OM PARKASH BALDEV KRISHAN Vs. STATE OF PUNJAB

JUDGEMENT

(1.) This revision petition is directed against the judgment dated 4.4.1986 passed by the learned Subordinate Judge Ist Class, Patiala, whereby an application under Section 33 of the Arbitration Act, 1940 (for short the 'Act') filed by the petitioners has been dismissed.

(2.) The facts in brief are that the Executive Engineer (Construction Division No. 1) P.W.D. B & R Branch, Patiala, invited tenders for the work styled as "Construction of high level bridge over Tangri Nadi in Mile No. 19/5 of Patiala-Pehowa Road". The petitioner submitted its tender in response to the same which was opened on 7.10.1975. The petitioner happened to be the lowest tenderer. It was required to submit drawings for the work to the higher authorities which he did. However, fresh tenders for the work were re-called in February, 1976 by the same Executive Engineer. The petitioner again submitted its tender. The Executive Engineer informed the petitioner through a telegram that its tender had been accepted and it was asked to take up the work in hand. Some subsequent correspondence took place between the petitioner and the Executive Engineer. Later, however, the petitioner informed the Executive Engineer that no valid and binding contract had come into being between it and the State of Punjab respondent No. 1 and, therefore, it withdrew its offer made through the telegram and a subsequent letter dated 31.8.1976 by the Executive Engineer did not constitute a legal, valid and binding contract having the force of law. After a lapse of almost three years the Executive Engineer vide letter dated 15.4.1980 informed the petitioner that since it had failed to start the work it had become liable for action under clause II of the agreement and that the Engineer-in-charge had levied penalty of Rs. 2,5,000/- on it. Later it appears that taking resort to the provisions of clause 28-A of the alleged agreement a claim for Rs. 4,56,040/- was made by respondent No. 1 through the Executive Engineer and a reference for adjudication of this claim was made to Superintending Engineer respondent No. 2 who according to the said clause of the agreement was to act as an Arbitrator. Respondent No. 2 called upon the petitioner to submit its reply to the claim. The petitioner, however, disputed existence of an Arbitration Act between the parties by contending that since there was no valid agreement any clause in the alleged agreement could not be considered to be a valid arbitration agreement. The petitioner, therefore, filed an application under Section 33 of the Act in the Trial Court for a declaration that there was no valid and binding agreement between the parties and as such there was no arbitration agreement and respondent No. 2 was not a validly appointed arbitrator.

(3.) The application was opposed by respondent No. 1. A reply was filed on its behalf. It was stated therein that besides telegram acceptance of the tender was conveyed through a detailed letter dated 31.8.1976 by the Executive Construction Division No. 1 to the petitioner. In compliance with that acceptance letter the petitioner had submitted the design calculations, partnership deed etc. It was also maintained that there was a clause in the tender duly signed on behalf of the petitioner that acceptance of the said tender would constitute a legal and binding contract between the parties. On the pleadings of the parties, the learned Trial Court framed the following issues :-