Water and Power Consultancy (India) Ltd. Vs. International Building and Furnishing Co. (Cal) Pvt. Ltd. and anr. - Court Judgment

Excerpt:
arbitration - jurisdiction - sections 7, 11 and 34 of arbitration and conciliation act, 1996 - appellant invited tenders - subsequently awarded work to respondent company - respondent was required to prepare a mock sample - appellant conveyed dissatisfaction to sample prepared by respondent - respondent filed application before this court under section 11 of act for appointing arbitrator - court appointed arbitrator - appellant filed slp before apex court challenging appointment of arbitrator - dismissed - arbitrator opined that respondent was entitled to amount for mock sample prepared by them - arbitrator passed award to be paid by appellant - appellant challenged award under section 34 of act - jurisdiction of arbitrator questioned - application dismissed by trial court on ground that no misconduct of proceedings carried out by arbitrator - hence, present appeal filed by appellant - held, though no formal agreement was executed but since tender documents contained an arbitration clause then it amounts to arbitration agreement under section 7 of act - applying ratio of state electricity board v. searsole chemicals ltd, court held that where arbitrator has applied his mind to pleadings, evidence and terms of contract, then there is no scope for reappraisal of matter by court - view taken by arbitrator would prevail - appeal dismissed - hindu law -- custom: [vijender jain, c.j., m.m. kumar, jasbir singh, rajive bhalla & rajesh bindal, jj] alienation of ancestral property - punjab and haryana - held, in respect of state of punjab by virtue of punjab amendment act, 1973 there is a complete bar to contest any alienation of ancestral or non-ancestral immovable property or appointment of an heir to such property on ground that such alienation or appointment was contrary to custom. in punjab the property in hands of a successor has to be treated as coparcenary property and its alienation has to be governed by hindu law except to the extent it is regulated by sections 6 and 30 of the hindu succession act. in haryana, property in hands of successor has to be treated as coparcenary property as well as ancestral property. parties can fall back upon hindu law in case they fail to establish that rule of decision is custom. therefore, in haryana both under hindu law and the customary law, the alienation would be open to challenge. custom was given precedent over uncodified hindu law presumably for reason that custom has been consistently replacing the hindu law. however, it was soon realized that ancestral immovable property, which ordinarily held to be inalienable amongst jats of punjab by virtue of custom except for necessity, no limitation was placed on degrees of collateral, eligible to contest such alienation. it was, therefore, felt necessary to engraft certain restriction on degrees of collateral, eligible to contest an alienation, which under the custom itself was not limited. accordingly, the punjab custom (power to contest) act, 1920 (act no.2 of 1920) was enacted. the hindu succession act was extended to the state of punjab. act 2 of punjab act defined expression alienation to include any testamentary disposition of property and appointment of an heir was to include any adoption made or purporting to be made according to custom. a further provision was made by section 3 that hindu succession act was to apply only in respect of alienation of immovable property or appointment of heirs made by persons who in regard to such alienation or appointment were governed by custom. whereas section 4 declared that hindu succession act was not to affect any right to contest any alienation or appointment of an heir made before the date on which the succession act was to come into force. in other words, act, no.2 of 1920 was not to affect alienation or appointments of heir made before date on which it came into force. it also preserved the rights of any alienation or appointment of an heir made by a family. after section 7 was inserted in act of 1920 by the punjab amendment act of 1973 right of contest being contrary to custom had been totally effaced and taken away. therefore, no person has any right to contest any alienation of immovable property whether ancestral or non-ancestral on ground of being contrary to custom after january 23, 1973. in haryana, the situation as enunciated by act no.2 of 1920 continued to prevail in respect of alienation because no reforms parallel to punjab as brought by amendment act of 1973, had been enacted although right to pre-emption has been substantially abolished in haryana also. no steps even have been taken in that regard. therefore, situation in haryana have to be regarded as it existed under act no. 2 of 1920. hindu succession act,1956[c.a.no.30/1956] -- sections 6 & 30: [vijender jain, c.j., m.m.kumar, jasbir singh, rajive bhalla & rajesh bindal, jj] alienation of coparcenary property - law laid down by full bench in joginder singh kundha singh v kehar singh dasaundha singh [air 1965 punjab 407] and pritam singh v assistant controller of estate duty, patiala [1976 punj lr 342] -whether there is any conflict? - held, the basic controversy in the full bench decision of joginder singhs case was regarding constitutional validity of section 14 of hindu succession act and as to whether it infringes article 14 of constitution. it was held that the estate held by male and limitation on his power of alienation were in no way removed and the reversioners were not debarred from challenging such alienations. the full bench held that section 14 of hindu succession act postulates that estate held by a hindu female before enforcement of succession act either by inheritance or otherwise, was enlarged and on date of enforcement of succession act, she became a full owner. likewise, if she has inherited any estate after the commencement of the act, she was to be regarded as absolute owner rather than a limited owner. consequently, the limitations on power of alienation automatically vanished. this was the necessary result of the provisions made in section 14 of the act. the full bench further held that in respect of male proprietors, no corresponding provision was made either enlarging their estate in ancestral property or enlarging their power of alienation over property inherited by them. however, it noticed section 30 and observed that it only deals with power of his share in coparcenary property by will, which prior to enforcement of the act, he had no right to do. the only provision made in respect of male proprietor regarding alienation of property was his power of alienation by will. in so far as persons governed by custom are concerned, they continued to be governed by the restriction on the power of alienation of a male holder as existed before enforcement of the act. likewise, other restriction on alienation other than disposal by will also continued. the full bench, thus, recognized the superior right of hindu females by virtue of section 14 and upheld the provision as intra vires. the argument that reversioners have ceased to exist after enactment of provisions of section 14 of succession act, was rejected as there was no provision pointed out to that effect. the proposition laid down by the full bench in pritam singhs case was that the hindu succession act has not abolished joint hindu family with respect to rights of those who were members of mitakshara coparcenary, except in the manner and to the extent mentioned in sections 6 and 30 of the act, this statement should also imply, though it does not say so expressly, the succession act to this extent does not affect the rights of the members governed by dayabhaga coparcenary. the full bench in pritam singh;s case expressly noticed the judgment of earlier full bench in joginder singhs case but construed the same as irrelevant by observing that it dealt with the power of alienation of a person governed by customary law and constitutional validity of section 14 of hindu succession act. thus there is no real conflict between the two full bench judgments. both the full bench judgments have been delivered on the assumption that joginder singhs case dealt with question of alienation whereas pritam singhs case had decided the question concerning succession. even on fact in joginder singhs case the issue was validity of alienation by consent decree by a father to his two sons, which was challenged by third son, whereas in pritam singhs case the question of nature of property in hands of sons on death of their father had arisen for purposes of assessment of estate duty. in pritam singhs case the property in the hands of the sons was held to be coparcenary property and only 1/3rd of property belonging to deceased father was considered eligible for estate duty. therefore, there was no question of alienation in pritam singhs case. - the learned civil court vide impugned order dated 5.8.2008 rejected the contentions of the appellant in respect of jurisdiction of the arbitrator as well as on merits and it was decided that no misconduct on the part of the contractor can be adjudged nor there appears to be any misconduct of proceedings carried out by him.rakesh kumar jain, j.1. this appeal is directed against the order passed by additional district judge, gurgaoh dated 5.8.2008 dismissing the application filed by the appellant under section 34 of arbitration and conciliation act, 1996 (for short 'the act').2. broadly, the facts of the case are that appellant company issued notice inviting tenders for interior partition and allied works for its office complex at gurgaon. in the tender documents, specifications and design of all the works to be done had been detailed as the work was of technical, skilled and specialised nature, details of the work, nature of material to be used and special techniques were also indicated in the tender documents. as the major portion of the work involved laminating hard laminate to the gyp board surface, its procedure for laminating and specialized material required for laminating gyp board surface was also detailed in the tender documents. precautions were also mentioned indicating to use skilled workers, experienced in hard laminate application and further to use neoprin base adhesive. tender documents also contained the list of size, where such work has been earlier done. the last date for submitting the list of size, where such work has been earlier done. the last date for submitting the tender was 6.3.2002. after negotiations, the respondent-company revised rates w.e.f. 21.3.2002. the appellant issued a letter dated 26.4.2002 vide which the respondent was informed that the appellant company has decided to award the work to them though at the negotiated final rates. letter also provided necessary action for signing of agreement, submission of bank guarantee and compliance with other terms and conditions as laid down in the tender documents. the respondent was required to prepare a mock sample, which was prepared and information in this regard was conveyed by the respondent to the appellant vide letters dated 2.5.2002 and 8.5.2002. the appellant suggested modification in the mock sample vide its letter in subsequent meeting dated 24.5.2002 and ultimately on 19.8.2002, the appellant conveyed dissatisfaction to the sample prepared by the respondent which led to a dispute between the parties. the respondent filed an application under section 11 of the act before this court for constitution of an arbitral tribunal to adjudicate upon the dispute stated to have arisen between them. this application was contested by the appellant on the ground that there is no concluded contract between the parties, therefore, arbitrator cannot be appointed.. this court vide its order dated 21.10.2005 appointed sh. h.l. randev, district and sessions judge (retd), resident of house no. 1510, sector 36d, chandigarh as sole arbitrator and also observed that the question of jurisdiction shall be decided by the arbitrator himself. the appellant then challenged the order of this court by way of slp (civil) no. 922 before the apex court and reiterated the stand that since the agreement has not been signed by the parties to the contract, therefore, there was no concluded contract between the parties and the arbitrator should not have been appointed. the said slp was dismissed on 8.5.2006. thereafter the arbitrator started the arbitration proceedings in which again a preliminary objection was taken about the jurisdiction of the arbitrator on the ground that in the absence of agreement signed by the parties, he has no jurisdiction to decide the lis between them. the said objection was decided by the arbitrator vide his order dated 1.7.2006 observing as under:i feel inclined to agree with the learned counsel for the claimants and do not find much force in the argument of the learned counsel for the respondents. it is pertinent to note that through letter, dated 26.4.2002 to which copy is ex.c-4, the respondents conveyed to the claimants their unreserved and unqualified decision to award the work to them at the negotiated final rates for the estimated quantity. of course, in the same letter, in separate para, they requested the claimants to take necessary action for signing of agreement, submission of bank guarantee and compliance with other terms and conditions as laid down in the tender documents and start work within the time frame mentioned therein, but this was nowhere indicated therein as condition precedent for their award of the work to the claimants. the respondents subsequent conduct of providing to them space at the site and allowing them to make samples thete through labour employed by them there, as indicated by their letters dated 23.5.2002 and 28.5.2002, of which copies are exs.r-2 and r-1, respectively, is compatible with this impression of mine as the claimants had not executed and signed any formal agreement or submitted bank guarantee till then and even thereafter. so, it is reasonable to assume that these were not essential requirements for bringing into existence agreement between the parties and it could be concluded through simple correspondence between them. in this connection, may be referred with advantage prahlad singh mulakh raj v. union of india and ors. 1986(1) arb lr 429 (delhi). in that case, tenders had been invited by the respondents and in response thereto, the petitioner had submitted tender which after some negotiations, accepted by the respondents. the non-existence of agreement was contended by the respondents because of non-execution of formal agreement by the petitioner. that contention was repelled and it was observed by his lordship mr. justice b.n. kirpal in para no. 8, at page 429 that:a contract can come into existence by exchange of letters. it is not necessary that there must be a single formal document executed by both the parties. when an offer is made and the same is accepted, it would result in the contract being concluded. in the present case, admittedly tender was submitted by the petitioner. it is not denied that by letter dated 21st november, 1980, the said tender was accepted. the offer of the petitioner having been accepted by the respondents, a contract came into existence.and then in para no. 9, that...a formal contract is a mere formality and merely because the same was not executed, it would not mean that a final and binding contract had not come into existence. in my opinion, therefore, there was a binding agreement between the parties.3. after that the arbitrator decided the entire dispute on merits vide his award dated 16.12.2006 and held that specifications and designs with the tender documents were, defective and in the absence of anything on record it cannot be held that specifications and designs existing at the sites given in the tender document were similar to those. it was further held that contract between the parties had become impracticable. it was also held that the respondent was entitled to the value of mock samples prepared by him. the arbitrator thus, awarded rs. 4,14,338/- to the appellants with 12% interest per annum on the amount and also rs. 25,000/- as costs of the arbitration proceedings.4. the appellant challenged the award of the arbitrator by way of an application under section 34 of the act by which it was inter alia challenged that the arbitrator has decided the dispute between the parties without their being a concluded contract. the learned civil court vide impugned order dated 5.8.2008 rejected the contentions of the appellant in respect of jurisdiction of the arbitrator as well as on merits and it was decided that no misconduct on the part of the contractor can be adjudged nor there appears to be any misconduct of proceedings carried out by him.5. sh. b.r. mahajan, learned counsel appearing on behalf of the appellant has reiterated the arguments which has been raised before the court below that in the absence of concluded contract, the arbitrator had no jurisdiction. in this regard, he has referred to letter dated 26.4.2002 to submit that it was only an offer negotiating the acceptance on behalf of the respondents but in the absence of tender having been signed by the parties concerned and submission of bank guarantee coupled with compliance of other terms and conditions laid down in the tendered documents to start work within time frame, there was no concluded, contract and the arbitrator had committed legal error in invoking the jurisdiction for the purpose of deciding the dispute between the parties. in reply, sh. t.s. dhindsa, learned counsel appearing on behalf of the respondents has vehemently contended that matter with regard to the jurisdiction of the arbitrator has been dealt with by the arbitrator in detail in the order passed by him dated 1.7.2006 wherein it has been observed that not only it was decided by the appellant to award the contract to the respondents but also as per their conduct it transpired that a concluded agreement came into existence between the parties. he has also submitted that even if presuming for the sake of arguments that agreement was not signed but once the work has been allotted, then that would be sufficient to hold that there is a concluded contract between the parties. learned counsel for the respondents relied upon a decision of delhi high court in the case of prahlad singh mulakh raj v. union of india and ors. 1986 (1) arb lr 429 and a latest decision of the supreme court in the case of unissi (india) pvt. ltd. v. p.g. institute of medical education & research 2008 (4) r.c.r. (civil) 678 to contend that though no formal agreement was executed but since tender documents contained an arbitration clause then it amounts to arbitration agreement under section 7 of the arbitration act. the next argument of the learned counsel for the appellant is that even after the letter of award, the respondents prepared a mock sample which was not in terms of the specifications and design prescribed nor the respondents had ever pointed out that design and specifications were defective in any manner, therefore, the arbitrator made out no case for the respondents which has been resulted into miscarriage of justice and on this ground, arbitral award is illegal. in response to this contention raised by the learned counsel for the appellant, learned counsel for the respondents cited two decisions of the supreme court in the case of state of raj as than v. puri construction co. ltd. and anr. : (1994) 6 supreme court cases 485 and u.p. state electricity board v. searsole chemicals ltd. : (2001) 3 supreme court cases 397 to contend that where arbitrator has applied his mind to the pleadings, evidence and the terms of contract, then there is no scope for reappraisal of the matter by court as if it was an appeal. it is clear that here two views are possible, the view taken by the arbitrator would prevail. learned counsel for the appellant could not controvert the proposition of law enumerated in the aforesaid judgments.no other point has been raised in this appeal before this court.in view of the above, i do not find any merit in the present appeal and the same is hereby dismissed without any order as to costs.