Sanjay Paper & Chemical ... vs Union Of India & Anr.
2000 Latest Caselaw 321 Del

ORDER

J.B. Goel, J.

1. This is a petition under Sections 32 and 33 of the Indian Arbitration Act, 1940 (for short "the Act") seeking a declaration that no arbitration agreement came into existence between the parties out of the tender submitted by the petitioner on 2.4.1990.

2. Briefly, the facts are that Director General of Supplies & Disposals (for short "DGS & D") on behalf of Union of India had invited tenders to be opened on 14.3.1990 for supply of 600 M. T. paper printing coloured in reels/sheets as per ISS:1848/81 with amendments 1 and 2. In response there to, to petitioner had submitted their quotation/offer on 10.3.1990 with relevant information/documents. This quotation was not accepted and fresh quotations were invited for 5.4.1990. The petitioner in supper session of their earlier quotation again submitted quotations on 2.4.1990. This offer was initially valid upto 5.7.1990 but its validity period was extended on several dates and finally extended upto 3.10.1990 vide letter No. SPCIL/CAL/RPK/90 dated 12.9.1990.

3. The further case of the petitioner is that the petitioner received respondent's letter No. PM-7/RGC-2485/Colour Ptg./90-91/150 dated 12.10.1990 purporting to be the formal acceptance of the offer of the petitioner made on 10.3.1990 which, according to the petitioner, was not a valid acceptance of the offer of the petitioner made on 2.4.1990 on the following grounds:-

1. That the offer made on 10.3.1990 had already been superseded by subsequent offer dated 2.4.1990 and so it could not be accepted:

2. Even if it was in acceptance of second offer dated 2.4.1990, the acceptance made on 12.10.1990 is after the expiry of its validity period and so it is not a valid acceptance:

3. There are material variations in the terms in the acceptance form the terms offered by the petitioner (variations have been mentioned) and as such it was not a valid acceptance;

4. The acceptance is ambiguous and vague.

And as such, no valid contract was formed between the parties on the basis of this acceptance and consequently no arbitration agreement also existed.

4. The respondent vide their letter dated 19.3.1991 purported to cancel the contract and threatened to make risk purchase. The petitioner refuted this action vide letter dated 10.5.1991 on the group that there was no valid and binding contract between the parties and then the petitioner has filed this petition to declare that there was no arbitration agreement between the parties as there was no valid contract in existence.

5. The respondent in reply has pleaded that the offer made by the petitioner on 2.4.1990 was accepted and this was accepted within the validity period as the advance acceptance was communicated to the petitioner by means of telegram dated 25.9.1990 and as such a valid contract came into existence between the parties and it is the formal acceptance that was conveyed vide letter dated 12.10.1990. It is explained that in the letter dated 12.10.1990, the date of tender was wrongly mentioned as 10.3.1990 instead of 2.4.1990 by mistake; otherwise the rates accepted were on the basis of offer dated 2.4.1990 and it was in acceptance of the offer dated 2.4.1990. It is denied that there are any variations in the terms of offer and those accepted by them. It is thus claimed that a valid contract came into existence between the parties and the contract contains an arbitration agreement which is binding on the parties and this petition is not maintainable.

6. The petitioner in rejoinder has denied having received the telegram dated 25.9.1990 and alleged that no such telegram was issued at all. Other averments made by the respondent are denied.

7. On the pleadings of the parties, the following issues were framed on 22.3.1996:-

"1. It is proved that there is valid and subsisting arbitration agreement At No. PM-7/RGC-2485/90-91/150, dated 12.10.1990 in existence?

2. Whether the respondent proves that by acceptance of offer vide telegram dated 25.9.1990, the arbitration agreement between the petitioner and the respondent, has come into existence?

3. To what relief, if any, the petitioner is entitled do?

4. What order?"

8. Both the parties led evidence by way of affidavits. Petitioner filed affidavit of Shri R. L. Bathwal, chairman/Director of the petitioner and also proved documents P-1 to p-8. Where as on behalf of the respondents, affidavit of Mr. Mohd. Yunus, Deputy Director (Supply) of DGS & D was filed but without its annexure R-1 mentioned in the affidavit. Even the copy of the alleged telegram dated 25.9.1990 has not been tendered in evidence.

9. On behalf of the petitioner, it is contended that in the facts and circumstances, no valid contract came into existence between the parties and the burden was on the respondent to prove that they had accepted the offer of the petitioner and communicated the same to the petitioner within the validity period which they have failed to discharge. Whereas, on behalf of the respondent, it is contended that the acceptance was communicated by advance acceptance of telegram dated 25.9.1990 which shall be deemed to have been duly served on the petitioner in due course of official business, for this reliance has been placed on Madan & Co. Vs. Wazir Jaivir Chand and Punjab State Electricity board, Patiala Vs. M/s Abnash Textile Trading Agencies, Ambala City .

10. I have considered the contentions and the material on record. It is the case of the respondent that the tender offer made by the petitioner on 2.4.1990 was accepted by them but by inadvertence the date is mentioned as 10.3.1990. It is not disputed that the offer made on 2.4.1990 was valid till 3.10.1990. The question is whether this tender offer was accepted within the validity period of the offer.

11. The burden of the two issues (1) and (2) on this aspect is no the respondents. The respondent in reply to the petitioner under Section 32 and 33 of the Act have pleaded that the respondent and sent a telegram being advance AT PM-7/RGC-2485/90-91/150 dated 25.9.1990 accepting the petitioner's offer. Petitioner in their rejoinder have denied having received it and has pleaded as under:-

"It is denied that the alleged telegram was issued by the respondent dated 25.9.1990 to the petitioner. There is no evidence filed of issuing the telegram. The alleged Annexure "A" is merely a confirmatory copy and not telegram. There is no evidence filed by the respondents of despatch of even confirmatory copy (though it has no meaning) ...................."

12. While leading evidence the petitioner had filed their affidavit first though the onus was on respondent. In the affidavit dated 7.8.1996 of Shri R. L. Bathwal, Chairman/Director of the petitioner, it has been denied that they had received telegram dated 25.9.1990 or that the respondent had at all issued such a telegram. In the affidavit of Shri Mohd. Yunus, Deputy Director (Supply) of DGS & D sworn on 30.5.1997, it is stated that the petitioner's tender offer was accepted by the respondent vide telegram dated 25.9.1990. It is further stated that the said telegram was delivered to the telegram office, New Delhi on 25.9.1990 in transmission which constituted a valid acceptance and thus there is a valid arbitration agreement between the parties. This statement is based on office record and not on personal knowledge. It is stated that copy of the extract from the register/peon book containing initials of the officer of the telegraph office, New Delhi is annexed with it as Exh. R-1. But this annexure R-1 is not actually annexed with this affidavit and it is not entered in the index accompanying the affidavit. Even copy of the telegram alleged to have been sent has not been annexed with this affidavit. Thus neither the copy of the telegram nor proof of its despatch/posting has been tendered in evidence by the respondent. Specific objection was taken on behalf of the petitioner in replication and in affidavit that telegram dated 25.9.1990 was not issued nor received by them and during arguments also it was pointed out that neither annexure R-1 nor telegram have been proved by the respondent along with their affidavit. Still no effort was made even after this objection was taken to produce the telegram and proof of its communication to the petitioner. This conduct on the part of the respondent reasonably gives rise to the inference that no such document existed in fact and a false statement has been made to this effect in the pleadings and the affidavit. In any case, the respondent has thus failed to prove and discharge the burden cast on them that the tender offer of the petitioner was accepted and the acceptance was communicated to the petitioner within the validity period till 3.10.1990. Two authorities relied on behalf of the respondent will not apply inasmuch as no presumption of service could be raised where it is not proved that the communication was actually dispatched.

13. The formal acceptance issued vide letter dated 12.10.1990 though admittedly received by the petitioner, however, that was issued, communicated and received by the petitioner after the expiry of the validity period of the offer which expired on 3.10.1990 and as such it is not a valid acceptance. Hence no valid contract was concluded between the parties and consequently no arbitration agreement also came into existence between the parties.

14. Both the issues 1 and 2 are accordingly decided against the respondent. The petitioner is thus entitled to the declaration as claimed.

15. The petition of the petitioner is accordingly allowed and it is declared that there is no valid and binding arbitration agreement between the parties in respect of the tender offer made by the petitioner in their letter dated 2.4.1990 (for 5.4.1990) for the supply of 600 Mt paper printing colored in reels/sheets.

16. In the circumstances, the parties are left to bear their own costs.