TaxTMI 
TaxTMI 
TaxTMI 
1996 (2) TMI 529
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...., the arbitrators are entitled to arbiter the dispute. The dispute arose in the backdrop of the facts that the U.P. State Electricity Board had floated tenders for construction, supply and erection of mechanical equipment and construction work including consultancy services. Last date for submission of the tender was June 30, 1984. The appellant-Nigam, an Undertaking of State of U.P. had purchased tender documents-from the Board on February 6, 1984. The respondent approached the appellant for their joint participation to submit the tenders to the Board. In furtherance thereof, negotiations were set on foot and they decided to enter into an agreement in that behalf and ultimately draft agreement dated. June 22, 1984 was sent to the respondent for signature. The appellant did not sign the draft agreement. On June 27, 1984, the respondent sent a counter-proposal deleting clause [10] of the agreement suggested by the appellant and materially altering clause [12] therein after signing the same. The tenders were submitted on June 30, 1984, i.e., the last date for submission of tenders; but before negotiating with the Board on February 23, 1985 the appellant had withdrawn the tenders. On....
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....it and the appellant. Clause [14] of the agreement contained an arbitration clause for adjudication of the disputes. The withdrawal of the tenders by the appellant caused damages as claimed by the appellant in the notice. Therefore, the respondent called upon appellant to nominate their arbitrator to adjudicate the dispute intimating in their letter appointment of the arbitrator on their part. From this there emerged a concluded contract containing clause [14] providing for arbitration for adjudication of the disputes. As stated earlier, the High Court came to the conclusion that from the correspondence between the parties there emerged a concluded contract. After due discussion between the parties the draft agreement duly signed with official seal of the respondent affixed thereon, was communicated to the appellant on June 27, 1984 which contained clause [14] which formed an integral part of the contract. The modifications suggested by the respondent were acted upon by the appellant. At no point of time it was suggested by any communication that the modifications were not accepted. On the other hand, tenders were submitted on June 30, 1984 for the joint participation of the appel....
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....ement, i.e., there is an acceptance of the proposal, the contract is not complete. It is seen that the draft agreement dated June 22, 1984 was sent to the respondent for acceptance, Admittedly, clause [10] was deleted and clause [12] was materially altered unilaterally to convert joint liability to individual liability of the appellant. It would, therefore, be a counter-proposal signed by the respondent and communicated to the appellant. At this juncture, it is relevant to notice the Articles of Association of the appellant-Company, a State Government Undertaking. Article 125 of the Articles of Association gives power to the Board of Directors of the appellant- Company and Article 126, clause [xii] confers power on the Board of Directors "to refer claims or demands, by or against the Company to arbitration". Under Article 125, the Company has the control and the competent authority has power to sign the contract on behalf of the Company. After the counter-proposal was signed by the respondent, the appellant had not signed any contract to bind the parties. From this factual matrix, the question arises: whether there emerged any concluded contract pursuant to which the parties are bo....
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....ceptance by the appellant to those conditions no concluded contract can be said to have emerged. It is seen that the appellant is a Government Undertaking and unless contract is duly executed in accordance with the Articles of Association, the appellant is not bound by any such contract. Shri Nariman sought to rely on the passage from Palmer on Companies Law containing that it is an indoor management between the appellant and its officers. When the negotiations were undertaken on behalf of the appellant, the respondent was led to believe that the officer was competent to enter into the contract on behalf of the appellant. When the counter- proposal was sent, The appellant had not Returned the proposal. Therefore it amounts to acceptance and thus concluded contract came into existence. We fail to appreciate the contention. As seen, the material alterations in the contract make world of difference to draw an inference of concluded contract, The joint liability of the parties was vade unilateral liability of The appellant. Thereby, the respondent sought to absolve itself From the liability of further performance of the contract with the Board. Similarly, clause [10] which contains mat....
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.... claim is not conclusive as under Section 33, ultimately it is the Court that decides the controversy. It being a jurisdictional issue, the arbitrator/arbitrators cannot cloth themselves with jurisdiction to conclusively decide the issue. In "Russel on Arbitration" [19th Edn.] at page 99 it is stated thus: "It can hardly be within the arbitrator's jurisdiction to decide whether or not a condition precedent to his jurisdiction has been fulfilled. It has indeed several times been said bluntly that an arbitrator has no power to decide his own jurisdiction and in one case where rules of an institution prepared to conduct arbitrations gave the arbitrator such power, the court will ignore this when asked to enforce the award, and decide the question itself. However, an arbitrator is always entitled to inquire whether or not he has jurisdiction. An umpire faced with a dispute whether or not there was a contract from which alone his jurisdiction, if any, can arise can adopt one of a number of courses. He can refuse to deal with the matter at all and leave the parties to go to court, or he can consider the matter and if he forms the view that the contract upon which the claimant is relying....
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....y for deciding the controversy. Since the tenders - the source of the contract between the parties - had not transformed into a contract, even if the proposal and counter proposal are assumed to be constituting an agreement, it is a contingent contract and by operation of Section 32 of the Contract Act, the counter proposal of the respondent cannot be enforced since the event of entering into the contract with the Board had not taken place. In Ramji Dayawala & sons [P] Ltd. v. Invest Import [AIR 1981 SC 2085], a two-Judge Bench of this Court considered the existence of the contract and arbitration clause thereunder. This Court had held that in the facts of a given case acceptance of a suggestion may be sub silentio reinforced by the subsequent conduct. Where there is a mistake as to terms of a document, amendment to the draft was suggested and a counter-offer was made, the signatory to the original contract is not estopped by his signature from denying that he intended to make an offer in the terms set out in the document. Where the contract is in a number of parts it is essential to the validity of the contract that the contracting party should either have assented to or taken to....