Tek Chand - (1.) THIS first appeal from order has been preferred under Section 39 of the Indian Arbitration Act, 1940, from the Court of Subordinate Judge 1st Class, Delhi, holding that there was an arbitration agreement between the parties and that the suit instituted by the plaintiff-appellant was liable to be stayed under Section 34 of the Arbitration Act.
(2.) IT is necessary to state the facts giving rise to the dispute in their entirety. The plaintiff-appellant is a Private Limited Company and was required to supply a certain quantity of Gram whole. The plaintiff is a registered Company. IT was invited to submit a tender. The conditions are contained in Mamo. C/200, dated the 31st of December, 1955. IT was stated in paragraph 2 of this document that the supplies of Barley/Gram whole will be governed by the terms and conditions as stipulated in the office Memo No. C/900, dated the 24th February, 1949, as amended to date, and special conditions stipulated hereunder, that is, Exhibit D-7, The invitation was signed as under: "B. R. Dhawan, Assistant Director of Purchase, for and on behalf of the President of India." IT is provided in Memo No. C/900, dated the 24th of February, 1949 (paragraph 4 (c)) that acceptance of offer will be communicated either by a telegram or by an express letter of acceptance or by a formal "Acceptance of Tender". On the 16th of October, 1956, the plaintiff's tender was telegraphically accepted. 'Inter alia' it was stated in the telegram that supplies would be governed by terms and conditions contained in "Purfood" Memo No. C/200 of 31st December, 1955, as amended. The telegraphic address of the sender of the telegram was "Purfood". Exhibit P. 13 is post copy of the above telegram, which was sent to the plaintiff under a registered cover A.O. under the signature of P. R. Kashyap, "Assistant Director of Purchase, for and on behalf of the President of India". On the top the date given is 17th of October, 1956, but it seems to have been signed by Shri P. R. Kashyap on the I6th of October, 1956. "Purfood", it may be stated, was telegraphic address of the Chief Director General of Food in the Ministry of Food and Agriculture.
(3.) THE formal acceptance of tender (Exhibit P.4) was sent to the plaintiff on the 22nd of October, 1956, under the signatures of Shri P. R. Kashyap, "Assistant Director of Purchase, for and on behalf of the President of India". THE communication was headed- "Government of India, Ministry of Food and Agriculture, Directorate General of Food, (Army Purchase Organisation)." On the basis of this agreement the plaintiff-appellant started supplying large quantities of Gram, but they were rejected as unfit. THE plaintiff also filed an appeal against rejection to the proper authority but was unsuccessful. On 1st of February, 1957, a letter was addressed to the plaintiff by the Deputy Director of Purchase stating that as the quantity of 360 tons of Gram whole has been finally rejected even on appeal the same is hereby cancelled from the contract at plaintiff's risk and costs subject to the recovery of extra amount that might be incurred by the Government of India in the repurchase. It was also pointed out that all other terms and conditions remained unaltered and further that this was without prejudice to Government's rights under the terms of the contract. THE Deputy Director of Purchase purported to send this communication for and on behalf of the President of India. At this stage I may refer to certain provisions of the Constitution as they have bearing upon what is to follow. Article 77 provides - "(1) All executive action of the Government of India shall be expressed to be taken in the name of the President. (2) Orders and other instruments made and executed in the name of the President shall be authenticated in such manner as may be specified in rules to be made by the President, and the validity of an order in instrument which is so authenticated shall not be called in question on the ground that it is not an order or instrument made or executed by the President. (3) THE President shall make rules for the mere convenient transaction of the business of the Government of India, and for the allocation among Ministers of the said business." Article 299, which refers to contracts to which the Union or a State is a party, runs as under: "(1) All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise. (2) Neither the President nor the Governor shall be personally liable in respect of any contract or assurance made or executed for the purposes of this Constitution, or for the purposes of any enactment relating to the Government of India heretofore in force, nor shall any person making or executing any such contract or assurance on behalf cf any of them be personally liable in respect thereof." ;