GHOSH SINGH PARTNERS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The only question involved in this appeal is whether between the appellant company and the Union of India, there is a binding arbitration agreement. Sarkar, J., has held that there is none. He was invited by the appellant to make appropriate orders with regard to an agreement set up by it, but he declined to do so in the view that the agreement, being contained in a contract which did not accord with Section 175(3) of the Government of India Act 1935, could not bind the Union of India. The appellant questions that finding and contends that, although the contract containing the agreement was not executed in accordance with the provisions of Section 175(3), those provisions are only directory and the contract accordingly was not void.

(2.) Since the only question canvassed before us was a pure question of law, it is not necessary to state the facts in detail. It will be sufficient to say that the appellant company entered into a contract with the General Manager of the East Indian Railway, Calcutta, and the Engineer-in-Chief for the Loco Building Works Project, Mihijam, for the supply of two crores of bricks during the year 1948-49. The appellant's case is that under the terms of the contract, the Engineer-in-Chief was to arrange for permits and priorities for the supply of coal to the appellant, but he failed to do so and, as a consequence thereof, an enormous quantity of moulded bricks were spoiled by the rains and the appellant suffered heavy loss. Various claims appear to have been submitted to the General Manager and the Engineer-in-Chief by the appellant company, but they were all rejected. In the end, the appellant asked the Engineer-in-chief to refer the dispute to arbitration in accordance with the agreement contained in the contract, but that request also was turned down on the ground that the agreement did not cover the disputes set up by the appellant. Thereafter, the appellant made the application out of which this appeal arises. It was an application under Section 20 of the Arbitration Act and by it, it was prayed that this Court might direct the agreement to be filed and might also make an order, referring the disputes to arbitration in accordance with the terms of the agreement.

(3.) According to the appellant company, the contract was evidenced by a tender and acceptance thereof in writing, dated the 4th of August, 1948 and also by a Work Order of a later date. Sarkar, J., did not find any arbitration agreement in the tender or its acceptance and it is stated in his judgment that, ultimately, the appellant did not rely before him on those documents as constituting or containing any agreement for arbitration. There was, however, the Work Order in the form of an offer made by the petitioner and an acceptance of it by the General Manager of the East Indian Railway. The first paragraph of the Work Order where the offer is said to be contained is wholly ungrammatical and almost unintelligible, but the words, "in accordance with the terms of the East Indian Railway Standard Specifications and General Conditions of Contract (1940 Edition)," are there. It does not appear to have been disputed before the learned Judge that the Work Order did contain an offer in those terms and that the offer, such as it was, had been accepted by the Engineer-in-Chjet and the General Manager. The General Conditions which were thus imported into the contract do contain an arbitration clause in paragraph 65 and it says that in the event of any question or dispute arising in connection with the contract, the same shall be referred to the decision of two arbitrators, one to be nominated by each party and, in the case of the arbitrators not agreeing, to the decision of an umpire to be appointed by them in writing. The arbitration clause excepts disputes relating to matters, the decision of which is specially provided for in the conditions, but it does not appear to have been the case of either party that the disputes in the present case came within the exceptions.