ROSE CONSTRUCTION CO Vs. HARYANA STATE

JUDGEMENT

(1.) RESPONDENTS invited tenders for the construction of Over-head water-tank for supply of drinking water. In response to the said notice, the petitioner submitted his tender, which was accepted by the respondents. Under the letter of acceptance, petitioner was required to sign the agreement within ten days. The said letter of acceptance also contained a clause that in case of dispute between the parties, the matter shall be referred to the Arbitrator. As per case of the respondents, the petitioner was asked to sign the documents number of times, but he failed to turn up. On his failure to sign the contract and for not executing that work, the respondents invoked Clause 25-A of the un-signed contract which provided for arbitration for referring the dispute to the arbitrator. Before the Arbitrator could enter into reference, the petitioner filed a petition under Section 33 of the Arbitration Act, challenging the validity of the arbitration agreement. Respondents on appearance, stated that the petitioner was asked many times to sign the contract as well as to submit design and drawing, but the petitioner deliberately avoided the signing of the agreement and thus, delayed the submission of design, drawing and calculation. Respondents also referred to some of the letters which they had written to the petitioner. On the pleadings of the parties, the trial Court framed the following issues:

(2.) HAVING heard the learned counsel for the parties at length, I am of the view that the revision petition deserves to succeed. Admittedly, letter of acceptance contained a condition requiring the petitioner to sign the formal contract within ten days, but he did not sign the same. From the acceptance of letter, the trial Court concluded that the petitioner is estopped from raising a plea that the acceptance letter does not constitute binding contract between the parties. The conclusion so arrived at by the trial Court is contrary to what has been held by this Court in State of Haryana and Anr. v. M/s O. P. Singhal and Co. , Hissar,1 A. I. R. , 1984 Punj. 358 and in M/s Om Parkash Baldev Krishan v. The State of Punjab through the Secretary to Government Punjab, Department of P. W. D. Chandigarh,2 (1981-2) 92 P. L. R. 313, wherein it was held that merely because of submission of tender and acceptance thereof, no binding contract as envisaged by Article 299 of the Constitution can come into being. Thus, where no binding contract has come into being between the parties within the meaning of Article 299, the arbitration clause contained in the unsigned agreement could not be relied upon. In M/s Om Parkash Baldev Krishan's case (supra), the petitioner therein was also required to sign the agreement within ten days from the acceptance of tender. The petitioner therein had also fulfilled some of its requirements by submitting designs, calculations etc. like the present case. In these circumstances, the Court held that Article 299 (1) of the Constitution applies to a contract made in exercise of the executive power of the Union or the State. The Judgment of the Supreme Court in Union of India v. Rallia Ram,3 AIR 1963 S. C. 1685, relied upon by the counsel for the respondents was taken note of by this Court in M/s O. P. Singhal's case (supra) and was rightly distinguished. In Rallia Ram's case (supra) it was assumed that there existed a valid contract between the parties, but the arbitration agreement which was reduced into writing, though not signed by the parties, was the subject-matter of the consideration. In these circumstances, it was held that unsigned agreement would be valid. However, in the present case, no valid contract came into existence between the parties and, therefore, clause relating to arbitration in an unsigned agreement cannot be invoked.