A valid contract as envisaged by Art.299 of the Constitution of India is mandatory and if no contract is entered into in those terms then it is a void transaction and cannot be given effect to in Court of law.

1. The Executive Engineer PWD (B and R), Hissar, invited tenders for execution of certain work and M/s. O. P. Singhal and Company through O.P. Singhal submitted the tender. The tender submitted by him was accepted by the Executive Engineer and letter of acceptance was conveyed. However, no formal contract as envisaged by Art. 299 of the Constitution, was entered into. Ultimately the contract was not executed and the parties blamed each other for the same. On 3rd March, 1980, M/s. O. P. Singhal and Company filed a suit for recovery of Rs. 4900.00 with interest and also prayed for injunction. The State of Haryana and the Executive Engineer filed an application under Sec.34 of the Arbitration Act, (hereinafter referred to as the Act ) for stay of the suit on the plea that the contract between the parties contained cl. 25-A, which provided for reference of the disputes to an Arbitrator to be appointed by the Chief Engineer, PWD (BandR), branch, Chandigarh The application was opposed by the plaintiff and he pleaded that no contract was executed, and, therefore, the arbitration clause was not applicable.

2. On the contest of the parties, the following issues were framed.

1. Whether the proceedings of the suit are liable to be stayed under Sec.34 of the Arbitration Act, OPA

2. Relief.

3. Both the sides led evidence. The trial Court by order dt. 29th April, 1982 stayed the proceedings in the suit, since the dispute had to be decided by the Arbitrator after recording finding that even if no written contract was signed by the parties the unsigned written contract contained arbitration clause, which was effective in view of Union of India V/s. A.L. Rallia Ram, AIR 1963 SC 1685, Union of India V/s. Bharat Charcoal Co. Ltd., AIR 1962 Cal 510 and Kumar Barbar Behera V/s. Executive Engineer, P.H. Maintenance Division No. II, Bhubaneswar, AIR 1980 Orissa 40.

4. On plaintiff s appeal the learned District Judge endorsed the finding of the trial Court that the unsigned written contract was enforceable. Mulamchand V/s. State of Madhya Pradesh, AIR 1968 SC 1218 relied upon on behalf of the plaintiff was distinguished and The Union of India V/s. S. Kesar Singh, AIR 1978 JandK 102 was followed in coming to the conclusion that a valid contract came into being between the parties merely by submission of tender and acceptance thereof. In spite of recording this finding in favour of the defendant-State, the learned District Judge concluded that in order to seek stay under Sec.34 of the Act, the concerned party had to plead and prove its readiness and willingness both at the commencement of the proceedings and at all other relevant times and to do all things necessary for the proper conduct of the arbitration proceedings in accordance with the law, failing which, stay would be refused. For this view, reliance was placed on Anderson Wright Limited V/s. Moral and Company, AIR 1955 SC 53, Food Corporation of India V/s. Thakar Shipping Company, AIR 1975 SC 469, Middle East Trading Company V/s. New National Mills Limited, AIR 1960 Bom 292, N.C. Padamanabhan V/s. S. Srinivasan, AIR 1967 Mad 201 and Punjab State V/s. F. Soni Construction Company, (1965) 67 Punj LR 1132.

5. Adverting to the facts of the case, the learned District judge held that bare averment was made in para 4 of the petition and the same was neither sup-ported by an affidavit nor any evidence was led in the case that the applicant was and is still ready and willing to do all necessary things to the proper conduct of the arbitration proceedings. This finding was arrived at particularly because the plaintiff repudiated the contract due to the non-performance of initial part of the contract by the defendants and the defendants did not bother to get the dispute referred to the arbitrator in accordance with the terms of the arbitration clause within the stipulated period of six months.

6. The learned District Judge further proceeded to hold that questions of law like acceptance of contract,