Kataria Construction vs Municipal Corporation Of Delhi
1993 Latest Caselaw 545 Del

JUDGMENT

Sat Pal, J.

(1) This petition under section 33 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act' ) has been filed by the petitioner for a declaration that there was no valid and binding contract in respect of the work in question between the parties. The petition has been opposed by the respondent Corporation.

(2) Mr. D.P. Sharma, learned counsel appearing on behalf of the petitioner, submitted that in the present case, the Executive Engineer Vi of the respondent Corporation vide letter dated 12th April, 1985 had informed the petitioner that its tender for the said work was accepted on behalf of the Corporation. He further submitted that admittedly the petitioner had agreed to keep his offer alive up to 15th April, 1985 and up to 15th April, 1985 for the acceptance of the tender no resolution has been passed by the Standing Committee of the respondent Corporation which is competent under the statute and the bye-laws made there under to accept the tender. He, therefore, contended that during the period of validity of the offer given by the petitioner which was only up to 15th April, 1985, the offer of the petitioner was not accepted by the respondent Corporation and as such there was no valid and binding contract between the parties. In support of his contention he placed reliance on a decision of this Court in Municipal Corporation of Delhi vs. M/s. Shall Agencies, 2nd (1981 ) Ii Delhi 607.

(3) Ms. Chopra, learned counsel appearing for the respondent Corporation did not deny the allegation that the Standing Committee of the respondent Corporation was the competent authority for the execution of the contract on behalf of the respondent Corporation. She, however, contended that the formal contract was a mere formality in the present case because post facto approval was given by the Standing Committee vide its resolution No.323 dated 19th April, 1985. She, therefore, submitted that there was a valid and binding contract between the parties.

(4) I have given my thoughtful consideration to the submissions made by the learned counsel for- the parties. From the record it is clear that at request of the respondent Corporation, the petitioner had extended the validity period of its offer up to 15th April, 1985. In their reply to the petition the respondent has not denied the fact that the Standing Committee of the respondent Corporation is the competent authority to accept the tender. Admittedly the Standing Committee of the respondent Corporation had not accorded its approval up to 15th April, 1985. Since the petitioner had extended the period of its offer only to 15th April, 1985 and up to that date the Standing Committee of the respondent Corporation had not accepted the offer, I am of the view that it was not a valid and binding contract between the parties. Here it will be relevant to refer to Section 203(2) of the Municipal Corporation Act which says that "no contract which is not made in accordance with the provisions of this Act and the bye-laws made there under shall be binding on the Corporation".

(5) In view of the above discussion, the petition is allowed and it is held that there was no valid and binding contract between the parties. However, the parties are left to bear their own costs.