BANWARI LAL RAM DEO Vs. BOARD OF TRUSTEES

JUDGEMENT

(1.) This is a Letters Patent Appeal from the judgment of a learned Single Judge of the High Court of Lahore, affirming, on appeal, the decision of a Subordinate Judge of Delhi refusing to stay the suit brought by respondent 1 against the appellants and respondent 2 for a declaration to the effect that the agreement dated 14 July 1942, executed between respondent 1 and the appellants was invalid and unenforceable on grounds of fraud and misrepresentation, and for cancellation of the aforesaid agreement as well as for recovery of a sum Of Rs. 2,50,000.

(2.) The facts giving rise to this appeal may be briefly stated as follows: The Board of trustees of the Hindu College, Delhi, wanted to construct a hostel for the College on the land allotted to the said College by the University of Delhi in what is called "the University Town." On 3 May 1940, they requisitioned the services of Messrs. Master Sathe and Bhuta, a firm of architects, carrying on business in New Delhi, for preparing estimates, drawings and specifications for the hostel and for supervising its construction, agreeing to pay them a lump sum of Rs. 2000 by way of honorarium. The aforesaid firm prepared drawing and specifications of the hostel buildings and estimated their cost at Rs. 1,50,000. The Government of India agreed to provide the said sum to the Board by way of a building-grant.

(3.) For the purpose of carrying out the work of construction the Board entered into an arrangement with Messrs. Banwari Lai Ram Dev, a firm of contractors, carrying on business at Panchquin Road, New Delhi, who undertook to construct the building at a cost of Rs. 1,49,807-9-0. On 6 June 1941, an agreement embodying the terms on which the contractors had agreed to do the work was duly executed. The agreement provided inter alia, that the contractors would complete the construction within a period of ten months -and would execute the work in every respect in accordance with the drawings and specifications prepared by the architects. It empowered the Board to appoint, with the approval of the architects, a clerk of works who was to superintend the work in the architects absence. It provided for payments being made to the contractors by instalments under interim certificate to be issued by the architects. An interim certificate was to be issued by the latter on being satisfied that work approximately of a specified value had been executed in accordance with the contract. A certain percentage of such value, was, however, to be retained and was to be paid on final adjustment of accounts on the completion of the work. The architects were given the power to withhold any certificate if they found that the works or any part thereof, were not being carried out to their satisfaction. Provision was also made for the settlement of all disputes and differences arising out of, or in connection with, the contract or the carrying out of works, whether during the progress of the works or after their completion and whether before or after the determination, abandonment, or breach of the contract, by arbitration. All such disputed and differences we re, in the first instance, to be referred to architects. In oases of disputes and differences relating to certain specified matters which were called excepted matters the decision of the architects was to be final. In all other cases, any party feeling aggrieved from the decision of the architects could ask for the matter or matters in dispute being referred to arbitration. Such party could, within twenty-eight days of the receipt of notice of the architects decision, require the other party, by means of a written notice specifying the matter or the matters in dispute, to refer such matter or matters to arbitration. If the parties could not agree to the appointment of a single arbitrator who had to be a Fellow of the Indian Institute of Architects, each of them could appoint an arbitrator of his own choice from amongst the Fellows of the said Institute. In that event, the arbitrators had, before entering upon their duties, to appoint an umpire,