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Mohammad Usman Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberCivil Writ Petn. No. 167 of 1974
Judge
Reported inAIR1982Raj100
ActsConstitution of India - Article 226; Contract Act, 1872 - Sections 63; Evidence Act, 1872 - Sections 115
AppellantMohammad Usman
RespondentUnion of India (Uoi) and ors.
Appellant Advocate M.M. Singhvi, Adv.
Respondent Advocate A.K. Mathur, Adv.
DispositionPetition dismissed
Cases ReferredAmar Nath v. B. H. Electricals
Excerpt:
- - 1972, when the railway administration failed to give relief to, the petitioner on the basis of the decision in chainsukhdass' writ petition. if the other party accepts such an offer, then by consensus the contract is determined and the party accepting the repudiation of the contract cannot turn round and insist on the performance thereof by the other side or complain of breach of contract. but a mutual abandonment, cancellation or rescission must be clearly expressed and act and conduct of the parties in this end must be positive, unequivocal and inconsistent with the existence of the contract. as in kapurchand's case (air 1963 sc 250) the plea that the petitioner was forced to accept payment clearly appears to be an afterthought and must be rejected for identical reasons......in jodhpur division of the northern railway, the highest bidder was required to deposit 25% of the sale price on the fall of hammer and to pay the remaining amount to the chief cashier and pay master, northern railway or divisional cashier and pay master concerned, within seven days from the date of final acceptance of the bid. the petitioner was the highest bidder in respect of one lot of scrap steel rails sold by auction held at bilara on jan. 31, 1967, sold for rs. 60,680/- and he deposited 25% earnest money then and there, on the closure of the auction and also deposited the balance 75% of the sale price within the prescribed period. 2. however, on apr. 1, 1967 the divisional superintendent, northernrailway, jodhpur division, informed the petitioner and other auction-purchasers that.....
Judgment:
ORDER

Dwarka Prasad, J.

1. The petitioner is a contractor and used to purchase scrap materials sold at railway auctions. The Controller of Stores, Northern Railway, New Delhi, published a public notice on Jan. 18, 1967 notifying the sale by public auction of scrap steel rails at Bilara in Jodhpur Division of the Northern Railway, The highest bidder was required to deposit 25% of the sale price on the fall of hammer and to pay the remaining amount to the Chief Cashier and Pay Master, Northern Railway or Divisional Cashier and Pay Master concerned, within seven days from the date of final acceptance of the bid. The petitioner was the highest bidder in respect of one lot of scrap steel rails sold by auction held at Bilara on Jan. 31, 1967, sold for Rs. 60,680/- and he deposited 25% earnest money then and there, on the closure of the auction and also deposited the balance 75% of the sale price within the prescribed period.

2. However, on Apr. 1, 1967 the Divisional Superintendent, NorthernRailway, Jodhpur Division, informed the petitioner and other auction-purchasers that the highest bids given by them for the sale of scrap steel rails were not accepted by the Controller of Stores, Northern Railway, New Delhi and that he had ordered the refund of the earnest money as also the balance of the sale price to the respective auction-purchasers. The petitioner approached the higher authorities of the Railway at the Northern Railway Headquarters, Baroda House, New Delhi and is said to have been orally assured that his bid would meet the same fate as would be decided by their Lordships of the Delhi High Court in the Writ Petitions filed by M/s. Chainsukhdass Sohanlal Jain and Abdul Sakoor, in respect of the highest bids given by the aforesaid persons for other lots. The petitioner approached the General Manager, Northern Railway by means of a representation dated Apr. 3, 1967 and to the Chairman of the Railway Board by a representation dated June 10, 1967, but nothing appears to have turned out of all these efforts. On Dec. 21/22, 1967 the Track Supply Officer, Head-quarters Office, Northern Railway, New Delhi sent pay orders in respect of the refund of the earnest money and the remaining sale price, deposited by seven auction-purchasers including the petitioner. It appears that the petitioner accepted the refund pay order and did not take any further steps in the matter.

3. The writ petition filed by M/s. Chainsukhdass Sohanlal was allowed by a learned single Judge of Delhi High Court on Jan. 31, 1972, and the order of the Controller of Stores, Northern Railway, New Delhi cancelling the auction sale was quashed. The petitioner thereafter approached the Controller of Stores by his representation dated Aug. 14, 1973 and also served a notice of demand for justice but as the same were ignored the present writ petition was filed in this Court on Dec. 13, 1973. It has been urged by learned counsel for the petitioner that the cancellation of the auction sale by the Chief Controller of Stores was without any basis and the same should be set aside.

4. On behalf of the Union of India some preliminary objections were raised by its counsel Shri A. K. Mathur. It was argued in the first instance that the writpetition has been filed after inordinate delay which has not been satisfactorily explained by the petitioner. It was then submitted that the acceptance by the petitioner of the refund pay order for the entire money deposited by him towards fulfilment of the contract amounted to acquiescence on his part in the revocation of the contract by the railway authorities. It was also urged by the learned counsel for the Union that the petitioner had wilfully and knowingly suppressed the important fact about his having obtained refund of the purchase price as in the writ petition no mention has at all been made of the fact that the petitioner had accepted refund pay order in respect of the entire sale price, when the same was offered to him by the Railway administration. It was also urged that there was no equity in favour of the petitioner after he had obtained the refund of the sale price and by his own conduct the petitioner has disentitled himself from seeking any relief from this Court, in its jurisdiction under Article 226 of the Constitution.

5. So far as the question of delay in filing the writ petition is concerned, the petitioner has tried to explain the same in the writ petition and has stated that he was given an oral assurance by the concerned authorities of the Northern Railway at Delhi that he would be given the same treatment as would be given to M/s. Chainsukhdass Sohanlal Jain and Abdul Sakoor, who had filed writ petitions in similar circumstances before the Delhi High Court. Thus the petitioner waited for the decision of the Delhi High Court as he bona fide believed that he would get the same treatment from the railway authorities as would be given to M/s. Chainsukhdass Sohanlal and Abdul Sakoor, who were similarly situated as the petitioner. There is no letter or other document in writing from the railway authorities with the petitioner, assuring him about the delivery of goods in case the writ petitions filed by other similarly situated persons were allowed by the Delhi High Court. Moreover, as I have already noted above, the judgment of the Delhi High Court in Chainsukhdass case was delivered on Jan. 31, 1972 but the petitioner took almost two years even thereafter in filing the present writ petition on Dec. 14, 1973.

The delay of about two years, even after the judgment of the Delhi High Court was delivered, has not been satisfactorily explained by the petitioner. An oral assurance is alleged to have been given to the petitioner in the year 1967 by the then Controller of Stores, but the same has been denied by the railway authorities concerned and it has been averred by them that it was absolutely false that the petitioner was advised to wait for the result of the writ petitions filed by other bidders, in respect of different lots and that for this reason the petitioner did not file a writ petition earlier in respect of cancellation of the auction sale made in his favour. At any rate there is no explanation forthcoming from the petitioner, why he did not file a writ petition, soon after the decision of the Delhi High Court in Jan. 1972, when the Railway Administration failed to give relief to, the petitioner on the basis of the decision in Chainsukhdass' writ petition. The unexplained delay of about 2 years is undoubtedly detrimental to the maintainability of the present writ petition.

6. It is also true that the petitioner wilfully omitted to mention the fact regarding his having obtained the refund of the sale price, in the writ petition. The petitioner has nowhere stated in the writ petition that the respondents made any offer to him about the refund of the sale price or that he protested against the refund of the sale price, and that he subsequently received the refund pay order reluctantly or under protest. It was primarily for the petitioner to explain the circumstances in which the refund of the sale price was received by him, but the writ petition is blissfully silent about the question of refund. It was only after the respondents had invited the attention of this Court in their reply to the fact that the petitioner had accepted the refund of the entire amount of sale price and has thereby agreed to the revocation of the auction sale in question, the petitioner thought it proper to advert to the question of refund in his rejoinder. Even at that stage the averment of the petitioner is as under :--

'So far as the refund of the deposit is concerned, the Government forced upon the petitioner the refund and it was not by his own volition that thepetitioner accepted the refund of the amount. It is submitted that once the property in goods has passed to the petitioner then there is absolutely no provision for reconveying of the title in goods nor it can be so done without the volition and consciousness on the part of the petitioner. The respondents were in fiduciary relationship with the petitioner and it was impossible for the petitioner to have refused to receive the amount tendered to him calling it a refund.'

7. Thus, even at this stage the case set up by the petitioner is that he was 'forced' to accept the amount of sale price offered by the railway authorities, by way of refund of sale price and that it was 'impossible' for him to refuse to receive the amount sought to be refunded to him. The petitioner has not even alleged that he received the refund of the sale price 'under protest' nor he explained the circumstances in which he was 'forced' to accept the refund of the sale price.

8. Section 63 of the Contract Act provides as under:--

'63. Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance or may accept instead of it any satisfaction which he thinks fit.'

9. If one party to the contract expresses to the other party, by words or by conduct, an intention not to perform his obligation under the contract, when the time for the performance of the contract arrives or even before that time, it is open to the other party to accept or decline the offer regarding rescission of the contract. If the other party accepts such an offer, then by consensus the contract is determined and the party accepting the repudiation of the contract cannot turn round and insist on the performance thereof by the other side or complain of breach of contract. In case of unilateral repudiation of a contract by one party, it is open to the other party to decline to accept the revocation of the contract and to claim damages for the rescission of the contractual relationship unilaterally by the first party; but if the other party avails itself of the option of accepting repudiation of the contract and receives some benefit which might have beenpassed by it to the other party, in duel performance of his part of the contract, then it must be presumed that the other party has acquiesced in the -repudiation of the contract by the first party and by so doing has terminated the contract. It does not lie with the other party thereafter to claim either damages for breach of contract or sue for specific performance of the contract.

10. In M. Ahmed Koya v. E. Murugesa Son & Co., AIR 1958 Ker 195, it was held that 'a party to a contract is not entitled in law to so cancel a concluded contract unilaterally. Having entered into an agreement, it is not open to the defendant to resile from the same on untenable grounds as he pleased. Therefore, such a cancellation has no effect in law, so far as the plaintiffs rights are concerned.'

11. In the aforesaid case, relied upon by the learned counsel for the petitioner, there was no question of acceptance of some benefit or acquiescence by the plaintiff in the unilateral rescission of the contract by the defendant. The law on the subject has been stated by Dua, J., as he then was, in Sohanlal Arjan Dass v. Banwarilal Vishwa Nath, AIR I960 Punj 549 (at p. 552), as under:--

'Generally, all the parties to a contract must assent to its rescission or abrogation and there must be a meeting of their minds in order to accomplish a rescission or abrogation by agreement; one of the parties cannot by himself rescind the contract by merely giving a notice of intention so to do and a contract can only be treated as abandoned when the acts of one party inconsistent with its existence are acquiesced in by the other. But a mutual abandonment, cancellation or rescission must be clearly expressed and act and conduct of the parties in this end must be positive, unequivocal and inconsistent with the existence of the contract.''

12. In Lala Kapurchand Godha v. Himayatali Khan, AIR 1963 SC 250, the defendant had executed a promissory note in favour of the plaintiff for a sum of Rupees Thirteen Lacs and odd on account of purchase of jewellery from the plaintiff. The plaintiff was offered a sum of Rupees Twenty Lacs in full satisfaction of his claim of Rupees Twenty Seven Lacs under the aforesaid promissory note and it was made clear that unless full satisfaction was recorded payment would not be made. The plaintiff after some initial protest agreed to accept the sum of Rupees Twenty Lacs in full satisfaction of his claim and duly discharged the promissory note by endorsement of full satisfaction and received the payment. When the plaintiff brought a suit for the recovery of the balance amount of Rupees Seven Lacs, their Lordships of the Supreme Court held that the case was completely covered by Section 63 of the Contract Act and illustration (c) thereof. It was observed that the plaintiffs having accepted the payment in full satisfaction of their claim, they were not entitled to sue for the balance. It was argued before their Lordships that the payment was accepted by the plaintiff under protest, reserving his right to claim the balance. In this context, their Lordships observed as under (at p. 253):--

'We may here state that no plea was raised by the appellants to the effect that the endorsements on the promissory notes had been obtained by coercion, and no issue was struck between the parties as to the endorsements on the promissory notes having been obtained by coersion. That being the position, what is the effect of Madhava Rao's evidence? The clear effect is that the authorities who were paying the money in discharge of the debt of the respondent made it clear that they would pay the money only if a full satisfaction of the claim was given by the appellants. The appellants after some initial protests agreed and duly discharged all the promissory notes by endorsing thereon full payment and satisfaction. The question of coercion, was introduced as and by way of afterthought.'

13. In the present case also, learned counsel for the petitioner tried to submit that the refund pay order was accepted by the petitioner 'under protest' but as I have noted above that in the writ petition the petitioner deliberately and intentionally omitted to mention even the fact of having obtained refund of the sale price. When his attention was drawn to the effect of his having received the refund pay order, which amounted to acceptance of revocation of the contract, the stand taken by thepetitioner even in his rejoinder was that he was 'forced' to accept the amount of refund of the sale price. Even at the stage of rejoinder, the petitioner did not take the plea that the amount was accepted by him 'under protest', nor he disclosed the circumstances in which and by whom he was forced to accept the refund of the sala price.

As in Kapurchand's case (AIR 1963 SC 250) the plea that the petitioner was forced to accept payment clearly appears to be an afterthought and must be rejected for identical reasons. The unilateral revocation of the contract by the respondents might be unjustified and illegal, yet the petitioner having accepted the refund of the entire amount deposited by him with the Rajasthan authorities in respect of sale price he must be held to have acquiesced in the revocation of the contract. After the petitioner had accepted full refund of the amount deposited by him towards the fulfilment of the contract of sale, the said contract came to an end and the petitioner had no subsisting right arising out of the contract for sale of scrap steel rails to maintain the present writ petition.

14. Moreover, the conduct of the petitioner has disentitled him from obtaining any relief in the equitable jurisdiction of this Court, as the petitioner has already accepted the refund of the entire sale price and then he sat silently at home until the Delhi High Court decided the writ petitions filed by the other auction purchasers and even thereafter the petitioner took no effective steps in the matter for almost two years. The entire conduct of the petitioner leads to the conclusion that he voluntarily acquiesced in the revocation of the contract and with that end in view he accepted the refund of the sale price deposited by him with the railway authorities. In these circumstances, the petitioner cannot be allowed to deposit the sale price now in order to revive the auction sale.

15. It was argued by learned counsel for the petitioner that the goods which were auctioned in 1967 were still lying at Bilara and have not been disposed of by the respondents and that the goods had been appropriated towards the contract and the property in the said goodshad passed to the petitioner. Learned counsel argued that the petitioner was thus entitled to the delivery of the goods. I am unable to accept this contention. Once the contract of sale has been rescinded or revoked and the revocation thereof has been accepted by the petitioner, even if the same might have been illegal, yet no subsisting right under the contract remained with the petitioner, which he could enforce by means of the present writ petition. Once the petitioner had accepted without any protest the refund of the full amount of the sale price his consent to the rescission of the contract was undoubtedly unequivocal, clear and positive which was inconsistent with the existence of the contract. Thereafter the petitioner had no right or title in respect of the goods which might have been earlier appropriated towards the contract and once the contract itself is terminated, thereafter the petitioner cannot claim delivery of the goods. If this Court were to order that the goods in question should be delivered to the petitioner on his now depositing the sale price thereof, then this Court would be creating a new contract which is not the contract which was concluded between the parties and which has ceased to exist long ago.

16. The decision in Amar Nath v. B. H. Electricals, AIR 1972 All 176, also relied upon by the learned counsel for the petitioner, is not applicable to the facts of the present case, as in that case the payment was accepted 'under protest', while in the present case the refund appears to have been accepted unconditionally by the petitioner without any demur or protest. After the unilateral rescission of the contract was made by the railway authorities and the offer to refund the sale price was made, the same was accepted by the petitioner and thus there was accord and satisfaction of the claim, in the sense of bilateral consensus and no right for the delivery of the goods remained with the petitioner, after the rescission of the contract was completed.

17. In view of the foregoing discussion, it is not necessary for me to consider the question as to whether the cancellation of the contract by the Controller of Stores was justified or unjustified. When the petitioner has nosubsisting right for the enforcement of the contract it would be of no avail to him, even if it is held, as was decided by the Delhi High Court in Chainsukhdass' writ petition, that the unilateral rescission of the contract was unlawful and the Controller of Stores could not cancel a completed contract.

18. In the result, the writ petition has no force and is dismissed. The parties are left to bear their own costs.


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