H. Suresh, J.
1 This is suit under section 20 of the Arbitration Act, 1940.
2. The plaintiff is a builder and contractor who gave a tender to the Bombay Municipal Corporation (defendant No. 1) for the construction of 30.5 meter wide road at Andheri, Bombay. The Corporation accepted his tender on March 28, 1973 and on April 23, 1973 the work was awarded to him. A contract was entered into between the parties as per the law. After he began the work the Corporation asked him to stop the work as the Corporation was contemplating variation in the work. The variation became necessary because the road level had to be raised considerably, which also required significant variation in the height and size of the open storm water drains on either side of the road. The initial estimate of the work was of the value of about Rupees 22 lakhs whereas on revision the revised cost was estimated at approximately Rupees 42 lakhs. The Municipal Commissioner, therefore, approached the Standing Committee for variation of the said contract. After obtaining the necessary sanction from the Standing Committee, instead of inviting fresh tenders for the remaining work it was decided that the same should be entrusted to the plaintiff. The plaintiff accepted the said variation. The work was completed accordingly March 31, 1977.
3. The plaintiff says that condition Nos. 58 and 83 of the General Conditions of Contract form part of the said contract. Condition No. 58 reads as follows :
"58. Any dispute or difference to be referred to Commissioner---If any doubt, dispute or difference arises or happens between the Engineer or any other officer on the one hand and the Contractor on the other hand, touching or concerning the said works or any of them, or relating to the quantities, qualities description or manner of work done and executed by the Contractor, or to the quantity or quality of the materials to be employed therein, on in respect of any additions, deductions, alternations, or deviations made into or from the said works or any part of them, or touching or concerning the meaning on intention of this contract or of any part thereof or of any plans, drawings, instructions or directions referred to therein or which may be furnished, or given during the progress of the works, or touching or concerning any certificate, order, or reward which have been made or in any way whatsoever relating to the interests of the Municipal Corporation or of the Contractor for in the premises, every such doubt, dispute and difference shall from time to time be referred to the Commissioner and if the contractor is not satisfied with the decision of the Commissioner, such dispute may be referred to arbitration as per condition No. 83".
The relevant portion of condition No. 83 reads as follows :
"83. Arbitration---All disputes or differences whatsoever which shall at any time arise between the parties hereto touching or concerning the works or the execution, or maintenance thereof or this contract or the construction, execution, or maintenance thereof or this contract or the construction, meaning operation or effect thereof or, to the rights or liabilities of the parties or arising out of or in relation thereto whether during or after completion of the contract or whether before of after determination, foreclosure or breach of the contract (other than those in respect of which, the decision of any person is by the contract expressed to be final and binding) shall after written notice by either party to the contract to the other of them specify the nature of such dispute or difference and call for such dispute or difference and call for the point or points at issue to be referred to the arbitration ...."
4. In the plaint the plaintiff only says that he raised certain claims under the contract by his various letters written from time to time. The Deputy City Engineer (Projects) of the Corporation "turned down" the said claims raised by the plaintiff is his letter dated April 15, 1982 addressed to the plaintiff. He further says that neither the final bill for the said work was made nor the security deposit was refunded to him. In these circumstances he invoked Clause 58 of the General Conditions of Contract and requested the Municipal Commissioner by his letter dated July 21, 1983 to refer the dispute to arbitrator. He has listed his claims in the said letter. There was no reply to the letter. He waited for 90 day or more. He, therefore, by his letter dated October 26, 1983 requested the Commissioner once again to settle the disputes and differences by arbitration. Thereafter by a letter dated February 13, 1984 he suggested the name of one Mr. Jamshed Burjor Aga as an arbitrator and requested the defendants to communicate their concurrence so that the said Mr. Jamshed Burjor Aga could act as the sole arbitrator in the matter. The defendants did not communicate their consent even after the expiry of the notice period of fifteen days specified in the said letter dated February 13, 1984. He, therefore, submits that he had no alternative but to approach this Court under section 20 of the Arbitration Act, 1940, for filing the arbitration agreement and for referring the dispute to arbitration. The petition was filed in this Court on or about July 19, 1984.
5. The defendants filed their reply. They have submitted in their reply that the petition filed under section 20 of the Act is barred by the law of limitation. They have stated that the plaintiff had made his claims in correspondence by his letters dated August 23, 1978, August 25, 1978 and August 30, 1978. The defendants have denied the said claims. They, therefore, submit that the plaintiff should have filed the above petition within three years thereafter. They, therefore, submit that the petition has been filed after more than five years and is liable to be dismissed on this ground.
6. They further submit that the original contract was awarded to the plaintiff as per the Standing Committee Resolution No. 4066 dated March 20, 1973 for Rupees 17 lakhs and odd. However, in 1976 the contract was substantially revised and the Bombay Municipal Corporation Resolution No. 2174 dated March 1, 1976 was passed making the revised estimate in the sum of Rupees 36 lakhs and odd. The Standing Committee of the defendants had passed their separate resolution. In this behalf on June 12, 1975. The contract period was also revised from 15 months to 23 months exclusive of the monsoon period. However, for the revised contract, the parties did not enter into a formal contract as required by the provisions of the Bombay Municipal Corporation Act. They, therefore, submit that the revised contract which does not bear any seal of the Corporation as required by law cannot be enforced and, therefore, this suit is not maintainable.
7. They further submit that when the contract was substantially amended and varied, no fresh arbitration clause was incorporated. They therefore, submit that there is no arbitration agreement at all between the parties and that, therefore, the plaintiff is entitled to file the above arbitration petition.
8. They have also raised various other contentions on the merits of the plaintiff's claims. They have submitted that the plaintiff has clearly agreed not to claim any escalation in the rates and that he would work as per the earlier tender rates only. They, therefore, submit that the claims itself is not maintainable.
9. The parties have tendered a compilation of admitted and relevant documents which has been marked as Ex-A. The Advocates have stated that they do not want to lead any oral evidence in the matter.
10. Before I deal with the rival contentions, I must briefly set out the facts which appear to have been established on the basis of the compilation. It is an admitted position that the plaintiff's earlier tender submitted on January 23, 1973 being the lowest was accepted by the Corporation. Consequently, the parties had entered into an agreement as required under sections 70 and 71 of the Bombay Municipal Corporation Act. Pursuant to the same, the plaintiff had begun the work. There is a certificate dated February 15, 1974 showing that the work was in progress and that the contractors had carried out the work satisfactorily to the extent of Rs. 15,00,000/- within a period of five months against the contract period of fifteen months. Thereafter by a letter dated August 2, 1974 the Executive Engineer of the Corporation informed the plaintiff that the revised estimate for the work was not yet sanctioned by the Standing Committee and that, therefore, he was requested not to carry out any further work till the revised estimation was sanctioned. Thereafter the Municipal Commissioner submitted the proposal for the revised estimate of the work to the Standing Committee. While the matter was under consideration, the plaintiff was asked whether he would complete the job with the increase in the estimate. The Standing Committee also considered that because there is a substantial revision in the estimate and the quantum of work, whether they should invite fresh tenders or not. It was considered that if, fresh tenders were to be invited for the remaining work the then prevailing fair market rate schedule would have to be applied and the cost would go up by 15%. On the other hand if the existing contractor were to be entrusted with the work at the tender rates, the Corporation would find it economical and beneficial to the extent of 15.30% below the office estimate and that the work also could be completed earlier. The Standing Committee, therefore, agreed to offer the revised contract to the plaintiff. There is a letter dated August 18, 1975 from the Deputy City Engineer addressed to the plaintiff stating that the Standing Committee in their meeting held on July 2, 1975 has accepted and approved of the revised estimate, and that they have approved to entrust the work to the plaintiff provided and whole work is executed at the previous tender rates only. It was also made clear in that letter that the Standing Committee had approved the revised cost and that the work has to be carried out at the original tender rates only and that no further escalation or compensation would be paid to the plaintiff for the delay in re-starting the work. He was asked to confirm. By his letter dated September 3, 1975 he confirmed the acceptance of the said offer. However, he expressed a hope that the Corporation would be considerate enough to grant the necessary extension of time period required for completion of the work and would not hesitate in granting whatever general increases as sanctioned by the Corporation to Municipal Contractors. This is followed by another letter dated October 3, 1975 from the plaintiff, again expressing a hope that the Corporation would consider his claim on a fair and reasonable basis inasmuch as the work is being started after a considerable length of time.
11. It is an admitted position that the work was completed on March 31, 1977. It is also an admitted position that his final bill has not yet been prepared. Mr. Thakkar says that it is the practice of the Corporation that the Corporation itself prepares the final bill.
12. After about a year's time the plaintiff by a letter dated August 23, 1978 addressed to the City Engineer sought to put on record that he had to carry out certain extra items which were not included in the original tender for the work. He invoked contract condition No. 6-A and claimed that for the extra items he should be paid at the rate prevailing at the time of actual execution of extra items. He also mentioned that due to the application of the same rates as mentioned in the tender and as included in the statement prepared in the beginning, he has been put to a substantial monetary loss. He also addressed another letter dated August 23, 1978 to the Municipal Commissioner, pointing out that he had executed the work in good faith and with the hope that the authorities will consider the loss sustained by him and that the authorities would compensate him for the same. He enclosed, along with the letter, a statement showing the details of excess quantities executed by him and also showing the difference between the tender rates and the Municipal schedule rates prevailing at the time of execution of work and pointed out that the difference works out to Rupees 3 lakhs and odd. He again requested the Commissioner to consider his case sympathetically and give him the rates for excess quantities prevailing at the time of the execution of the work. This was followed by another letter dated August 25, 1978 also addressed to the Municipal Commissioner reiterating the same demand and requested the Commissioner to pay him the extra amount calculated on the basis of escalated rate over and above the tender rate. To this correspondence there is a reply dated February 6, 1979 sent by the Deputy City Engineer, categorically stating that no compensation was admissible to him as it had been specifically stated that the plaintiff would carry out the revised work at the same rate quoted by him in the original tender, for the said work.
13. Thereafter there was a lull in the correspondence for about a year and a half. Some time in October 1979 he sent a reminder. He approached the Chairman of the Standing Committee. There was a meeting with the Chairman of the Standing Commitee some time in January 1982 and he was informed later on that one Mr. Patwardhan, Director, Engineering Services and Projects, would discuss the matter with him, on or about March 9, 1983. This is followed by a letter dated March 6, 1982 from the plaintiff addressed to the Municipal Commissioner senior wherein the plaintiff has stated that he had represented to compensate him for the loss and then Municipal Commissioner had agreed to compensate him suitably on the basis of guidelines prescribed for such cases. He, therefore, requested him to expedite his claim :for compensation". This is followed by a letter dated April 15, 1982 from the Deputy City Engineer addressed to the plaintiff wherein the plaintiff was once again informed that his claim "as worked out cannot be considered. However, you will be paid the general escalation as per policy approved by the Standing Committee admissible in your case in May 81." Thereafter the plaintiff addressed a letter dated July 21, 1983 to the Municipal Commissioner listing out his claims as mentioned in the said letter which are all the items which had been mentioned earlier and further stating that the disputes differences have arisen between him and the Municipal Corporation which are to be referred to the Municipal Commissioner for his decision as per Clause 58 of the general Conditions of Contract forming part of the contract. He, therefore, requested the Commissioner to take a decision as per the contract. This is replied to by the Deputy City Engineer by a letter dated August 27, 1983 wherein the Corporation reiterated what was said in the earlier letter dated April 15, 1982 and said that the Corporation had nothing to add further. The letter also says that his final bill and escalation is under preparation and that he would be informed shortly. Thereafter the plaintiff by his letter dated October 26, 1983 invoked arbitration Clause 83 of the General Conditions of Contract. There was no reply to the said letter. This is followed to a letter dated February 13, 1984 wherein he purported to appoint Mr. Jamshed Burjor Aga, Architect, as the sole arbitrator in the matter and he called upon the Corporation to concur with him in this appointment. By a letter dated February 25, 1984, the Corporation informed the plaintiff that they would not agree to the appointment of any arbitration in the matter and that no further correspondence would be entertained. Thereafter on July 18, 1984 the plaintiff lodged the present suit.
14. On the question of limitation Mr. Dalal submitted that disputes and difference had arisen when the plaintiff preferred his claim by the two letters dated August 23, 1978 and August 25, 1978 and when the Corporation denied, by its letter dated February 6, 1979, the claim of the plaintiff. He submitted that for the purpose of filing a suit under section 20 of the Arbitration Act the period of limitation would commence from February 6, 1979 and under Article 137 of the Limitation Act, the suit ought to have been filed within three years from the date. As against this Mr. Thakkar submitted that when the defendants wrote the said letter dated April 15, 1982 they had agreed that the plaintiff would be paid a general escalation and that, therefore, it could be said that the suit is in time. He also submitted that it could also be said that the time commenced when the Corporation by its letter dated May 22, 1984 stated that the plaintiff's request to appoint an arbitrator could not be acceded to. He further submitted that in the present case, in fact, limitation has not commenced at all inasmuch as the Corporation has not yet prepared the final bill and that, therefore, it is open to the plaintiff to refer the dispute to arbitration even now.
15. Mr. Thakkar also argued that the question of limitation, as regards the plaintiff's claim is concerned will have to be decided by the arbitrator and not by this Court at this stage. He drew my attention to the case of Wazir Chand v. Union of India, .
Undoubtedly, when the Court is concerned with a suit under section 20 of the Act, the Court is not called upon to deal with the question whether the claim of a party to the arbitration agreement is barred by the law of limitation or not, and that question falls within the province of the arbitrator to whom the dispute may be referred. But the question before me is when does the time begin to run, if a party to the arbitration agreement wants to come to the Court under section 20 of the Act and not whether the claim for escalated rates etc. are barred by the law of limitation. Mr. Dalal in this connection drew my attention to the case of Rupam Pictures v. Brijmohan, . In that it has been held that Article 137 which is a residuary article under the Limitation Act, should apply to any application under section 20 of the act. Therefore, the period of limitation for filing such an application will be three years from the time the right to apply accrues under section 20(1) of the Act what is required is that the petitioner should establish that he has entered into an arbitration agreement before the institution of the suit, and that differences and disputes have arisen to which the agreement applies. It is at that point of time when the differences and disputes arise, the time should begin to run for the purpose of filing a suit under section 20 of the Act.
16. Mr. Thakkar relying on the case of Union of India v. L.K. Ahuja and Co., , submitted that on completion of the work right to get payment would normally arise, but on settlement of the final bill the right to get further payment gets weakened. But the claim subsists and whether it does subsist or not is a matter which is arbitrable. In this connection he relied on the following passage :
"In view of the well settled principles we are of the view that it will be entirely a wrong to mix up the two aspects, namely, whether there was any valid claim for reference under section 20 of the Act, and secondly, whether the claim to be adjudicated by the arbitrator was barred by lapse of time. The second is a matter which the arbitrator would decide unless, however, if on admitted facts a claim is found at the time of making an order under section 20 of the Arbitration Act, to be barred by limitation. In order to be entitled to ask for a reference under section 20 of the Act, there must be an entitlement to money and a difference or dispute in respect of the same. It is true that on completion of the work, right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist, is a matter which is arbitrable. In this case the claim for reference was made within three years commencing from April 16, 1976 and the application was filed on December 13, 1976. We are therefore, of the view that the High Court was right in this case."
On the basis of this Mr. Thakkar was tempted to contend that there is no question of limitation in these proceedings and that if there is any such question it is for the arbitrator to decide. It is true that if the matter is to be referred to arbitration and in such proceedings, question arises whether the claim is barred by the law of limitation it is for the arbitration to decide. But certainly it is different from saying that there can be no plea of limitation under section 20 of the Arbitration Act. In the above case the disputes and differences arose on April 16, 1976 and the application was filed on December 13, 1976 and that was certainly within time. Article 137 of the Limitation Act applies and the time has to be calculated from the date disputes and differences arose with regard to the claim of one as against the other. This is amply clear from the case of Inder Singh v. Delhi Development Authority, . The relevant passage is as follows :
"Therefore in order to be entitled to an order of reference under section 20, it is necessary that there should be an arbitration agreement and secondly, difference must arise to which this agreement applied. In this case, there is no dispute that there was an arbitration agreement. There has been an assertion of claim by the appellant and silence as well as refusal in respect of the same by respondent. Therefore, a dispute has arisen regarding nonpayment of the alleged dues of the appellant. The question is for the present case when did such dispute arise. The High Court proceeded on the basis that the work was completed in 1980 and, therefore, the appellant became entitled to the payment from that date and the cause of action under Article 137 arose from that date. But in order to be entitled to ask for a reference under section 20 of the Act there must not only be an entitlement to money but there must be a difference or a dispute must arise. It is true that on completion of the work a right to get payment would normally arise but where the final bills as in this case have not been prepared as appears from the record and when the assertion of the claim was made on 28th February, 1983 and there was non-payment, the cause of action arose from that date, that is to say 28th of February, 1983. It is also true that a party cannot postpone the accrual of actual of action by writing reminders or sending reminders but where the bill had not been finally prepared, the claim made by the claimant is the accrual of the cause of action. A dispute arises where there is a claim and a denial and repudiation of the claim. The existence of dispute is essential for appointment of an arbitrator under section 8 or a reference under section 20 of the Act See Law of Arbitration by R.S. Bachawat, 1st Edition, page 354. There could be dispute and there can only be a dispute when a claim is asserted by one party and denied by the other on whatever grounds. Mere failure or inaction to pay does not lead to the inference of the existence of dispute. Dispute entails a positive element and assertion in denying, not merely inaction to accede to a claim or a request. When in a particular case a dispute has arisen or not has to be found out from the facts and circumstances of the case."
17. In the present case disputes and differences arose for the first time when the plaintiff by his two letters dated August 23, 1978 and August 25, 1978, set out the list of claims and when the Corporation by its letter dated February 6, 1979 declined to consider the same. Therefore, it could be said that it is at that point of time the time started running and this suit ought to have been filed within a period of three years from February 6, 1979.
18. Mr. Thakkar advanced two contentions. Firstly, he relied on the subsequent correspondence which ultimately culminated in the letter dated April 15, 1982. It is in that letter, as stated above, the defendants while declining to consider the plaintiff's claims also stated that the plaintiff would be paid the general escalation as per the policy approved by the Standing Committee as admissible in his case in May 1981. He also relied on the subsequent letters wherein the plaintiff invoked clauses 58 and 83 of the General Conditions of Contract, and submitted that it is only when the Commissioner declined to appoint an arbitrator as mentioned in their letter dated May 22, 1984, it could be said that the time has begun to run for the purpose of filling this petition under section 20 of the Arbitration Act. In my view, if one analyses those letters, it is clear that was not in accordance with the agreement. It was on the basis of a certain policy applicable to all contracts and in this case, as applicable in the month of May 1981, whereas the work had been completed as far back as on March 31, 1977. Under that policy the Corporation may still pay him. But there is no question of arbitration to enforce a policy. Mr. Thakkar says that can be considered as an admission on the part of the Corporation extending the period of limitation. I am afraid, the argument is misconceived. There is no admission on the part of the Corporation either agreeing to pay or to refer the matter to any arbitration. On the other hand in each letter, there is a categorical denial of the plaintiff's claim as claimed by him. Just because the correspondence is kept alive, while each party repeats its respective stand, limitation cannot get any fresh breath at each letter.
19. The other contention of Mr. thakkar is that the final bill is not yet made, and that limitation will not start till the final bill is prepared. In this connection he points out that in the case of Union of India v. L.K. Ahuja and Co. (supra), the Supreme Court appears to have taken note of the fact that settlement of the final bile had taken place and thereafter the question of referring the dispute to arbitration arose. So also in the case of Inder Singh v. Delhi Development Authority, (supra) the final bill had not been prepared as can be seen from the record and that the assertion of the claim was made on February 28, 1983 and the cause of action arose from that date. But I think, the ratio in both the cases is not that time would run only after the final bill is made. The test is whether in respect of the subject matter of the agreement, there is any dispute or difference. If so, when did it arise ? In the present case, as the record stands, there is no dispute about the final bill. The dispute is with regard to the escalation charges as claimed in the two letters dated August 23, 1978 and August 25, 1978 and repeated later on in the letters dated July 21, 1983 and October 26, 1983. It is this dispute or difference which the plaintiff wants to refer to arbitration. Undoubtedly these disputes and differences arose in 1978-79 and the time has begun to run as from that date.
20. This takes me to the other question viz., whether the plaintiff can enforce the revised or varied contract. Mr. Thakkar submitted that in fact there is no question of enforcing any revised contract inasmuch as the original contract which, in form and manner of execution, is flawless, is still existing, particularly with regard to clauses relating to arbitration. Mr. Thakkar submitted that there was no separate tender and there was no separate agreement. The work was the same, only the quantity was more. In these circumstances he submitted that if the plaintiff seeks arbitration it could be said to be under the original agreement as it existed. He also submitted that as far as the clauses relating to arbitration are concerned, they are as per the General Conditions of Contract which are required to be incorporated in all such contracts. Under the original contract the clauses relating to arbitration viz., clauses 58 and 83 have been made part of the contract and therefore, it could be said that those clauses are still subsisting Mr. Thakkar also submitted that assuming the contract was revised with regard to the quantum of work and the period and the amount involved, still there was no variation with regard to clauses relating to arbitration as mentioned above. In these circumstances, he submitted that it was still open to the plaintiff to invoke those clauses and seek arbitration.
21. If one has regard for the record, I must necessarily proceed on the assumption that there was a variation of the contract. It is true that after the original contract was entered into, the plaintiff began the work. At a certain point of time the plaintiff was asked to stop the work as the Corporation intended to revise the estimate. That revision called for a fresh sanction from the Standing Committee. Before the Standing Committee, question arose as to whether they should invite fresh tenders or not. It was only when the Corporation felt that by giving the work to the plaintiff the Corporation would benefit to a certain extent the Standing Committee agreed that the contract could be offered to the plaintiff, provided that he was willing to carry out the work at the tender rate and without asking for any escalation at the time of the execution of the work-contract. The plaintiff by his letter September, 1975 expressly agreed to accede to the said revised contract and agreed to do the work. Therefore, it is in this sense, I must necessarily hold that there was a varied or revised contract. Admittedly this contract has not been entered into as required under section 69, 70, 71 of the Bombay Municipal corporation Act. If the contract is not in form and manner as prescribed under the Act, under section 71 of the Act such a contract shall not be binding on the Corporation.
22. Mr. Dalal in this connection drew my attention to an unreported judgment of Kantawala, J. in O.O.C.J. Suit No. 241 of 1964 M/s. Machine Tools Traders v. The Municipal Corporation of Greater Bombay, delivered on March 2/3, 1971. The learned Judge after considering the case of P. Dhunji Shaw v. Poona Municipality, and also the case of Pandu v. Municipal Corporation of Bombay, 1930(32) Bom.L.R. 832 has categorically stated that if the contract is varied the contract made out on the basis of initial sanction does not cover the subsequent contract. The relevant passage is as follows :
".......where such sanction is given to a "particular" contract within the meaning of section 92(d) of the Act and thereafter there are variations in the party and terms and another contract is made out the initial sanction does not cover the subsequent contract. Provisions necessitating such sanctions are compulsory and not merely directory and if they are not complied with there is no binding contract. Thus it will not be permissible to the plaintiffs to vary the terms of a contract, in a manner not permitted by section 69 to 71 of the Act nor can a plea of estoppel be raised by them so as to by-pass the statutory provisions."
Mr. Dalal also drew my attention to the case of H.S. Rikhy v. New Delhi Municipality, , wherein the Supreme Court has
considered the provisions of the Punjab Municipal Act in which also there was a similar provision as section 71 of the Act, to the effect that no contract or transfer of the description mentioned in section 47 of the said Act executed otherwise than in confirmity with the provisions of the same shall be binding on the Committee. In that context the Supreme Court said that "It is settled law that the provisions of a Statute in those peremptory terms could not but be construed as mandatory."
23. Mr. Dalal then cited the case of Bombay Municipality v. Ramadevi, . In that case a Division Bench of this High Court was dealing with the contention that the respondent therein had undertaken to enter into an agreement of lease which had been accepted on behalf of the Corporation, but the same was not in accordance with sections 69, 70 & 71 of the Act. This is what the Division Bench said..
"Having regard to this statement of the law, it is clear that even on the offer which has been made by respondent 1 that she had undertaken to enter into an agreement of lease, the mere fact that this offer was accepted on behalf of the Corporation would not bring about any contract binding on the Corporation unless the contract was in compliance with the provisions of sections 69, 70 & 71 B.M.C. Act. It was therefore, an essential term of the offer that an agreement to lease would be executed and the said agreement was to be under seal. Unless that agreement was executed, there was not even a right which could be enforced specifically by respondent 1 against the Corporation requiring it to lease out the disputed property her."
In the present, case, there can be no dispute that there was a variation which required approval by the Standing Committee and that the Commissioner has complied with the requirements of section 69(e) of the Act. But Mr. Thakkar relying on the language of section 70(1) of the Act, submits that with regard to the variation of the contract, while the Commissioner is required to obtain approval from the Standing Committee he is not bound to enter into any contract in the same form as prescribed. The relevant portion of section 70(1) is as follows:
"70.(1). Every contract entered into by the Commissioner on half of the Corporation shall be entered into such manner and form as would bind the Commissioner if such contracts were on his own behalf, and may in the like manner and form be varied or discharged: Provided that---......"
Section 70(2) sets out how the common seal should be affixed in the presence of two members of the Standing Committee and that they too shall affix their signatures as distinct from the signatures of any witnesses. But section 71 makes it clear.
"71. No contract of the nature specified in sub section (2) of the last preceding sanction not executed as in the said section provided shall be binding on the Corporation."
24. Mr. Thakkar submitted that as far as the original contract is concerned it "shall" be entered into in such manner and form as would bind the Commissioner, and as far as the variation or discharge of a contract is concerned the words used are 'may in the like manner and form be varied or discharged". He further submitted that when a contract is varied it cannot be said that it is a substitution of the original contract. The original contract remains and is varied to a certain extent. Similarly, in a given case the Commissioner may discharge the contract, without all the formalities.
25. I am unable to accept this argument. The language of any statute must be understood in its context, and the object it seeks to serve. Essentially these provisions are for the purpose of safeguarding public interest. Wherever public expenditure is involved, public accountability is a must. That is why the courts have always construed these provisions as mandatory and not discretionary. I am not prepared to say that section 71 of the Act does not apply to variation or discharge of a contract. In fact such a question is no longer res integra.
26. This disposes of the two contentions which go to the root of the matter. However, Mr. Dalal has also argued that if one has regard for the correspondence and the record, it is clear that the plaintiff had agreed not to demand any escalation of rates when the revised contract was offered to him. In my view, I need not go into this question. That will be a question which have to be decided on the merits of the case Similarly, Mr. Thakkar also apprehended that if it is said that this suit is barred by limitation his claim might ultimately get affected. I do not think so. His final bill is not yet made. As far as the same is concerned, there is no question of limitation as yet. But as regards his claim for arbitration with regard to the disputes and differences as set out in those two letters, certainly that is barred by the law of limitation.
I, therefore, pass the following order :
The petition is dismissed; however, the parties will bear their own costs.