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The State of Madhya Pradesh Vs. Hakim Singh and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 77 of 1969
Judge
Reported inAIR1973MP24; 1972MPLJ957
ActsContract Act, 1872 - Sections 2 and 5; Constitution of India - Article 299(1)
AppellantThe State of Madhya Pradesh
RespondentHakim Singh and anr.
Appellant AdvocateM.V. Tamaskar, Deputy Govt. Adv.
Respondent AdvocateR.S. Dabir, Adv.
DispositionAppeal dismissed
Cases ReferredK. P. Chowdhry v. State of M. P..
Excerpt:
- .....of the bid and also signed the contract deed. the auction was subject to the approval of the chief conservator of forests, a few days after the date of auction, it is alleged that the plaintiff discovered that he had given the bid on misapprehension of facts, namely, that though, in fact. 115 trees of the girth of 37 inches to 48 inches wera shown in the list of various trees to be included fox auction in that coupe, the plaintiff no. 1 was misled in thinking that they were 1115 in number. it was also alleged that as there was no proper arrangement of loudspeaker, though the upset price was declared as rs. 14,000/-', the plaintiff and other bidders had taken it to be 'rs. 40,000/-'. that was the reason why the bid had gone so high. on discovering these mistakes the plaintiff.....
Judgment:

Bhave, J.

1. The trial Court has decreed the plaintiffs claim for refund of Rs. 12,950/- by the defendant State with interest at 6 per cent per annum from the date of the suit till realisation of the amount. The trial Court has further Issued an injunction restraining the defendant State and its officers and employees from recovering Rs. 23,500/-from the plaintiffs. Costs have also been awarded to the plaintiffs. The State has therefore, preferred this first appeal.

2. The facts of the case, in brief, are that on 22-8-1961 Sargadi Coupe No. 1 of Pratappur Range of North Surguia Forest Division was put to public auction and the highest bid of 'the plaintiff No. 1 for Rs. 51,500/- was accepted. Accordingly, the plaintiff No. 1 deposited one-fourth amount of the bid and also signed the contract deed. The auction was subject to the approval of the Chief Conservator of Forests, A few days after the date of auction, it is alleged that the plaintiff discovered that he had given the bid on misapprehension of facts, namely, that though, in fact. 115 trees of the girth of 37 inches to 48 Inches wera shown in the list of various trees to be included fox auction in that Coupe, the plaintiff No. 1 was misled In thinking that they were 1115 In number. It was also alleged that as there was no Proper arrangement of loudspeaker, though the upset price was declared as Rs. 14,000/-', the plaintiff and other bidders had taken it to be 'Rs. 40,000/-'. That was the reason why the bid had gone so high. On discovering these mistakes the plaintiff addressed letters dated 28-9-1961 (Ex. P-7) to the Conservator of Forests, the Divisional Forests Officer and the Minister of Forests. Bhopal, bringing to their notice the misapprehension under which the bid was offered by him and requesting the authorities that the auction in question may not be sanctioned and the amount deposited by him may be refunded. Similar letter (Ex. P-8) was sent by the plaintiff to the Chief Conservator of Forests. Madhya Pradesh, the sanctioning authority, on 11-9-1961, with a request that the sum deposited by him be refunded to him and re-auction of the Coupe be held. In spite of these letters, the Chief Conservator of Forests signed the contract deed on 29-11-1961 as is clear from Ex. D-3 and a demand was made against the plaintiff for deposit of the other instalments that had become due. As the plaintiff did not deposit the balance of 'the amount, the so-called contract was cancelled and in terms of the contract the Coupe was ordered to be re-auctioned. The re-auction took place on 16-12-1963 for Rs. 15,000/. The amount of Rs. 12,950/- was directed to be forfeited and after adjusting Rs. 15,000/-against the original bid a demand for Rs. 23,500/- was raised against the plaintiff. The plaintiff No. 2 had also signed the surety-form on the date the auction took place and was also proceeded against for recovery of the said amount. Under the circumstances, the plaintiffs filed 'the suit with a prayer that the defendant State' be directed to refund Rs. 12,950/-with interest and for permanent injunction restraining the defendant State and its officers from recovering the amount of Rs. 23,500/-.

3. In the written statement filed on behalf of the State it was alleged that there was no scope for any misapprehension of facts: as such, there was no question of cancelling the bid of the plaintiff and the Chief Conservator of Forests was within his rights in enforcing the contract. In terms of the contract the Chief Conservator of Forests was also within his rights in cancelling it in re-auctioning the Coupe and in demanding the balance of Rs. 23,500/- and in forfeiting the amount already paid by the plaintiff.

4. The trial Court found that there was no scope for misapprehension of facts. The plaintiffs' suit was, however, decreed on the ground that it was not shown that the Chief Conservator of Forests had any authority to sign the contract on behalf of and in the name of the Governor as is required under Article 299 of the Constitution. In this view it was further held that inasmuch as no contract came into being, the defendant State was not entitled to forfeit the amount deposited by the plaintiff and to raise any demand against him for the difference in terms of the contract. The plaintiffs' suit was, therefore, decreed as indicated above.

5. The trial Court was in error in holding that the Chief Conservator of Forests had no authority to sign the contract. The Government Advocate, appearing for the State, produced before us the document containing delegation of the authority to the Chief Conservator of Forests and other Forest Officers. Shri Dabir, learned counsel for the respondents, conceded that the Chief Conservator of Forests had the authority to sign the contract for and on behalf of the Governor.

6. Shri Dabir however, urged and in our opinion, rightly -- that when the plaintiff had informed the Chief Conservator of Forests that hp was withdrawing his bid and inasmuch as the contract was subject to the approval of the Chief Conservator of Forests and inasmuch as the contract could not become binding between the parties till it was signed by the Chief Conservator of Forests, he had no authority to sign the contract after the bid was withdrawn by the plaintiff. If because of the withdrawal of the bid and re-auctioning of the Coupe any damage was sustained by the State, its remedy was to the file a suit for recovery of the damages. It could not enforce the terms of the alleged contract from which the plaintiff had already backed out before it could become a binding contract between the Parties. The offer of the bid and deposit of the amount by the plaintiff No. 1 was in the nature of a 'proposal'. Before that could be accepted by the Chief Conservator of Forests, the communication was sent to him that the plaintiff was withdrawing his offer. The Chief Conservator of Forests, therefore, had no right to put his signature on the contract deed and to treat it as if the contract had come into being. It therefore, follows that, in fact, no contract came into being between the Parties and the defendant State had no right to enforce the contract as such. It is no doubt true that in Sale Condition No. 14 (Ex. D-l) a provision has been made that if a successful bidder fails at the close of the auction to pay the amount of the consideration, or the first instalment, as the case may be, or to furnish a security or to complete the formalities, the earnest money deposited by him shall be forfeited to the State Government and the coupe shall be re-auctioned and the deficiency shall be realised from the original bidder as arrears of land revenue. The State Government, however, cannot take any advantage of this condition inasmuch as it has been held by the Supreme Court in K. P. Chowdhry v. State of M. P.. AIR 1967 SC 203 that in view of Article 299(1) of the Constitution no implied contract could be spelt out between the Government and the forest contractor at the stage of bidding: for Article 299 in effect, ruled out all implied contracts between the Government and other persons and that the sale conditions which did not satisfy the requirements of Article 299(1) could not therefore, be enforced. It was also held that Section 155 (b) of the M. P. Land Revenue Code was not applicable, since, that clause provided for recovery of all monies falling due to the State Government under any grant, lease or contract The 'contract' in that clause could not be understood to be an 'implied contract' between the Government and another person In view of Article 299(1) of the Constitution. In view of this clear pronouncement of the Supreme Court it is no longer open to the State to urge that the amount of the first instalment deposited by the plaintiff could be forfeited or that any demand could be raised for any amount found due on re-auction and recovered as arrears of land revenue under the provisions of the M. P. Land Revenue Code. It must, therefore, be held that the plaintiffs are entitled to refund of the amount deposited by them. They are also entitled to injunction restraining the State Government from recovering the difference as arrears of land revenue. It must, however, be made clear that the State is free to file a suit for damages if it is so advised.

7. In the result, the appeal filed by the State is dismissed and the decree of the trial Court is confirmed, though for different reasons. The injunction granted by the trial Court shall not, however, prevent the State from filing a civil suit for recovery of damages, if any sustained by it. In the circumstances of the case, we make no order as to costs.


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