LexUNION OF INDIA & OTHERS versus N. K. PRIVATE LIMITED & ANOTHER
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A B c D E F G H UNION OF INDIA & OTHERS v. N. K. PRIVATE LIMITED & ANOTHER February 11, .1972 437 [K. S. HEGDE, P. JAGANMOHAN REDDY AND K. K. MATHEW, JJ.) Constitution of Jndi'a, Art. 299-Whether the Secretc..ry to the Rail- wa,v Board can enter into a conu<ct on behalf of the Prellident of India reprtstnt~d by the Ministr1v of Rilways. A global tender to sell surplus serviceable and scrap rails was issued to established (myers by the Government Of India and pursuant to this tender notice, the respondents by their letter dated 21-5-68 offered to bu¥ 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 t.he 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; i>ut Shri P. C. Oak for Secretary, Railway Board, replied that subsequent to 15-7-68, there were negotia- tions 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 !5th July 1968 and it was stated that, theJetter 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 objec- tion that the petition was misconceived as there was no arbitration agree- ment' between the parties and so the question of enforcing the afoitration c:lause in the alleged contract did not arise: Further, it was contended by the appellants that the letter of acceptance and the subsequent letters were not by the Director of Railway Stores, but by the Secretary to the R.ailway Board, who was not a person authorised to enter into the agree- ment between the President Of India represented by the Ministry of Rail- wa}'1 and the respondents as required undr Art. 299 of the Constitution. Allowing the appeal. HELD : The Secretary to the Railway Board, on whose behalf the offer of the respondents waa accepted, waa not the person nuthorised to enter into a contract on behalf of the President of India, as required under Art. 299, and therefore, the contract, if nny, 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 Oau'e- 9 specifically provided for the contracts connected with the sale of sc'rap: ashes coal, du•t, empty containers and stores; and relayable rails, bein~ part of the stores, it was covered by Oause 9 and the Secretary, Railway Board, was not empowered by the President to enter into a contract on his behalf. (445 Bl Seth Bikhra/ Jaipur/a vs, Villon of India, [1962] 2 S.C.R. 880, refer- red to, 438 SUPREME COURT REPORTS [1972] 3 S.C.R. 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. !. Rane, for the appellants. V. M. Tarkunde, G. L. Sanghi, B. R. Agarwala and Jane11dra 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. Jaganmohan Reddy, J. This appeal is by special leave. The question for consideration is whether there is a bind- ing, valid and concluded contract between the appellants and the respondents. On an application ll!ed by the respondents under section 20 of the Arbitration Act a single Judge of the Delhi Higlr Court directed the appellan!S to file the arbitration agree- ment to refer the disputes between lh~ partil)S arising under the .contract to arbitrators. An appeal ag<.1nst 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, there- A B
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