1993 PLP 530 (SCMR)

‑‑‑‑S.20‑‑‑Contract Act (IX of 1872), S.2(h)‑‑‑Contract‑‑‑Dispute arising out of contract to be referred to Chairman Board of Intermediate and Secondary Educati8n‑‑‑Failure of Chairman to give decision within specified time or the extended period or in the event of respondent's dissatisfaction with the decision of Chairman, dispute was to be referred to the sole arbitrator to be appointed by appellant‑‑‑Respondent's application under S.20, Arbitration Act, 1940, before Trial Court seeking direction for the filing of arbitration agreement in Court and for the appointment of sole arbitrator was dismissed by Trial Court on the ground that before moving the same respondent had not approached Chairman of appellant for his decision in accordance .with arbitration clause in the agreement‑ ‑‑High Court in appeal, set aside order of Trial Court and directed it to proceed further in the matter in accordance with law‑‑‑Validity‑‑‑Respondent in his application before Trial Court had listed disagreements between the parties which it wanted to refer to arbitration; which were entirely different disputes than those referred to in the notice sent by respondent to Chairman‑‑‑Respondent had thus, failed to fulfil the requirements of arbitration clause by referring the dispute in the first instance to the Chairman before applying to Court for filing the arbitration agreement‑‑‑High Court was in error in recording a finding to the contrary‑‑ Judgment of High Court was set aside and that of Trial Court (whereby it had dismissed respondent's petition for referring dispute to arbitration after filing of arbitration agreement by appellant and appointment of sole arbitrator by the Court) was restored. Ch. Asghar Ali Bhatti, Senior Advocate Supreme Court instructed by Tanvir Ahmad, Advocate‑on‑Record for Appellant. Fazal‑i‑Miran Chohan, Advocate Supreme Court instructed by MA. Qureshi, Advocate‑on‑Record for Respondent. Date of hearing: 21st October, 1992. SAAD SAOOD JAN, J .‑‑‑This is an appeal by special leave from the order dated 5‑11‑1989 of the Lahore High Court whereby the order of Civil Judge, Multan on an application under section 20, Arbitration Act, was set aside and he was directed to proceed further in the matter in accordance with the law.

2. On the basis of a tender floated by the appellant Board for the construction of the `rear block', the parties entered into contract whereby the respondent undertook to execute the said project. The cost of the project was stated to be Rs.23,91,

906. The work order was issued to the respondent on 22‑5‑1978 and the construction was to be completed within a period of two years. Clause 25‑A of the deed executed by the parties in this regard prescribed the manner of settlement of disputes arising between the parties. According to this clause, in the event of any disagreement arising out of the contract, it was to be referred in the first instance to the Chairman of the appellant‑Board who was required to give his decision within three months or within such further period as might be allowed by the appellant Board; and, in case the Chairman failed to give his decision within the said or the extended period or if the respondent was not satisfied with his decision the dispute was to be referred to the sole Arbitrator to be appointed by the appellant Board.

3. Disputes arose between the parties during the course of the execution of the contract with the result that the project was not completed within the stipulated period. There was some correspondence between them, but it does not appear to have been conducive to the satisfactory settlement of the disputes. However that may, on 6‑11‑1980 the respondent moved an application under section 20, Arbitration Act, before the Civil Judge at Multan seeking a direction for the filing of the arbitration agreement in Court as well as for the appointment of a sole arbitrator,

4. The application was resisted by the appellant‑Board mainly on the ground that before moving the same the respondent had not approached the Chairman for his decision in accordance with the arbitration clause in the agreement. This plea found favour with the trial Court, accordingly, it dismissed the application. From the judgment of the learned trial Court the respondent filed an appeal in the High Court. A learned Single Judge came to the contrary conclusion and held that the respondent had duly camped with the requirement of first referring the dispute to the Chairman before seeking arbitration; accordingly, he accepted the appeal, set aside the order of the learned trial Court and directed it to proceed further in the matter in accordance with the law. From his judgment the appellant has come in appeal to this Court.

5. There is no disagreement between the parties over the interpretation of arbitration clause in the agreement. The clause clearly stated that before referring the dispute for decision to an arbitrator, the contractor, that is, the respondent, was required to take his "disagreement" to the Chairman for decision. The High Court took the view that the respondent had already complied with this precondition and in this context it referred to three documents which have been placed on the record as Exhs.P‑11, P‑12 and P‑

13. The document Exh.P‑11 is clearly irrelevant for it is a letter written by the architect of the appellant Board to the respondent, informing the latter, inter alia, that it would be supervising the construction work. The document P‑12 is an extract from the minutes of the meeting of the appellant‑Board wherein reference to two petitions in Urdu sent by the respondent to the Chairman has been made and certain decisions have been recorded. The petitions submitted by the respondent to the Chairman have not been placed on the record. However that may be, it does not appear from the record that the respondent was dissatisfied with the decisions taken in the meeting. Exh.P‑13 is a notice sent by the respondent through its counsel to the Chairman on 1‑8‑1979. It is to be noticed that in its application under section 20, Arbitration Act, the respondent had listed the disagreements between the parties which it wanted to refer to arbitration. A perusal of the `disagreements' listed will show that these constituted entirely different disputes from those referred to in the minutes or in the notice Exh.P‑

13. It cannot therefore be said that the respondent had fulfilled the requirement of the arbitration clause by referring the disputes in the first instance to the Chairman for decision before applying to the Court for filing of the arbitration agreement. The learned Single Judge was dearly in error in recording a finding to the contrary.

6. For the reasons stated above, we accept this appeal, set aside the judgment of the learned Single Judge and restore that of the trial Court. There will be no order as to costs. AA./B‑207/S Appeal accepted.