Bachawat, J. - (1.) THIS is an appeal by the Union of India from an order passed under Section 20 of the Indian Arbitration Act. The Union of India invited tenders for the supply of certain goods. The invitation contained inter alia the following query: "Do you agree to sole arbitration by Director General of Supplies and Disposals or his nominee as provided in Clause 21 of me General Conditions of Contract Form W. S. B. 196? (Your acceptance or non-acceptance of this clause will not influence the decision of the tender. It should, however, be noted that an omission to answer the above question will be deemed, as an acceptance of the clause)."
(2.) DEFENDANTS M/s. Himco (India) Private Ltd. submitted their tender dated October 3, 1956 wherein they stated at the foot of the query mentioned above as follows:-- "We feel there should be an unattached arbitrator". The Union of India accepted the tender by A/T No. Cal./PR-II (3)/16359-G/448 dated November 30, 1956. The acceptance stated inter alia that the conditions of the contract would be as contained in Form No. W. S. B. 138 as amended up to date. Clause 21 of the said Form contained the following arbitration clause: "In the event of any question, dispute or difference arising under these conditions or any special conditions of contract, or in connection with this contract, (except as to any matters the decision of which is specially provided for by these or the special conditions), the same shall be referred to the sole arbitration of the Director General of Supplies and Disposals or of some other person appointed by him. It will be no objection that the arbitrator is a Government servant, that he had to deal with the matters to which the contract relates or that in the course of his duties as a Government servant he has expressed views on all or any of the mailers in dispute or difference. The award of the arbitrator shall be final and binding on the parties to this contract. It is a term of this contract- (a) if the arbitrator be the Director General of Supplies and Disposals- (i) in the event of his being transferred or vacating his office by resignation or otherwise, it shall be lawful for his successor-in-office either to proceed with the reference himself, or to appoint another person as arbitrator; or (ii) in the event of his becoming unable to act, for any reason, it shall be lawful for the Director General of Supplies and Disposals to appoint another person as arbitrator; or (b) if the arbitrator be a person appointed by the Director General of Supplies and Disposals--in the event of his dying, neglecting or refusing to act, or resigning or being unable to act for any reason, it shall be lawful for the Director General of Supplies and Disposals cither to proceed with the reference himself or to appoint another person as arbitrator in place of the outgoing arbitrator. It is further a term of this contract that no person other than the Director General of Supplies and Disposals or the person appointed by him should act as arbitrator and that, if for any reason that is not possible, the matter is not to be referred to arbitration at all. Upon every and any such reference, the assessment of the costs incidental to the reference and award respectively shall be in the discretion of the arbitrator. Subject as aforesaid, the Arbitration Act, 1940 and the rules thereunder and any statutory modifications thereof for the time being in force shall be deemed to apply to the arbitration proceedings under this clause. Work under the contract shall, if reasonably possible, continue during the arbitration proceedings and no payment due to or payable by the Purchasers shall be withheld on account of such proceedings. The venue or arbitration shall be the place from which the acceptance note is issued or such other place as the Purchaser at his discretion may determine. In this clause the expression "the Director General of Supplies and Disposals" means the Director General of Supplies and Disposals for the time being and includes, if there be no Director General of Supplies and Disposals the officer who is for the time being the administrative head of the Supplies organisation, whether in addition to other functions or otherwise. Disputes arose under the contract and on April 13, 1960 the defendants served a notice of their claim under Section 80 of the Code of Civil Procedure, 1908 upon the Union of India. In course of the subsequent correspondence the Union of India asserted that the disputes should be referred to arbitration in accordance with the aforesaid arbitration agreement whereas the defendant's asserted that the disputes should be referred to the arbitration of an unattached arbitrator. On or about December 1, 1960 the Union of India applied to this Court on its Original Side for filing of the aforesaid arbitration agreement and for other appropriate orders under Section 20 of the Indian Arbitration Act, 1940. The defendants contested the application contending inter alia that (1) there was no valid arbitration agreement and (2) that the Court had no jurisdiction to try the suit. P.C. Mallick, J. negatived both these contention. His Lordship, however, held that the parties entered into an arbitration agreement upon the terms contained in clause 21 of Form No. W. S. B. 133 with the modification that name of the arbitrator was left undetermined or alternatively with the modification that the arbitrator should be an unattached person to be appointed by the Director General of Supplies and Disposals; and that consequently the Court had the power to appoint an arbitrator. Accordingly the learned Judge appointed Shri B.K. Choudhury, Barrister-at-Law as the arbitrator and directed that the arbitration agreement be filed and that the disputes be referred to the arbitration of Shri B.K. Choudhury. Aggrieved by this order the Union of India has preferred this appeal. The defendants filed a cross-objection. Before us Dr. Das formally abandoned the cross-objection. On behalf of the defendants Dr. Das now accepts as final the findings of the Court below that there was a concluded contract with an arbitration clause and that the Court has jurisdiction to try the suit. The Union of India has pressed its appeal.
(3.) WE are satisfied that there was a concluded arbitration agreement between the parties in terms of clause 21 of Form No. W. S. B. 133. With respect we cannot agree with the learned Judge's finding that the parties entered into a modified arbitration agreement. By their tender the defendants made a suggestion that there should be an unattached arbitrator. The Union of India did not accept this suggestion and by its acceptance of tender plainly stated that terms of the contract and of arbitration agreement would be as contained in Form No. W. S. B. 133 as amended up to date. The acceptance of tender not being an unqualified acceptance of the offer of the defendants amounted to a counter-offer by the Union of India. By their subsequent conduct the defendants accepted this counter-offer. They acted upon the footing that there was a concluded contract upon the terms contained in the acceptance of tender, dated November 30, 1956 and on that footing supplied goods to the Union of India. The defendant's letter, dated the 13th April 1960 refers to the supplies as having been made under the acceptance of tender, dated November 30, 1956. It is common case before us that there was a concluded contract together with a concluded arbitration agreement. The defendants seek to enforce claims against the Union of India under this concluded contract; whereas the Union of India seeks to enforce the arbitration agreement contained in it. The terms of this concluded bargain are recorded in the acceptance of tender which on its face stated that the contract was on the terms specified in it and in the schedule annexed thereto and that those documents would be the sole repository of the transaction. In these circumstances we are bound to hold that the parties entered into an arbitration agreement in terms of clause 21 of Form No. W. S. B. 133, and not into a modified arbitration agreement as suggested by the defendants.;