The main legal point established in the judgment is the application of Section 4 of the Contract Act to determine the existence of a concluded contract and the liability of the defendant for non-fulfillment of the contract terms.

1. The defendant has filed this First Appeal against the Judgment and Decree dated 16-12-1988 passed by Sri Vidyut Prabha Singh, the learned 3rd Subordinate Judge, Purnea in Money Suit No. 12 of 1983/ 1 of 1987 decreeing the plaintiff-respondent suit for Rs. 84,196.02/-.

2. The plaintiff-respondent filed the aforesaid money suit claiming the said amount alleging that the defendant was appointed as regular handling and transport contractor for F.S.D. Koshi Colony and Maranga on 29-02- 1980 for a term of two years under Tender No. F-3 (69/79-80/CONT. Vol. III dated 05- 12-1979 through which the defendant had offered to work at 244 per cent above schedule rate which was accepted by the Regional Manager, Food Corporation of India, Patna with a direction to deposit security amount and to start the work by 07-03-1980 within the jurisdiction of District Manager, Purnea as per the terms and conditions of the contract with the Corporation.

3. The further case is that the defendant neither deposited the security amount nor started the work. Therefore, his appointment was terminated on 19-04-1980 and according to the terms of the contract, the earnest money was forfeited. According to the further terms and conditions of the contract, the defendant was liable to compensate the Corporation by way of damage incurred by the Corporation for the entire period. Because of failure on the part of the defendant to carry on the contract, the Corporation had appointed M/s. North Bihar Transport Syndicate as the contractor for the F.S.D. Koshi Colony and Maranga at the rate of 411 per cent above the schedule rate by order dated 03-07-1980. The defendant made himself liable to make good the loss to the Corporation owing to his omission or commission as because of that act of the defendant, the Corporation engaged another contractor making higher, payments thereby causing loss to the Corporation. The defendant Was called upon to pay the loss caused by the Corporation on account of higher payments and sent the bills. The plaintiff-respondent in Schedule A of the plaint has given the details of the amount and also annexed the bills with the plaint.

4. The defendant-appellant appeared and admitted the fact that he was one of the tenderers and his rate was accepted by the Regional Manager, F.C.I., Patna who sent telegram to him to the effect that his offer dated 05-12-1979 at 244 per cent above schedule rates was accepted for two years and asked the defendant to furnish security deposit of Rs. 18,750/- and take order to work within 7 days and also directed the defendant to furnish income tax clearance certificate within 30 days. The further case is that the appellant was ill, so he had not received the telegram. He sent a letter to the Regional Manager, F.C.I., Patna on 30-07-1980 by registered post informing him that on account of illness, this defendant was not in a position to undertake the work allotted to him because Doctor has advised for a change of place and defendant has shifted to Rajasthan. The defendant was directed to deposit security money amounting of Rs. 18,750/- but as he was at Rajasthan due to his illness and was not in a position to take of work did not deposit the security amount and did not take up the work. The Clause X of the terms and conditions of contract is not applicable because the defendant has not deposited the security money and had not agreed to work as communicated by the Regional Manager, F.C.I., Patna. This communication was not received by the defendant. Had the defendant deposited the security money then the appointment of the defendant would have been confirmed. The terms and conditions as contained in Clause XI (F) is also not applicable because there was no contract so there is no question of termination of contract according to Clause X of the contract. In any case, the defendant is not liable to pay damage said to have been sustained and suffered by the F.C.I.

5. The further case of the defendant is that