UNION OF INDIA Vs. SARJU PRASAD JAGDISH PRASAD

JUDGEMENT

(1.) THE principal point for decision in this matter is the construction to be placed on Section 33 of the Arbitration Act, 1940. This question arises on account of an application moved by the Union of India under Section 33 of the Arbitration Act, 1940. Briefly stated, the facts leading to the moving of this application are as follows.

(2.) ON 13th April, 1964, the Assistant Director of Purchase, Ministry of Food and Agriculture (Department of Food), Army Purchase Organisation, Government of India, New Delhi, for and on behalf of the President of India, issued a tender enquiry for supply of several kinds of 'Dais', including 444 metric tonnes 'Dal Channa'. The respondent herein first submitted a tender for supply of 244 metric tonnes of 'Dal Channa' but later on submitted another tender for supply of an additional 200 metric tonnes of Dal Channa. The tenders suitted by the respondent were accepted and first a telegram of advance acceptance was issued on behalf of the petitioner herein on 29th April, 1964 and thereafter a formal acceptance of tender was also issued. It is alleged by the petitioner that the respondent did not supply the contracted quantity which resulted in the petitioner having to purchase 444 metric tonnes of Dal Channa from other sources involving it in a loss of Rs. 1,48,818.00. The petitioner claimed this amount from the respondent but it refused to pay the same. In fact it is alleged that the respondent by its letter dated 6th October, 1964 called upon the Secretary to the Government of India, Ministry of Food and Agriculture (Department of Food) to refer the dispite regarding the Government's right to recover risk purchase loss to arbitration. In consequence of this request the Secretary to the Government of India, Ministry of Food and Agriculture referred the dispute to the sole arbitration of one Shri V. Ramaswamy lyer. Additional Legal Adviser, (Arbitration), Ministry of Law, Government of India. Before the arbitrator the petitioner herein filed a statement of claim dated 5th March, 1965 and the respondent filed its written statement on 12th April, 1965. In the written statement filed by the respondent, inter aha, a plea was raised that there was no valid and binding contract in existence between the parties and so, the reference could not proceed. It may be mentioned here that the original acceptance of tender issued by the petitioner contained an arbitration clause. The sole arbitrator then directed the respondent herein to get the non-existence of the arbitration agreement declared from a Court. The respondent, however, took no steps in the matter with the result that a stalemate was caused. The petitioner. therefore, itself moved the present petition to get a declaration about the existence of a valid and binding contract including an agreement to refer the disputes to arbitration. It will be advantageous here to quote the reliefs that have been sought by the petitioner. These are contained in para 12 of the petition and read as under :