JUDGMENT
Sivaraman Nair, J.
1. The appellant is the Managing Partner of a registered firm of contractors. He had filed O.S. No. 411 of 1981 under Section 20 of the Arbitration Act. That suit was dismissed on the finding that the contract which the appellant had entered into with the respondents did not provide for reference to the arbitrator. Hence this appeal
2. The appellant had submitted a tender for construction of a building for the Government Secondary School, Quilandy. Consequent on the acceptance of his tender, he executed an agreement on 18-11-1978 with the second respondent. According to the appellant, Clause 14 of the Form of Tender and Clauses 24, 24(a) and 44 of Form No. 83 were expressly made part of the agreement. These clauses were to the effect, that in case of any dispute or difference that may arise in the working of the contract, the same should be referred to arbitration before the Government Arbitrator, at the instance of either party. Several disputes arose between the parties regarding execution of the work. It was because his request for referring the dispute to the Arbitrator was not allowed that he filed O.S. No. 411 of 1981.
3. In their written statement, the respondents submitted that condition No. 14 of the Form of Tender and Clauses 24 and 24(a) of Form No. 83 had been specifically eliminated from the contract and the dispute could not be referred for Arbitration. Reference was also made to Ext. B2 Government Order dt. 8-5-1978 to the effect that arbitration would be restricted only to works the estimated P.A.C. of which was Rs. 2 lakhs and below. They also contended that Article 3 of the Agreement was deleted and the appellant had endorsed such deletion. Consequence of such deletion, read in conjunction with Ext. B2 Government Order, and the removal of Clauses 24 and 24(a) of Form No. 83 was said to be to shut out Arbitration ‘in the instant case, since, admittedly, the estimated amount of contract exceeded Rs. 2 lakhs by over Rs. 2,40,000/-.
4. The trial court considered the question whether the disputes were liable to be referred for Arbitration under the terms of the contract. The trial court found that Clause 44 has the only effect of incorporating general conditions forming part of the contract documents and that general Clause 73 in Madras Detailed Standard Specifications which necessarily formed part of the notice inviting tender and therefore of the agreement could not survive the deletion of Clauses 3, 24 and 24(a), which related specifically to arbitration. Those clauses were scored off. The trial court also found that in the light of the specific deletion of Clauses 24 and 24(a), it was not reasonable to hold that Clause 14 of the Tender Form was incorporated in the agreement by virtue of the provisions of Clause 44 in Form No. 83. The court held further that the appellant having signed Form No. 83, from which Clauses 24 and 24(a) relating to Arbitration were deleted, could not be heard to seek arbitration in spite, of such deletion. Appellant submits, that Clause 44 of Form No. 83 and Clause 14 of the tender notice do survive and such survival in the contract willingly entered into between the parties do provide for a reference of dispute arising out of the contract to the Government Arbitrator.
5. The very question as to whether the provision for arbitration as contained in the Madras Detailed Standard Specifications, which are incorporated as terms of the contract, would enable a contractor to claim reference of disputes for arbitration notwithstanding the deletion of clauses similar to 3, 24 and 24(a) had come up for consideration before this court in a number of decisions. State of Kerala v. Joseph, 1983 Ker LT 583, a Division Bench of this Court held, that incorporation of the terms of M.D.S.S. had the effect of providing for arbitration of disputes notwithstanding the specific deletion of arbitration clauses in the agreement. A different view was taken in M.F.A. No. 158 of 1984. In yet another decision, State of Kerala v. Siby. Varghese, (1987) 1 Ker LT 860, another Division Bench adopted a slightly different view. In that decision, it was held in unmistakable terms that the M.D.S.S. served an entirely different area and would not supply or supplement provisions dealing with arbitration. A Full Bench of this Court considered the divergence of views expressed in the above decisions in the judgment in M.F.A. Nos. 586 and 789 of 1987, (1988) 2 Ker LT 768 : (AIR 1989 Ker 61) (FB), and held that Clause 73 of the M.D.S.S., which was to be read as part of the contract, was not meant to render the deletion of Clauses 3, 24 and 24(a) of the contract ineffective. The Full Bench, therefore, held that the effect of the deletion of those clauses was that not only the arbitration clause, but the entire arbitration process itself was consciously annihilated. The Full Bench also referred to G.O.Ms. 53/78/PW&E dt. 8-5-1978 (Ext. 82) and held, that the order unmistakably indicated the intention of the Government to do away with the provision for arbitration in contracts, the P. A. C. of which was more than Rs. 2 lakhs. The Full Bench concluded, that a situation in which Clauses 3 and 24 were deliberately and consciously struck down, the entire arbitration provisions collapsed. We are bound by the decision and have necessarily to dismiss this appeal.
6. We have to come to the said conclusion for yet another reason also. Article 299 of the Constitution of India deals with contracts made in the exercise of the executive power of the Union or of a State. It provides for the manner in which the contract shall be expressed to be made and executed on behalf of the President or the Governor. A contract which does not comply with Article 299 of the Constitution is not enforceable against the executive Government. Article 299 of the Constitution, dealing with the executive power of the Union or of State in respect of contracts is in the following terms :
“299. Contracts.– (1) All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise.”
Ext. B2 is an order of the executive Government and is expressed in the name of the Governor as required by Article 166 of the Constitution of India. That clearly and unmistakably indicated that no contract with the executive Government, comprehended by Article 299 of the Constitution of India, shall contain a provision for arbitration if the estimated PAC was more than Rs. 2 lakhs. Even assuming that Clause 73 of the M.D.S.S. should be read as part of the Form of contract, the existence of that condition which is contrary to the expressed intention of the executive Government will be inoperative, because it will be contrary to the direction which the Governor is competent to issue under Article 299 of the Constitution of India. A provision of a contract which is contrary to the stipulations contained in directions issued by the Governor under the above Article cannot be enforced against the executive Government.
7. Counsel for the appellant submitted that though the appellant had countersigned the deletion of Clause 3, he had not countersigned deletion of Clauses 24 and 24(a) of the agreement. He submitted further, that according to Clause 44 of the agreement, Clause 14 of Form No. 84 which provides for arbitration should be read into the contract. He, therefore, submits that the finding of the trial court is unsustainable. We have perused the agreement, the tender notice and Clause 14 of Form No. 84 dealing with specifications. What we find is that Form No. 84 is not part of the tender notice and cannot therefore be read into the contract by virtue of the provisions contained in Clause 44 of the agreement.
8. In addition to the reasons stated by the Full Bench in the decision referred to above, we hold that a provision for arbitration would not survive the promulgation of Ext. B2 order by the Governor in relation to the manner in which contracts shall be executed on behalf of the executive Government. A term in a contract contrary to the directions issued by the Governor is incapable of enforcement against the executive Government.
The appeal is, therefore, devoid of merits and is hereby dismissed The parties will suffer their respective costs.