STATE OF PUNJAB Vs. OM PARKASH BALDEV KRISHAN

JUDGEMENT

(1.) -This appeal involves a short question and the field is more or less covered by the constitutional provisions as well as the authorities of this Court. The Executive Engineer (Construction Division No. 1) PWD B and R Branch, Patiala, invited tenders for the work called "Construction of high level bridge over Tangri Nadi in Mile No. 19/5 of Patiala-Pehewa Road". The respondent in response to the said invitation submitted the tender for the aforesaid work, which was opened on 7th October, 1975. The Executive Engineer informed the respondent on that date, who happened to be the lowest tenderer and before the tender could be finally considered, that the drawings in triplicate be submitted to the Chief Engineer PWD B and R. Suptd. Engineer, PWD B and R and Executive Engineer Construction Division No. 1 PWD B and R Branch, Patiala. The tender, however, was recalled in February, 1976 by the Executive Engineer Construction Division No. 1. The respondent again submitted tender on 31st August, 1976. The Executive Engineer informed the respondent telegraphically that the tender submitted by him had been accepted and asked the respondent to take up the work in hand. This was followed by the letter dated 31st August, 1976 from the Executive Engineer. It was contended that the telegram as well as the letter mentioned hereinbefore revealed that the tender of the respondent was not accepted by the Governor of Punjab, as it was mandatory under the Constitution in order to amount to a valid acceptance and to create a binding contract between the parties. The respondent, however, withdrew the offer on 6th November, 1976. On 22nd November, 1976 the respondent-contractor in its letter made it clear that no agreement had been signed between the parties. In reply to the letter dated 1st December, 1976 from the Executive Engineer, the respondent vide letter dated 6th December, 1976 reiterated and repeated that legal infirmity could not be met by the considerations as made by the appellant. But on 15th April, 1980, the Executive Engineer intimated the respondent that as he had failed to start the work, and he became liable for action under clause 2 of the agreement (Sic). The letter further stated that the Engineer-in-charge on behalf of the Governor of Punjab had levied a penalty of Rs. 2,55,000/-. The above position, however, was not accepted by the respondent and he advised the appellant to settle the matter in Court. The Suptd. Engineer PWD B and R Patiala, then forwarded the claim of Rs. 4,56,040/- for arbitration and asked the firm to submit the reply in duplicate within 30 days from the issue of the letter. Reply was sent by the respondent to the effect stating that no valid contract in respect of the construction of high level bridge over river in Mile No. 19/5 of Patiala-Pehewa Road, ever came into existence between the Parties. The Arbitrator again on 2nd July, 1983 issued a letter after a lapse of one year and the same was replied more or less in the same manner. The respondent filed an application under section 33 of the Arbitration Act, 1940 (hereinafter called 'the Act'). The learned Sub-Judge 1st Class, Patiala, on 4th April, 1986 dismissed the application of the respondent with costs. It was contended before him that there were no valid acceptance of the offer made by the respondent herein and, therefore, there was no valid contract. It was contended that no agreement between the parties as required by law, had. been brought into existence. Therefore, there was no question of breach of agreement. The learned Sub-Judge commented that no oral evidence was adduced on behalf of the respondent. The learned Sub Judge came to the conclusion that there was a valid offer. He observed that the only point that required consideration was whether the acceptance regarding the allotment of work of construction of high level bridge over river Tangri on Patiala Pehewa Road was issued on behalf of the Governor of Punjab or not. The learned Judge came to the conclusion after discussing various evidence that the Executive Engineer was authorised to accept tender. He referred to various clauses. The learned Judge noted that it was clearly laid down in the tender itself that the tender together with acceptance thereof would constitute a valid and binding contract between the parties. The relevant condition of the tender, that is, condition No. 4.6 read as follows:

(2.) The learned Sub-Judge recorded that the above tender form was duly signed by the respondent and the appellant. On an analysis of the evidence on records, the learned Judge came to the conclusion that there was a valid contract and accordingly the application under Section 33 of the Act was dismissed with costs. There was a revision to the High Court. The High Court after discussing the relevant evidence came to the conclusion that there was no valid contract. The learned Judge of the High Court noted that in the acceptance letter Ext.P. 7 and Ext.RW1/14, the Executive Engineer had required the respondent at the end to sign the agreement which was under preparation within ten days. No such agreement was ever signed. That position is undisputed. Therefore, the High Court was of the view that no contract in conformity with Article 299(1) of the Constitution, which was a constitutional requirement in this case, has not been entered into and came to the conclusion that there was no contract between the parties. In that view of the matter the revision was allowed and the order passed by the trial Judge was set aside. This appeal arises from the said decision.

(3.) Shri C. M. Nayar advocate for the appellant contended that there was a valid and subsisting contract. He strenuously argued that there was authority for the Executive Engineer to enter into the contract on behalf of the Governor. He drew our attention to clause 2.76 of the Public Works Department Code which provided as follows: