KASHMIRI LAL Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is an appeal against an order of Bhat J. accepting the application of the defendant for staying the suit and refering the matters in suit to arbitration.

(2.) THE plaintiff brought a suit for the recovery of Rs. 22,000 as earnest money and damages against the defendant in respect of a contract given to him by the Union of India for storage accomodation somewhere near Udhampur. The plaintiffs case was that tenders were invited for starting the work of construction of storage accomodation and the plaintiff submitted his tender which was ultimately accepted. The plaintiff entered into contract with the defendant on the specific footing that the area where the work was to be carried on was an unrestricted area. Subsequently, however, when the Plaintiff visited the spot, he found that it was a restricted area and, therefore, he was unable to perform the contract on the terms accepted by him due to misrepresentation practised on him. The plaintiff wanted a substitution of a new contract on fresh terms but as the defendant did not agree to the same, the plaintiff has filed the present suit for damages and return of earnest money. While the suit was pending before the learned single Judge of this court, an application was filed by the defendant praying that the suit may be stayed under Section 34 of the Arbitration Act in view of the fact that the agreement between the parties contained an arbitration clause under which all disputes arising out of the contract had to be referred to the arbitrator. This application was resisted by the appellant on several grounds, the most important of them being the fact that the contract between the parties was invalid as it was not in consonance with Art. 229 of the Constitution of India. This appears to be the only objection pressed by the appellant before the learned Single Judge. The learned Judge after hearing the parties rejected the objection of the plaintiff and held that the contract was valid and did not suffer from any formal defect. The learned Judge, accordingly, stayed the suit and referred the matter to arbitration. Hence this appeal under the Letters Patent before us.

(3.) APPEARING for the appellant Mr. Vidya Sagar did not challenge the finding of the learned Judge on the question that the agreement was valid in accordance with the provisions of the Constitution, but submitted that the agreement itself was void inasmuch as, it was obtained by mis -representation or it was based on mutual mistake of fact. It is true that this objection was not specifically raised by the appellant before the learned Single Judge, but reading the various paragraphs of the plaint and the objections, it is clear to us that it was specifically raised in the objections. As the point taken by the appellant goes to the very root of the contract and is essentially a point of law, we allowed the appellant to raise this point before us and gave an opportunity to the Advocate General to meet this point.