RAGHUBAR DAYAL, J.

(1) THE facts giving rise to this appeal, by special leave, are these :

(2) THE Dominion of India, as the owner of the Madras and Southern Mahratta Railway, represented by the General Manager of that railway, invited tenders for the supply of jaggery to the railway grain shops. The respondent submitted his tender for the supply of 14,000.00 imperial maunds of cane jaggery during the months of February and March 1948. The tender form contained a note in paragraph 2 which was meant for the quantity required and thedescribed dates of delivery. This note was : `This Administration reserves the right to cancel the contract at any stage during the tenure of the contract without calling up the outstandings on the unexpired portion of the contract.` The Deputy General Manager of the Railways, by his letter dated 29/01/1948, accepted this tender. The letter asked the respondent to remit a sum of Rs. 7,900.00 for security and said that on receipt of the remittance, official order would be placed with the respondent. In his letter dated 16/02/1948, the Deputy General Manager reiterated the acceptance of the tender subject to the respondents acceptance of the terms and conditions printed on the reverse of that letter. Among these terms, the terms of delivery stated : Programme of delivery to be 3,600 maunds on 1/03/1948 ; 3,500 maunds on 22/03/1948; 3,500 on 5/04/1948; and 3,500 maunds on 21/04/1948. At the end of the terms and conditions was a note that the administration reserved the right to cancel the contract at any stage during the tenure of the contract without calling up the outstandings on the unexpired portion of the contract. The date for the delivery of the four installments were slightly changed by a subsequent letter dated 28/02/1948.

(3) BY his letter dated 8/03/1948, the Deputy General Manager informed the respondent that the balance quantity of jaggery outstanding on date against the order dated 16/02/1948, be treated as cancelled and the contract closed. The protests of the respondent were of no avail as the railway administration took its stand against the stipulation that the right to cancel the contract at any stage was reserved to it. Ultimately, the respondent instituted the suit against the Union of India for recovering damages resulting from breach of contract. The trial court dismissed the suit holding that the railway administration could cancel the contract without giving any reason whenever it liked, without making itself liable to pay any damages. The High court held that the clause reserving the right in the appellant to cancel the contract was void and in view of the trial court having not decided the issue about damages, remanded the suit for disposal after dealing with that matter. It is against this decree that the Union of India has filed this appeal after obtaining special leave.

(4) THE contentions raised for the appellant are two. One is that on a proper construction of the terms of the contract, the appellant had agreed to but only such quantity of jaggery as it might require, up to a maximum of 14,000.00 maunds and therefore there was no enforceable obligation to purchase the entire quantity. The other contention is that the respondent had expressly agreed to the impugned clause and that therefore the appellant was at liberty to terminate the contract at any stage of the duration of the contract with respect to the outstanding obligations under it. The stipulation is valid and binding on the parties and it amounted to a provision in the contract itself for its discharge or determination. On the other hand it is contended for the respondent that the contract was a complete contract of the supply of a definite quantity of jaggery viz., 14,000.00 maunds, on the dates mentioned in the order dated 16/02/1948, to start with, and ultimately on the dates mentioned in the subsequent letter dated February 28, and that the stipulation relied on wa