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Kumarbar-bar Behera Vs. Executive Engineer, P.H. Maintenance Division No. Ii, Bhubaneswar and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberCivil Revn. No. 395 of 1979
Judge
Reported inAIR1980Ori40; 49(1980)CLT53
ActsArbitration Act, 1940 - Sections 2 and 33; Constitution of India - Article 299(1)
AppellantKumarbar-bar Behera
RespondentExecutive Engineer, P.H. Maintenance Division No. Ii, Bhubaneswar and anr.
Appellant AdvocateR.K. Rath, Adv.
Respondent AdvocateD.P. Mohapatra, Addl. Govt. Adv.
DispositionRevision allowed
Cases ReferredUnion of India v. A. L. Rallia Ram
Excerpt:
.....chief engineer appointing the arbitrator, i am satisfied that both the parties had agreed that the work in question was to be executed in accordance with the terms and conditions mentioned in the prescribed f-2 form no. on the facts stated above supported by the documents on record the aforesaid agreement in writing between the parties containing the arbitration clause is well established, and so the arbitration clause in its entirety shall hold good in respect of matters covered by the same. that being so, on the facts of this case, i hold that there has been substantial compliance of the requirements of article 299(1) of the constitution, though it would have been better if the invitation for tender and acceptance of the same would have been done expressly and in strict accordance with..........of an arbitrator to decide certain disputes arising between the parties in connection with the work in question, and the chief engineer by his order dated 30-3-1978 appointed sri a.k. patnaik, superintending engineer, p. h. circle, berhampur, ganjam (opposite party no. 2) as the arbitrator in the case. the petitioner has filed his statement of claim before the arbitrator and has claimed rs. 1,31,015.00 on that account. when the arbitration proceeding was in progress, opposite party no. 1 on 22-2-79 filed a petition u/s. 33 of the arbitration act in the court below for a declaration that there was no valid agreement for arbitration of disputes relating to the work in question between the parties, and so the arbitration proceeding before the arbitrator was null and void. the court.....
Judgment:
ORDER

S. Acharya, J.

1. This Civil Revision is filed against the order dated 19-6-1979 of the Subordinate Judge, Bhubaneswar in Misc. Case No. 88/79 holding that there is no valid existence of an arbitration agreement between the parties and the arbitration proceeding pending before the Superintending Engineer, P. H. Circle, Berhampur, Ganjam (opposite party No. 2) in this revision and also in the court below is null and void.

2, The facts which are not disputed by the parties are as follows:--

The Executive Engineer, P. H. Maintenance Division No. II, Bhubaneswar (opposite party No. 1) by his notice dated 5-2-1974 called for a tender for the work 'Flood damage repair at Kuakhai duringflood on 6th and 7th September'. The work then was assessed at Rs. 47,000/-and odd. The tender submitted by the petitioner turned out to be the lowest, and it was accepted. On revised estimate of the work done later it was assessed at Rs. 26,837.65, and that was communicated to the petitioner on 22-4-74. After about 4 years the petitioner requested the Chief Engineer, Public Health, for appointment of an arbitrator to decide certain disputes arising between the parties in connection with the work in question, and the Chief Engineer by his order dated 30-3-1978 appointed Sri A.K. Patnaik, Superintending Engineer, P. H. Circle, Berhampur, Ganjam (opposite party No. 2) as the arbitrator in the case. The petitioner has filed his statement of claim before the arbitrator and has claimed Rs. 1,31,015.00 on that account. When the arbitration proceeding was in progress, opposite party No. 1 on 22-2-79 filed a petition u/s. 33 of the Arbitration Act in the court below for a declaration that there was no valid agreement for arbitration of disputes relating to the work in question between the parties, and so the arbitration proceeding before the arbitrator was null and void. The court below on hearing both the parties has allowed the petition in the terms mentioned above.

3. It is submitted by Mr. Rath, the learned counsel for the petitioner in this Court, that the decision of the court below is illegal as it is against the facts of the case and the materials on record. He submits that there was a completed contract between the parties and that the tender submitted by the petitioner in pursuance of the Executive Engineer's (opposite party No. 1) notice dated 4-2-1974 was the lowest and accordingly it was accepted by the concerned Superintending Engineer on 26-3-1974. After the acceptance of the tender, the agreement No. F2/S. E. of 1975-76 in the prescribed F-2 agreement form was executed by the petitioner as desired by the Executive Engineer, and thereafter written order was issued by opposite party No. 1 to the petitioner to proceed with the work. Later on, a revised estimate of the work, was made unilaterally, and the original estimate of the work was amended and brought down to Rs. 26,000/- and odd. In this connection Mr. Rath drew my attention to the F-2 agreement No. F2/S. E, of 1975-76, filed by opposite party No. 1 in the court below. At the top of thisF-2 agreement it is mentioned as follows :--

'Tender has been accepted by the S. E., P. H.C. BBSR for Rs. 47,703.25 vide his letter No. 2372 dated 26-3-1974.'

The name of the work in question is mentioned at page 3 of the said agreement. Against the heading 'Date of written order to commence' in that page it is mentioned: 'T. O. letter No. 2235 dated 22-4-1974'. All the pages of that agreement have been signed by the petitioner. A signature with the date '26-3' is appended under the rubber seals of the Executive Engineer, Bhubaneswar, P. H. Division No. II, in all the pages of that F-2 agreement.

3(a). Mr. Mohapatra, the learned Addl. Government Advocate for opposite party No. 1, however, states that the signature appended under the said rubber seal is not that of the Executive Engineer but of somebody else and so it cannot be said that the said agreement was executed by both the parties.

3 (b). The said agreement in the prescribed printed form duly filled in with all details of the work in question, was in the possession of the Executive Engineer and has been produced by opposite party No. 1. That bears the office seal of the Executive Engineer in all the pages, Somebody has signed underneath the rubber seals in all the pages. Opposite party No. 1 who filed this agreement form has nowhere stated that the said agreement was not executed or intended to be executed in respect of the work in question by or on behalf of the Executive Engineer, though the petitioner's tender was accepted and he duly executed the said agreement and filed the same before the concerned Executive Engineer. The Chief Engineer while appointing the arbitrator refers in his order directly to this particular agreement No. 2, F-2/S. E. of 1975-76 and says that it was executed by the Executive Engineer.

3 (c). Another document which is a statement of 'Estimated cost' of the work in question, which also was filed by opposite party No. 1 in the court below, shows that the lowest rate offered by the petitioner for the work in question was accepted. Letter No. 2372 dated 26-3-1974, which is mentioned in the F-2 agreement as the letter by which the tender was accepted by the Superintending Engineer, is also mentioned in red ink in the statement of 'Estimated cost' very close to the above order of theSuperintending Engineer accepting the tender of the petitioner. It was mentioned in the tender notice for the work in question, issued by the office of the Executive Engineer, P. H. Division No. II, Bhubaneswar, that the contract would be drawn in P. H. D. F-2 contract forms. The Agreement Register filed by the opposite party No. 1 in the court below shows that there was an agreement in F-2 form in respect of the work in question, and the petitioner's offer to execute the work was accepted by the Superintending Engineer, P. H. Circle, Bhubaneswar as per his letter No. 2372 dated 26-3-1974. The Executive Engineer him self of course has not signed this particular entry in that register, but someone else has appended his signature just below the rubber seal affixed against this entry.

3 (d). The letter of the Executive Engineer dated 31-7-1974 to the petitioner shows that the work was executable under the F-2 agreement form. The letter dated 29-4-1974 of the Executive Engineer shows that the contractor for this work, i.e. the petitioner, 'will be paid at the scheduled rate as per the terms of the agreement.' The agreement referred to therein cannot be any agreement other than the said F-2 agreement. The details of the work done in respect of the work in question have been shown in the Measurement Book wherein the above work order mentioned in the F-2 agreement is referred to. That goes to show that the said work was executed in accordance with the work order mentioned in the F-2 agreement.

3 (e). All the above documents were filed in court by the Executive Engineer, opposite party No. 1 herein and the petitioner in the court below. On a perusal of the said documents and the copy of the Chief Engineer's order appointing the arbitrator, communicated to the petitioner by Memo No. 9061 dated 30-3-1978 under the signature of the Chief Engineer, it becomes evident that after the acceptance of the lowest tender submitted by the petitioner for the work in question the agreement No. F-2/S. E. of 1975-76 was entered into between the parties in accordance with which the petitioner proceeded to execute the work. Of course a revised estimate of the work in question was later on made unilaterally by the department and the original assessment of the work at Rs. 47,000/-and odd, as mentioned in the F-2 agreement and in the other relevant documents, was reduced to Rs. 26,837.65. From the documents filed by the Executive Engineer it appears that after the said revised estimate of the work, the contractor was asked to sign a fresh agreement. The petitioner, as it appears, did not sign the agreement to execute the work as per the, revised estimate. But the Measurement Book and other connected documents show that the petitioner did some work in pursuance of the work order issued to him.

It is not the case of the opposite party No. 1 that as the petitioner did not execute the later agreement on revised estimate he was not allowed to proceed with the work in question and/or that he did not do any work in that connection. Merely because the petitioner did not sign the later agreement it cannot be said that the aforesaid agreement No. F-2/S. E. of 1975-76 between the parties is abrogated or annulled. As the original work was entrusted to the petitioner to be executed in accordance with the terms and conditions of the said agreement, subsequent unilateral revision of the estimated amount for the work would not and could not put an end to or invalidate or nullify or efface the agreement. It takes two parties to put an end to an agreement. There is nothing on record to show that the said original agreement between the parties was actually put an end to by the parties or even by one of the parties at any point of time. There is nothing on record to show at the first sight that the previous agreement is void, fraudulent or invalid in any way. The validity of the revised estimate and the legal and factual effect of the same are matters arising out of or relating to the contract for the work in question and estimates thereof, and as per Clause 23 of the original agreement No. F-2/S. E. of 1975-76, the matters relating to the same can be agitated before the Arbitrator. Moreover, merely by the revised estimate of the work it can at best be said that the original estimate of the work as shown in the agreement was revised and that portion of the agreement was amended. This appears to be the correct position, as even though no new agreement on the revision of the estimate was executed by the petitioner he was allowed to proceed with the work in question under the supervision of the officers of the Works Department as is evident especially from the 'Measurement Book'.Therefore, merely because no new contract or agreement to execute the work for a lesser amount on the unilateral revision of the valuation of the work at a later stage by the Executive Engineer was not signed sy the petitioner, it cannot be said that the original agreement for the work, executed by the petitioner on the acceptance of his tender and on the entrustment of the work in question to him, became null and void or automatically ceased to have any effect. The arbitration clause, i.e. Clause 23, in the original agreement between the parties has been incorporated with the object of providing a machinery for the settlement of disputes arising in relation to or in connection with the contract to execute the work. Therefore, merely on the unilateral amendment of the valuation of the work, the arbitration clause is not any way affected, abrogated, invalidated or nullified. In this connection the observation of their Lordships of the Supreme Court in paragraph 7 of the decision in Damodar Valley case (AIR 1974 SC 158) may be seen.

4. The contention of the learned counsel appearing for opposite party No. 1 that there was no valid agreement between the parties as the Executive Engineer has not appended his signature to the above-mentioned original agreement No. F-2/S. E. of 1975-76 is without any substance. Admittedly tenders for the work in question were invited by the concerned Executive Engineer. The petitioner's tender for this work was the lowest. From the 'Statement of estimated cost' filed by the Executive Engineer in the court below and from other documents on record it is evident that the petitioner's tender for the work was accepted by the Superintending Engineer, and the above mentioned F-2 agreement form in respect of the work was duly executed by the petitioner and submitted to the officers concerned, which is evident from the fact of its production in court by opposite party No. 1. The said agreement form bears the rubber seal of the relevant Executive Engineer with the signature of somebody put under the said rubber seal. The said agreement remained in the custody of the relevant Executive Engineer. The petitioner proceeded to execute the work under the supervision of the men and officers under the Executive Engineer. The latter produced the agreement before the court below. The other documents in respect of thework, all filed by the Executive Engineer clearly refer to the said agreement as mentioned above. The Chief Engineer while appointing the arbitrator directly refers to this agreement F-2/S. E. of 1975-76. In the petition 7/S. 33 filed in the court below it is not specifically stated that this agreement was not executed or given effect to or that it became invalid or inoperative due to any reason. One can take judicial notice of the facts that entrustment of such work to contractors on calling tenders is mostly done on the basis of agreements under the prescribed F-2 contract forms, From the documents on record, filed in court by the Executive Engineer, and the order of the Chief Engineer appointing the Arbitrator, I am satisfied that both the parties had agreed that the work in question was to be executed in accordance with the terms and conditions mentioned in the prescribed F-2 form No. S. E. of 1975-76, and so both the parties are bound by the terms and conditions enumerated in that agreement, though the concerned Executive Engineer had not actually appended his signature to the said agreement. It is settled law that to constitute an arbitration agreement in writing it is not necessary that it should be signed by the parties. It is sufficient if the terms are reduced to writing and the agreement of the parties thereto is established. The decisions on this point in AIR 1963 SC 1417, AIR 1963 SC 1685; AIR 1955 SC 812, (1969) 35 Cut LT 592; and (1979) 47 Cut LT 499 may be seen. On the facts stated above supported by the documents on record the aforesaid agreement in writing between the parties containing the arbitration clause is well established, and so the arbitration clause in its entirety shall hold good in respect of matters covered by the same.

5. Mr. Mohapatra's contention, that there was no valid contract between the parties as the mandatory requirements of Article 299 of the Constitution for a valid and binding contract had not been complied with, was only a last ditch effort. As stated above, tender for execution of the work was called for by the Executive Engineer, Bhubaneswar, P. H. Division No. II. The tender submitted by the petitioner in pursuance of the said tender call notice was accepted by the concerned Superintending Engineer. Thereafter the F-2 agreement No. S. E. of 1975-76 was executed. It is not alleged that the Executive Engineer was not authorised to call for the said tender orthat the Superintending Engineer was not authorised to accept the petitioner's tender on behalf of the State. From the documents on record it is quite evident that the Executive Engineer was the properly authorised person to execute the said agreement and also to look to the proper execution of the said work on behalf of the State. The Government has never repudiated the contract. The petitioner executed the work under the direct supervision of the officers of the State. That being so, on the facts of this case, I hold that there has been substantial compliance of the requirements of Article 299(1) of the Constitution, though it would have been better if the invitation for tender and acceptance of the same would have been done expressly and in strict accordance with the wordings of Article 299(1) of the Constitution so far as applicable. However, on the above consideration, the arbitration agreement is valid and would govern the rights and liabilities between the parties. In this connection the decision in State of Orissa v. Govind Chowdhury and Sons, (1969) 35 Cut LT 592 and the case reported in Union of India v. A. L. Rallia Ram (AIR 1963 SC 1685) may be seen.

6. On the above considerations the decision of the court below that there is no valid existence of arbitration agreement between the parties and that the arbitration proceeding pending before opposite party No, 2 is null and void is incorrect and is liable to be and is hereby set aside. The arbitrator appointed in this case shall proceed to perform his job in accordance with law and shall submit his award within as short a time as possible.

The revision, therefore, succeeds and is allowed with costs. Hearing fee Rs. 300/-(Three hundred).


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