P L D 1971 Karachi 292 (PLP)

"Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship, or materials used on the work, or as to any other question, claim, right, matter or thing what soever in any way arising out of, relating to the contract, designs, drawings, specifications, estimates instructions orders, or these conditions, or otherwise concerning the work of the execution, or failure to execute the same whether arising during the pro gress of the work, or after the completion or abandonment thereof shall be referred to a Superintending Engineer whether holding or having held charge of the circle or not, to be nominated by the Chief Engineer for arbitration in the manner provided by law relating to arbitration for the time being in force who after such nomination shall deliver his award which shall be final, conclusive and binding on all parties to this contract." In course of time there arose two sets of disputes between the petitioners and the Provincial P. W. D. It is the second set of disputes between them which is the subject‑matter of the present petition. The first dispute was in relation to a claim for damages by the Provincial P. W. D. against the petitioners. This was referred to the arbitration of an Arbitrator nominated by the Provincial P. W. D. and has since been disposed of. The second set of disputes with which we are now concerned relates to a claim by the petitioners against the Provincial P. W. D. The petitioners applied to the Chief Engineer, Provincial P. W. D. for nomination of an Arbitrator in terms of clause 25 of the said agreement for adjudicating their claim. On this request the Deputy Chief Engineer, Provincial P.W.D. by his order dated 23rd October 1968 nominated Mr. Riaz Ahmad Shaikh, Superintending Engineer, High Way Circle. Karachi to act as an Arbitrator in the case. It would appear that the parties have participated in this reference and the award remains to be announced. Pending announcement of the Award the petitioners have filed the present application questioning the jurisdiction and competence of the aforesaid Arbitrator to act as an Arbitrator in the case. The contention of the petitioners is that under clause 25 of the relevant agreement the right to appoint and nominate an arbitrator vested in the Chief Engineer of the Central P. W. D. and not the Chief Engineer of the Provincial P. W. D. The present arbitrator, it is urged, has been appointed by the Deputy Chief Engineer, Provincial P. W. D. and as such suffers from two fundamental illegalities. In the first place the appointment of the Arbitrator not being by the Chief Engineer of the Central P. W. D. as provided in the agreement, the whole reference is contended to be void. The second contention is that it is in any case only a Chief Engineer who could nominate an Arbitrator and not the Deputy Chief Engineer. The petitioners have attempted to explain their own request to the Provincial P. W. D. to nominate an Arbitrator by saying that this request was made by mistake and that in any case this action on their part will not operate to confer jurisdiction on the Arbitrator, which he did‑not otherwise possess. A significant feature of this case is that the Central P. W. D., who have also been joined as a respondent here, have supported ‑the petitioners' case. The petition was resisted by Mr. Noorul Hassan, the learned counsel for the Provincial P. W. D. His contention in brief was that the petitioners had concurred in executing the contract work (under the first respondent and in fact had worked under them. He further pointed out that prior to the present arbitration the petitioners had themselves invoked the same arbitration clause and had procured the appointment of an Arbitrator by the Provincial P. W. D. in a different dispute concerning a claim by ,the Department for penalty and damages against the petitioners. It is stated that the last mentioned arbitration ended in favour of the petitioners by an award dated 30th April 1967 and the petitioners had enjoyed the benefit of that arbitration. Mr. Noorul Hasan further argued that the aforesaid conduct of the petitioners considered with their conduct in relation to the present arbitration and the correspondence exchanged in connection therewith clearly pointed to a novation of the contract and the petitioners should be deemed to have agreed to a modification of the arbitration clause by substituting the words "West Pakistan Public Works Department" in the place of `Pakistan Public Works Department' wherever appearing in the said contract. Reliance was sought to be placed on the following circumstances in support of the aforesaid contentions. The petitioners had given in writing their unconditional concurrence to work under the Provincial P. W. D. for the purpose of the contract in question. The petitioners had however, not only in the earlier case of arbitration but also in the present reference invoked the arbitration clause by writing themselves to the Chief Engineer, Provincial P. W. D. for appointment of an Arbitrator. The petitioners had also participated in this reference without objection and had in fact themselves applied to this Court for extension of time for giving the award by the present arbitrator. In sum, the argument of the learned counsel for the first defendant was that the substitution of the words `West Pakistan Public Works Department' for the words `Pakistan Public Works Department' wherever appearing in the subject contract was to be inferred from the conduct of the petitioners and from the sense in which the petitioners themselves under stood the contract to be. The arguments of the learned counsel are not without force. It is true that under the Arbitration Act of 1940 an agreement to refer disputes to arbitration is necessarily to be in writing. This is so in view of the definition of the term, `arbitration agreement' contained in section 2(a) of the said Act as meaning `a written agreement to submit present or future difference to arbitration,' whether an arbitrator is named therein or not.' As would clearly appear from a perusal of the foregoing definition, it is only the substantive part of the agreement namely to refer disputes to arbitration, that is required to be in writing. The agreement may be wholly silent on every other matter connected! with arbitration and yet be valid. If the parties choose to incorporate in any such agreement the machinery for appointment of an arbitrator or other provisions intended to govern the arbitration, they do not do so under compulsion of law but of their own volition. These subsidiary provisions will not, to my mind, enjoy the exclusive sanctity afforded by sections 91 and 92 of the Evidence Act to agreements required by law to be in'' writing. Consequently, a party may always plead that although the arbitration agreement provided for a particular machinery for appointment of an Arbitrator yet a different course in respect thereto was by consent followed by them. In all such cases collateral evidence may be looked into for the purpose of seeing whether the parties had agreed to any change in the system of appointment of an arbitrator or umpire. In the instant case I find that the petitioners had themselves on a previous occasion written to the Chief Engineer, Provincial P. W. D. for appointment of an arbitrator in terms of clause 25 of the contract. I would imagine that they did so in the clear understanding that the function of appointing the arbitrator had: in the context of a change in the `employer', passed on to the Chief' Engineer of the Provincial P. W. D. Not only did the petitioners thus accept the Chief Engineer of the Provincial P. W. D. as the appropriate authority to appoint an arbitrator by requiring him to name the arbitrator but also participated in the said arbitration and obtained an award in their favour. Even in the instant case the petitioners once again themselves obtained the appointment of an arbitrator by writing to the Chief Engineer, Provincial P. W. D. The arbitrator was appointed by the Provincial P. W. D. at their request and the petitioners have fully participated in the proceedings before the said arbitrator until their fag end. Their objection to his jurisdiction has been raised at a stage when the evidence before the Arbitrator had concluded and only the award remained to be announced. In these circumstances the petitioners] are deemed to have waived their objection; if any, to the jurisdiction of the arbitrator appointed by the Provincial P. W. D. to deal with the matter and any irregularity in his appointment is cured by the acquiescence of the petitioners and their submission) to his jurisdiction. As observed by a Division Bench of this, Court in the case of Habib & Sons v. Virak & Co. (P L D 1957 Kar. 245). "There is vast difference between want of jurisdiction and irregular exercise or assumption of jurisdiction. Irregular exercise of assumption of jurisdiction may be waived." Dealing further with the concept of waiver, their Lordships observed:‑ "The cases on waiver proceed on the principle that if the party concerned knows of a defect in the appointment of an arbitrator in the proceedings and nevertheless goes on with the reference before the arbitrator he cannot be allowed to raise any objection at the trial as he must be taken to have waived the irregularity." Even more apposite is the observation' contained at page 383 of Russel on Arbitration : "If the parties to the reference either agree before hand to the method of appointment, or afterwards acquiesced in the appointment made, with full knowledge of all the circumstances, they will be precluded from objecting to such appointment as invalidating subsequent proceedings. Attending and taking part in proceedings with full knowledge of relevant facts will amount to such acquiescence.'" The attitude of the Court in such cases should be as held by the Madras High Court in A I R 1941 Mad. 129 : "A Court would be unwilling to assist a party who with full knowledge of the circumstances, allows an arbitration to proceed and takes part in it and then seeks to evade it later on by raising a number of objections which have never occurred to him before." The petitioners however, contended that they were under a mistake as to the true meaning of the agreement and lost no time in coming to the Court as soon as they realised it. I must frankly say that I am not much impressed by this plea. A mistake of the nature pleaded by the petitioners may be relevant in relation to a casual act. It can hardly be urged in relation to a series of deliberated acts spread over a period of time. To me it seems that the petitioners have been impelled to bring this petition having lost confidence in the arbitrator. And I would not be surprised if this were so since I find from one of the letters written by the Arbitrator that he had become indignant on the petitioners' appointment of a counsel without his approval. An arbitrator who expects a party before him to appoint his counsel after obtaining his previous approval can hardly inspire confidence. However, this observation of mine has no bearing on the merits of the case before me. What I wish to emphasise is that the plea of mistake taken by the petitioners is, in the circumstances of the case, far too flippant to carry conviction and the real motivation of this petition is an undisclosed one. There is yet one more aspect of this case to which I will now advert. The petitioners contention, as seen above, is that according to the arbitration clause, the right to name an arbitrator vested in the Chief Engineer of Central P. W. D. and in so far as the arbitrator in the instant case was named by the Provincial P. W. D. his constitution was illegal and he had no jurisdiction to proceed with the reference. I have already observed that the above circumstances may at least be treated as an irregularity of the petitioners' own seeking and did not, in view of the petitioners' acquiescence therein vitiate the jurisdiction of the arbitrator to give C a valid award. But a perusal of the correspondence exchanged between the petitioners and the Provincial P. W. D. would point to the further fact that the parties in the process had modified the original agreement and had agreed to an arrangement whereby the arbitrator was to be named by the Chief Engineer of the Provincial P. W. D. In other words, the conduct of the petitioners in requiring the Chief Engineer of the Provincial P. W. D. to appoint an arbitrator more than once and the action of the Pro vincial P. W. D. in making such appointment and notifying it to the petitioners can be construed clearly as a novation of the original contract. Thus the infirmity of the petitioner's case does not lie wholly in his conduct amounting to waiver and acquiescence but also in the fact that the parties had agreed to an arbitration wherein the right to name the arbitrator had been conceded to the Chief Engineer of the Provincial P. W. D. Learned counsel for the petitioners referred me to a judgment dated 14‑10‑65 delivered by a learned Single Judge of this Court in Judicial Miscellaneous No. 52/65. This was a case whose facts were substantially similar to those of the present one, but in the cited case the Chief Engineer of the Central P. W. D. had appointed the arbitrator although the work had, as in the present case, been transferred to the Provincial P. W. D. This led to the authority of the arbitrator being challenged by the Provincial Government in this Court. The learned Single Judge dismissed the petition by holding that there was nothing to show that clause 25 of the original agreement of arbitration was in any way varied. However, in the case cited the parties had done nothing which could be construed as waiver or acquiescence or as conduct giving rise to a new contract. The present case is therefore vastly distinguishable. Morever, one of the considerations which appears to have influenced the learned Single Judge in dismissing the Government petition was that the award was due to be announced and the stage was too advanced to warrant as interference. Ever so, I find that the judgment cited before does not take note of the Division Bench case of this very Court reported in P L D 1951 Kar.

245. The facts of the case before me however squarely attract the principles enunciated in the said D. B. case and I do not see how, being faced with the said decision. I can pursuade myself to follow the view taken by the learned Single Judge. It was lastly contended by the learned counsel for the petitioners that the appointment of the arbitrator in the reference fn question was not made by the Chief Engineer as provided in the agreement but by a Deputy Chief Engineer. Mr. Noorul Hassan for the first respondent has met this contention by stating that at the relevant time the Deputy Chief Engineer of the West Pakistan P. W. D. was also officiating as the Chief Engineer. This position has not been demonstrated to be incorrect and I ould accept the statement by the learned counsel at the bar. But even supposing this was not so, I need hardly observe that the reasoning given above to sustain the reference will, a 'fortiori, render the present argument also ineffectual. In view of the foregoing discussion I would dismiss this petition with no order as to costs. While however, doing so I must express the hope that the learned arbitrator will resort to a more judicious approach to the case than is in evidence. A. E. Petition dismissed.