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High Court Of Orissa
S. Acharya, J.
KUMARBAR-BAR BEHERA - Appellant
Versus
EXECUTIVE ENGINEER, P.H.MAINTENANCE DIVISION NO.II, - Respondent
Civil Revn. 395 Of 1979
Decided On : 10/23/1979
ARBITRATION - VALIDITY OF AGREEMENT - EXECUTION OF F-2 AGREEMENT - SUBSEQUENT REVISED ESTIMATE - EFFECT ON ARBITRATION CLAUSE - ARTICLE 299 OF THE CONSTITUTION - SUBSTANTIAL COMPLIANCE.
Fact of the Case:
A tender was invited by the Executive Engineer for a work, and the petitioner's tender was accepted. An F-2 agreement was executed, and the petitioner proceeded to execute the work. Later, a revised estimate of the work was made unilaterally, and the original estimate was reduced. The petitioner did not sign the agreement for the revised estimate but continued to work. The Executive Engineer filed a petition under Section 33 of the Arbitration Act, claiming that there was no valid arbitration agreement and that the arbitration proceeding was null and void.
Finding of the Court:
The court held that there was a valid arbitration agreement between the parties and that the arbitration clause in the F-2 agreement was binding on both parties. The court also held that the subsequent unilateral revision of the estimate did not affect the validity of the arbitration clause. The court further held that there was substantial compliance with the requirements of Article 299 of the Constitution, even though the invitation for tender and acceptance of the same were not done expressly and in strict accordance with the wordings of Article 299 (1) of the Constitution.
Issues: 1. Whether there was a valid arbitration agreement between the parties. 2. Whether the subsequent unilateral revision of the estimate affected the validity of the arbitration clause. 3. Whether there was substantial compliance with the requirements of Article 299 of the Constitution.
Ratio Decidendi: 1. 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. 2. The subsequent unilateral revision of the estimate did not affect the validity of the arbitration clause, as the arbitration clause was 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. 3. There was substantial compliance with the requirements of Article 299 of the Constitution, as the tender was invited by the authorized person, the tender was accepted by the authorized person, and the petitioner executed the work under the direct supervision of the officers of the State.
Final Decision: The court set aside the decision of the court below and held that there was a valid arbitration agreement between the parties. The court also held that the arbitrator appointed in the case shall proceed to perform his job in accordance with law and shall submit his award within as short a time as possible.
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 during flood 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 4-21974 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 this F-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.
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