Wednesday, 1 October 2014

Appointment of Arbitrator Judgment

PLJ 2014 Peshawar 73 (DB)
Present: Abdul Latif Khan and Rooh-ul-Amin Khan, JJ.
versus
C.R. No. 968 of 2012, decided on 16.1.2014.
----Ss. 8 & 20--Civil Procedure Code, (V of 1908), O. VII, R. 11--Appointment of arbitrator regarding dispute arose out of contract agreement for recovery--Application for rejection of plaint was dismissed by trial Court--Principle of natural justice--Non-compliance of legal provisions relating to manner--Validity--Contract agreement containing arbitration clause qua question of limitation, could not be determined summarily and needs deep probe--There exists prima facie a dispute regarding additional claim of huge amount between the parties arising out of construction contract containing arbitration clause which requires pro and contra evidence, as parties are at variance on these issue and could be resolved only by adhering to the normal course of law and not by technical knock out.    [P. 76] A
Mr. Noor Alam Khan, Advocate for Petitioners.
Mr. Ajmal Khan, Advocate for Respondents.
Date of hearing: 16.1.2014.
Judgment
Abdul Latif Khan, J.--Through the instant revision petition, the petitioners have called in question the judgment dated 07.5.2012 passed by the learned Civil Judge-XIV,Peshawar whereby their application under Sections 8 and 20 of the Arbitration Act, 1940 was dismissed.
2.  Learned counsel for the petitioners contended that the impugned order has been passed in slipshod and cursory manner, hence, not sustainable under the law. It was argued that Respondents No. 1 and 4 have, with mutual connivance, exercised the powers in arbitrary manner which escaped the notice of learned trial Court. It was argued that no documents were annexed with the written statement/reply filed by the respondents which were later on produced but subject to objection of petitioners, which amounts to non-compliance of legal provisions relating to the matter which makes the impugned order not sustainable under the law. It was argued that the petitioners have completed the civil work awarded under the contract agreement on 16.12.2008. It was added that claims regarding the monetary compensation of additional costs incurred by the petitioners, denied by the respondents requires for and against evidence but the trial Court has wrongly passed the impugned order without affording opportunity to the parties, makes the impugned order passed in a manner alien to law. It was argued that no order has been passed by the engineer, rather the matter has been referred to a committee, which is against the procedure and mandate given in the contract agreement.
3.  As against that the learned counsel for the respondents supported the impugned order and added that application of the petitioners is bared by law. It was contended that China International Water and Electric Corporation (CWE) as partner submitted his claims before the engineer/consultant which was properly rejected after proper inquiry/evaluation. It was added that Clause 67.1 of the contract agreement provides the settlement of disputes, in connection with disputes between the employer and the contractor shall be referred to Engineer, not later than 84 days after the day on which he received such reference and shall give notice of his decision to the employer and the contractor, shall be final.
4.  We have given our deep thought to the arguments of learned counsel for the parties and perused the record with their able assistance.
5.  The perusal of record reveals that application under Sections 8 and 20 of the Arbitration Act, 1940 was filed by the petitioners for appointment of arbitrator regarding dispute arose out of contract agreement executed between the parties for recovery of Rs.225424459/- alongwith markup in accordance with prevailing bank rates, as provided under clause 67.1 of the contract agreement, for resolution of disputes. At the outset the respondent/defendant moved an application for rejection of application under Order VII, Rule 11 C.P.C which was dismissed by the learned trial Court on 28.10.2011, on the ground that cause of action is a wider term which need pro and contra evidence and defendant could not point out any law which expressly or impliedly barred the petition filed by the petitioners before the trial Court. The impugned order has been passed by the same Court on 07.5.2012 whereby application/petition filed by the petitioners has been dismissed on the score of limitation and due to non-filing of rejoinder by the petitioners and decisions of arbitrators regarding claims pertaining to years 2004 to 2006, having attained finality and have binding effect upon either party, which is not in line with law and runs counter to the facts of the case.
6.  The civil work has been admittedly completed on 16.12.2008 and decisions for the period 2004-2006 made by the arbitrators, in view of the trial Court, having attained finality does not stand to reasons. If at all there was any decision having binding effect upon the parties should have been discussed in the impugned order in detail as required under the law. No word uttered to this effect nor other facts alleged in the application/petition and controverted in written reply, have been met properly and findings given thereto, rather the matter has been disposed of summarily without affording opportunity to the parties to produce evidence and of being unheard which is violently against the principles of natural justice, law besides. The trial Court in the impugned order has not even mentioned the facts nor discussed the same in the light of arbitration  agreement and  passed in slipshod manner, which is alien to law. The contract agreement containing arbitration clause qua question of limitation, could not be determined summarily and needs deep probe. There exists prima facie a dispute regarding additional claim of huge amount between the parties, arising out of construction contract containing arbitration clause which requires pro and contra evidence, as parties are at variance on these issue and could be resolved only by adhering to the normal course of law and not by technical knock out.
7.  For the reasons mentioned above, we allow this petition, set aside the impugned order dated and remand the case to the trial Court for decision afresh after providing to the parties to produce their respective evidence, of course, subject to deposit of Court fee amounting to Rs. 15000/-. No order as to costs.
(R.A.)  Petition allowed

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