KASHMIRI LAL GUPTA Vs. UNION OF INDIA

JUDGEMENT

(1.) THE plaintiff Shri Kashmiri Lal Gupta, has brought the present suit against the Union of India for a sum of Rs. 22,000. According to the plaintiff, the Union of India invited tenders in respect of a work relating to CA No. CEJK -6/63 -64 provisions of Storage accommodation near a place in Udhampur, Jammu province. The plaintiff also offered his tender and by a letter No. 8084/64/E8 HQ XV Corps, Engineering Branch, c/o 56 A.P.O. dated 29th January 1964, the plaintiff was informed that his tender had been accepted. The site for the construction in the tender notice was shown as an unrestricted area. The plaintiff received an intimation dated 31st January 1963 on the 4th February 1963 (it should be in fact 1964) from the concerned authorities to attend the office of 861 Engineers Works section c/o 56 A. P. O. to take over the site and start the work. The plaintiff was given an order sheet asking to commence the work and finish it also by definite dates (the dates are not very material for the disposal of the present petition) The plaintiff on inspection found that the area where the work was to be set up was a restricted area which has contrary to condition No. 8 of the tender notice. He protested against this variation by means of his letter dated 8 -2 -1964. Certain correspondence ensued between the plaintiff and the officer in charge of the contract. Later on by his letter dated 21 -2 -1964, the plaintiff informed the officer in charge of the works section 861, that he was not prepared to carry out the contract. Again there was some correspondence between the Engineer in charge and the plaintiff. According to the plaintiff by another letter dated 11th April 1964 No. 8084/80/E8 HQ XV Corps Engineers Branch, the plaintiff was given some changed conditions and in view of the conditions of the site and the non -availability of the same in time certain facilities should be given to the plaintiff as contained in that letter. The plaintiff had deposited a sum of Rs. 14,000 as earnest money and, adding to this amount some damages, he has brought the present suit for Rs. 22,000.

(2.) WHEN the defendant was summoned, an application under section 34 of the Arbitration Act was presented on behalf of the defendant by the Advocate General who represented the defendant, the Union of India, in this suit. According to the defendant, the plaintiffs tender dated 23 -13 -63 in respect of this contract was accepted by the Union of India. The plaintiff also accepted this contract and signed the acceptance on 6 -2 -1964. Vide Chief Engineers No 8084/63/E8 dated 30 -1 -64 a copy of Prices General Summary together with a set of tendered documents and drawings was sent to the plaintiff to enable him to start the work and this was followed by O C. 861 Engrs. Works Sections No. 8473/15/E8 dated 6 -2 -1964. The above constitute a valid contract between the plaintiff and the defendant. As per condition 70 of the Conditions of Contract (IAFW -2249) read with the documents which the plaintiff has accepted as a part of contract between the parties, the matter had to be referred to the arbitration of the Engineer officer to be appointed by the Engineer in chief, Army Head quarters, New Delhi, whose decision would be final, and binding on the parties The defendant has been at all relevant times and still remains ready and willing to do all things to the proper conduct of the arbitration. The prayer of the defendant, therefore, was that the suit should be stayed under the provisions of section, 34 of the Arbitration Act. The plaintiff filed his objections to this application of the defendant. In the objections, the signatures of the plaintiff on the documents mentioned by the defendant have been admitted. The plaintiff has stated that the documents referred to by the defendant in his application do not constitute a contract between the parties. Para No. 70 of the General Conditions do not and could not apply to the present case. The plaintiff was never handed over the site of the work, nor did he ever take the possession thereof. No valid contract had come into being between the parties and all the contracts between the Union of India and a private individual had to be made in accordance with the formalities laid down by Art. 229 of the constitution of India and without such condition being fulfilled, the agreement is unenforceable in a court of law. The plaintiff, therefore, prayed that the application of the defendant for the stay of the suit be dismissed. The plaintiff appeared as his own witness in support of his objections. The defendant did not adduce any evidence but remained content with the statement made by the plaintiff. I have heard very lengthy and learned arguments of the learned counsels for the parties, with respect to the application under Section 34 of the Arbitration Act filed by the defendant.

(3.) THE first contention of Mr. L. N. Sharma is that no valid contract has been entered into between the parties and, therefore, the arbitration clause which is mentioned in the tender notice has no application to the facts of the present case. According to Mr. Sharma after the plaintiff made a tender which was accepted by the concerned authority in the military department a regular contract or an agreement should have been drawn up between the plaintiff and a competent authority acting and executing the agreement on behalf of the Union of India. There was no formal contract drawn up. There was some correspondence which could not be legally called a completed contract. To appreciate this argument, some factual narration of the case and the documents admitted by the plaintiff is necessary. It appears that when the tender notices were invited, the plaintiff also made his tender on 23 -12 -1963. This render was accepted by Brig. P. D. Joshi to and on behalf of the President of India vide his No. 8084/E8 Head Quarters XV Corps Engineers Branch c/o 56 A. P. O. dated 29th Jan. 1964 for a lump sum of Rs. 6,62,012.45. This is Ex. Pl/D 10. This was accepted by the plaintiff on 6 -2 -1964. Later on when the plaintiff discovered that the construction tendered for had to be put up in a restricted area instead of unrestricted area as contained in the tender notice he objected to the variation. He offered to carry out this contract, if instead of 31% above he was given a percentage of 48%. It appears that some correspondence to k place between the plaintiff and the Chief Engineer in pursuance of which the plaintiff is alleged to have attended the office of the Chief Engineer, more than once. The plaintiff raised some objections to the carrying out of contract which is contained in his letter dated 30 -3 -1964 and in particular he emphasized two points that the area was restricted and no work register had been supplied to him. According to Mr. Sharma on 11 -4 -1964, the Chief Engineer substituted a new contract for the old as tendered by the plaintiff and thus the original tender of the plaintiffs was discharged. Mr. Sharma has laid much stress on this letter which is marked as Annexure "K by the plaintiff in the list of his documents. When we read this letter carefully, this does not substitute a new contract for the old The letters opens with the words "Reference your letter No, 4/M/64 dated 30th March 1964" and it further says You have discussed the case with me and during the discussion the following decisions have been taken on the points brought out by you" the completion period of the contract is extended, the date of commencement is changed because of the nonavailability of site and certain minor changes, the gate passes of the labourers, labour camps, guarding of damps, and working hours are incorporated in this letter. On pages 16 and 17 of the documents filed by the Advocate General, we find a general summary. This document is marked Bx.Pl/D2 and is signed by the plaintiff and Mr. P. D. Joshi. Ex. P1/D4 are the amended general conditions of the contract which are contained in the tender notice. As already indicated Ex. P1/D10 is the acceptance of the tender by the Chief Engineer which is signed by the plaintiff on 6 -2 -1964. It is therefore, clear that the plaintiff made a tender which was accepted for and on behalf of the President of India by the Chief Engineer. Certain minor variations for the execution of the contract were also suggested by the Chief Engineer which were accepted by the plaintiff on 11 -4 -1964. This is the correspondence which has taken place between the plaintiff and the Chief Engineer and this is admitted by the plaintiff also. Mr. Sharma stressed that there was no formal contract executed in pursuance of this correspondence. This poses a legal question that is to say whether such a correspondence is sufficient to constitute a valid agreement on the basis of which a reference to arbitration can be made by either party to the same. The learned counsels for the parties have referred to a number of authorities and it may be stated with certainty that the authorities are very clear on the point that in order to constitute a contract whereupon arbitration can be insisted, no formal writing or no signatures of the parties is necessary. This matter has come up number of times before different High courts and the Supreme Court has laid down the law in the same terms. The earliest authority of the Supreme Court on this point is Jugal Kishore Rameshwaidas v. Mrs Goolabi Hormusji, reported in AIR 1955, S. C. 812, where their Lordships have laid down : -