Bishambhar Dayal, C.J.
1. This is a writ petition by firm Messrs Hariprasad Rameshkumar which had submitted a tender for purchasing tendu leaves in a Government forest. After making the tender and before the tender was accepted, it informed the State that it wanted to withdraw and would not abide by its tender. Some time afterwards, it was informed that its tender had been accepted and that it would be liable to compensate the Government for any loss that may occur to the Government on giving the contract to somebody else. In this case the petitioner has contested the fact that its tender was ever accepted. But we may not go into that question and it may be taken for granted that some sort of an acceptance was accorded to it by the officer concerned. Admittedly, however, no formal agreement was executed between the petitioner and the Government.
2. Rule 7 (10) of the M.P. Tendu Patta (Vyapar Viniyaman) Niyamawali, 1965. providing for sale of tendu leaves prescribes the execution of a formal document in form 'K' given in those Rules within 15 days of the receipt of the order of appointment. Condition no 17 of the tender-notice also prescribes a similar form. Therefore, a valid agreement in respect of the contract could only come into existence between the parties by execution of an agreement in the prescribed form. Article 299(1) of the Constitution among other things prescribes as follows:--
'...... all such contracts ...... shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise.' The Rules, therefore, directly presnribe a form and the manner in which an agreement will be executed. Unless such an agreement was executed, it cannot be said that a binding agreement has come into existence between the State and the petitioner. Admittedly, no such agreement has been executed.
3. The Government has thereafter given the contract to a third party and has demanded the deficiency between the tender of the petitioner and the contract executed with that third party. This necessarily depends upon a breach of the contract, if any, between the petitioner and the Governor. A claim for breach of contract cannot arise unless there is a valid contract binding between the parties. As stated above, there was no valid contract which could bind the parties.
4. Learned counsel for the State relied upon Union of India v. Rallia Ram, AIR 1963 SC 1685 for the proposition that formal execution of an agreement was not necessary and that correspondence could also create a valid agreement. This case is wholly irrelevant in the circumstances of the present case. The Supreme Court case relied upon was a case which dealt with an arbitration agreement. It has been expressly noted by their Lordships of the Supreme Court that there was no direction or provision in what manner such arbitration agreements would be executed. Then their Lordships further go on to observe in that case that the letter by which the acceptance on behalf of the Governor-General was given to the arbitration agreement was expressed to be on behalf of the Government although at the bottom where the letter was signed it was not stated that the signature was being made on behalf of the Governor-General. In these circumstances, their Lordships said that acceptance by the proper officer when expressed on behalf of the Governor-General was enough to create a valid contract. Reliance was also placed on behalf of the State upon D. G. Factory v. State of Rajasthan AIR 1971 SC 141. That was a case in which a formal agreement had in fact been executed and that agreement purported to be on behalf of the Governor. It stated:--
'........ .and the Governor of the State of Raiasthan (hereinafter called the Government which expression shall so in the body of the agreement it was expressly mentioned that it was being made on behalf of the Governor. The only dispute was whether the agreement not having been signed by the Inspector-General of Police expressly on behalf of the Governor fulfilled the requirement of Article 299 of the Constitution. It was held that it was not necessary that under the signature also the Inspector-General of Police should have mentioned that he had signed on behalf of the Governor. These cases are, therefore, distinguishable and cannot apply to the circumstances of the present case.
5. Learned counsel for the State also relied on Manickam Chettiar v. State of Madras AIR 1971 Mad 221 That case undoubtedly supports the contention of learned counsel. But with due respect to learned Judges we are unable to argee with the conclusion arrived at in that case. It is mentioned in the judgment of the learned Judges that under the terms of the contract it was essential that a formal agreement was to be executed between the parties. That being the situation, it was not possible to create a binding agreement between the Government and the tenderer unless the agreement as prescribed was executed. The learned Judges merely relied upon AIR 1963 SC 1685, (supra) without observing the distinction between the two cases.
6. In view of the clear defect mentioned above in the present case, we need not go into the other points raised by the petitioner challenging its liability.
7. The result is that this petition Is allowed. The order dated 3rd January 1970 passed by the Conservator of Forests, the demand notice dated 16th January 1970 issued by the Divisional Forest Officer and the notice dated 3rd February 1970 issued by the Sub-Divisional Officer are quashed. The petitioner will get its costs. Counsel's fee is fixed at Rs. 100/-. The outstanding amount of the security deposit shall be refunded to the petitioner.