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The State of Rajasthan Vs. Ram Dayal Modi - Court Judgment

LegalCrystal Citation
SubjectContract
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil First Appeal No. 16 of 1970
Judge
Reported in1983WLN638
AppellantThe State of Rajasthan
RespondentRam Dayal Modi
DispositionAppeal dismissed
Excerpt:
contract act - forfeiture of earnest money--communication within 4 months of acceptance of tender is necessary--government forfeiting earnest money without communicating acceptance of tender within 4 months--held, state government had no right to forfeit earnest money;where the state wants to forfeit the earnest money of the plaintiff even though it has not been put to any loss and in such circumstances it was necessary to have communicated to the plaintiff within four months that his tenders had been accepted by the government. as already mentioned above neither ex. 7 & 8 nor ex. a. 12 make any mention at all that the tenders had been accepted by the government or that sanction had been accorded by governor.;the state government has no right to forfeit the earnest money of the..........to the executive engineer, bharatpur on april 14, 1966, but did not deposit may amount as earnest money. the tenders were not accepted till july 25, 1976 and the date of acceptance was going to expire on august 14, 1966 as such the excutive engineer vide his letters no. 8039 and 8310 dated july 25, 1966 sought further extension of two months from the plaintiff. the plaintiff, however refused this request. the case of the plaintiff further is that he received a letter no. 9723, dated september 2, 1966 from the executive engineer, intimating the plaintiff of the acceptance of his two tenders with this letter, two work orders, dated august 12, 1966 were also received by the plaintiff as enclosures. in the said letter, dated september 2, 1966 it was mentioned that acceptance of the tenders.....
Judgment:

N.M. Kasliwal, J.

1. This appeal by the State is directed against the judgment and decree of learned Additional District Judge, Dholpur, dated May 31, 1969.

2. The plaintiff respondent filed a suit for declaration and injunction on the allegations that the Executive Engineer PWD (B & R), Bharatpur invited tenders on April 14, 1966 for widening of Shoulders from Miles 715 to 724 Zone A and of miles 723 to 731 of Zone B of Agra-Bombay road. According to the terms mentioned in the notice inviting tenders, the tenders were to be filed on prescribed forms. Earnest money mentioned in the notice was to accompany the tender. The tenders were to be accepted by the Rajasthan Government and the rates quoted by the contractor were to remain in force up to four months from the date of tenders, i.e. from April 14, 1966 The case of the plaintiff was that he submitted two tenders, one each for the above two works to the Executive Engineer, Bharatpur on April 14, 1966, but did not deposit may amount as earnest money. The tenders were not accepted till July 25, 1976 and the date of acceptance was going to expire on August 14, 1966 as such the Excutive Engineer vide his letters No. 8039 and 8310 dated July 25, 1966 sought further extension of two months from the plaintiff. The plaintiff, however refused this request. The case of the plaintiff further is that he received a letter No. 9723, dated September 2, 1966 from the Executive Engineer, intimating the plaintiff of the acceptance of his two tenders With this letter, two work orders, dated August 12, 1966 were also received by the plaintiff as enclosures. In the said letter, dated September 2, 1966 it was mentioned that acceptance of the tenders of the plaintiff were complete under Section 4 of the Indian Contract Act, on the following grounds:

(1) That a telegram dated August 13, 1966 was issued by the Assistant Engineer, B & R, Dholpur to the plaintiff accepting the tenders, but the same was returned by post office, as nobody received it at the official residence of the plaintiff.

(2) The Assistant Engineer has reported vide his letter, dated August 21, 1966, that the work orders No. Spl. 1 & 5 dated August 21, 1966, were not taken by the plaintiff and they were intentionally avoided.

3. The plaintiff then sent a reply, dated September 9, 1966 to the Executive Engineer, denying the allegations raised by him in his letter, dated September 2, 1966. Thereafter the plaintiff received a letter No. 2055, dated March 14, 1967, from the Executive Engineer PWD (B & R) intimating him that the Chief Engineer PWD (B & R), Rajasthan Jaipur had ordered the forfeiture of earnest money amounting to Rs. 26,200/- vide his letter No. F. 5-67 (116) Section II, dated March 7, 1967, on the ground that the plaintiff avoided to take delivery of the work orders and to commence the work allotted to him. On this basis, the Executive Engineer asked the plaintiff to deposit the aforesaid amount in his office within a fortnight, failing which action would be taken to recover the amount from the earnest money and the security deposit lying in other divisions.

4. The plaintiff challenged the alleged order of the Chief Engineer being without jurisdiction and ultra vires and not binding on the plaintiff on the following grounds amongst others:

(i) That there were no valid tenders nor there was any earnest money deposited and hence no forfeiture can be made.

(ii) That there was no acceptance offenders within the prescribed time of four months, nor any communication of acceptance was posted within four months.

(iii) That no communication of the acceptance of the tenders was put in the course of transmission addressed to plaintiff so as to be out of the power of the acceptor within the prescribed time of four months.

(iv) That the alleged telegram, dated August 13, 1966, a copy of which was shown to the plaintiff by the Executive Engineer and which was copied by plaintiff (reproduced below) is not for and on behalf of She Governor or Rajasthan Government and is also not by an officer who was authorised to accept the tenders in this ease on behalf of the Governor, or Rajasthan Government. Further no tenders were given 10 the Assistant Engineer even and as such, also he had no authority to accept the tenders.

Copy of alleged Telegram

YOUR TENDRES MILES 715 to 724 AND 725 to 731 OF WIDENING N.H. No. 3 ARE ACCEPTED AT RATE OF 22 73 P.C. AND 19.31 P.C. ABOVE RESPECTIVELY. TREAT THIS AS WORK ORDER. ORDERS FOLLOW.

ASSISTANT ENGINEER ROADS

(v) That alleged work orders Spl. No. 1 & 4 dated August 12, 1966 are neither for and on behalf of the Governor of Rajasthan Government nor from a competent authority or any officer authorised. Further they were not put in the course of transmission addressed to the plaintiff so as to be out of the power of the acceptor before September 2, 1966. Hence there is no acceptance within time so as to bind the plaintiff.

(vi) That tae alleged order of the Chief Engineer is without his powers and he cannot pass such order and particularly without a hearing or at least without a show cause notice. Hence order is also bad. No such order could further have been passed when there was dispute whether there were completed contracts or not?

(vii) That the estimated cost of the works has been shown by Executive Engineer in his letter dated March 14,1967, as Rs. 66,000/- and 65,000/- and earnest money 2 p.c. has been calculated at Rs. 26,200/-. This is absolutely wrong. Then this amount does not come out even on the contract amounts shown in alleged work-orders, dated August 12, 1966.

(viii) That there were no contracts binding on the plaintiff

(ix) That the alleged work orders, dated as August 12, 1966 and numbered as Spl. No. 1 & 4 are patently false and have been made up malafide by anti-dating them and under a new device of numbering them. There are no regular numbers of the office of the Executive Engineer on these work-orders, nor they have ever been despatched before September 2, 1966.

5. The plaintiff in these circumstances prayed that a declaration be made in favour of the plaintiff and against the defendant that the orders of the Chief Engineer, dated March 7, 1967, communicated to the plaintiff by the Executive Engineer vide his letter, dated March 14, 1967 of forfeiture of earnest money amounting to Rs. 26,200/- and ordering to make recovery of the said amount were illegal, ultravires and without jurisdiction and were not binding on the plaintiff. It was further prayed that an injunction be issued against the defendant not to realise in any way any amount under the aforesaid orders of the Chief Engineer, dated March 7, 1967 and communicated to the plaintiff by the Executive Engineer vide his letter, dated March 14, 1967.

6. The state in the written statement submitted that the plaintiff was a registered "A class contractor in Public Works Department (B & R) and as per rules a registered contractor was not required to submit the earnest money along with the tender. When the contractors got themselves registered as "A" class contractors, a lump sum amount of rupees 15,000/- or Rs. 7,00/-, as the case may be, is got diposited by them which enables the contractors to tender for any work without any earnest money and which continues to hold good until their registration comes to an end. The plaintiff on this account had not deposited the earnest money. The fact that the Executive Engineer asked the plaintiff for an extension of two months is admitted. The fact that the plaintiff refused this request is not admitted the plaintiff did not reply to the letter and it was argued that the time would not be the essence of the contract. In reply to para 8 of the plaint it is alleged that the tenders were not invalid for the reasons that earnest money was not deposited. The acceptance of the tenders was within time. It was despatched within time, but the plaintiff deliberately avoided the service although he was aware of it. Besides this the time was not the essence of contract and it did not violate the agreement. It has been further alleged that the tenders were accepted by the competent authorities, Intimation of the acceptance, of tenders nowhere provided to be conveyed by the competent authority itself, and such intimation could be given by any subordinate official directed to do it. It has been further alleged that the Executive Engineer in the District was head for all the purposes. The work orders were duly accepted by the competent authorities and that was enough. Their acceptance could be conveyed by any of the officers subordinate to those authorities. No rule or law required that the acceptance should be conveyed by the competent authorities. What is required is the sanction by such an authority and no more. On the basis of the aforesaid pleadings it was prayed that the suit deserved to be dismissed with costs.

7. On the basis of the aforesaid pleadings of the parties, the trial court framed the following issues :

8. Apart from documentary evidence, the parties in support of their case examined oral evidence. The plaintiff in support of his case gave his own statement as PW 1, while the State examined S.S. Bakhsi, DW 1, Suresh Chandra Chaturvedi DW 2, Banka DW 3, Bhajan Lal DW 4, Prabhu Dayal Mathur DW 5, Ram Kishan Verma DW 6 and Radha Kishan DW 7.

9. Learned trial court after hearing arguments of the parties decided issues Nos. 2 to 8 in favour of the plaintiff and issue No. 1 against the plaintiff. In the result, the trial court pissed a decree in favour of the plaintiff for declaration and injunction as sought in the plaint. Aggrieved against the judgment and decree passed by the trul court, the State has filed this appeal.

10. Mrs. Kamla, Jain, learned Addl. Government Advocate, submitted that in the present case it was clearly proved by the evidence of S.S. Bakhsi DW 1, Suresh Chandra Chaturvedi DW 2, Banka DW 3 and Prabhu Dayal Mathur DW 5 that the respondent avoided the service of acceptance of his tenders and work orders. The plaintiff in his own statement admitted that he was in his house at Dholpur on August 13, 1966 and he intentionally got the report made on the telegram that he was out of station. The respondent has never challenged that the address mentioned in the telegram was not correct. It has been proved by the confirmatory letter of the post-office Ex. A 13 that the telegram was sent at the correct address. It is further submitted that according to Section 4 of the Contract Act the communication of acceptance of tender was complete against the respondent when the telegram was put is course of transmission to him. It is also argued that the respondent had the knowledge that his tenders had been accepted from his own conduct. On July 25,1966 letters Ex. 3 and 4 had been sent for extension of period as the sanction had not bean received from the Government till them.

11. It is also argued by the learned Addl. Government Advocate that there was no question of any non-compliance of Article 299 of the Constitution in this case. In the present else, the stag" of compliance of Art 299 of the Constitution had not reached. The plaintiff respondent in the event case did not dispute the right of the State of forieit the earnest money and the breach of contract took place on the part of the respondent at the stage of acceptance of tender It has been proved by Ex. A 1 that the Governer had accorded sanction for the acceptance of the tender and the acceptance was communicated by the telegram. The Assistant Engineer was an authorised agent for communicating the information of acceptance of the tender and ah steps had been taken to inform the respondent regarding acceptance of the tender by the Governor, before August 14, 1966, but the respondent intentionally avoided to receive the information. The formality of executing a contract in accordance with Article 299 of the Constitution would have arisen at a subsequent period and the State entitled to forfeit the earnest money as the respondent had relied from performing the contract at the stage of acceptance of the tender. Reliance is placed on Maheshwari Metals and Metal Refinary v. Madras State Small Industries Corporation Ltd. AIR 1974 Mad. 69 and Union of India v. The Steel Stock Holders Syndicate Poona .

12. It was also submitted that the telegram was only a mode of information of the acceptance of the tender and it was not an integral part of the contract. The entire set of communication placed on record would show that the tender had been accepted by the competent authority prior to the expiry of four months. Reliance is placed on Sadhoo Lal Motilal v. State of Madhya Pradesh and Ors. . It was further contended that in case of a contract between State Government and private party, if the agreement is signed by duly authorised officer under his official designation then such an agreement is valid and enforceable. Reliauce is placed on Devacos Garments Factory and Anr. v. State of Rajasthan ILR 1971 21 Raj. 532.

13. On the other hand it was argued by Mr. Agarwal, learned Counsel for the respondent, that the learned trial Court has discussed in minute details of the evidence of the witnesses led by the State and has rightly arrived at the conclusion that the acceptance of the tender was never communicated to the respondent before August 14, 1966. It was not a suit for compensation for breach of contract and the State has not proved that it suffered any loss on account of any breach of contract. On the contrary, it was admitted by Shri S.S. Bakhsi DW 1, Executive Engineer, that the work was subsequently given to Kirorilal Hukam Chand and to his knowledge the said work was given on a lower rate than the rate of the plaintiff. It was further argued that the question of forfeiture of earnest money does not arise unless it was proved that the tender was accepted by the competent authority. The alleged telegram has not been produced on the record of the case and even Ex. A. 13 does not mention that it had been accepted by the Government who was alone the competent authority to accept the tender in view of the high valuation of the tender. Reliance is placed on Bhikraj Jaipuria v. Union of India , Moot Chand v. Union of Madhya Pradesh , Maula Bux v. Union of India and Hariswar Singh v. Bigum Sumbrai and Ors.

14. It is not in dispute that the respondent was "A" class contractor and according to the procedure well established in this regard in the department, such contractors were not required to submit earnest money along with any tender filed by such contractor. Issue No. 1 was framed in this regard and the learned trial Court has recorded its finding, against the plaintiff and the same has not been assailed by learned Counsel for the plaintiff before this Court. The question now remains regarding the fact of communication of the acceptance offender to the plaintiff. From the evidence led by the defendant State. It is proved beyond any manner of doubt that the attempt to serve any letter of acceptance along with work orders on the plaintiff by personal messager did not materialise. I am in agreement with the argument of learned Addl. Government Advocate to this extent that the plaintiff was intentionally avoiding the communication of acceptance of his tender, but still the question remains as to what was that information which was tried to be communicated to the plaintiff. It has been admitted by Suresh Chand DW2, Banka DW 3 and Prabhu Dayal DW 5 that Ex. 7 and 8 were not delivered to the plaintiff inspite of all efforts. It is also admitted that no information in writing was sent by post. It is pertinent to mention that Ex. 7 & 8 letters, dated August 12, 1966 issued by the Executive Engineer make a mention only that the tender for the works had been accepted by the Chief Engineer, PWD (B & R) Jaipur vide his telegram dated August 12, 1966. It was further mentioned that the plaintiff should start the work immediately under the instructions of the Assistant Engineer, PWD (B & R), Dholpur and complete it within a period of 18 months. These letters do not mention at all that the tender had been accepted by the Government who alone was the competent authority in the present case. So far as the telegram U concerned, I do not agree with the finding of the trial Court that in the absence of original telegram it was not proved as to what were the contents of such telegram. In this regard the defendants have placed on record Ex. A. 12 which is a copy of letter sent by post in confirmation of the telegram by the Assistant Engineer (Roads), Dholpur to Shri Ram Dayal Modi (plaintiff), dated August 13, 1966. This letter gives out the exact language of the telegram sent to the plaintiff and reads as under:

State Express

Shri Ram Dayal Modi,

Contractor Dholpur.

Your Tenders mile 715 to 724 and 725-731 of widening National Highway No. 3 are accepted at the rate of 22.73% and 19.31 above respectively Treat this as work order orders follow.

Assistant Engineer

Roads

... ... ... ... ... ...

Not to be telegraphed,

Sd/- P.D. Mathur

Assistant Engineer,

(B & R) Dholpur-R"

Then there is Ex. A. 14, a memo from the post and telegraph department informing that telegram No. A.7 handed in on August 13, 1966 addressed to Shri Ram Dayal Modi contractor, Dholpur at M 20 and could not be delivered owing to addresses out of station and not known when he could corns Section 68 of the Evidence Ac provide for presumption as to telegraphic messages. According to this Section the Court may presume that a message, forwarded form a telegraph office to the person to whom such message purports to be addressed corresponds with a message delivered for transmission at the office from which the message purports to be sent, but the Court shall not make any presumption as to the person by whom such message was delivered for transmission. Prabhu Dayal, Assistant Engineer, DW5, has stated that he had sent a telegram in the name of the plaintiff through clerk Kailash Nath Tiwari Ex. A/2 bears his signature at C to D and it was the office copy of the telegram sent by him. Portions A to B of Ex A. 12 were the contents of the telegram. The order-sheets of the record of the trial Court go to show that the defendants had tried to call the postman as a witness for proving the delivery of the telegram but from s letter received from Superintendent Post-office, Bharatpur it was revealed that no such telegram was available in the record of Dholpur Post-office. It is further mentioned that record of such telegram is kept at Calcutta for a period of 12 months. The trial Court in its order-sheet, dated March 12, 1980 has mentioned that it would be futile to grant any time to the defendants as it was evident from the letter of Superintendent, Bharatpur that such record was kept at Calcutta for 12 months only and the telegram having been given in August, 1966, there would be no purpose to grant any further opportunity to lead evidence in this regard. Thus from a perusal of the aforesaid evidence it would be presumed that a telegram was sent to the plaintiff on August 11, 1966 at 20.00 Hrs. and its contents were as reproduced in Ex. A. 12 from A to B. It is also a settled proposition of law that telegram is one of the mode of sending information regarding acceptance of the tender. Section 4 of the Contract Act provides as to when a communication will be complete. It provides that communication of an acceptance is complete as against the proposer, when it is put in a course of transmission to him, so as to hi out of the power of the acceptor.

15. Thus, so far as the communication of the acceptance of tender is concerned, the same was complete in the present case as soon as the telegram was put in course of transmission to the plaintiff. It is not disputed by the plaintiff that the address mentioned in the telegram was correct. However, the question still remains, whether it was a valid communication of acceptance of tender by the competent authority? The contuse of portion A to B of Ex. A 2 also go to show that the Assistant Engineer had informed the plaintiff that his tenders for mile 715 to 724 and 7.5-731 of widening national high-way No. 3 were accepted at the rate of 22.73% and 19.31 above respectively and so treat this work order and orders were to follow. This telegram also does not mention a single word that the tenders had been accepted by the Governor or the State Government, who alone were the competent authority. This is a case where the State wants to forfeit the earnest money of the plaintiff even though it has not been put to any loss and in such circumstances it was necessary to have communicated to the plaintiff within four months that his tenders had been accepted by the Government. As already mentioned above, neither Ex. 7 & 8 nor Ex. A. 12 mike any mention at all that the tenders had been accepted by the Government or that sanction had been accorded by the Governor I do not agree with the submission of learned Addl. Government Advocate that it was not necessary for the Executive Engineer or the Assistant Engineer to have mentioned in the letters or the telegram that the tenders had been accepted by the Government. In my view even if these letters and the telegram are deemed to have been communicated to the plaintiff, he was entitled to ignore the same as he was never informed that his tenders had been accepted by the Government or sanctioned by the Governor. It is no doubt true that the form I agreement could have been executed subsequently in accordance with Article 9' of the Constitution, but in order to bind the plaintiff so as to forfeit his earnest money, it was also necessary to inform him within four months that his tenders had been accepted by the competent authority.

16. In this view of the matter, I am clearly of the opinion that the State Government has no right to forfeit the earnest money of the plaintiff.

17. In the view taken by me above, I do not think it necessary to discuss any of the authorities cited by learned Counsel for both the parties as the precise point in issue decided by me in the facts and circumstances of this case, is entirely different and the above authorities lend no assistance on the point in issue involved in this case.

18. In the result, this appeal fails and is dismissed with costs.


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