MANMOHAN, J (ORAL)

1. Present petition had been filed in the year 1992 under Sections 8, 9 and 20 of Arbitration Act, 1940 (hereinafter referred to as “Act, 1940”) for appointment of an arbitrator to adjudicate upon the disputes between the petitioner and the respondent-Cooperative Society.

2. Mr. B.K. Dewan, learned counsel for petitioner-contractor stated that petitioner-contractor was awarded a contract by respondent no. 1 for carrying out balance construction work of 70 flats at Plot No. 33, Parparganj, Delhi on labour rate basis vide letter dated 26th April, 1990. He further stated that the tender floated by respondent-Cooperative Society contained an arbitration clause, namely, Clause 37 and the said Clause would apply in view of the acceptance letter dated 26th April, 1990 even though no formal agreement had been executed between the parties.

3. Mr. Dewan submitted that in pursuance to the said acceptance letter, petitioner-contractor had not only executed the work partially but had also submitted its fifth running bill on 5th October, 1991 which was certified by the Architect, namely, the respondent no. 2. However, according to Mr. Dewan, as the petitioner-contractor was not paid any amount after submission of sixth running bill on 05th February, 1992, petitioner-contractor filed the present petition in April, 1992.

4. Mr. Dewan emphasised that even though a formal contract had not been executed between the parties, petitioner-contractor would be entitled in law to rely upon Clause 37 of the tender document inasmuch as respondent-Cooperative Society had accepted petitioner-contractor’s offer vide letter dated 26th April, 1990 and petitioner-contractor had implemented part of the contract. Mr. Dewan also placed reliance upon Clause 15 of Special Conditions (hereinafter referred to as “SC”) of the tender document forming part of the Schedule of Quantities wherein it had been stated that irrespective of the fact whether a formal contract had been executed or not, written acceptance by respondent-Cooperative Society shall constitute a binding agreement between the parties. Accordingly, he submitted that the present petition needs to be allowed and disputes between the parties needs to be referred to an arbitrator.

5. On the other hand, Mr. L.D. Adlakha, learned counsel for respondent-Cooperative Society submitted that there was no arbitration agreement between the parties as the contract had not been executed in writing even though the last paragraph in the respondent-Cooperative Society’s letter dated 26th April, 1990 specially stipulated so.

6. Mr. Adlakha relied upon a judgment passed by this Court in Union of India Vs. Mohan Meakin Breweries Ltd. reported in AIR 1988 NOC 33 (Delhi) wherein this Court had held as under:-

“Where a voluntary offer made by a breweries company to the Union of India for supply of certain quantity of rum to the Army as a gesture of good will and not pursuant to any tender enquiry, which was accepted by the Government and subsequently by another letter, a condition was put forth by the Company that if there was delay in tendering or supplying rum then the company would not be liable to pay any liquidated damages or penalty, and the Government issued Acceptance of Tender purporting to accept offer of company to supply rum, which contained among other clauses, a clause of arbitration and also a clause providing for damages to which company was liable for liquidated damages for late supply and the company never signed nor sent to the Government the acknowledgement of receipt of such Acceptance of Tender, it was held that there was no arbitration agreement between the parties or there was no concluded contract. The Acceptance of Tender offered by the Government in law amounted to a counter-offer, which was not accepted by the Company as it was not signed by it. In such a case, the fact that the Company paid the security amount as provided in Acceptance of Tender would not amount to implie