on the time period for invoking the arbitration under the arbitration clause was provided in that case. In the present case there is a specific bar of 28 days has been, provided for invoking the arbitration by the party aggrieved of the decision of the consultant. It has already been settled that precondition contained in the arbitration clause are binding upon the parties. The documents were prepared by the defendants and they themselves incorporated the condition of prior reference of the claim to the consultant and attached the element of finality to the decision in case it was not challenged within a_ period of 28 days. They cannot now be allowed to turn around and disown the conditions laid down by them which has been relied and acted upon by the plaintiff on the basis of the documents provided by them to the contractor.
11. In view of the above I am of the opinion that the arbitration clause cannot be resorted to by the defendant at this stage accordingly CMA 6203/2001. Is dismissed and CMA 7592/2001 is allowed.
Case may came proceedings.