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Suit No. 1109 of 1980, decided on 16th March, 1982.

---S.20--Contract Act (1X of 1872), S.28--Petitioner invoking arbitration clause failed to refer matter within period stipulated in contract--Plea that restriction imposed by agreement curtailing period of limitation provided by law was void, repelled--Where agreement spells out that on non-compliance of any condition, right of plaintiff to sue shall extinguish or discharge defendant from liability in respect of claim, S. 28 of Contract Act will not apply--Agreement to absolve a party from all liability against other if action was not taken within stipulated period, not void.

P L D 1970 S C 373; A I R 1951 Bom. 347 and A I R 1960 Pb. 236 rel.

--S.20--Petitioner failing to invoke arbitration clause within period stipulated in contract and also failed to comply with pre-conditions- Petitioner was debarred from invoking arbitration clause.

Zia Parvez for Applicant.

Abdul Sattar Shaikh, A.A. -G. for Opponents.

Date of hearing: 18th February, 1982.

This is a petition under section 20 of the Arbitration Act, praying that direction be issued to the opponent to file the agreement. The applicant had entered into contract with the opponent for construction of Deputy Secretary's Flats and 6 Garages and servant quarters for Block No.4, Bath Island, Karachi. On the photo copy filed by the applicant the date of the agreement does .not seem to be clear but the tender was opened on 28-12-1976 at noon and the applicant's allegation that the agreement was made in 1977 has not been denied. It has been alleged that as the dispute arose between the parties the applicants by their letter dated 6-1-1979 addressed to the Secretary, Works Division, Highway Government 6f Sind, Karachi copy of which was endorsed to Chief Engineer, Building Department, Hyderabad the applicants requested for settlement of dispute. A copy of this letter has been filed with the petition and marked "A" According to the applicants the Claim was rejected by opponent No.2 by a letter dated 8-9-1979 (Annexure B to the petition). Thereafter as the matter was not settled the applicants by their letter dated 27-11-1979 invoked the arbitration clause. Again the same request was repeated by letter dated 14-1-1980.

The opponents have filed counter affidavit and pleaded that no dispute has arisen within the content of the agreement. It has further been stated that before invoking arbitration the applicants have to first make a reference to the Superintending Engineer in respect of the dispute. As this condition has not been fulfilled the applicants can not seek arbitration. It was denied that the letter dated 6-1-1979 can be construed as reference to Superintending Engineer. It has been pleaded that as the applicants have neither served any notice within 20 days of the receipt of the alleged decision of Superintending Engineer nor reference has been made within 3 months after the completion of the work they are not entitled to invoke the arbitration clause.

The applicants filed rejoinder and produced for the first time a photo copy of a letter alleged to be dated 6-1-1979 addressed to the Secretary, Works & Highway, Government of Sind, copy of which was endorsed to the Chief Engineer, Superintending Engineer and Executive Engineer. There is a note also on this letter which is annexure A to the rejoinder. This note has been initialled by someone which it is stated was made by A.C. and contains a direction to inform Superin tending Engineer. Thereafter it seems that the Chief Engineer wrote a letter dated 8-9-1979 to the Chief Secretary, Government of Sind stating that the applicants were entitled to claim enchanced rate as provided in clause 10 of General Rules and Directions. The contract provides the following arbitration clause:-

In the event of any disagreement arising out of the contract the matter shall first be referred to the S.E. for decision who shall after making such enquiries as he may deem fit give his decision in writing not later than three months after the reference is made to him. This period for decision of the case by the S.E. may however, be extended by the C.E. under the special conditions according to the circumstances justifications available in each case. The contractor shall forthwith give effect to the decision of the S.E. and shall proceed with the work with due diligence whether arbitration is intended or not.

If the contractor be dissatisfied with the decision of the S.E. or if his decision is not forthcoming within the stipulated or extended period/periods and desires arbitration under the arbitration clause as hereinafter provided he shall give a notice in writing of such intention within a period of 20 days of the receipt of the S.E's decision, or in case no decision. The said notice shall contain the cause of action, material facts of the case and relief sought, failing which the decision of the S.E. shall become final, conclusive and binding and the contractor shall be deemed to have forfeited and departed from the claim in excess of that allowed by the S.E. No subsequent inflation/ increase in the amount of claims once preferred in the said notice shall be allowed nor shall any other claim in respect of the same work be entertained from the contractor at any inter stage. A reference for Arbitration shall be made by the contractor in writing not later than three months after the completion of the work. Failure to make such a reference within this period shall be deemed that the contractor has waived all claims in respect of any dispute.--

(a) disputes which may be referred for arbitration shall be limited to: -

(i) any question, difference or objection whatsoever which shall arise in any way connected with or arising out of the contract or/and

(ii) the meaning of the operation of any part of the contract or/and

(iii) the rights, duties or liabilities of either party or/and

(iv) whether the contract should be terminated or has been rightly terminated and as regards the rights and obligations of the parties as the result of such termination:

Provided those matters for which provision has been made in the contract for final and binding decision by the S.E. or the XEN shall be excluded from Arbitration.

(b) The venue of Arbitration shall be in West Pakistan.

(c) In the event of any dispute arising in accordance with the limitations provided in sub-clause (a) of this clause, the same shall be referred to the decision of a sole Arbitrator to be appointed by the C.E. Incharge of the Works from among the officers of the deptt; not below the rank of S.E. and other than the S.E. Incharge of the deptt. not below the rank of S.E. and other than the S.E. incharge of the contract work. In case of claim referred for an amount upto Rs.1.0 Ise only the decision of the sole Arbitrator in such case shall be final and binding on the parties concerned. In case the amount of the claim referred is over Rs.1.0 lac the dispute shall be referred to the award of the two Arbitrators to be appointed from the S.E. of the deptt; other than the S.E. incharge of the work, one to be nominated by the C.E. of the region concerned and the other by the contractor, in the case of the said two arbitrators not agreeing the case shall be referred to the award of an umpire who shall be an officer of the department not below the rank of a C.E. to be appointed by the Govt. in the Administrative Deptt. The Decision of the two Arbitrators/Umpires as the case may be shall be final and binding on the parties concerned. Where the matter involved claims forth payment or recovery or reduction of money only the amount if any awarded in arbitration shall be recoverable in respect of the matter so referred.

Mr. Abdul Sattar Shaikh", the Additional Advocate-General has contended that the precondition lard down in the agreement for referring the dispute to arbitration has not been complied with and therefore the applicants are not entitled to seek arbitration. The second contention of the learned A.A.-G. is that even if there was a decision by the Superintending Engineer as alleged by the applicants they have failed to serve a notice within a period of 20 days of the receipt of the S.E's decision and therefore they are not entitled to invoke the arbitration clause. The third contention is that the applicants have failed to make reference within 3 months of the completion of the work.

According to the applicants' own admission the work was completed in June, 1979. The plaintiff /applicant addressed a letter to the secretary, Works Highway on 6-1-1979 which is Annexure A to the application but it can hardly be termed as a letter seeking reference to Superintending Engineer. The applicants have relied on a photo copy of the letter dated 6-1-1979 addressed to the Secretary Works. There are clear alterations in the date which shows that in the photo copy the month of February has been amended to January. The learned A.A.-G. has disputed the genuineness and authenticity of this letter and the endorsement thereon. During proceedings, he requested for time to ascertain the correct facts and denied that the endorsement was made by any of the officers of the Deptt. This letter cannot be pressed in service firstly as it is merely a photo copy and there are clear interlineations and cuttings in the date. Secondly it was not filed along with the petition and was produced with the rejoinder merely to meet the objections that were raised by the opponents. In cases which are to be decided on affidavit it is the duty of the party making a claim to produce all the documents upon which the claim is based alongwith the petition so that the other side may have the opportunity to file its reply. A party, unless there are circumstances to justify it, should avoid to file such documents with rejoinder which should have been filed with the petition and form basis of the claim. The letter Annexure A to the rejoinder is a document of this nature. The changes in the dates do not make it worthy of credit. Even the note put on it has been denied. In the circumstances although a copy is endorsed to Superintending Engineer it is difficult to rely upon it and it cannot be treated as a reference' to Superintending Engineer.

The learned counsel for the applicants has referred to Annexure B to the petition which is a letter, dated 8-9-1979 from the Chief Engineer to the Secretary to Government of Sind, Communication and Works Department whereby on the basis of the report of the Superin tending Engineer he has repudiated the petitioners' claim. I am afraid this cannot be termed as a final decision of the Superintending Engineer as contended by the petitioners' counsel.

The objection of Mr. Abdul Sattar Shaikh, is shat even if it was a decision of the Superintending Engineer the petitioners should have served a notice in writing to refer the matter to arbitration within a period of 20 days from the receipt of this letter. According to him as the petitioners have failed to comply with this pre-condition they cannot seek arbitration. From the respective contentions the fact emerges is that as alleged by the petitioners even if the letter dated 6-1-1979 (6-2-1979) was served on the S.E. in February, 1979 for his opinion the petitioners chose not to refer the matter to the Arbitration till 27th November, 1979. It may also be noted that the petitioners completed work in June 1979 but reference was not made within 3 months from the date of completion.

Mr. Zia Parvaiz, the learned counsel for the petitioners has contended that the restriction imposed by this agreement curtailed the period of limitation as provided by law and therefore the clause was hit by section 28 of the Contract Act. The contention of the learned counsel for the petitioners does not seem to be correct. Section 28 contemplates suspension permanently of the usual remedies for the enforcement of legal right. While considering the provision of section 28 in M. A. Choudhry's case P L D 1970 S C 373 it was observed that "the language of section 28 of the Contract Act is clear by itself and can only mean that a contract which absolutely restricts any party to it from enforcing his rights under or in respect of such a contract by the usual legal proceedings in ordinary tribunals of the country, will to that extent be void unless protected by the exception to the said section". If by an agreement, tiny remedy provided by law is absolutely barred or period of limitation is curtailed then it will be hit by section 28 of Contract Act. Where the agreement spells out that on non-compliance of arty condition, right of the plaintiff to sue shall extinguish or discharge the defendant from liability in respect of the claim, section A 28 will not apply. An agreement to absolve a party from all liability against the other if an action is riot taken within the stipulated period, is riot void. Reference can be made to A I R 1951 Bom. 347; A I R 1960 Panj. 236.

From the facts stated it is clear that the applicants have failed to invoke the arbitration clause within three months from the date of completion of the contract therefore they are debarred from invoking it. This petition is dismissed.

M.I.

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