A material alteration in a contract without the consent of one party amounts to fraud and avoids the contract.

Kapur, J.

1. This is an appeal brought by the Union of India against an order passed under Section 34 of the Indian Arbitration Act refusing to stay the suit which .was brought by the plaintiff Din Dayal Kapur for the recovery of Rs. 14,420/- on the 12th June 1950.

2. On the 25th October 1950, the Government Pleader on behalf of the Union made an application under Section 34 of the Arbitration Act for stay of proceedings alleging that the Union was always ready and willing to do everything necessary for the proper conduct of arbitration. To this the plaintiff took objection and stated in his reply dated the 15th November 1950 that the arbitration clause was void for uncertainty, that the claims of the plaintiff were outside the arbitration clause, that the Superintending Engineer and the Executive Engineer were guilty of fraud inasmuch as they altered the terms of the contract and that the Union had repudiated the contract.

3. On the 5th July 1943, the plaintiff had submitted a tender which is marked Exhibit D. 2. To this was attached a schedule giving the rates at which the plaintiff offered to do the job which was re-roofing of the hospital. The Executive Engineer to whom the tender was submitted signed the schedule on the 9th of July 1943. The contractor was then asked to do some additional work which was the re placing of a torn ceiling and this was finished by the plaintiff on the 6th July. The plaintiff had received a sum of Rs. 41,000/- out of the sums due to him by June 1944. On be half of the Government, the contract was accepted by the Superintending Engineer, Arrears Circle, C.P.W.D., on the 26th August 1947; it had been signed by the plaintiff on the 5th July 1943. It is the case of the Government that contracts such as_ this can be accept ed and signed by Superintending Engineers only and Executive Engineers have no power to sign them.

4. In his plaint the plaintiff. Din Dayal Kapur, after reciting the facts alleged that the work was done in accordance with the rates given in schedule A, that the Government failed to supply asbestos sheets as a result of which the completion of the work delayed, that on the 30th May 1944, the Superintending Engineer ordered a torn ceiling to be replaced for which the Executive Engineer sent up an estimate of Rs. 15,000/- and the plaintiff was ordered by the Engineer-in-charge to carry out this extra work, that for this extra work the plaintiff offered to accept the rates given in the schedule and that the Superintending Engineer per his letter No. 3994/Cons-53 dated the 12th November 1945 reduced the rates which he was not entitled to do and which the plaintiff re fused to accept. He further alleged that the Aviation Division, Gaya, came to an end and a bill was made on the 4th December 1947. On these allegations the plaintiff claimed Rs. 14,420/- with interest. As the defendant applied for stay, no written statement was filed.

5. Certain letters have been placed on the record by the plaintiff which have been admitted by the defendant. The first is dated the 14th July 1947 which is sent by the plaintiff to the Superintending Engineer saying that at the time of allotting the work to him annas eight per sq. ft. was agreed between him and the Executive Engineer and an agreement was drawn up in accordance with that. In reply to this letter the Superintending Engineer wrote on the 6th August 1947 saying:

* * * *

"This rate was only recommended by the Executive Engineer to the Superintending Engineer who was the competent authority and who finally approved the rate of -/6/- per sq. ft., based on proper analysis. The undersigned is therefore unable to revise the orders already passed by the previous Superintending Engineer.

The Executive Engineer is being asked to finalise your account and the case has been treated as closed."

Another letter was sent to the plaintiff by the Executive Engineer dated the 11th September 1947 in which it was stated: * * * *

"Subject to the condition