1984 PLP 155 (CLC)

SALEEM AKHTAR, J.‑This appeal has been filed against order passed by the learned Single Judge, sitting on the Original Side dismissing the appellants' application under sections 31 and 33 of the Arbitration Act. The appellants had awarded a contract to the respondent 1 for construc tion work. The agreement between the parties contained an Arbitration clause which is reproduced hereunder:‑

"All disputes and differences of any kind whatsoever arising out of or in connection with the Contract of the carrying out of the work (whether during the progress of the work or after their completion and whether before or after the determination, abandonment or breach of the Contract) shall be referred to and settled by the Architects who shall state their decision in writing. Such decision may be in the form of a final certificate or otherwise. The decision of the Architect with respect of any of the accepted matters shall be final and without appeal. But if either the Employer or the Con tractor be dissatisfied .with the decision of the Architect on any matter, question or dispute of any kind (except any of the accepted matters) or as to the withholding by the Architect of any certificate to which the Contractor may claim to be entitled, then and in any such case either party (the Employer or the Contractor) may within twenty‑eight days after receiving notice of such decision give a written notice to the either party through the Architect requiring that such matters in dispute be arbitrated upon. Such written notice shall specify the matters which are in dispute and only such dispute or difference of which such written notice has been given shall be referred to the arbitration and final decision of a single Arbitrator. The Arbitrator will be a qualified and competent Architect or Engineer to be agreed upon and appointed by both the parties or in case of their disagreement as to the appointment of a "single Arbitrator" there will be two Arbitrators each being a qualified and competent Architect or Engineer one to be appointed by each party. Which Arbitrators shall before proceeding to the reference appoint an Umpire. The Arbitrator, the Arbitrators or the Umpire shall have power to scrutinize, review, and revise any certificate, opinion, requisition or notice, save in regard to the accepted matter referred to in the proceeding clause 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 an incidental to the reference and award respectively shall be at the discretion of the Arbitrator, or Arbitrators or the Umpire who may determine the amount thereof, or direct the same to be taxed as between attorneys and‑client or as between party and party, 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 the Arbitra tion within the meaning of the Arbitration Act, 1940 or any statutory modification thereof. The award of the arbitrator or Arbitrators or the Umpire shall be final and binding on the parties. Such reference except as to the withholding by the Architect of any certifications under clause 4.43 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 the Contractor. Provided always that the Employer shall not withhold the payment of an Interim Certificate, nor the Contractor except with the consent in writing of the Architect, in any way delay the carrying out of the works by reason of any such matter, question or diligence and shall, until the decision of the arbitrator or arbitrators or the Umpire be given abide by the decision of the Architect and award of the Arbitrator or Arbitrators." The respondent No. 1 completed the work in December, 1972 and retention money was paid by the appellants on 21‑10‑1974. As certain disputes arose between the parties, the respondents No. 1 on 14‑3‑1975 addressed a letter to the Architect making a claim for Rs. 36,66,286 from the appellants. The architect wrote several letters to the appellants calling upon them to settle the matter with the respondent No.

1. On 11‑11‑1979 the appellants referring to a meeting held on 17‑9‑1979 asked for certain information s from the respondent No. 1 which was furnished by them. On 6‑7‑1980, the Architect again asked the appellants to settle the matter and complained that the appellants were .avoiding to settle the genuine claim of the respondent No. 1 and expressed the view that he would recommend to the respondent No. 1 to proceed legally into the matter. On receipt of a copy of this letter the respondent No. 1 by letter, dated 31‑7‑1.980 appointed Mr. Salim Thariani as a arbitrator and called upon the appellants to appoint their arbitrator. The appellants denied the claim stating that there was no dispute between the parties and claim was barred by time. Without prejudice they appointed M/s, Soorti and Partners as arbitrator. The respondent No. 1 tiled their claim before the arbitrators for Rs. 1.,12,56,

223. The appellants filed a reply challenging the jurisdic tion of the arbitrators aged maintainability of the claim. It was further pleaded that the claim was barred by time. The appellants filed an appli cation praying that three preliminary issues relating to the maintainability of the claim and limitation should be decided first. The arbitrators after hearing the parties by their order, dated 15‑6‑1961 held that those issues could not be decided without recording the evidence of the parties and directed them to produce evidence after which the entire case including those issues shall be decided. The appellants immediately filed an application under sections 31 and 33 of the Arbitration Act praying that it be held that no valid or subsisting arbitration agreement exists, the arbitration agreement is liable to be declared/superseded, the arbitrators have no jurisdiction to proceed and reference made to the arbitrators is barred by time. This application was dismissed by the impugned order. The arbitration clause has already been reproduced above which pro vides that the dispute between the parties are first to be referred to the Architect whose decision can be in the form of final certificate or other wise but if either of the parties are dissatisfied with the decision of the Architect or the withholding by Architect of any certificate then either party may within 28 days after receiving such decision can refer the dispute for adjudication by the arbitrators. From the fact it is clear that the work was completed in December, 1972, the retention money was paid on 21‑10‑1974 and on 14‑3‑1975 the respondent No. I made a claim against the appellants which remained with the Architect pending who asked the appellants to settle it and as no positive response was received, on 4‑7‑1980 he finally stated that he was inclined to recommend to the contractor to proceed legally in the matter. Consequently on 31‑7‑1980 the respondent No. 1 appointed an arbitrator. In view of these facts the dispute between the parties is whether the claim of the respondent No. 1 is barred by time and can it be. adjudicated by the arbitrators. Mr. Zaidi, the learned counsel for the appellants has referred to the various letters written by the Architect and stated that all his letters upto the last letter 6‑7‑1980 contain the same warnings and, therefore, the letters written in 1977 should be treated as letters Withholding to give certificate or refusal to give a decision within a reasonable time and, therefore, the claim is barred by time. The letters written by the Architect were only recommendations for settlement of claim which according to him was genuine. However, in the last letter dated 6‑7‑1980 the Architect clearly stated that he was inclined to recommend to the respondent No. 1 to pro ceed legally in the matter. This clearly, suggested that he did not want to do anything further and, therefore, the respondent No. 1 took the next step as provided by the arbitration clause. Be that as it may, the arbitrator are to decide all questions of law and fact which include determination of the point of limitation. The determination of question of limitation entirely depends upon assessment of evidence, particularly in the present case the volume of letters and documents produced at this stage suggested that it will require sufficient evidence for determining this issue as well as the question of maintainability of the claim. We have purposely avoided on express our opinion on the question of limitation as it may effect the arbitration proceedings but it is obvious that on the basis of the record produced by the appellants it is not possible to agree with the contention of the learned counsel for the appellants. It has been contended by the learned counsel for appellants that the cause of action for the claim arose in the year 1971 in any case in 1977 and, therefore, by the time arbitrators were appointed the claim had become barred by time. In this regard the conditional arbitration clause, the correspondence and evidence on this point will have to be examined. It is not a. case where one can say the claim to be patently barred by time. There is a genuine controversy and in fact a real dispute has been raised. The point of limitation is a mixed question of law and fact which has to be decided by the Arbitrators. The learned counsel has referred to Messrs Haji Muhammad Sharif Atta Muhammad v. Mithabhi Nathoo (PLD1960Kar.40) where it was held that where claim was clearly barred by time there was no real dispute existing between the parties and the arbitrators have no jurisdiction. In the present case the appellants have raised a dispute that the claim is barred by time which can be determined on consideration of documentary and oral evidence of the parties. In Messrs Muhammad Sharif Atta Muhammad's case principle governing such situation as in the present case has been laid down in the following manner :‑-- "The correct angle of view from which the situation should be seen, when a claim that is submitted for decision by arbitration is disputed as barred by time is to see whether the dispute is real or "a mere pretence". If it is real, then it can be a proper subject of arbitration and leave under section 5 of the Arbitration Act 1940, to revoke the authority of an appointed arbitrator cannot be granted. Similarly no relief can be granted under section 33 of the Arbitra tion Act when the dispute is genuine, because neither the existence nor the validity of the arbitration agreement, and award, nor their effect can be questionable merely on the ground that a claim is disputed as barred by time. It is only where the dispute is a mere pretence and it appears that none really exists that the question of "effect" of arbitration agreement under section 33 would arise." This itself is a complete answer to the contention of the appellants. The learned counsel for the appellant next contended that the claim made by the respondent No. 1 includes such claims which cannot be made subject‑matter of the arbitration clause. It is not denied that part of the claim is covered by the arbitration clause but he contended that the same is barred by time. Such disputed question can be decided by the arbitra tors and it is within their limit to, decide it. The appeal is, therefore, dis missed in limine. S. Q. Appeal dismissed.