BIND BASNI PRASAD, J. - (1.) THIS is an appeal from an order dated 20 -2 -1950, passed by the learned civil Judge of Agra refusing to stay proceedings of a suit on the defendant's application under Section 34, Arbitration Act of 1940. The relevant facts are as follows : 2. The plaintiff is a firm, registered under the Partnership Act carrying on the business of purchasing and selling ghee. In November 1948, the Government of India invited tenders for the supply of ghee to the armed forces and the plaintiff submitted one. Its tender to supply 2,600 tons of ghee at a total cost of about Rs. 1,31,80,000 was accepted. In February 1949 the Central Government increased the quantity to 3,250 tons at a total cost of about Rs. 1,64,00,000. The acceptance of the plaintiff's tender was contained in a letter with which its enclosures is printed at pp. 29 to 45 of the paper book supplied to us by respondent's counsel. Detailed terms and conditions of the contract are contained therein. The plaintiff accepted these terms and conditions by the letter printed at p. 46 of the paper book. It is important to note here that the terms and conditions of the contract communicated by the Central Government, though addressed to the plaintiff firm, were accepted by one of the partners only Ved Prakash Gupta, who styled himself as the authorised representative for the plaintiff firm. One of the terms of the contract related to arbitration and it was contained in Appen. II (printed at p. 42 of the paper book) of the Central Government's letter accepting the tender. It runs as follows : 'In the event of any question or dispute arising under the conditions mentioned in the Tender or the Schedule or appendices annexed thereto or in General conditions of the contract (Supply Department. Form W.S.B. 133) except as to any matter the decision of which is specially provided for by these conditions, the same shall be referred to the sole arbitration of the Secretary, Government of India, Ministry of Food pr his nominee within a year from the date of completion of contract. The award of the arbitrator so appointed shall be final and binding on the said parties.
(2.) THIS clause does not apply to any matters the decision of which is specially provided for by any conditions applicable to this contract and it shall not be open to either party to refer any such questions or disputes to arbitration unless a specific reference to arbitration s jointly signed by the contractor and the purchaser. The provisions of the Arbitration Act, 1940, and of the rules thereunder and any statutory modification thereof shall be deemed to apply to and be incorporated in this contract. 4. Upon every and any reference as aforesaid the assessment of the costs incidental to the reference and award respectively shall be in the discretion of the sole arbitrator. 5. Work under the contract shall if reasonably possible continue during the arbitration proceedings, and no payment due to or payable by the purchaser shall be withheld on account of such proceedings. 6. The venue of the arbitration proceedings will be the premises of the Food Ministry New Delhi, or such other place as the sole arbitrator may decide.'
(3.) THE plaintiff alleges that it 'carried out all the terms of the contract on his part and supplied the entire quantity of ghee according to the contract without any complaint or defect or rejection and the quality of ghee supplied by him was uniformly found to be according to the prescribes standard after severe tests of analysis by the defendant's officers.' The defendant, viz., the Central Government, made payment of all the bills except two. The plaintiff therefore, brought a suit for the recovery of Rs. 4,90,423 -6 -0 the particulars of which as given in the plaint are as follows : Rs. As. Ps.1. Bill dated 10 -5 -1949, for thesupply 01 Milk ghee blended dulysupplied by inspectio note 1,09,592 13 0Vide para. 7 of the plaint interest@ 6% per annum 2,356 4 02. Bill dated 18 5 1949 for thesupply of 23 tons 176 lbs. ofMilk ghee blended duly sup -plied by inspection note 1,13,713 4 0Vide para. 10 of the plaintinterest @ 6% per annum ... 2,293 3 63. Refund of Security deposit ... 2,00,000 0 0Vide para. 18 of the plaintinterest @ 6% per annum .. 3,433 5 64A. Damages owing to blocking ofthe stock of raw ghee at theghee Heating Centre, result -ing vide para. 12 of theplaint) ... 43,200 0 04B. Damages as consequential lossowing to the cancellation ofthe supply of 62 tons of gheearising out of the illegal andunlawful cancellation of thecontract and its frustration@ 5% (vide para. 16 of theplaint. ... 15,250 0 0Total of paras. 4A and 4B ... 58,450 0 0Interest @ 4% ... 584 8 0 - - - - - - - - - - - - - - - - - - - - - Rs. 4,90,423 6 0 - - - - - - - - - - - - - - - - - - - - - - - 34 'the defendant has been informed that the plaintiff has adulterated supplies of ghee made to the defendant. The police investigations in this connexion are in progress.' ;