Judgment

SIKRI, J.: This is an appeal by special leave, and while granting it this Court confined it only to the point arising under Section 97 of the U. P. Municipalities Act, 1916- hereinafter referred to as the Act.

2. The facts relevant to the point are as follows: The Municipal Board, Saharanpur, respondent before us and hereinafter referred to as the plaintiff, brought a suit for the recovery of Rs. 12,044/-/9 and future interest upto date of realisation from B. C. Mohindra, appellant before us and hereinafter referred to as the defendant. In brief, the case of the plaintiff was that there was an auction on March 29, 1950, of the theka for collecting tahbazari dues of the mandi in Mazahir Gang alias Ganj Jadid, Saharanpur, for one year from April 1, 1950 to March 31, 1951, subject to the conditions of sale entered in the amended sale proclamation. The defendant bid Rs. 40,000 subject to the confirmation by the Board. The Board did not confirm the auction sale, and on April 8, 1950 the tahbazari was reauctioned. The defendant bid Rs. 53,025. At the time of the auction sale a meeting of the Board was also held in which the auction aforesaid was confirmed under Resolution No. 26 dated April 8, 1950,in the presence of the defendant, and only the condition relating to the payment of auction money was amended to provide for payment in four instalments. The defendant had to deposit 1/4th of the bid on April 8, 1950. He failed to deposit this instalment on April 8, 1950, but on April 10, 1950, he deposited the instalment and took charge of the mandi aforesaid and began to collect tahbazari dues. The defendant was asked to execute and complete an agreement in favour of the plaintiff according to the conditions and the rules but he continued to put off the matter. As the defendant failed to deposit the amount of the second instalment and execute the agreement, the plaintiff cancelled the theka of the defendant and began to collect tahbazari dues through its own staff and re-auctioned the theka on July 3, 1950. After taking into account the money received from the re-auction on July, 3, 1950, and the money deposited by the defendant, according to the plaintiff there was a shortage of Rs. 12,044/-/9.

3. The defendant did not dispute the fact that an auction was held and that he made the last bid of Rs. 53,025/- which was accepted. He also admitted that he had deposited Rs. 13,256/4/-. But he alleged that the plaintiff had committed various breaches of the contract in contravention of the rules, contract and the bye-laws as the result of which the defendant suffered a loss of Rs. 9,685/-.

4. The Trial Court framed various issues arising out of the pleadings but no issue was raised regarding non -compliance with Section 97 of the Act. It appears that an argument was raised before the Trial Court regarding Section 97. The Trial Court observed:

"On the basis of this decision 1951 All WR (HC) 560 (FB) it was urged on behalf of the defendant that it was necessary in the present case that a written contract should have been obtained by the plaintiff under Section 97 of the Municipalities Act . . . . . . In a public auction, the various bidders give their bids which may be called offers. and the moment the auctioneer knocks the hammer down at a particular bid, that bid is to be taken as accepted between the parties. It is the knock of the hammer which concludes the contract. The list of bidders is the only evidence of the contract showing that out of various offers, the highest bid was accepted. In this particular case, the list of bidders bears the signature of the defendant and of the Chairman of the plaintiff Board, thus reducing the contract into writing, vide Ex. 17.

The contract in this case is therefore, a written contract evidenced from paper Ex. 17 ....According to the provision of Section 97 of the Municipalities act, such a contract should have been only in writing and this condition was fulfilled by drawing up the list of bidders and