TMI Blog2016 (10) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... erent precedents as discussed above, I am of the view that there was no arbitration agreement between the parties as provided under Section 7 of Arbitration and Conciliation Act, 1996, nor the arbitration agreement was in writing executed between the parties, therefore, a contract with regard to arbitration cannot be presumed. An Agreement which is enforceable in law is a contract. The alleged agreement between the parties is not enforceable in law being not a concluded agreement between the parties. Section 16 of the Arbitration and Conciliation Act would operate only in the event where there was a concluded agreement between the parties in terms of Section 7 of the Arbitration and Conciliation Act. There was no consensus ad idem between the parties with reference to any terms and conditions of the offer and acceptance. Revision petition dismissed. - CR No. 2471 of 2016 (O&M) - - - Dated:- 22-10-2016 - MR. JUSTICE RAJ MOHAN SINGH For the Appellant : Mr. Ashok Kumar, Sr. Advocate with Mr. Adish Gupta, Advocate For the Respondent : Mr. Ashish Aggarwal, Sr. Advocate with Mr. Govind Chauhan, Advocate ORDER RAJ MOHAN SINGH, J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Clause 13.0 of the terms and conditions of the work order was to the following effect:- Execution of Agreement: The contractor shall have to execute an agreement on ₹ 50/- non-judicial stamp paper to be purchased from any stamp vendor under the jurisdiction of the Orissa High Court, in the specific format enclosed at Annexure VII. Dy. General Manager (Planning Contracts) shall sign the contract on behalf of NALCO. The agreement should be executed within 15 days of issuance of work order. The agreement shall not be required to be executed for work orders of value less than or equal for ₹ 50,000/- [6]. Thereafter, petitioner-defendant No.1 sent E-Mails and letters dated 17.11.2011 to 21.11.2011 to the plaintiff-respondent No.1 asking for kick off meeting between the plaintiff and defendant No.1. In reply, the plaintiff sent letter dated 21.11.2011 informing that they did not receive any original document and no acceptance could be given till receipt of final specifications. Defendant No.1 once again asked for initiation of work by plaintiff-respondent vide letter dated 22.11.2011. [7]. According to the plaintiff, since the work order w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Clause 22.00 of NIT WO and Clause-87 of GCC against claim of risk and cost amount along with LD for non-execution of Ash Pond-IV construction work by the plaintiff. [12]. The said claim of defendant No.1-petitioner was contested by plaintiff-respondent No.1 on the ground that there was no binding agreement/contract between the parties, therefore there was no question of any dispute having arisen between them. Plaintiff-respondent No.1 informed defendant No.1-petitioner that there was no occasion for appointment of any arbitrator vide letter dated 20.06.2015. [13]. Thereafter, vide letter dated 04.07.2015, defendant No.1- petitioner requested plaintiff-respondent No.1 to select any one name from the panel of three persons for appointment of an Arbitrator under Clause 22.00 of NIT WO and Clause-87 of GCC against claim of risk and cost amount along with LD for nonexecution of Ash Pond-IV construction work by the plaintiff. Plaintiff reiterated its earlier stand of no binding contract between the parties and therefore, there was no occasion for appointment of any Arbitrator. [14]. Vide letter dated 02.09.2015, defendant No.1-petitioner informed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case and that too in the absence of any written statement, the order dated 07.10.2015 passed by Civil Judge (Junior Division), Gurgaon was found to be unsustainable in law and was accordingly, set aside. Defendant No.1-petitioner and Arbitrator-defendant No.2 were restrained from proceeding with arbitration proceedings till pendency of the suit. That is, how, the present revision petition came to be filed at the instance of defendant No.1-petitioner. [19]. I have heard learned counsel for the parties. [20]. Learned counsel for the petitioner vehemently contended that petitioner floated a Notice Inviting Tenders dated 05.05.2011 for construction of Ash Pond-IV in NALCO District Angul, Orissa. Bidders were asked to submit their sealed offer after considering all the terms, conditions and specifications. Respondent No.1 submitted its tender and deposited earnest money to the tune of ₹ 25 lakhs on 06.06.2011. Thereafter, petitioner accepted the offer made by respondent No.1 and sent work order on 09.11.2011. Petitioner also requested respondent No.1 to attend the kick off meeting on 19.11.2011. Once again respondent No.1 was requested to come for kick of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the parties were at ad idem, then mere fact of one party not signing the agreement cannot absolve other party from the liability arising out of the agreement. Signing of agreement is not mandatory. Arbitration clause has to be interpreted in such a manner so as to give effect to the agreement rather than to invalidate it. This is more so in a commercial document having arbitration clause where presumption is in favour of the validity of the agreement. [23]. Learned counsel for the petitioner further submitted that in view of Section 16 of the Arbitration Act, it is explicitly clear that the Arbitral Tribunal has the power to rule on its own jurisdiction even when any objection with respect to existence or validity of the arbitration agreement is raised, and a conjoint reading of sub Sections (2), (4) and (6) of Section 16 of Arbitration Act would make it clear that such a decision would be amenable to be assailed within the ambit of Section 34 of the Arbitration Act. Reference was made to Kvaerner Cementation India Limited case (supra). [24]. In view of observations made in M/s Pappu Rice Mills case (supra) , learned counsel for the petitioner submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract Act, 1872 which prescribes that in order to convert a proposal into a contract (promise), the acceptance should be absolute and unqualified. In the absence of such feature, there cannot be any acceptance in the eyes of law. It would be a case of mere counter offer which would require further acceptance by the offerer. Learned counsel also submitted that work order dated 09.11.2011 was not an absolute acceptance of its offer as the acceptance of the petitioner was made conditional to respondent No.1 i.e. to accept or reject the work offer within a stipulated period of 7 days from the date of its receipt. The copy of work order dated 09.11.2011 in duplicate was received by respondent No.1 only on 30.11.2011 by registered post. Since the work order was not technically sound, therefore, respondent No.1 proceeded not to accept the same and sent its refusal vide registered letter dated 02.12.2011 within stipulated period of 7 days from receipt of the work order. The work order was a counter offer and not an unconditional acceptance which further required the acceptance on the part of respondent No.1. This aspect of the matter was further fortified by letters darted 05.12.2011, 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Constructions Vs. Union of India and others, 2015 AIR (SC) 270 and Travancore Devaswom Board Vs. Panchami Pack Pvt. Ltd., 2004(13) SCC 510 to submit that arbitration agreement is required to be in writing in terms of Section 7(3) of the Arbitration and Conciliation Act, 1996. In the absence of specific written agreement, a contract with regard to arbitration cannot be presumed. Arbitration arises from a contract and unless there is a specific written contract, a contract with regard to arbitration cannot be presumed. Section 7(3) of the Arbitration Act stipulates that the contract with regard to arbitration must be in writing. The disputes referable in terms of Clause of the Contract cannot be arbitrated upon by the arbitrator as there was a specific clause whereby the said dispute has been excepted. When the law specifically provides a provision with regard to formation of a contract/agreement in a particular manner, there cannot be any exception or presumption with regard to a contract if the contract is not entered into by the mode prescribed under the Act itself. Even participation before the arbitrator would not preclude the respondent from assailing the jurisdiction of arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R (Civil) 362 in this context. [38]. At last, learned counsel relied upon Vishwa Industrial Company Private Ltd. Vs. Mahanadi Coalfields Limited and others, 2007 AIR (Orissa) 71, Milestone Gears Pvt. Ltd. Vs. Industrial Finance Corporation of India, 2010 (8) RCR (Civil) 1521, Union of India Vs. M/s Uttam Singh Dugal and Company (Pvt.) Ltd., 1972 AIR (Delhi) 110 and Forbes Gokak Limited Vs. Central Warehousing Corporation and another, 2003(1) RAJ 200 to submit that acceptance with a verification of a condition was not an acceptance. It was merely a counter proposal. In order to convert a proposal into a promise, the acceptance must be absolute or unqualified. It had to be accepted by the original proposer before a contract was made. The cancellation of conditional offer did not result in a valid and binding contract between the parties. An acceptance of an offer must be absolute. When there was variance with the offer and acceptance, even in respect of any material term, the acceptance could not be said to be absolute and unqualified. Such an offer would not result in the formation of a legal contract. Except in the eventuality of unconditional and unequivocal acceptance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be constraint to take action as per terms and conditions of contract as deemed fit. Vide letter dated 02.12.2011, respondent No.1 on the basis of technical reasons explained earlier, showed its inability to accept the work and returned the same. [41]. As per Clause 13.0 of the Contract Agreement under general instructions, contractor was required to execute an agreement on non-judicial stamp of ₹ 50/- under the jurisdiction of Orissa High Court in the specific format enclosed at Annexure VII. Deputy General Manager (Planning and Contracts) was required to sign the contract on behalf of NALCO. The agreement was required to be executed between 15 days of issuance of work order. The agreement was not required to be executed on work orders of value less than or equal to ₹ 50,000/-. No such execution of agreement was executed between the parties as per the contract document under general instructions. [42]. Similarly, as per condition No.13.0 of General Conditions of Contract, successful tenderer was required to execute an agreement with the owner in the proforma attached with tender document within 10 days of receipt of the notification of acceptance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Section 7 of the Indian Contract Act, except in the eventuality of unconditional and unequivocal acceptance, there cannot be any consensus ad idem between the parties. The offeree has to give unqualified consent to the exact terms of offer so as to bring about a concluded contract. There is a contrast distinction between arbitration agreement and a contract. Contract can be entered into even orally. The same can be spelt out from the conduct and correspondence between the parties. In case of arbitration agreement, it can come into existence only in the manner as contemplated under section 7 of the Arbitration and Conciliation Act, 1996. Arbitration agreement has to be in writing. [45]. In Govind Rubber Limited case (supra), the Hon ble Apex Court held in the following manner:- 15. A perusal of the aforesaid provisions would show that in order to constitute an arbitration agreement, it need not be signed by all the parties. Section 7(3) of the Act provides that the arbitration agreement shall be in writing, which is a mandatory requirement. Section 7(4) states that the arbitration agreement shall be in writing, if it is a document signed by all the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted by respondent No.1 being not considered viable by respondent No.1. There were no other supporting documents which infer from the conduct of the parties that the agreement was ever implemented by exchange of letters, telex, telegrams or other means of telecommunication. The parties were never ad idem on any agreed terms and conditions of the agreement, therefore, Govind Rubber Ltd. case (supra) operates in different fields and is not applicable in the facts and circumstances of the present case. [48]. It is true that Section 16 of the Arbitration and Conciliation Act, 1996 makes it explicitly clear that the Arbitral Tribunal has the power to rule on its own jurisdiction even when any objection with reference to existence or validity of arbitration agreement is raised. Sub Section (2), (4) and (6) of Section 16 of Arbitration and Conciliation Act would make it clear that such a decision would be amenable to be assailed within the ambit of Section 34 of the Arbitration Act. There cannot be any dispute with regard to aforesaid proposition, but for the applicability of the same, there must be a concluded document and lawful arbitration agreement. [49]. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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