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Judgment
J.V. Gupta, J.—The Appellant Punjab Pre-stressed concrete works i.e. the contractor entered into an agreement under which the Appellant-Company was employed to execute certain works for M/s. Punjab Comcast Steels Ltd. In accordance with the terms of the agreement, the contractors executed certain works. Lateron, certain dispute has arisen between the parties and in view of Clause 25(1) of the agreement, the matter was referred to the Arbitrator as provided therein. Since the said Arbitrator could not decide the dispute between the parties, another reference was made to the President, for the time being, of the Institute of Engineers (India) as provided in Clause 5(1) and consequently, the matter was again referred to the Arbitrator. The Respondent M/s. Punjab Concast Steels Ltd., challenged the said reference u/s 33 of the Arbitration Act for declaration that there exists no arbitration agreement and there is no valid reference to Respondent No. 2, i.e. Shri Jiwan Dutt, Retired Engineer. It was alleged therein that since the work had been completed in October, 1973, no reference could be made to the Arbitrator after completion of work and, therefore, the appointment of the Arbitrator was unwarranted. This applications was contested on behalf of the Appellant-Company. Learned Senior Sub Judge took the view that in the present case the work had already been completed and so the arbitration clause ceased to be operative between the parties and resort to it could not be made by the contractors. As a result of these finding, it was declared that there is no subsisting arbitration agreement between the parties and thus, there is no valid reference of the arbitration. Dissatisfied with the same, the contractors have filed this appeal in this Court.
The main controversy between the parties centers round the interpretation of Clause 25(1) of the agreement which is reproduced as under:
If any dispute of any kind shall arise between the employer and the Contractor during the ''Execution'' of the Contract, it shall be referred to and settled by the Engineer who shall state his decision in writing and will be binding on both the employer and Contractor until the completion of the work and shall forthwith be given effect to by the Contractor who shall proceed with the work with all due diligence.
If the Engineer shall fail to give his decision or if the Employer or the Contractor be dissatisfied with any such decision of the Engineer, then and in any such case either the Employer or the contractor may within three calender months from the date of the Engineer''s decision or six calender months from the date of dispute in case of the Engineer failing to give a decision within three months after being requested to do so, require that the matter shall be referred to an arbitrator to be agreed upon between the parties or failing agreement to be nominated on application of either party by the President of the time being, of the Institution of Engineers (India) and any such reference shall be deemed to be a submission to arbitration within the meaning of the Indian Arbitration Act, 1940, or any Statutory re-enactment or amendment thereof for the time being in force.
Such Arbitrator shall have full power to open up and review the matter including receiving necessary evidence and or witness from the Employer, Contractor and Engineer as required. The award of the arbitrator shall be final and binding on the parties.
The learned Counsel for the Appellant contended that the view taken by the learned Senior Sub Judge that the reference could only be made during the pendency of the work and not after its completion, was wholly wrong, illegal and misconceived. According to the learned Counsel, if dispute of any kind arises during the execution of the contract, it shall be referred to and settled by the Arbitrator. The Clause 25(1) does not mean that reference could only be made during the pendency of the contract and not after its completion in support of his contention, he referred to Chatturbhuj Vithaldas Jasani Vs. Moreshwar Parashram and Others, and Ram Lal Jagan Nath Vs. Punjab State and Another,
After hearing the learned Counsel for the parties. I find no force in the contention raised on behalf of the Appellant. There is no warrant for the proposition that under Clause 25(1), the reference could only be made during the pendency of the work and not after its completion. As a matter of fact, if the dispute arises at the time of the final payment, though the work has to been completed, reference could only be made at that time and not earlier. It was observed by the Supreme: Court in Chatturbhuj Vithaldas Jasani''s case (supra) that there is always a possibility of the liability being disputed before actual payment is made and the vendor may have to bring an action to establish his claim to payment. There, the Supreme Court interpreted a contract for supply of goods and it was held that it does not terminate when goods are supplied and rather it continues being till it is fully discharged by performance on both sides. In the Full Bench judgment referred to above, it was observed that there is nothing peruliar or extraordinary about arbitration agreements and the same rules of construction and interpretation apply to such agreements as apply to agreements generally. The Court has to seek to give effect to the intention of the parties as evidenced by the agreement itself, without being over-technical in its interpretation. Such intention must be gathered from the whole context even though the immediate object of the enquiry be the meaning of an isolated clause, in view of these judgments, no meaningful arguments could be raised on behalf of the Respondents to sustain the judgment of the learned Senior Sub Judge.
Faced with this situation, learned Counsel for the Respondents submitted that the application filed on 20.10.1976 itself was barred by time, and, therefore, no valid reference could be made on that application. I am afraid, no such objection was taken before the learned trial court nor there is any discussion on this point, in the order under appeal. Moreover, this was not the application made for the first time. The reference had already been made under Clause 25 to the Engineer concerned, but when he failed to decide the matter, the matter was again sought to be referred to the President as provided under the said clause. Under these circumstances, the application dated 20.10.1976 was not first application made for claiming the reference. It is why that no such contention was raised before the learned Senior Sub Judge on the question of limitation and it does not find any discussion in the order under appeal.
As a result of the above discussion, this appeal succeeds. The impugned order is set aside and the application u/s 33 of the Arbitration Act is dismissed with costs. Costs assessed Rs. 1000/-.
The parties through their counsel have been directed to appear before the Arbitrator on 15th September, 1986. The Arbitrator is expected to dispose of the matter within four months thereof.