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TMI Blog2021 (1) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... he Additional Senior Civil Judge, Visakhapatnam allowing the suit being O.S. No. 106 of 1993 filed by the Respondent-Port Trust against the Appellant for damages, and dismissing O.S. No. 450 of 1994 filed by the Appellant for refund of earnest deposit. 3. On or about 17.7.1990, the Respondent-Port Trust floated a tender for supply of Wooden Sleepers. The tenders were due to be opened on 01.08.1990. 4. Clauses 15 and 16 of the tender are extracted hereinbelow: 15. The purchaser will not pay separately for transit insurance and the supplier will be responsible till the entire stores contracted for arrive in good condition at destination. The consignee will as soon as but not later than 30 days of the date of arrival of stores at destination notify the supplier of any loss, or damage to the stores that may have occurred during transit. 16. In the event of the supplies being found defective in any matter the right to reject such materials and return the same to the supplier and recover the freight by the Port is reserved. 5. Pursuant to the aforesaid tender, the Appellant submitted its offer on or about 01.08.1990. It was a specific condition of the offer of the Appellant that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely supply two thousand of BG Tracks sleepers and the supply can be completed as per your requirement. 6. We are regular supplier of sleepers to Indian Railways. We wish to extend our transaction with the V.P.T. 7. We will execute 10% of security deposit as on bank guarantee and also you have refund to our E.M.D. amount of Rs. 75,000/- awaiting your favourable order. 10. Thereafter, further correspondence ensued between the parties. By another letter dated 20.10.1990 addressed to the Controller of stores of the Respondent-Port Trust, the Appellant reiterated that it had not agreed to inspection at the General Stores of the Respondent-Port Trust. The Appellant made it clear that, in the event the Respondent-Port Trust insisted on inspection at the General Stores of the Respondent-Port Trust, the Appellant would charge 24% extra instead of 25% as mentioned in its earlier letter. The said letter dated 20.10.1990 was duly received by the Respondent-Port Trust. 11. By a letter dated 29.10.1990, written in response to the quotations dated 1.8.1990, 8.8.1990 and the letter dated 20.10.1990 of the Appellant, the Respondent-Port Trust informed the Appellant that the Respondent-Port Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 30.10.1990 of the Appellant. By the aforesaid letter, the Respondent-Port Trust requested the Appellant to supply the materials ordered as per the purchase order, inter alia, contending that the purchase order had duly been placed on the Appellant within the period of validity of the price quoted by the Appellant, after issuing a letter of intent to the Appellant, accepting its offer. The Appellant was warned that if supply was not made as per the purchase order, risk purchase would be made at the cost of the Appellant and the Earnest Deposit of Rs. 75,000 would be forfeited. The Respondent-Port Trust also noted that the Appellant had not made the security deposit, to which the purchase order was subject. 17. By another letter dated 19.11.1990, the Respondent-Port Trust requested the Appellant to commence supply of materials. In response to the said letter, the Appellant wrote a letter dated 27.11.1990 to the Respondent-Port Trust, contending that that there was no concluded contract between the Appellant and the Respondent-Port Trust and once again requested that the earnest money deposited by the Appellant with the Respondent-Port Trust be refunded to the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed together and heard by the First Additional Senior Civil Judge, Visakhapatnam. In the first suit, the following issues were framed for trial: (i) Whether the Appellant committed breach of contract? (ii) Whether the Respondent-Port Trust was entitled to recover the suit amount from the Defendant? (iii) To what relief was the Respondent-Port Trust entitled? 24. In O.S. 450/1994 (the second suit), the issues were: (i) Whether the Appellant was entitled to refund of earnest money with interest as claimed from the Respondent-Port Trust. (ii) Whether the suit (second suit) was barred by limitation? (iii) To what relief, if any, was the Appellant entitled? 25. Since the two suits were clubbed together and the issues in the two suits were interlinked, common evidence was recorded for the two suits. While one V. Adinarayana, who had been working in the Stores Department of the Respondent-Port Trust at the material time, was examined on behalf of the Respondent-Port Trust, Shri G.C. Padia, who was the Director of the Appellant was examined on behalf of the Appellant. 26. The two suits were disposed of together, by a common judgment and order dated 31.3.2000. While the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes to the knowledge of the proposer. The communication of a revocation is complete,-- as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge. 32. The Trial Court found that it had been proved that there was a concluded contract between the Appellant and the Respondent-Port Trust, but the Appellant had admittedly not supplied the wooden sleepers to the Respondent-Port Trust. Once it was proved that there was a concluded contract and the Defendant that is, the Appellant before this Court, had admittedly not supplied the goods as per the terms of the purchase order, it had to be held that the Defendant had committed breach of contract. The Trial Court, in effect, held that the fact that the Appellant had received the letter of intent and endorsed the receipt thereof within 31st October, 1990, established the case of the Respondent that the contract had been concluded. 33. The Trial Court held that the Appellant having committed breach of its obligations under a concluded contract with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Court found that the contract was enforceable till its completion or its abandonment. The rescission of the contract and consequential forfeiture of security deposit was proper and within the terms of the contract. 39. In Rajasthan State Electricity Board and Ors. v. Dayal Woods Works (supra), cited on behalf of the Appellant before the Trial Court, the High Court had found on facts that there was no concluded contract for supply of sleepers and consequently the Plaintiff was entitled to refund of security deposit. 40. In Fateh Chand (supra), cited on behalf of the Appellant before the Trial Court, a five-Judge Bench of this Court held: 10 ......In assessing damages the Court has, subject to the limit of the penalty stipulated, jurisdiction to award such compensation as it deems reasonable having regard to all the circumstances of the case. Jurisdiction of the Court to award compensation in case of breach of contract is unqualified except as to the maximum stipulated; but compensation has to be reasonable, and that imposes upon the Court duty to award compensation according to settled principles. The Section undoubtedly says that the aggrieved party is entitled to receive com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the contract was to be performed at Kanpur it was the Respondent's duty to buy the goods in Kanpur and rail them to Calcutta on the date of the breach and if it suffered any damage thereby because of the rise in price on the date of the breach as compared to the contract price, it would be entitled to be reimbursed for the loss. Even if the Respondent did not actually buy them in the market at Kanpur on the date of breach it would be entitled to damages on proof of the rate for similar canvas prevalent in Kanpur on the date of breach, if that rate was above the contracted rate resulting in loss to it. But the Respondent did not make any attempt to prove the rate for similar canvas prevalent in Kanpur on the date of breach. Therefore it would obviously be not entitled to any damages at all, for on this state of the evidence it could not be said that any damage naturally arose in the usual course of things. 43. In State of Maharashtra and Anr. v. Digambar Balwant Kulkarni (supra), cited on behalf of the Respondent-Port Trust this Court held that a contract could not be rescinded after the expiry of the due date for the purpose thereof. Abandonment of the contract work after ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty AIR 1962 SC 554 that the effect of such a prohibition as is contained in Sub-section (3) of Section 34 renders the contract itself void and unenforceable. In that case the controversy was about estoppel against New Delhi Municipal Corporation which was governed by the Punjab Municipal Act, 1911, which contains a similar provision viz., Section 47. 49. In Visakhapatnam Port Trust, Visakhapatnam and Anr. v. Bihar Alloy Steels Ltd. and Ors. (supra) this Court held that the promise as contained in the letter of Traffic Manager to lease an area of port trust was void and unenforceable against the Board of Trustees, there being no contract made in accordance with Section 34 of the Major Port Trusts Act. 50. In Raghunandhan Reddy v. The State of Hyderabad thr. The Secretary to Government Revenue Department (supra), a Division Bench of the High Court held: 8. It is a well-established principle of law that only when an offer is accepted that the contract is concluded and binds the parties. It is equally well-settled that before an offer is accepted, the offerer can withdraw his offer, but if the acceptance is conditional or is not final, then there is no concluded contract. 51. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, P.W. 1 during his cross-examination, stated that it is true that the contract was not concluded. However, that itself cannot be a reflection on the nature of intent, which could follow the facts and circumstances in the documents, which are staring at. It is to be seen that even according to the M/s. Padia Timber Company Pvt. Ltd., and as per its letter dated 27.11.1990 ex. A. 10, the M/s. Padia Timber Company Pvt., Ltd., admitted about the receipt of the letter dated 29.10.1990 and the acceptance of tender which is valid for three months. Therefore, having regard to the letter in Ex. A. 10 mentioning about the acceptance of the tender on 29.10.1990, it is not open to the M/s. Padia Timber Company Pvt. Ltd., to fail back and say that there was no acceptance at all nor there was any concluded contract. The Court below was rightly held that the tender of the Defendant was duly accepted on 29.10.1990 which was followed by the purchaser order on 31.10.1990 and that itself is more enough to show that there was concluded and enforceable contract. Thus, nothing lies in the mouth of the M/s. Padia Timber Company Pvt. Ltd., to say that there was no concluded contract. Further, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al which must be accepted fully by the original proposer, before a contract is made. 57. In Union of India v. Bhim Sen Walaiti Ram (1969) 3 SCC 146, a three-Judge Bench of this Court held that acceptance of an offer may be either absolute or conditional. If the acceptance is conditional, offer can be withdrawn at any moment until absolute acceptance has taken place. 58. In Jawahar Lal Burman v. Union of India (supra), referred to by the High Court, this Court held that Under Section 7 of the Contract Act acceptance of the offer must be absolute and unqualified and it cannot be conditional. However, in the facts and circumstances of that case, on a reading of the letter of acceptance as a whole, the Appellant's argument that the letter was intended to make a substantial variation in the contract, by making the deposit of security a condition precedent instead of a condition subsequent, was not accepted. 59. The High Court also overlooked Section 7 of the Contract Act. Both the Trial Court and the High Court over-looked the main point that, in the response to the tender floated by the Respondent-Port Trust, the Appellant had submitted its offer conditionally subject to inspect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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