SANAD ASSOCIATES Versus GENERAL MANAGER, TELEPHONE AND TELEGRAPH, QUETTA

1. This is an application under Section 20 of the Arbitration Act, 1940, for filing the arbitration agreement dated 20‑1‑1985 and for an order of reference of the dispute to the Arbitrator in terms of the arbitration agreement.

2. The facts are that pursuant to an invitation of tender made by the defendant/ respondent for construction of Telecommunication Buildings and Staff Residences at Quetta, Pishin and Chaman, the petitioner submitted its tender in the month of January, 1985 and formal contract was entered into being dated 20‑1‑1985. The said contract contained an arbitration clause in the following terms:‑

3. Clause‑16. Settlement of Disputes Arbitration. If any dispute or differences any kind whatsoever s a arise between the Employer and the Contractor in connection with or arising out of the contract, or the carrying out of the work (whether during the progress of the works or after their completion and whether before or after termination, abandonment or breach of the contract) it shall in the first place be referred to and settled by the consultant who shall give written notice of his decision to the contractor.

4. If the Consultant has given written notice of his decision to the Contractor and no claim to arbitration has been communicated to the Consultant by the Contractor within a period of thirty (30) days from receipt of such notice, the said decision shall remain final and binding upon the Contractor. If the Contractor be dissatisfied with any such decision then the Contractor may within thirty (30) days after receiving notice of Consultant s decision. The matter or matters shall then be referred to the Director General, telephones & Telegraphs or his nominee and the decision of the Director‑General or his nominee shall be final upon both the parties.

5. It is alleged in the application that after award of the project, the plaintiff commenced the preparation for the work and was supplied a set of working drawings by the consultants. The plaintiff by its letter pointed out some missing drawings required for the advancing planning of the work. The plaintiff vide its letter dated 19‑3‑1985 pointed out certain discrepancies in the drawings which had been supplied by the Consultants and which discrepancies resulted in delays.

6. The defendant vide their letter dated 30‑3‑1985 suspended the execution of work on the items of boundary wall, land‑scaping and site development till further instructions. It is alleged that the architectural and structural drawings were supplied by the Consultants after about two and half months after the date on which the Contract period commenced.

7. It is alleged that the consultants vide their letter dated 10‑8‑1986 while recommending payment to the plaintiff against its various running bills therein also recommended deduction of amount of Rs.106,667.75 towards their consulting charges under clause 16 of the Special Conditions. The plaintiff protested against the said deduction. The Divisional Engineer Development vide his letter dated 14‑10‑1986 directed the plaintiff to pay Consultants Supervision expenses in terms of clause 16 within seven days failing which the amount will be deducted under clause 23 of the General Conditions of Contract. It is further alleged that the Consultants vide their letter dated 7‑1‑1987 refused to process/verify the running bills of the plaintiff on the ground of non‑payment of their supervision fee.

8. It appears that certain disputes arose between the parties in respect of the said contract and the plaintiff‑petitioner alleged breach of the contract in refusing to process or verify the running bills and in demanding consultants fee. The plaintiff sent a notice dated 15‑3‑1987 to the defendant /respondent under registered post to invoke the arbitration clause and in terms of clause 66 to appoint a sole arbitrator. The aforesaid notice was duly served upon the defendant/ respondent. There was complete inaction on the part of the defendant respondent. The plaintiff petitioner accordingly filed the present application on 1‑4‑1987 with a prayer to call for the original agreement from the defendant for filing it in Court and to appoint an arbitrator and refer the disputes to him for arbitration.

9. The defendant /respondent filed counter‑affidavit on 18‑8‑1987 in which it was accepted that the plaintiff was awarded contract for the construction of Telecommunication Buildings and Staff Residence at Quetta, Pishin and Chaman. It was submitted that the dispute under reference has arisen inter se the plaintiff and the defendant to which the Consultant is not party. It was submitted that the Consultant never refused in toto to entertain the bills and refusal was only limited and subject to the plaintiff s fulfillment of its contractual obligations under clause 16 of the Special Conditions of the Contract. It was further submitted that the plaintiff has not declined to reimburse the supervisions expenses but has only disagreed with the quantum, to be reimbursed about the same being in confirmity with the contract.

10. I have heard Mr. Bilal A . Khawaja, the learned counsel for the plaintiff and Mr. Q.M.Sayeed learned standing counsel for the defendant. According to Mr. Bilal A . Khawaja, learned counsel for the plaintiff, the relevant clause in the agreement is clause 66 which is already reproduced in the early part of this judgment.

11. The contention raised by Mr. Bilal A. Khawaja, the learned counsel on behalf of the plaintiffs is that the arbitration clause in the contract is vague and uncertain and thus unenforceable in law. It is urged that the arbitration clause provides that if any dispute/ difference of any kind whatsoever shall arise between the employer and the contractor it shall in the first place be referred to the consultant who shall give written notice of his decision to the contractor. In the second place if the consultant has given written notice of his decision to the contractor and no claim to arbitration has been communicated to the consultant by the contractor within thirty days from receipt of such, notice, the said decision shall be final and binding upon the contractor, if the contractor be dissatisfied with such decision then the contractor may within thirty days after receiving notice of consultant s decision refer the matter or matters to the Director‑General of Telephones and Telegraphs or his nominee and the decision of the Director‑General or his nominee shall be final upon both the parties. According to the learned counsel for the plaintiff these words have no meaning or the connotation attached to them, which renders the clause vague, uncertain and unworkable. Reference was made to the decisions of Inland Revenue Commissioner v. Executors of Dr. Robert Rechards (1971) 1 A E R 785), Staffordshire Area Health Authority v. South Staffordshire Waterworks Co., (1978 (3) A E R), West Pakistan Industrial Development Corporation, Karachi v. Aziz Qureshi (1973 SCMR 555), and Gulabchand Gambhirmal v. Kudilal Govindram and another, (AIR 1959 Madhya, Pradesh 151).

12. The decisions cited by the learned counsel for the plaintiff are not relevant to the facts of the case.

13. It appears that the contract between the parties was for construction of Telecommunication Buildings and Staff Residences. According to the application the dispute raised is not in respect of claims which have no connection with the construction of tele communication buildings and staff residences as according to the plaintiff the Consultant while recommending payment of running bill also recommended deduction of an amount of Rs.1,06,667.75. The plaintiff protested by its letter. The Divisional Engineer directed the plaintiff to pay consultants supervision expenses in terms of clause 16 of the Special Conditions within seven days failing which the amount would be deducted by the defendant under clause 23 of the General Conditions bf contract. I am of the view that provisions for referring the disputes first to the Consultant would be most appropriate in the arbitration clause. Further under the arbitration clause it appears that the Consultant shall give written notice of his decision to the contractor. After receipt of notice the Contractor has to prefer claim to arbitration within 30 days and if he does not prefer any claim then the decision is final and binding upon the contractor.

14. It is difficult to appreciate why the arbitration clause is uncertain and vague as contended by the learned counsel for the plaintiff. The learned counsel is unable to point out any uncertainty or vagueness. There is no inconsistency vagueness or uncertainty as suggested by the learned counsel for the plaintiff.

15. After carefully considering the facts of this case and the plaintiff s own averments in paragraphs 9,10,11,12,13,14,15 and 16, I am satisfied that there is sufficient cause why the arbitration agreement should not be filed and prayer for substituting the appointed consultant arbitrator by another arbitrator at the instance of the plaintiff in this application is not permissible under Section 20 of the Arbitration Act and Court has no such power. Therefore, in my view, in the peculiar facts of this which constitute sufficient cause being shown by the defendant why an order under Section 20 should not be made.

16. Thereafter, it is quite clear that the Court has to exercise its discretion in making an order under section 20 taking into consideration all the facts and circumstances of a particular case in its proper perspective and come to a conclusion whether an order under Section 20 should be made in the facts of a particular case. As I have analysed the facts of the case from the conduct of the plaintiff it has been demonstrated clearly it has no intention to refer the disputes to the consultant in the first place and then to go to arbitration. Apart from the said facts the plaintiff himself alleged bias and unsuitability of the consultant /arbitrator appointed under the arbitration clause and therefore, asking for variation of the arbitration agreement under section 20 of the Act and in para. 12 of the plaint makes the said intention of the plaintiff to vary the arbitration agreement by changing the consultant/arbitration unilaterally by the Court in favour of making an order for filing the arbitration agreement as the arbitration agreement as stands now, is not asked for by the plaintiff to be filed but the plaintiff asking for a different arbitration agreement by changing the name of the arbitrator to be filed which the Court has no power to do so.

17. In the result, there will not be an order under section 20 of the Arbitration Act to refer the disputes to the arbitrator and the application is dismissed with no order as costs.

18. This judgment will not prejudice the rights of the plaintiff to proceed according to law, if so, advised.

19. M . Y . H . / S‑265/ K Petition dismissed.