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CASE NO.: appointed  in  even a lower grade if  sufficient  number  of vacancies are not available in the grade for which he may be found  fit.  In other words, even between  candidates  found fit for a particular grade, the recommendation may be for an appointment  to a lower grade.  As between those  found  fit for a particular grade, the preferences had to be and were, presumably,  determined by fair and honest appraisements  of their  merit.  Such, preferences due to honest  assessments, which are not above possibilities of error, have never  been held  to  cast any reflection which, could be  equated  with punishment.  If the view of the Division Bench of the  Delhi High Court is correct, as we think it is, that the rules had the  effect of constituting a new service, with a  fair  and reasonable procedure for entry into it, the procedure  could not be characterized as a device to defeat the provisions of Art. 311 or a fraud upon the Constitution simply because the results, of subjection to the process of appraisement of the merits  of each, candidate may not meet the  expectation  of some candidates. Article 311 affords reasonable opportunity to defend against threatened  punishment  to  those already  in  a  Government service.   Rule 5 provides a method of recruitment or  entry into a new service of persons who, even though they may have been serving the Government, had no right to enter the newly constituted’  service  before going  through  the  procedure prescribed by the Rule.  If the petitioner had already  been appointed  a  permanent Government servant, there  may  have been some justification for 458 contending that Rule 5 could not be so applied as to deprive him  of a Permanent Post without complying with Article  311 as  such  deprivation would have been per se  a  punishment. The  mere possibility of misuse of Rule 5 could not  involve either its conflict with or attract the application of  Art. 311.  The fields ,of operation of Rule 5 and Art. 311 of the Constitution  are quite different and distinct so  that  the two do not collide with each other. The  learned Counsel for the Appellant then  contended  that ;each   person  placed  in  the  category  of   Departmental candidates  by  Rule 2 had to be treated alike, but  Rule  5 enables the Selection Committee to treat them differently by assigning  different  grades to them.  In other  words,  the contention  was  that  Rule  5 gives too  wide  a  power  of selection   to  the  Selection  Committee.   It   was   also submitted,  though  not quite so clearly, that Rule  5  must itself  be  so interpreted as to operate  automatically  and place   all persons  falling  within  the  definition   of Departmental candidate" in a single class if Rule 5 is to be upheld  as  valid.   It was urged  that  the  interpretation placed  on Rule 5 by the Division Bench involved not  merely its   conflict  with  the  definition  of  a   "departmental candidate" in Rule 2(b) but also with Articles 14 and 16  of the Constitution, as it meant that those treated equally  by Rule 2(b)  could  be  treated  unequally  by  the  Selection Committee.     This  argument rests on a misconstruction  of Rule 2(b). The  definition of a Departmental candidate given by Rule 8 (b) is  :               2 (b) "departmental candidate" means-               (i)   a person in the Ministry of  Information               &  Broadcasting  or any of  its  attached  and               subordinate  offices who was holding or  would               have held, but for his absence on  deputation,               a duty post, on the 1st November, 1957, and

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             who  is holding, or has a lien on a duty  post               in a substantive capacity at the  commencement               of these rules; or               who   has  been declared quasi-permanent in  a               duty post, on, or prior to, the 1st July 1957;               or               who   was  eligible  to  be  declared   quasi-               permanent  in a duty post, on, or on any  date               prior to, the 1st July 1957; or               who   was  appointed  to a duty  post  on  the               basis of selection by the Commission or  whose               appointment   thereto  was  approved  by   the               Commission,  before the commencement of  these               rules;               459               (ii)  any  other  person in  the  Ministry  of               Information  and  Broadcasting or any  of  its               attached  and  subordinate  offices  whom  the               Government may declare as such on the basis of               his qualification and experience"; It  is  clear  that  this  definition  of  a   "departmental candidate"  is meant only as an aid in interpreting  Rule  5 and was not intended to operate as a fetter on the functions and  powers of the.  Selection Committee.  We may  add  that the  validity of Rule 5 does not appear to us to  have  been assailed  in arguments before the High Court.  And,  in  any case, the attack on it must fail on merits. Fifthly and lastly, it was urged that the action against the Petitioner  was  visited  by mala fides.  We  find  no  such ground  taken either in the Writ Petition or argued  at  any stage  in  the  High Court or mentioned in  the  grounds  of appeal  taken in the application for certifying the case  as fit  for  appeal to this Court.  It was, however,  a  ground taken by the Petitioner Appellant in his Rejoinder affidavit in attempting to reply to the affidavit filed in, opposition to the Writ Petition. It  had been stated in the affidavit filed on behalf of  the Union of India that the Appellant’s work was not found to be up to the mark even during the period of his probation which had  to  be extended thrice by two months on  each  occasion before  the probationary period was at last terminated.   It had also been pointed out that the Appellant had been  given a warning that he should improve his work.  Furthermore,  it was  stated that all the facts of the Appellant’s case  were carefully examined, from the point of view of his merit,  by the Selection Committee.  Ile case of the Union of India was that  the  post actually held by the  Appellant  before  his selection  for appointment to the newly constituted  service did not automatically or wholly determine the position of  a departmental candidate who offered himself to the process of appraisement of his merits by the Selection Committee to  be made on the totality of relevant facts.  That Committee  had to  be presided over either by the Chairman or a  Member  of the Union Public Service Commission and had officials of the Department  on  it  who  must have been  in  a  position  to correctly  evaluate the petitioner’s merit and to know  the. weight  to be, attached to such entries as  the  Appellant’s confidential records contained. In reply to the case of the Union of India, that the  Appel- lant’s   merits  were  duly  considered  by  the   Selection Committee, the Appellant had characterized what had happened as  an ’attempt to create prejudice against  the  Petitioner and to justify its .RM60 460

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mala  fide  reduction of rank of the Petitioner".   He  also said  that ,this amounted to "raking up the past" which  had no relevance to "the admitted case of the Appellant" that he was holding the temporary substantive rank of Editor when he was  reduced  to  the rank of  an  Assistant  Editor.   This assertion was incorrect if it implied, as it seemed to, that it was admitted that the petitioner was being punished.  The Appellant  had also referred to assertions made by  him,  in his  representation  dated  5-4-57  (Annexure  ’B’  to  the, Rejoinder) to the Minister of Information land  Broadcasting against the termination of his service by notice ,-dated 23- 3-57, and also to those contained in another  representation dated  11-3-1960 (Annexure ’E’ to the  Rejoinder  Affidavit) against  the impugned order.  In these representations,  the petitioner  had  complained  that he was  a  victim  of  the prejudice  and machinations of an Officer in  the  Transport Ministry   (not  named  by  him)  whose  mistakes,  in   the publications of the Transport Ministry, had been pointed out by  the Appellant.  He had also referred to a number of  his own publications.  Thus, the Appellant’s case on mala  fides rests  on  allegations  which  had  been  examined  by   the Department  and  may  also  have  been  considered  by   the Selection Committee.  The petitioner had assumed that  there were some malicious reports against him which, according  to him,  he had no chance to meet and on which he  thinks  that the  recommendations  of the Selection Committee  about  him were based.  The reply of the Union of India to this case of mala  fides  was that it was an after thought and  that  the assessment  of  the  Selection Committee was  based  on  the results of the interview given to the Appellant and a  total assessment  of all the facts concerning the Appellant  which were before the Selection Committee. Even if we were to assume that the Appellant had thus  taken up   a  case  of   action  vitiated by  mala  fides  at  its foundations    and  had  Supported    it   with    necessary particulars  and averments, it is evident that such  a  case could not be properly tried upon the materials on the record before  us,  without even impleading the ,official  who  was alleged  to, be the architect of his misfortunes.  it  could not,  as  it has been, argued seriously for the  first  time before us. The  fatal weakness in the Appellant’s case arises from  the fact  that he was holding only a temporary post so  that  he could have no right to continue in it after it had ceased to exist.  We think that the necessary effect of setting up  of the   Central   Information  Service,  together   with   the determination of its classes and grades and their  strengths was  that the temporary posts in the Department  which  were not  shown to have been continued, automatically came to  an end.  The Appellant was offered a new 461 Post altogether after going through the process of selection in  accordance  with Rule 5 to which he  subjected  himself. Indeed,  the  Appellant  had  no option,  if  he  wanted  to continue  in  the service of the Department,  except  to  go through the procedure provided by the rules.  We are  unable to  hold  that the procedure contemplated by Rule  5  either automatically fixed the Appellant in any particular grade or post or could be held to be void for any reason  whatsoever. Therefore,  if the Appellant was selected for  a  particular post,  by  a  process which, for the purposes  of  the  case before  us, must be assumed to have been fair,  honest,  and legal, he cannot complain that he was entitled to a.  better one. We,   therefore,   dismiss  this  appeal.    But,   in   the

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circumstances  of  the case, we leave the  parties  to  bear their own costs throughout. V.P.S.                          Appeal dismissed. 462

PETITIONER: UNION OF INDIA & OTHERS

       Vs.

RESPONDENT: N.K. PRIVATE LIMITED & ANOTHER

DATE OF JUDGMENT11/02/1972

BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN HEGDE, K.S. MATHEW, KUTTYIL KURIEN

CITATION:  1972 AIR  915            1972 SCR  (3) 437

ACT: Constitution  of India, Art. 299--Whether the  Secretary  to the Railway Board can enter into a contract on behalf of the President of India represented by the Ministry of Railways.

HEADNOTE: A global tender to sell surplus serviceable and scrap  rails was issued to established buyers by the Government of  India and pursuant to this tender notice, the respondents by their letter  dated  21-5-68  offered  to  buy  the  rails  at   a particular  price  and  Shri P.  C.  Oak,  Deputy  Director, Railway  Stores, Railway Board, on behalf of the  Secretary, Railway  Board,,  accepted the respondents’ offer  with  the terms  and conditions mentioned in the letters sent  by  the respondent on 15-7-68.  Negotiations for the final contract, however, took place between the parties and on 15-7-68,  the respondents  complained that some of the Railways  who  were holding  stocks are selling the steel rails which they  have no right to sell in view of the concluded contract; but Shri P.  C.  Oak  for  Secretary,  Railway  Board,  replied  that subsequent to 15-7-68, there were negotiations for the vital terms and conditions of the contract and so the question  of the  existence  of a concluded contract did not  arise.   At this, the respondents filed a petition in Court under s.  20 of  the  Arbitration  Act, after setting  out  the  relevant correspondence leading upto the letter of acceptance of 15th July 1968 and it was stated that, the letter was a  definite acceptance  of the offer and constitute a valid and  binding contract between the parties. In   the   written  statement,  the  appellants   raised   a preliminary objection that the petition was misconceived  as there  was no arbitration agreement between the parties  and so  the question of enforcing the arbitration clause in  the alleged  contract did not arise.  Further, it was  contended by  the  appellants that the letter of  acceptance  and  the

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subsequent  letters  were  not by the  Director  of  Railway Stores,  but by the Secretary to the Railway Board, who  was not a person authorized to enter into the agreement  between the President of India represented by the Ministry of  Rail- ways  and the respondents as required under Art. 299 of  the Constitution.  Allowing the appeal. BELD  : The Secretary to the Railway Board, on whose  behalf the  offer  of  the respondents was accepted,  was  not  the person authorized to enter into a contract on behalf of  the President  of  India,  as  required  under  Art.  299,   and therefore,  the  contract, if any, was not  binding  on  the appellants.  Further, it was not correct to say that  Clause 43  of  Part  XVIII and Part XLI  empowered  the  Secretary, Railway Board to enter into such contracts; because Clause 9 specifically  provided for the contracts connected with  the sale  of  scrap;  ashes coal,  dust,  empty  containers  and stores;  and repayable rails, being part of the  stores,  it was  covered by Clause 9 and the Secretary,  Railway  Board, was not empowered by the President to enter into a  contract on his behalf. [445 B] Seth  Bikhraj Jaipuria vs.  Union of India, [1962] 2  S.C.R. 880, referred to. 438

JUDGMENT: CIVIL APPELLATE JURISDICTION: C.A. No. 1067 of 1971. Appeal  by special leave from the judgment and  order  dated October  30, 1970 of the:-Delhi High Court in F.A.0.  (O.S.) No. 40 of 1970. N.   A.  Palkhivala,  D. Mukherjee, R. H. Dhebar and  A.  J. Rane, for the  appellants. V.   M. Tarkunde, G. L. Sanghi, B. R. Agarwala and Janendra Lal, for respondent No. 1. A.   K. Sen, G. L. Sanghi and B. R. Agarwala, for respondent No. 2. The  Judgment of the Court was delivered by P.   Jagammohan  Reddy, J. This appeal is by special  leave. The  question  for  consideration  is  whether  there  is  a binding, valid and concluded contract between the appellants and  the  respondents.   On  an  application  filed  by  the respondents under section 20 of the Arbitration Act a single Judge  of  the Delhi High Court directed the  appellants  to file the arbitration agreement to refer the disputes between the  parties arising under the contract to arbitrators.   An appeal against that order to a Division Bench was dismissed. In  order to understand the scope of the controversy, a  few facts  may be stated.  On the 21st March 1968, a  notice  of Global  Tender No. 1 of 1968 was issued by the President  of India,  therein  referred  to as the  Government  of  India, Ministry of Railways (Railway Board) proposing  to sell 80,000 tones of surplus released  serviceable and scrap rails, as per details  given in  the  schedule thereto, to established buyers  abroad  or their  accredited  agents.   It invited  offers  in  respect thereof  to be addressed to the President of India and  sent to  Shri  R. No. Mubayi, Director, Railway  Stores,  Railway Board.    With  this  notice  were  enclosed   the   general conditions   of  tender,  special  conditions   of   tender, instructions   to   tenderers,   including   proforma    for performance  guarantee and deed bonds as in clauses  4A  and 4B,  shipping terms and schedule of stocks available  as  on 1st  March 1968.  In the general conditions the  seller  was defined  to mean the President of India acting  through  the

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Director, Railway Stores, Railway Board, unless the  context otherwise  provided.   The delivery F.O.B.  (Free  an  Board /F.A.S.  (Free  Alongside Ship) invoices  and  freight  were dealt  with  in clause 9. The default clause  in  clause  11 provided  that where a buyer fails to execute  the  contract the seller was to have power under the hand of the Director, Railway Stores, Railway Board, to declare the contract at an end 439 at  the risk and cost of the buyer.  The special  conditions of tender dealt with prices, quotations, payments, terms  of shipment,  weighment, basis of sales and handling at  ports, force  majeure, arbitration, legal jurisdiction,  acceptance of  offers  and  title and risk.   In  the  instructions  to tenderers,  the  tenderers  were requested  to  quote  their highest   offer  indicating  the  price  per  metric   tonne inclusive  of  export  incentive  of  5%  of  F.O.B.   value currently applicable as guarantee by the Government of India which  will  always be to, the sellers benefit  for  handing over of the rails F.O.B. docks/F.A.S./F.O.B. Indian Port  or C.I.F. destination port.  The tenderer was required to offer comments  clause  by clause on the  ’general  conditions  of tender’  and  the  ’special  conditions  of  tender’  either confirming acceptance of the clauses or indicating deviation therefrom,  if  any.   It  was  further  provided  that  the contract  will  come into force from the  date  the  buyers’ letter  of credit is accepted by- the sellers’ nominee.   In 4A  of these instructions the proforma deed bond  was  given which  was to be signed by the tenderer and  the  acceptance was to be signed for and on behalf of the President of India by the person designated for that purpose.  Similarly,  para 4B.  gave  the  proforma performance guarantee  bond  to  be addressed to the President of India executed by the tenderer and accepted for and on behalf of the President of India  by the  ,person so designated.  The terms and  conditions  also set  out the shipping terms in detail, though a few of  them were  also  mentioned in the special  conditions  under  the headings  Shipment, Terms of Shipping and Receiving  Notice. It  appears that the terms and conditions enclosed with  the tender  notice annexed to the petition filed in  court  were not  full  and  complete.  Consequently  the  appellant  has annexed a true copy of the enclosures with the special leave petition  and prayed that this may be admitted in  evidence. As there was no dispute in respect of the contents  thereof, we  have allowed this prayer because without them it is  not possible to arrive at a just conclusion. Pursuant  to this tender notice, the respondents,  by  their letter,  Ex.  ’B’, dated 21-5-1968, offered  to  buy  80,000 tonnes  of rails at $45.1 per tonne F.O.B. Indian  Ports  on the term and conditions set out therein.  In reply  thereto, by  a  letter dated 25-5-1968, the  Dy.   Director,  Railway Stores, Railway Board, P.C. Oak in para 1 (6) categorically. stated  by  reference to para 14 of the  conditions  of  the letter of the respondents that as shipping terms have finan- cial  implications  they  were requested  to  indicate  with reference to the tender which particular clauses they desire to  re-negotiate and settle.  In para 2 it was  stated  that the  offer  of  the respondents was  not  addressed  to  the President  of  India as required under clause  1(3)  of  the Instructions   to   the  Tenderers   and,   therefore,   the Respondents  were required to confirm that their  offer  was deemed to ’nave been addressed to the President  of  India and’ is 440 open  for  acceptance  on behalf of the  President,  it  was

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further  stated  in para 4 that they should send  the  reply addressed to the President of India through the Director  of Railway  Stores,  Railway  Board  covering  all  the  points indicated  therein, to reach them not later than  28-5-1968. No reply was, however, received by the time indicated in the letter of the appellants and while so stating another letter was addressed to the Respondents on 3-6-68 by C. Parasuraman for Secretary, Railway Board, seeking further  clarification in respect of items Nos. 26 and 27 of the offer contained in the  aforesaid  letter of the Respondents  dated  21-5-1968. There  were also two other clarifications in respect of  the weight  of  the  tonne for which $45.1 was  quoted  and  the option  to transfer the contract in the name of the  foreign principles  which  it  was stated, could not  be  agreed  to straightaway  unless  and until they knew the names  of  the foreign  principles  and their willingness to enter  into  a legal  binding guarantee of all the terms and conditions  of the  contract.   The Respondents wrote subsequently  to  the Director,  Railway Stores on the 15th June, 29th  June,  8th July and the three letters on 10th July and one on the  15th July  1968,  some of which were written after  a  discussion with  the Director of Railway Stores in the presence of  the Director  of  Finance, Mr. Datta.  On the same  day  as  the letter  of 15th July was sent by the Respondents, P. C.  Oak signing  for the Secretary of the Railway  Board,  addressed the  following letter of acceptance, No. 68/RS(G)/709/10  to the Respondents               "Subject:-Tender No. 1 of 1968 for Export sale               of used re-rollable and repayable steel rails.               Reference:-Your  letter Nos.  Nil dated  21-5-               68,  15-6-68,  29-6-68,  8-7-68,  10-7-68  and               15-7-68.               Kindly be advised that your offer (at $39  per               long ton F.O.B. Indian Port for export and Rs.               458/- per long ton for indigenous consumption)               with terms and conditions referred to in  your               above  letters  is  hereby  accepted.   Formal               contract will be issued shortly.               2. Kindly acknowledge receipt.               Yours faithfully,               Sd./- P. C. Oak.               for Secretary,               Railway Board". Thereafter,  it  is alleged that  several  draft  agreements were.  exchanged  regarding  which there is  a  dispute  but ultimately  be,  fore us it is not contested  that  a  draft agreement,  which the appellants say is the 5th  draft,  but according to the Respondents is 441 the final draft, was handed-over to the Respondents by P. C. Oak on 27-8-68 but this, however, was not signed.  Clause  2 of  this draft agreement states. that the contract has  been concluded   by   the   issue   of   seller’s   letter    No. 68/RS(G)/709/10  dated 15-7-68 to the buyers; that the  term of  the  contract  shall be three years  from  1-11-1968  to 31-10-1971;  that the buyers reserve the right to  act  upon the  contract any time before 1-1 1-68 and start  inspection and  take  delivery of the goods but this will  not  in  any manner  effect the terms of the contract.   Even  thereafter there  was further correspondence between the  parties.   By letter dated 18-9-68 the Respondents wrote to the  Director, Railway  Stores,  agreeing to several other  matters  to  be included  in the final draft and requested him to issue  the ’final. contract’ without delay.  On the 21st September 1968 the Respondents again wrote to the Director, Railway Stores,

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complaining  that  the information provided by  the  various Railways  was not complete and requested him to contact  the various Railways and obtain the required information as soon a-,  possible.  After the receipt of this letter  the  Joint Director,  Railway Stores (G), wrote to the general  Manager (S),  All  Indian Railways with a copy  to  the  respondents calling  for the required information.  In that  letter  the Joint Director stated thus :-               "..  the Board have finalized  an  export-cum-               internal  sale contract with M/s.  N.  K.  (p)               Ltd.,  New  Delhi  for a period  of  3  years,               entitling them to export stock of such surplus               rails  available with the Railways.   The  de-               tailed  terms and conditions of  the  contract               will be apprised to you when finalized". On  the 23rd October 1968, C. Parasuraman,  for  Secretary., Railway  Board, replied to the letter of the Respondents  of the  21st  September 1968, stating that it was  not  correct that  their officehas assured them that it would arrange  to get  the  missing details from the concerned  C.O.Ss.  After this   letter  two  other  letters  were  written   by   the Respondents  to the Director, Railway Stores, dated 7th  and 23rd November 1968.  In the first letter it was stated thus               "In pursuance of your invitation we  submitted               our tender for purchase of used relayable  and               re-rollable  steel  rails on  21-5-68.   After               some  negotiations the terms of  the  contract               were  finalized  and  the  Secretary,  Railway               Board  by his letter No.  68/RS(G)70910  dated               15-7-68,. accepted our offer and concluded the               contract.   We were informed that  the  formal               contract  will be issued shortly.  A draft  of               the  formal contract was handed over to us  on               27-8-68.   In  our  letter  of  18-9-68,  some               agreed  terms  were set out which  had  to  be               incorporated  in the formal  contract.   Since               the acceptance of our-               442               offer  we  have made all arrangement  for  the               sale  of  the material- We beg to  inform  you               that  out  of  the total  quantity  of  88,936               tonnes of Rails already offered to us for  our               approval we approve and shall take delivery of               53,807  Tonnes as per list enclosed  herewith.               The above quantity may kindly be reserved  for               us and arrangement be made for their  delivery               in terms of the contract. . . . " In the second letter, the respondents complained that though the contract for sale of used rerollable and relayable steel rails was concluded on 15-7-68 they regretted that they  had not  received the formal contract so far and requested  that it  should be sent without any further delay.  In  the  last paragraph  of that letter, the Respondents  complained  that they  came  to  know that some of  the  Railways  who  were. holding  storks are selling the steel rails which they  have no  right to do and requested them to stop such  sales.   To this, P. C. Oak for Secretary, Railway Board, replied               "Kindly  refer to correspondence resting  with               your   letters  dated  July  26,  1968,   18th               September  1968  and  No.   RB/Rails/68/1/114,               dated  2nd  December  1968.   Your  contention               contained  in your letter No.  RB/Rails/  68/1               dated  23-11-68 that the Railway Board is  not               authorized  to  sell rails’ to  other  parties               because  of their having concluded a  contract

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             with  you is factually incorrect.   No  doubt,               letter   No.  68/RS(G)/709/10  dated   15-7-68               indicated  an intention to enter into  a  con-               tract  with  you,  but  subsequent  to   this,               discussions  had  been held with  you  over  a               number of sittings on 20-7-68, 12-8-68,  26-8-               68,  27-8-67 culminating in your letter  dated               18-9-68.   This would amply indicate  that  no               agreement had been reached on vital terms  and               conditions, and the question of the  existence               of    a    concluded   contract    does    not               arise’. . . ." The Respondents replied to this letter by their letter dated 25-1-1969 expressing surprise and contesting the stand taken by  the Railway Board.  In the petition of  the  Respondents filed in Court after setting out the relevant correspondence leading  upto  the letter of acceptance of P. C.  Oak  dated 15th  July  1968,  ’it was stated that  that  letter  was  a definite  acceptance of the offer and constitutes a  binding and valid contract between the parties.  With respect to the draft  agreement of the 27th August 1968 handed over to  the Respondents embodying the agreement between the parties, the averment was that the then Acting Director of Railway Stores desired certain additional terms to be embodied in the terms that were agreed to.  The additional terms were agreed to by the plaintiffs (Respondents) by their letter to the 443 Director,  Railway Stores, dated 18-9-1968.  In para  16  it was  further alleged that after the letter of acceptance  by the  appellants the then Acting Director of  Railway  Stores and the Director of Finance proposed to the plaintiffs  that the  price  offered by them should be increased  or  in  the alternative certain alterations be made in the agreed terms, but  the plaintiffs having justly refused to do so, the  2nd defendant (C.  Parasuraman) falsely wrote to the  plaintiffs on 15-1-1969 that no concluded contract had taken place  and that  the Railway Board was, therefore, not  precluded  from selling rails to other parties. The appellants in their written statement, raised a prelimi- nary  objection, namely, that the petition was  misconceived as  there was no arbitration agreement between  the  parties and  so the question of enforcing the arbitration clause  in the alleged contract did not arise.  It also reiterated  its stand earlier taken that the letter dated 15-7-68 written by Oak  on  behalf of the Secretary, Railway Board, was  not  a letter  of acceptance of the offer of the Respondents so  as to  amount to a concluded contract binding on the Union  of India  nor  could  it be construed as such in  view  of  the mandatory  provisions of Article 299 of the Constitution  of India.   The contention was that unless and until  a  formal instrument  of contract was executed in the manner  required by  Article  299  of the Constitution and  by  the  relevant notifications, there would not be a contract binding on  the Union of India and at any rate no such agreement was entered into  as  it was. alleged that though interviews  had  taken place  at  various  times between  the  plaintiffs  and  the several officers of the Railway Board, no agreement had been reached on vital terms and conditions. Two  submissions  were urged on behalf  of  the  appellants, namely :               (1)   that apart from the contention  relating               to Art. 299 of the Constitution, there was  no               concluded   contract  between   the   parties,               because  (a)  the  essential  terms  were  not               agreed  to between them on the date  when  the

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             acceptance letter was issued by P.  C. Oak on               15-7-68,   and  (b)  even  it  there  was   an               acceptance  as  alleged, that  acceptance  was               conditional  upon  a  formal  contract   being               executed by the appellants;               (2)   that the three mandatory requirements of               Art.  299 of the Constitution for a valid  and               binding  contract  made  in  exercise  of  the               executive  power  of the Union have  not  been               complied  with namely, (a) that  the  contract               was  not  expressed to be in the name  of  the               President, nor (b) was               444               it executed on behalf of the President, or (c)               by  a person authorized to execute it  on  his               behalf. The  crucial  question  which arises  for  determination  is whether there was a concluded contract, and if  there  was one,  whether the mandatory requirements of Article  299  of the  Constitution  for  entering into a  valid  and  binding contract  have  been satisfied?  It is now settled  by  this Court  that though the words ’expressed’ and  ’executed’  in Article 299(1) might suggest that it should be by a deed  or by  a formal written contract, a binding contract by  tender and  acceptance can also come into existence if the  accept- ance  is by a person duly authorized on this behalf  by  the President of India.  A contract whether by a formal deed  or otherwise by persons not authorized by the President  cannot be binding and is absolutely void. We  do not for the present consider it necessary to go  into the question whether and to what extent the requirements  of Art. 299 have been complied with in this case.  What we have to  first  ascertain is whether apart  from  the  contention relating to Article 299, a concluded contract has come  into existence as alleged by the Respondents.  Before us detailed arguments were addressed on behalf of the appellants-to show that  notwithstanding the letter of acceptance of 15th  July 1968, no concluded contract had in fact come into  existence and  though that letter accepted certain terms,  there  were other essential terms of the contract which had to be agreed to  and  were  the subject matter  of  further  negotiations between  the  parties;  that it was  the  intention  of  the parties that all those terms were to be embodied in a formal contract  to  be  executed which contract alone  was  to  be binding between the parties; and that in any case the letter of  acceptance  and the subsequent letters were not  by  the Director  of  Railway  Stores but by the  Secretary  to  the Railway Board who was not a person authorized to enter  into the agreement between the President of India represented  by the Ministry of Railways and the Respondents.  On the  other hand,  the stand taken by the Respondents was that  all  the essential  terms  of  the contract were agreed  to  and  the contract was concluded on 15th July 1968, though at the ins- tance  of  the Director, Railway Stores further  terms  with respect  to the execution of the contract were the  subject- matter  of negotiations between the parties and in any  case these  did not pertain to the essential terms and could  not on  that  account  detract  from the  binding  nature  of  a concluded  contract.  It was also contended that the  letter of  acceptance by P. C. Oak though signed on behalf  of  the Secretary,  Railway Board was in fact on behalf of the  said Board  which was authorized to enter into such  a  contract. It  is  in  our view unnecessary  to  consider  the  several contentions  as  to whether all the essential terms  of  the contract  had  been  agreed  to or  that  the  contract  was

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concluded by the acceptance 445 letter of 15th July 1968 or whether the parties intended  it to  be a term of the contract that a formal contract  should be  entered into between them in order to bind the  parties. In  this case, we are of the view that the Secretary to  the Railway Board, on whose behalf the offer of the  Respondents was accepted, was not the person authorized to enter into  a contract  on  behalf of the President of India.  As  can  be seen  from the various documents already extracted that  the tender  notice  invited  offers  to  be  addressed  to   the President  of India through the Director of Railway  Stores, Railway Board.  Under the general conditions the seller  was defined  to mean the President of India acting  through  the Director,  Railway Stores and in the default clause  it  was provided that where the buyer fails to execute the contract, the seller shall have power under the hand of the  Director, Railway Stores, Railway Board, to declare the contract at an end.   In the letter written by Oak on 25-5-68,  as  earlier noticed,  it was pointed out to the Respondents  that  their offer  was  not  addressed  to the  President  of  India  as required  under  clause  1(3) of  the  Instructions  to  the Tenderers  and, therefore, the Respondents were required  to confirm  that  their  offer  can  be  deemed  to  have  been addressed  to  the President and is open for  acceptance  on behalf of the President and their reply should be  addressed to  the President of India, through the Director of  Railway Stores, Railway Board.  Even the draft contract dated  27-8- 68  in  terms of which the Respondents were insisting  on  a final contract to be issued to them by the appellants was to be  executed by the Respondents as buyers on ,the  one  part and  the  President of India acting  through  the  Director, Railway Stores, Ministry of Railways (Railway Board) as  the sellers, on the other.  There is little doubt that the  only person  authorized to enter into the contract on  behalf  of the  President is the Director, Railway Stores.  It is  true that  the  notification  of the Ministry of  Law  issued  in exercise of the powers under clause 1 of Article 299 of  the Constitution   shows   that  the  President   directed   the ’authorities  named  therein to execute on  his  behalf  the contracts and assurances of property specified therein.  But notwithstanding  this, the President is fully  empowered  to direct  the execution of any specified contract or class  of contracts  on ad hoc basis by authorities other  than  those specified in the said notification.  This Court had in  Seth Bikhraj  Jaipuria v. Union of India, (1) earlier  held  that the  authority  to execute contracts may be conferred  on  a person  not  only by rules expressly framed  and  by  formal notifications  issued  in  this  behalf  but  may  also   be specifically  conferred.   In this case the  letter  of  ac- ceptance  dated  15-7-1968 was on behalf of  the  Secretary, Railway  Board,  who  is  not authorized  to  enter  into  a contract on behalf of the President. (1)  [1962] (2) S.C.R. 880. 446 It  is contended that clause 43 of part XVIII and  Part  XII empower the Secretary, Railway Board to enter into such con- tracts.  Clause 43 of Part XVIII provides that all deeds and instruments  other than those specified in that part may  be executed  by  the Secretary or the Joint  Secretary  or  the Deputy-  Secretary  or the Under, Secretary in  the  Railway Board  or  a Director, Joint Director,  Deputy  Director  or Assistant  Director in the Railway Board.  It  is  submitted that as nothing has been specified in Part XVIII relating to the contract of the type we are considering, the  Secretary,

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Railway  Board  is authorized to enter into  a  contract  on behalf  of  the  President.  This  submission  is  untenable because  clause  9 specifically provides for  the  contracts connected  with the sale of scrap, ashes, coal, dust,  empty containers and stores.  The tender, it will be observed,  is for  rails  which  are  scrap  as  well  as  rerollable  and relayable  but  it  is urged that relayable  rails  are  not stores nor can they be considered as scrap and as these  are not  covered  by clause 9, the Secretary, Railway  Board  is fully empowered by the President to enter into a contract on his  behalf.  We cannot accept this argument because in  our view relayable rails are part of the stores.  It may be that some  of  these rails which are part of the  stores  may  be considered  to  be  in a  condition  which  the  authorities concerned  think  should  be  disposed  of.   The  contracts relating to the goods of the nature specified in the  tender notice  are,  therefore,  dealt with by clause  9,  as  such clause  43 will have no application.  Part XLI empowers  the Secretaries  to  the Central Government in  the  appropriate Ministries  or  Departments  to  execute  any  contract   or assurances of property relating to any matter whatsoever and is in these terms :-               "Notwithstanding     anything     hereinbefore               contained   any  contract  or   assurance   of               property relating to any matter whatsoever may               be  executed by the Secretary or  the  Special               Secretary  or  the Additional Secretary  or  a               Joint  Secretary or a Director or where  there               is   no  Additional  Secretary  or   a   Joint               Secretary or a Director, a Deputy Secretary to               the  Central  Government  in  the  appropriate               Ministry or Department and in the case of. . " The  contention on behalf of the Respondents is  that  since Railway  Board  is  a  Department  of  the  Government,  the Secretary  to the Department is authorized to enter  into  a contract under the above provision.  This submission in  our view,  is  equally misconceived because  reading  the  above requirement carefully it will appear that the persons  there mentioned  should be Secretary.  Special Secretary etc.,  to the  Central  Government  in  the  appropriate  Ministry  or Department  and not that the Secretary to any Department  or office  of the Government of India is empowered  thereunder. It is however contended that the Secretary to the  447 Railway  Board  is a Joint Secretary to  the  Government  of India  and as such under the above Provision the  acceptance letter should be considered to have been executed on  behalf of the president Even this submission lacks validity because as  pointed out on behalf of the appellant, at the  relevant time  the  Secretary to the Railway Board did not  have  any status  as Secretary to the Central Government.  The  status of  a  Joint  Secretary  was only  conferred  on  him  by  a notification  by the Government of India in the Ministry  of Railways  for the first time on 15-9-1969 with  effect  from that  date.   An affidavit of the Deputy  Secretary  to  the Railway  Board (Ministry of Railways) has been filed  before us  setting  out  the  above fact  and  enclosing  the  said notification.   Then again it was urged that the members  of the Railway Board were Secretaries to the Central Government and   hence  the  Board  on  whose  behalf   the   Secretary communicated  the  acceptance  could enter  into  a  binding contract.   This  submission also is without  force  because there  is no material before us to conclude that  the  Board was  so  authorized.  In these circumstances,  even  if  the correspondence  shows that the formalities necessary  for  a

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concluded contract have been satisfied and the parties  were ad  item  by the time the letter of acceptance of  the  15th July 1968 was written, about which we do not wish to express any  opinion, there is no valid or binding  contact  because the letter of acceptance, on the evidence before us, is  not by  a person authorized to execute the contracts for and  on behalf of the President of India. On  the evening before the day the judgment in the case  was due  to be delivered, an application dated 7-2-72 was  filed enclosing  an  affidavit of R. N. Mubayi who  was  Director, Railway  Stores, between 18-12-1965 to 30-9-1969 as also  an affidavit of R. B. Lal, Managing Director of the  Respondent No. 1 to take them in evidence and consider the facts stated therein  before judgment is delivered, and if necessary,  to call  for the file and give a re-hearing.  The affidavit  of Mubayi  states that only after he recorded on  the  relevant file and issued instructions to his Deputy Director, Shri P. C. Oak to convey the acceptance of the offer of M/s.  N.  K. Private Limited, that the acceptance was conveyed by Shri P. C. Oak to the said company.  The affidavit of R. B. Lal says that though the affidavit filed by P. Lal, Deputy Secretary, Railway Board stating that the Secretary, Railway Board, did not  have  the  status  of  Secretary,  Special   Secretary, Additional Secretary, Joint Secretary or Deputy Secretary to the  Government of India in the Ministry of Railway, he  has not  denied that the Secretary did not have the status of  a Director.   It is further submitted in that  affidavit  that the  Secretary of the Board had the status of a Director  at the  relevant  time  and as mentioned in  Part  XLI  of  the Notification  of  the  Ministry  of  Law,  ’a  Director’  is authorized to accept offers. 448 Apart  from the question whether we should admit  additional evidence  at  this  stage in this case  and  though  we  had rejected an earlier submission to call for the files, having regard  to  the facts stated by R. N.  Mubayi,  Director  of Railway Stores during the relevant period that it was he who had  asked P.C. Oak to accept the offer and had so  endorsed it on the file, as also the affidavit of R. B. Lal that  the Secretary  to the Board was the Director of Railway  Stores, we withheld the judgment and called for the file to  satisfy ourselves.   The  file  has  been submitted  to  us  by  the appellants  along with an affidavit of R. Srinivasan,  Joint Director, Railway Board in which it is categorically averred that  at the relevant time, namely, 15-7-68,  the  Secretary Railway Board did not have the status of the Director  under Para  XLI of the Notification of the Ministry of Law  or  at all.  A perusal of the relevant file relating to the  letter of acceptance would show that on 15-7-68, Shri Oak made  the following endorsement: "Reference to Board’s orders at  page 38/N,  draft letter accepting M/s.  N.K. (P) Ltd., offer  is being  issued today.  D.R.S. may kindly see  before  issue", and  this endorsement was merely signed by R.N. Mubayi.   We are not here referring to the other proceedings on the  file as  to  whether  the execution of a formal  contract  was  a condition precedent and as one of the terms of the  contract but even the above endorsement does not show that the letter of  acceptance  of  15-7-68 was issued  on  the  orders  and directions  of  Mubayi as alleged by him in  the  affidavit. What  it in fact shows is that it is the Board  that  issued the orders of acceptance and that the acceptance letter  was only  to be seen by him.  Even the draft letter issued  does not  contain his initials or his signature in token  of  his having  seen or approved it.  The letter of  acceptance  not having  been issued on the orders of the  Director,  Railway

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Stores, there was no concluded contract as on that date,  by a person authorized to enter into a contract.  There is also nothing  to  show that the Secretary to the  Board  was  the Director, Railway Board as further alleged in the  affidavit of R. B. Lal. In this view the appeal is allowed and the application under section  20  of the Arbitration Act is dismissed  but  there will  be  no order as to costs of the  appellants.   On  the other hand, we direct the appellants to pay the costs of the Respondents  because special leave was granted on  condition that the petitioner will pay the costs of the Respondents in this appeal in any event. S.C.                       Appeal allowed. 449