(1) The agreement was signed by the defendant but the plaintiff did not sign it even though the contract was in his custody. The Corporation suggested a revised draft agreement to which the defendant did not agree Howevre, during the pendency of the petition filed by the defendant under Section 20 of the Arbitration Act, the Commissiener, Municipal Corporation, signed the contract. The questions which arose for decision were (1) whether the contract was valid and (2) whether it could be ratified.
(2) Held that: After referring to Sections 201 and 203 of the Delhi Municipal Corporation Act it was held that every contract entered into by the Commissioner, the common seal of the Corporation has to be affixed. It has to be signed by the Commissioner or a person duly authorised by him. The common seal of the Corporation has to be affixed in the presence of a member of the Standing Committee who shall sign the contract in token that the same was sealed in his presence. Then the document has to be signed by a witness to the execution of such contract. The admitted position is that on behalf of the Commissioner the contract was not signed nor was the common seal of the Corporation affixed to the instrument. Nor did any members of the Standing Committee sign the contract in token that the same was sealed in his presence. On these facts the inevitable conclusion is that there is no contract between the parties, nor arbitration clause. The provisions of Section 203 of the Act are mandatory. thereforee the contract is void. The legal significance of the expression 'shall not be binding on the Corporation' simply means that it shall not be enforceable against the Corporation and an agreement not enforceable in law is void. Following the observations of the Supreme Court in the case reported as Dr. H. S. Rikhy v. Ndmc 1962 Sc 554 it was held that similarly in the present case that the contract is not binding on the Corporation. On the principle of mutuality it will not bind the contractor either. Sections 201 & 203 of the Act relating to contract by Corporation and the procedure for making them are grounded in public policy. If the public, or a class or section of the commuhity, are interested in the general observance of the conditions prescribed by the statute, it has always been held on the ground of public policy that there can be no waiver, even by express contract or consent, of the right to such observance by any individual party. These provisions are for the protection of the public. The Corporation is cot at liberty to renounce at their pleasure the advantages which these clauses afford. These statutory provisions cannot be waived. A disobedience of the mandatory provisions must result in the nullification of the contract. A contract which does not strictly conform to the formalities prescribed by these provisions is unenforceable and invalid. It does not bind the Corporation nor the other party. It was thereforee held that there was no concluded contract between the parties containing the arbitration clause.
(3) Held further that the Corporation suggested certain amendment to the original agreement signed by the contractor. The revised agreement the contractor was not willing to sign. The matter rested there. The parties were not ad idem on the terms of the contract. There must be consensus of minds to lead to contract. Agreement is necessarily the outcome of consenting minds.
(4) Following Dr. H. D. Rikhy (supra) it was held that the failure to comply the requirements of the bye-laws 'nullifies the contract and renders it void and 'unenforceable'. There is no question of ratification by signing the contract when the petition is pending. It is not a question whether the contract was ratified or was not ratified. It is a case of void contract.
(5) There is close similarity between the provisions of Section 201 and 203 of the Act and Article 299 of the Constitution. Under the Constitution it has been repeatedly held that the 'provisions of Article 299 are mandatory in character and failure to comply with the conditions enacted in the Article nullifies the contract and renders it void and unenforceable'.
(6) Held further that the Corporation cannot be allowed to whittle down the importance of the provisions contained in Section 201 to 203. The whole object of the legislature would be defeated if the contract is not executed in the 'manner and forms' prescribed by the bye-laws.