R.L. Anand, J.
1. This Civil Revision has been directed against the judgment and decree dated 28-2-1998, passed by Additional District Judge Hisar, who dismissed the appeal of Sankrod Co-operative L. & C. Society Ltd. (hereinafter called 'the society'). Objections under Sections 30 and 33 of the Indian Arbitration Act were dismissed by the trial Court on 1-12-1993.
2. In an arbitration dispute, an ex parte award was given against the society. Aggrieved by the award dated 24-3-1989, the society filed the objections under Sections 30 and 33 of the Indian Arbitration Act and took certain objections including the one that the contract which was allegedly being replied upon by the State, never came into existence as it was not signed by any duly authorised officer on behalf of the State and in these circumstances, on such a contract, which might have included the clause of arbitration, no award could be passed by an Arbitrator. The objections were dismissed by the trial Court. Even the appeal was also dismissed by the first appellate Court for the reasons given in paras No. 7 to 9 of its order, which may be read as under :
7. Sh. M. L. Hans, Ld., counsel for the appellant has impeached the impugned judgment and decree passed by the Ld. Lower Court mainly on the ground that the Ld. Lower Court has failed to appreciate the fact that there was no concluded contract between appellant and the Haryana State as no formal agreement was executed by any officer on behalf of the Governor of Haryana pursuant to acceptance of tenders submitted by the appellant as contemplated under Article 299 of Constitution of India. It has been further contended that since no formal contract between the parties came into existence, the Engineer-in-Chief, Haryana Public Works Department, Building and Roads Branch, Chandigarh was not competent to appoint the Superintending Engineer, Gurgaon Circle, Public Works Department Building and Roads as Arbitrator for settlement of the dispute between the parties and the award on this ground alone is a nullity. In support of these conditions. Sh. M. L. Hans has cited M/s. Chiranji Lal Multani R. B. (Pvt.) Ltd. v. Union of India (AIR 1963 Punjab 372), through Secretary Department of food, Ministry of Food and Agriculture New Delhi (AIR 1963 Punjab 372). The Bihar Eastern Cangetic Fisherman Co-operative Society Ltd. v. Siphal Singh and others (AIR 1977 SCC 2149), and M/s. Om Parkash Baldev Krishan v. The State of Punjab through the Secretary to Government, Punjab Department of PWD Chandigarh and others (1987(2) Punjab LR 313), Sh. M. L. Hans has also led me through Rule 7.22 of the Building and Roads Manual of the order.
8. In M/s. Chiranji Lal Multani R.B. (Pvt.) Ltd. (supra), it has been observed by or Hon'ble High Court as under -
"The reason for enacting Article 299 of the Constitution of India is that in order to bind a Government there should be specific procedure enabling the agents of the Government to make contracts. The public funds cannot be placed in jeopardy by contracts made by unspecific public servants without express sanction of the law. It is a provision made essentially in the interest of the Government so that Government may not be committed by any and every public servant."
In the Bihar Eastern Gangetic Fishermen Co-operative Society Ltd.'s case, it has been laid down by the Hon'ble Supreme Court as under :
"The provisions of Article 299 of the Constitution which are mandatory in character require that a contract made in the exercise of the executive power of the Union or a State must satisfy three conditions, viz.:
(i) it must be expressed to be made by the President or by the Governor of the State as the case may be,
(ii) it must be expressed on behalf of the President or Governor, as the case may be, and
(iii) its execution must be by such person and in such manner as the Presiding or Governor may direct or authorise.
Failure to comply with these conditions nullifies the contract and renders it void and unenforceable.
There is no question of estoppel or ratification in a case where there is contravention of the provisions of Article 299(1) of the Constitution.
In M/S. OM Parkash Baldev Krishan's case it has been laid down by our Hon'ble High Court as under :
Held that Article 229(1) of the Constitution applies to a contract made in exercise of the executive power of the Union or the State. Such a contract is nullified and becomes void if the contract is not executed in conformity with the provisions of Article 299(1) and there is no question of esstoppel or ratification in such cases nor can there be any implied contract between the Government and another person. Subsequent conduct of the petitioner in complying with the requirement of the acceptance letter amounts to acquiescence and estoppel, is not at all sustainable."
Rule 7.22 of B & R Manual of order has laid down that the contract Agreement should invariably be drawn on proper form and strictly in accordance with the terms and conditions of notice inviting tenders, tender of the contractor and letter of acceptance. It has been further laid down that in case of works, tenders for which have been accepted by a competent authority higher than the Executive Engineer, the contract agreement will be prepared and executed by the Executive Engineer on behalf of the Governor of the State Government.
9. In reply of these arguments, it has been contended by Ld. GP that the tenders were invited by the Governor on behalf of the Haryana State and all the conditions of the contract were stated in the form of inviting tenders. The appellant submitted his tender which was accepted by the Executive Engineer, Provincial Division PWD (B & R) Hisar on behalf of the Governor of Haryana through his letter No. 8024 dated 20-11-1986 addressed to the appellant-society which has been reproduced by the Ld. Lower Court in its judgment. Subsequent to receipt of this letter, the appellant-society also executed the contract in form H through one Jai Singh, although the contract in form H could not be signed by the Executive Engineer due to oversight. Ld. GP has stated that in view of the letter dated 20-11-1986 sent by the Executive Engineer to the appellant-society, a valid contract came into the existence between the parties. In support of this contention, Ld. GP has placed reliance upon Union of India v. A. L. Rallia Ram (AIR 1963 SC 1685). In this case a tender notice was issued by the Government of India, Department of Food (Division III) in the name of the Chief Director of Purchases who had authority to contract for sale of 'War Disposal' goods and sign the contract. In his letter submitting a tender the respondent offered to purchase the goods on certain rates and conditions. The acceptance note was signed by the Chief Director of Purchases in his official designation without stating in the description that the contract was executed on behalf of the Governor General. It was held that the correspondence between the parties ultimately resulting in the acceptance note, amounted to a contract expressed to be made by the Government and therefore, by the Governor General, because it was the Governor General who has invited the tender through the Director of Purchases, and it was the Governor General who through the Chief Director of Purchases accepted the tender of the respondent subject to the conditions prescribed therein. No rule made by the Governor General had been placed before the Court showing that in executing a contract for the sale of "War disposal" goods, the officer authorised in that behalf must describe himself as signing on behalf of the Governor General of India. It was further held that Section 175(3) does not in terms required that a formal document executed on behalf of the Dominion of India, and the other contracting party, alone is effective. In the absence of any direction by the Governor General under Section 175(3) of the Government of India Act prescribing the manner, a valid contract may result from correspondence if the requisite conditions are fulfilled. It is true that Section 175(3) uses the expression executed but that does not by itself contemplate execution of a formal contract by the contracting parties. A tender for purchase of good in pursuance of an invitation issued by or on behalf of the Governor General of India and acceptance in writing which is expressed to be made in the name of Governor General and is executed on his behalf by a person authorised in that behalf would conform to the requirements of Section 175(3). The learned lower Court has also considered this aspect of the matter in the light of decision of Supreme Court in case Union of India v. A. L. Railia Ram and come to the conclusion that the execution of formal agreement is not necessary if requirements of Article 299 of Constitution of India are otherwise satisfied. The findings given by the Learned Lower Court does not call for interference. No fault can also be found with the findings of Learned Lower Court that the Arbitrator neither misconducted himself nor the proceedings and the award was made by him within the statutory period of four months. The Learned Lower Court, has, therefore, rightly dismissed the objections of the appellant and made the award dated 24-3-1989 Rule of the Court. The impugned judgment and decree passed by the Ld. Lower Court is accordingly affirmed and this appeal is dismissed with costs. Decree sheet be drawn accordingly. Record of the Lower Court be sent back and file of this Court be consigned to the records."
3. Aggrieved by the judgment dated 28-2-1998, the present revision has been filed by the society.
4. I have heard Shri P. K. Mutneja, Advocate, on behalf of the petitioner and Shri C. R. Dahiya, DAG, Haryana, on behalf of the respondent.
5. The learned counsel for the petitioner relied upon Dodsal Pvt. Ltd. v. Delhi Electric Supply Undertaking (1996(2) SCC 576 = 1996(1) Arb. LR 409 (SC), and Waverly Jute Mills v. Raymon & Company (AIR 1963 SC 90), and submitted that since the contract was not signed by any authorised person on behalf of the State, therefore, no valid arbitration agreement had ever come into existence and in these circumstances, the Arbitrator could not invoke the jurisdiction to refer any dispute which might have been referred to him by the Government.
6. I do not subscribe to the arguments raised by learned counsel for the petitioner. Section 2(a) of the Arbitration Act, 1940, lay down that "Arbitration agreement" means a written agreement to submit present or future differences to arbitration whether an Arbitrator is named therein or not. As per this clause the contract which contained the arbitration clause need not be signed by both the parties. Requirement is that the agreement should be in writing. The learned counsel for the petitioner has shown me the agreement itself which shows that it is signed by the authorised agent on behalf of the society but it is not signed by any authorised officer on behalf of the State. In Union of India v. A. L. Rallia Ram (supra), it was observed that in order to constitute an arbitration agreement' within the meaning of Section 2(a) Arbitration Act, there must be a valid agreement to submit present or future differences to arbitration and the agreement must be in writing and must be accepted by the parties. It is, however, not a condition of an effective arbitration agreement that it must be incorporated in a formal agreement executed by both the parties thereto, nor is it required to be signed by the parties. But where the Dominion of India was a party to the arbitration agreement, which is a contract within the meaning of Section 175(3) of the Government of India Act, 1935, it must, to bind the Dominion of India, be made in the form prescribed by that section.
7. In this case, it cannot be lost sight of the fact that the reference to the Arbitrator was made by the Government itself, meaning thereby, that the Government at all times had agreed the terms of the contract which was signed by the society through its representative.
8. In this view of the matter, I do not find any merit in the contention raised by Shri Mutneja that the Arbitrator had given the award without any jurisdiction. No merit.
10. Petition dismissed.