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PETITIONER: J.K. JAIN & ORS.

       Vs.

RESPONDENT: DELHI DEVELOPMENT AUTHORITY & ORS.

DATE OF JUDGMENT26/09/1995

BENCH: SINGH N.P. (J) BENCH: SINGH N.P. (J) FAIZAN UDDIN (J)

CITATION:  1996 AIR  318            1995 SCC  (6) 571  JT 1995 (7)   409        1995 SCALE  (5)625

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T N.P. SINGH. J      Leave granted.      The appellants  have questioned  the  validity  of  the order, passed  by the High Court, rejecting the claim of the appellants  that   there  was   no  agreement   between  the appellants and the respondent - Delhi Development Authority, (hereinafter referred  to as  ‘the respondent’) to refer the dispute between them to an Arbitrator.      The  appellant   No.4-M/s  Jain   Rolling  Mills  is  a registered  partnership   firm  and   the   appellant   No.1 (hereinafter referred to as ‘the appellant’) is the Managing Partner. The respondent issued a notice inviting tenders for supply of  steel bars  of various diametres to the extent of 20,000 Mt. Tonnes. The appellant obtained a tender form from the said  respondent on 16.11.1982. The tender was submitted alongwith  a   covering  letter   dated  18.11.1982.   After negotiations, the  tender was  accepted only  for supply  of 10.000 Mt.  Tonnes of  steel bars  of various  diametres.  A formal agreement was executed. Thereafter some dispute arose between the  parties and it appears that the respondent vide its letter  dated  23.10.1984  rescinded  and  annulled  the contract for  the balance  quantity of  3512.285 tonnes. The Engineer Member  of the  authority in  purported exercise of the powers  under clause  14 of  the agreement, appointed an Arbitrator to make an Award relating to the disputes between the appellant  and the respondent. An Original Miscellaneous Petition was  filed before the Delhi High Court on behalf of the appellants  challenging the appointment of an Arbitrator on  the  ground  that  appellants  were  not  party  to  any Arbitration Agreement.  That petition  was  dismissed  by  a learned single  Judge. On  appeal being  filed the  Division Bench came  to the  conclusion that  in view of Clause 14 of the agreement  any dispute  between the  parties had  to  be referred to an Arbitrator to be appointed by the respondent.

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In  the   agreement  which  was  entered  into  between  the appellants and the respondent it was stated:-      "WHEREAS the  Contractor  has  submitted      tender  for   the  work  "Supplying  and      stocking of  Cold Twisted deformed Steel      Bars  Conforming  to  IS:  1786-1979  of      various dias  at any  D.D.A.  Stores  in      Delhi/New Delhi"  and the  same has been      acepted by  the Authority  on the  terms      and condition  contained in  the  tender      forms and  conditions attached  herewith      in the  letter of  acceptance dated  the      27.12.82.      NOW THIS DEED WITNESS AS UNDER:      That the  terms and conditions contained      in the tender form and conditions of the      contract attached to this deed, and also      the  letter   of  acceptane   dated  the      27.12.82 shall  be binding  between  the      parties." To that  very agreement,  the tender  form with  the heading ‘Tender and  Contract for supply of materials’ was enclosed. The tender  form has  an endorsement  "issued  to  M/s  Jain Rolling Mills",  signed by  the Executive  Engineer, Housing Division, on  16.11.1982. Appellant has signed the agreement aforesaid and  the different  pages of  the tender  form  on behalf of  appellant No.4,  the firm. The Executive Engineer has signed  on behalf of the respondent. Paragraph 14 of the said tender  form contains  the arbitration  clause,  saying that ’except  where otherwise  provided in  the contract all question  and  disputes  relating  to  the  meaning  of  the specifications,   designs,    drawings   and   instructions, hereinbefore mentioned  and as to the quality of workmanship or materials  used on  the work  or to  any other  question, claim, right  matter or thing whatsoever, in any way arising out  of  or  relating  to  the  contract,  designs  drawings specifiation,  estimates   instruction   orders   or   these conditions  or   otherwise  concerning   the  works  or  the executions on  failure to  execute the  same whether arising during the  progress of  the work or after the completion or abandonment  thereof   shall  be   referred  to   the   sole arbitration of  the person appointed by the Engineer Member, DDA at the time of dispute....’      The stand  of the  appellants is  that the  said clause shall not  be deemed to be a part of the agreement, inasmuch as it  is only  part of  the tender  form which is issued to every  contractor  intending  to  supply  materials  to  the respondent. It is just general rules for the guidance of the contractors. It  may be pointed out that the notice inviting tenders clearly stated ’Contract documents consisting of the detailed plans,  complete specifications,  the  schedule  of quantities of the various classes of work to be done and the set of conditions of contract to be complied with the person whose tenders  may be accepted will also be found printed in the form of tenders, can be seen/purchased at the Divisional office between  the hours  of 11  A.M. and 4 P.M. every day, except on  Sundays and Public Holidays’ (emphasis supplied). From the  notice inviting  tenders it  is apparent,  that to whomsoever the  contract was  to be allotted, the conditions in the  printed form  of tender  had to be complied with. It appears because  of the aforesaid condition mentioned in the notice inviting tenders, at the time of the execution of the agreement, the appellant, the Managing Partner, on behalf of the firm  signed each  page  of  the  said  form  of  tender including the last page. On behalf of the respondent, it has

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been signed by the Executive Engineer and the form of tender has been attached to the agreement referred to above. In the agreement it  has been  clearly stated  that the  terms  and conditions contained  in the  tender form and the conditions of the  contract attached  to the  said deed  and  also  the letter of  acceptance  dated  27.12.1982  shall  be  binding between the  parties. The  effect of the aforesaid agreement shall be that the tender form and conditions of the contract attached to  the said deed to agreement including the letter of acceptance  dated 27.12.1982  shall be  deemed to  be the part  of  the  agreement  between  the  appellants  and  the respondent including  that in event of dispute in respect of any claim,  right or  matter or  thing whatsoever in any way arising out of or relating to the contract shall be referred to the  sole arbitration  of the  person  appointed  by  the Engineer Member of the respondent.      The  learned   counsel  appearing  for  the  appellants submitted that the expression ’Tender Form’ mentioned in the agreement does  not refer  to the aforesaid form relating to ’tender and contract for supply of materials’ in which there is an  arbitration clause,  rather it  refers to  form  No.9 which had  been filled up by the appellants saying that they had submitted  their tender  for supply  to the  respondent, materials described  therein within  time specified ’subject to the  conditions of the contract’. Towards the end of that form under heading ’Specification and Additional Conditions’ details of  the steel  bars to be supplied and that ISI test certificate  in   original  to  be  given  along  with  each consignment etc. have been mentioned.      On the  direction being  given by  Court  the  original agreement alongwith  all  documents  attached  thereto  were produced on  behalf of the respondent. The form of tender in which clause  14 contains  condition regarding referring the disputes to  the arbitration,  as well  as the  form No.9 on which reliance  has been  placed on behalf of the appellants are attached  to the  agreement and  as such  both shall  be deemed to be the part of the agreement. These documents have been signed  on behalf of the appellants and the respondent. In the  agreement, a  clear and  specific statement has been made that  the terms  and conditions contained in the tender form shall  be binding  between  the  parties,  which  shall include the  condition in  clause 14  thereof, to  refer any dispute to  an Arbitrator  to be  appointed by  the Engineer Member of the respondent.      It is true that there must be an arbitration agreement, to confer  jurisdiction on the Arbitrator to hear and decide the dispute.  Where there  is no  such agreement there is an initial want  of jurisdiction.  That  is  why  it  has  been impressed by Courts that one of the essential ingredients of submission to  arbitration is  that the parties should agree that the  dispute should  be determined  by  an  Arbitrator. Where there  is an  arbitration clause  in  a  contract,  it amounts to  two contracts  into one,  one  relating  to  the execution of the work entrusted in the manner prescribed and the other  how to  resolve the  dispute in  event  any  such dispute arises in respect of the said contract. Whenever one party to  the dispute  asserts that  there is an arbitration agreement by  which the  parties had  agreed  to  refer  the dispute to an Arbitrator which is disputed and challenged by the other  party to the agreement, it has to be examined and determined. To  constitute "an  arbitration agreement" it is not necessary  that there  should be  a formal  agreement or that the  terms should all be contained in one document. All that is  necessary that  from documents  it must appear that parties had  agreed to  submit present or future differences

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to arbitration.      Section   2(a)   of   the   Arbitration   Act   defines ’arbitration agreement’  to  mean  a  written  agreement  to submit present or future differences to arbitration, whether an arbitrator is named therein or not. But when Section 2(a) while  defining   ’arbitration  agreement’  speaks  about  a written agreement to submit present or future differences to the arbitration,  it is not necessary that it should also be signed by  the parties like any formal agreement relating to a contract.  In the  case of  Jugal Kishore Rameshwardas vs. Mrs. Goolbai  Hormusji, AIR  1955 SC 812 = 1955 (2) SCR 857, it was said:      "But  it   is  settled   law   that   to      constitute an  arbitration agreement  in      writing it  is  not  necessary  that  it      should be  signed by  the  parties,  and      that it  is sufficient if the terms, are      reduced to  writing and the agreement of      the parties thereto is established." It  was   said  in   the  case   of  Banarsi  Das  vs.  Cane Commissisoner, AIR 1963 SC 1417 = 1963 (2) SCR 760:      "It  may   be  pointed   out  that   the      arbitration clause  in the agreement was      enforceable if  agreed to,  even without      the signature  of the appellant as it is      a settled  law  that  to  constitute  an      arbitration agreement  in writing  it is      not necesary that it should be signed by      the parties  and it is sufficient if the      terms are  reduced to  writing  and  the      agreement  of  the  parties  thereto  is      established."      In the  case of  Union of India vs. A.L.Rallia Ram, AIR 1963 SC 1685 = 1964 (3) SCR 164, it was said:      "A   writing   incorporating   a   valid      agreement  to   submit  differences   to      arbitration is  therefore requisite:  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.  There   must  be  an      agreement to  submit present  or  future      differences   to    arbitration,    this      agreement must  be in  writing, and must      be accepted by the parties."      In Commercial  Arbitration by  Mustill &  Boyd,  second edition at page 105, it has been stated:      "...the parties  need not  set  out  the      terms of  their arbitration agreement in      the contract  itself. It  is  sufficient      for the  clause to  be  incorporated  by      reference either  to a  standard form of      clause or  to a set of trade terms which      themselves include  provisions requiring      disputes to be submitted to arbitration.      Nor  need   the   contract   itself   be      contained in a single document."      As already  pointed out  above, so far the present case is concerned,  the arbitration  clause has not been included in the  agreement itself.  But it shall be deemed to be part of the  agreement because  the agreement  specifically  says that the  terms and  conditions contained in the tender form shall be  binding between  the parties  which obviously will

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include clause  14 of  the  tender  form,  which  admittedly requires any  dispute between  the parties to be referred to an arbitration.  The other  special feature  of the  present case is  that each  page of the tender form which forms part of the agreement has been signed by the appellant, on behalf of the  firm and  the Executive  Engineer on  behalf of  the respondent. A  mere denial  of the existence of the contract of arbitration  by one  party does not denude the arbitrator of jurisdiction.  The Arbitrator gets jurisdiction to decide the disputes  on  basis  of  the  agreement  to  refer  such disputes and  not by its acceptance or denial. The objection on behalf  of the appellants, that there was no condition in the main  agreement to refer the disputes to arbitration can be accepted  only if it is held that the different terms and conditions mentioned  in the  tender form are not binding on the parties, because parties never agreed to those terms and conditions, while  entering into  a contract.  But the  fact about which  there is  no dispute,  is that both the parties had signed  the tender  form in token of having accepted the terms  and  conditions  mentioned  therein  including  about reference of  disputes, if  any, to  an Arbitrator. They had also  agreed  in  the  main  agreement,that  the  terms  and conditions contained  in the  tender form  shall be  binding between the parties. In this background, it is difficult for us to  comprehend  as  to  how  it  can  be  held  that  the appellants had  never agreed  to refer  any dispute  arising between the  parties to  an Arbitrator in terms of Clause 14 of the tender form.      In the result, the appeal fails and is dismissed. There shall be no order as to costs.