The validity of a contract is a matter for adjudication by a court of law and not by an arbitrator.

MONORANJAN MALLICK, J.:- This is an appeal against the Order dated 23rd Feb., 1979 passed by the Judge, 10th Bench, City Civil Court at Calcutta dismissing the appellants application u/S.34 of the Arbitration Act. Briefly the facts are as follows :-

The appellant, Hindusthan Cables Limited being interested in disposing of twenty items of scrap materials issued a tender being SPC762/ LSA-82 in various leading Newspapers between 16th March and 27th March, 1974. Pursuant to the aforesaid tender notice several interested parties submitted the quotation including the respondent in the prescribed form. The aforesaid tender documents specially under general terms and conditions of the said tender contains an arbitration clause which is as follows :-

"All disputes and differences except the matters decisions whereof are specifically provided for under the clause of terms and conditions of this tender should be referred to the arbitration of the Managing Director of the Company or his nominee whose decision shall be final and conclusive under the proceedings of Arbitration Act, 1940 and the rules thereunder and the statutory modifications thereon, if any, shall be deemed to apply. If, however, no award can be made by the arbitrator within a period of 4 months from the date of entering on the reference by him, the arbitrator can enlarge time for making the award with the consent of all the parties to the arbitration proceedings."

2. On or about April, 15, 1974 the appellant accepted the offer of the respondent for Items Nos.1, 3, 4 and 14 respectively and requested the respondent to arrange for immediate remittance of the full value. In view of the terms of the contract, contract by and between the appellant and the respondent was concluded on the 15th April, 1974. The petitioner, thereafter, by a letter dated April 19, 1974 issued a formal letter of acceptance by way of and/or in compliance with the formalities prevalent in the appellant company. The aforesaid letter of acceptance was a mere formality as, indeed, would be evident, inter alia, from the course of conduct and/or dealings by and between the parties herein. However, in spite of repeated requests made in letters dated 29-4-74 and 7-5-74 respectively, the respondent failed and neglected to deposit the full value of stores within the stipulated period or within the extended time as granted by the petitioner. The time to deposit the full value of the materials was extended and last of such extension was made on May 7, 1974. Ultimately, by an Express Telegram dated May 17, 1974 the appellant informed the respondent as they had failed and neglected to deposit the full value of the items in breach of the contractual terms and/or in violation thereof the earnest money lying to the credit of the contract was forfeited and have been taking steps for re-sale of the items at the respondents risk and costs. Thereafter, materials covered on the aforesaid items Nos.1, 2 and 3 were sold to one M/s. Motion Metal Stores of 157, Netaji Subhas Road, Calcutta-1 and item No.14 was sold to M/s. Hindusthan Drum and Supply Co. of No.71, Princes Street, Calcutta-13 as a result whereof the appellant has suffered loss and damages to the tune of Rs. 2,02,415/-. The appellant thereafter by a letter dated 8th March, 1976 duly informed the respondent about the said loss sustained by them and demanded payment of the aforesaid sum from the respondent. Inasmuch as the respondent wrongfully failed and neglected to pay the above sum of Rs. 2,02,415/- or portion thereof, the appellant by a letter dated March 21, 1977 invoked arbitration in terms of the aforesaid contract and duly referred the dispute to the arbitration of the Managing Director of the appellant. The Managing Director by a letter dated March 24, 1977 nominated and/or appointed in terms of the aforesaid arbitration clause one Mr. R.Sen and requested him to adjudicate upon the dispute. Mr. Sen, the Ld. arbitrator directed the appellant to fi