Raipur Alloys & Steel Ltd. And Anr. vs Union Of India And Ors.
1987 Latest Caselaw 299 Del

JUDGMENT

Aggarwal, J.

(1) This is a petition by Raipur Alloys and Steel Ltd. (Petitioner No. 1) and V. K. Sharma, a shareholder and executive director, of Petitioner No. 1 under Article 226 of the Constitution of India for a declaration or any other writ or writs or direction declaring that there was no concluded contract between the parties in respect of the tender No. IS-90 of 1984 and further that the petitioners are not liable to pay any money whatsoever to the respondents in respect of the alleged contract. The petitioners further claimed a declaration that the appointment of the arbitrator and his continuing the arbitration. proceedings is illegal and void and of no legal effect.

(2) The relevant facts are that the respondents invited tenders for supply of Spring Steel Rounds sometime in September 1984- M/s. Raipur Wires & Steel Ltd.. P-48, Industrial Area, Raipur. M.P., of which the Petitioner No. I claims to be the successor submitted a tender. The Ministry of Railways (Government of India) by their letter dated 29th November 1984 informed M/s. Raipur Wires and Steels Ltd. that the rates quoted by them against some of the items appear to be high and consequently a counter offer was made. There was correspondence between the parties and on 15th/ l8th January 1985 M/s. Raipur Wires & Steel Ltd. wrote to the respondents intimating that they were returning the copies of the contract as well as I.R.S. conditions and general conditions of contract duly signed as a token of acceptance with a request to incorporate the amendments/modifications mentioned therein, in the contract.

(3) The case of the petitioners is that since the respondents had not agreed to the amendments/modifications proposed by the petitioners, there was no concluded contract between the parties.

(4) On the other hand the contention of the respondents is that M/s. Raipur Wires & Steels Ltd. had conveyed the acceptance of the order in their letter dated 15th/l8th January 1985 and a concluded contract had come into existence. It is further stated by the respondents in their counter that in view of the firm refusal to proceed with the contract disputes and differences had arisen between the parties and the respondents had appointed Shri Cherian, as an arbitrator under the Board's letter dated 15/22nd May, 1986. The respondents pleaded that the disputes which related to a contract are beyond the writ jurisdiction. The locus standi of the Petitioner No. I was also challenged on the ground that the respondents had dealings and placed contract on M/s. Raipur Wires and Steel Ltd., Raipur and not with Petitioner No. 1.

(5) At the threshold, a crucial question- arises whether this court in its writ jurisdiction would go into the question of determining whether there is or there is not a concluded contract between the parties. The determination of such a question would require going into evidence that the parties may choose to place before the court.

(6) In Tata Engineering and Locomotive Company Ltd. v. The Assistant Commissioner of Commercial Taxes and another (1967) 19 Sales Tax Cases 520(1), a Bench of the Supreme Court held as under : "THE jurisdiction of the High Court under Article 226 of the Constitution is extraordinary and has to be used sparingly. It is not appellate and it cannot be a substitute for the ordinary remedies at law. Nor is its exercise desirable if facts have to be found on evidence. The High Court, therefore, leaves the party aggrieved to take recourse to the remedies available under the ordinary law if they are equally efficacious and declines to assume jurisdiction to enable such remedies to be by-passed. To these there are certain exceptions. One such exception is where action is being taken under an invalid law or arbitrarily without the sanction of law. In such a case, the High Court may interfere to avoid hardship to a party which will be unavoidable if the quick and more efficacious remedy envisaged by Article 226 were not allowed to be invoked.

(7) We find that under the ordinary laws of this country, the petitioners have. an equally efficacious and speedy remedy available to them. Section 33 of the Arbitration Act provides that any party to the arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the court and the court shall decide the question on affidavits. Provided that where the court deems it just and expedient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit.

(8) Dr. Singhvi contended that a reading of section 33 shows that only a person who is a party to the arbitration agreement could challenge the existence of the agreement but since the petitioners do not accept that they are a party the arbitration agreement the petitioners may be non-suited in case they have resource to section 33 of the Arbitration Act.

(9) We do not agree in this contention. Even a person who is alleged to be party to the arbitration agreement and who denies its existence would be competent to challenge the existence of the agreement under section 33. Mr. Dutt for the respondents concedes that the petitioners would be competent to challenge the existence of the arbitration agreement under section 33.

(10) Dr. Singhvi contended that the respondents had appointed an arbitrator and the petitioners will have to participate in the proceedings before the arbitrator and this would entail great hardship to the petitioners. We see no hardship. The petitioners can in their application under section 33 challenging the existence of the arbitration agreement ask for the stay of the proceedings before the arbitrator. In any case, if in the application under section 33 it is ultimately held that there is no valid contract between the parties the arbitration proceedings would be rendered void.

(11) For the reason stated, we see no reason why this court in its extraordinary writ jurisdiction should go into the controversy whether a contract had or had not come into existence between the partics. Also, there seems to be no reason why the remedies available under the ordinary law if they arc equally efficacious should be allowed to be by-passed.

(12) THE petition is dismissed.