The main legal point established in the judgment is that the compensation clause in the agreement was outside the purview of arbitration and could not be referred for arbitration.

JUDGMENT

Tarlok Singh Chauhan, J —The defendants are the appellants, who aggrieved by the judgment and decree dated 04.06.2005 passed by learned Additional District Judge, Fast Track Court, Kangra at Dharamshala in Civil Suit No. 1-K/04/03/99 whereby the suit of the plaintiff/respondent has been decreed, have filed the Regular First Appeal before this Court.

2. Brief facts of the case are that the respondent/plaintiff filed Civil Suit No. 1-K/04/03/99 in the Court of Additional District Judge, Fast Track Court, Kangra at Dharamshala for declaration with consequential relief of permanent injunction against the appellants /defendants on the grounds that the tender for the execution of the construction work of Block-II of the College of Veterinary & Animal Sciences at Holta, CSK HP Krishi Vishwavidyalaya, Palampur was issued in favour of the respondent/plaintiff on 27.8.1997. Agreement in the prescribed standard form (PWD-8) was entered into vide agreement No. 194(D) of 1997-98. The work in question was to be completed in nine months from the 15th day of the issuance of the letter of acceptance. According to the agreement, time was the essence and the work was required to commence by 4th November, 1997 and was to be completed till 3rd August, 1998. As per the contract, the appellants/defendants were to make available the site for work, requisite designs, instructions for execution of the work and requisite quantity of the construction material i.e. the cement, steel etc. It was averred by the respondent/plaintiff that the appellants/ defendants failed to honour the terms and conditions of the agreement, as a result of which the respondent/plaintiff could not execute the work. It was further averred that the appellants/ defendants did not make available the designs, drawings and the material and also the running payment of the work executed due to which the respondent/plaintiff became entitled to be compensated for the increased cost of execution of the work. It was further stipulated in the contract/agreement that in the event of delay in execution of the work by the contractor/plaintiff, the appellants/defendants would be entitled to such amount of compensation not exceeding 10% of the value of the work and the same shall be determined by the Estate Officer concerned. It was the case of the plaintiff/respondent that the appellant/defendant No.2 while exercising the powers of Estate Officer, without affording any opportunity to the respondent/ plaintiff, vide letter dated 23rd January, 1999 imposed an amount of Rs.4, 24, 560/- as compensation for the alleged delay in completion of the work. It was alleged by the plaintiff that he approached the appellant/defendant No.2 for reviewing the order of imposition of compensation and the appellant No.2 vide letter dated 16th April, 1999 rescinded the contract allotted in favour of the respondent/plaintiff and forfeited his deposited security without affording any opportunity to the respondent/plaintiff. The plaintiff challenged the said order being illegal, arbitrary, null and void. Further case of the plaintiff was that the matter is beyond the scope of Arbitration Clause stipulated in the agreement and the same cannot be referred to the Arbitrator and had to be decided by the Court. It was further prayed that a declaratory decree be passed in favour of the plaintiff by declaring the orders dated 23rd January, 1999 and 16th April, 1999 to be null and void being illegal and without jurisdiction.

3. The suit filed by the respondent/plaintiff was contested by the appellants/defendants by raising preliminary objection that in view of Clause-25 of the Agreement, there existed an arbitration clause, hence the Civil Court has no jurisdiction to try the present case. While denying the rest of the averments made in the plaint, it was specifically submitted that the respondent/plaintiff was made available the site, designs/drawings, construction material well in time besides giving him instruction