Law:

Section:

(a) Contract Act (IX of 1872)--S. 74---Compensation for breach of contract---Reasonable---Connotation---Word "reasonable" specifically used in S.74 of the Contract Act, 1872 was of great importance because a reasonable amount according to one party may not be reasonable for the other---What was reasonable and was not could not be decided by the parties themselves, but could be decided only by an independent and impartial person/forum in fair and proper manner; as a party could not be a judge of its own case. (b) Arbitration Act (X of 1940)--- ----S. 20---Application to file arbitration agreement in court---Scope---Reference of dispute to arbitration---Conditions---Existing dispute was an essential condition for reference to an arbitration---Assertion of a claim by one party and repudiation thereof by the other party would constitute a dispute to warrant recourse to S.20 of the Arbitration Act, 1940---Before referring a matter to arbitration, three conditions were necessary, namely, existence of an arbitration agreement; existence of a dispute under the agreement, and proceedings under Chapter II of the Arbitration Act, 1940 not having been commenced. Pakistan through Ministry of Finance, Economic Affairs and another v. Fecto Belarus Tractors Ltd. PLD 2002 SC 208; Crescent Industrial Chemical Ltd. v. Federation of Pakistan and 3 others PLD 2004 Quetta 92 and Messrs Friends Trading Co. v. Messrs Muhammad Usman-Moula Bux PLD 1954 Sindh 56 ref. Ghulam Ishaq Khan Institute of Engineering, Science and Technology and another v. Messrs Hassan Construction Co. (Pvt.) Ltd. Engineer and Consultants 1998 CLC 485 and Muhammad Umar v. Yar Muhammad through Legal Heirs and others 2009 CLC 348 rel. ORDER NADEEM AKHTAR, J.---This is an application under section 20 of the Arbitration Act, 1940, whereby the applicant/plaintiff has prayed that the dispute between the plaintiff and the defendant arising out of the contract dated 5-5-2007 (the Contract) be referred for resolution to a sole arbitrator in terms of Clause 16 of the Contract. 2. The defendant has filed detailed objections in opposition to the application. Before discussing the submissions made by the learned counsel for…

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