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2001 Supreme(Guj) 212
Gujarat High Court
Judgename :H.H.MEHTA
OIL AND NATURAL GAS COMMISSION - Appellant
Versus
BALARAM CEMENTS LIMITED - Respondent
APPEAL FROM ORDER 566 of 1992
Decided On : 03/28/2001
Headnote:(a) Contract Act, 1872 (Central Act 9 of 1872) — Sec. 5 — Revocation of proposal and acceptance — Proposal may be revoked before communication of acceptance is complete as against proposer — Acceptance may be revoked before communication of acceptance is complete as against acceptor — In both situations, not afterwards — Held, plaintiff entitled to revoke proposal by revising old rates before acceptance.
A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer but not afterwards and an acceptance may be revoked at any time before communication of the acceptance is complete as against the acceptor but not afterwards. As per well-settled principles of law, the plaintiff was entitled to revise his offer before acceptance of the offer put with old rates.
[Para 20]
In view of Sec. 5 of the Indian Contract Act, no such condition can be made operative against the plaintiff. When the Indian Contract Act itself allows the offer to revise by revoking his earlier offer, before that offer is accepted by the opposite party, aforesaid Para 32 of the tender, will not be helpful to the defendant No. 1.
[Para 21]
(b) Contract Act, 1872 (Central Act 9 of 1872) — Sec. 5 — Concluded contract — `P revised earlier offer before acceptance by `D 1 — Revised offer not accepted by `D 1 — Held, no binding contract was concluded.
For the satisfaction of Court, defendant No. 1 has not produced the form of acceptance of tender, and, therefore, the contract has not been concluded unless and until the form of acceptance of tender is sent by the defendant No. 1 to the plaintiff. As said earlier, defendant No. 1 has accepted the offer of the plaintiff which he put in the tender dated 7.8.1990 stating old rates. Before that offer could be accepted by the defendant No. 1 on 24.11.1990, the plaintiff had already modified his offer by revising the rates in his letter dated 21.11.1990 which is admittedly received by the defendant No. 1 before 24.11.1990. Defendant No. 1 has advanced his case that contract has been concluded by the Telex message dated 24.11.1990. As against, that, it is the case of the plaintiff that contract is not concluded because offer stating old rates was modified and revised by him in his letter dated 21.11.1990 which had already been received by defendant No. 1 before 24.11.1990, and, therefore, despite the fact that defendant No. 1 has accepted the old rates stated in the tender, it cannot be said that contract is concluded because earlier offer was already revised and modified by the plaintiff on 21.11.1990, and, therefore, prima facie plaintiff has satisfied that in this case, there is no concluded contract. It may be noted that in this case, plaintiff and defendant No. 1 have not entered into a formal agreement in writing. Both the parties rely on exchange of correspondence in between them.
[Para 22]
The plaintiff had already revised his earlier offer and that offer has not been accepted by defendant No. 1. On the contrary, the defendant No. 1, by his Telex message dated 24.11.1990, accepted the offer of old rates, and, therefore, it cannot be said that in this case, the binding contract has been concluded.
[Para 24.1]
(c) Contract Act, 1872 (Central Act 9 of 1872) — Sec. 5 — Encashment of bank-Guarantee — No concluded contract — Subject-matter of bank guarantee not produced by `D 1 — Held, Bank-guarantee cannot be encashed.
There is no concluded contract in between the parties and still the subject is under process of offer and acceptance, then the Bank guarantee which was to be given for the contract cannot be encashed by defendant No. 1 only on the ground that a concluded contract has not come into existence.
[Para 29]
(d) Contract Act, 1872 (Central Act 9 of 1872) — Sec. 5 — Arbitration Act, 1940 (Central Act 10 of 1940) — Sec. 34 — Dispute to be referred to arbitrator — When no concluded contract, arbitration clause is ineffective.
Concession can be taken into consideration, if arbitration clause is effective by way of concluded contract. When there is no concluded contract, concession cannot be taken into consideration for referring the suit to the Arbitrator.
[Para 30]
( 1 ) AT the request of learned advocates for both the parties, these two appeals from orders are disposed by this common judgment, as in both these appeals, a common order dated 19th September, 1992 passed below application Ex. 5 and Ex. 18 in Special Civil Suit No. 2 of 1991 which is still pending on the file of learned III Joint Civil Judge (Senior Division), Palanpur (who will be referred o hereinafter as the learned Judge of the trial Court for the sake of convenience), has been challenged on the ground that said common order by which two applications Exs. 5 and 18 have been disposed of, is not legal and valid and the same is not according to law.
( 2 ) IN Appeal From Order No. 546 of 1992, appellant is the defendant no. 1, while respondent nos. 1 and 2 are original plaintiff and defendant no. 2 respectively in Special Civil Suit No. 2 of 1991. 2. 1 in Appeal From Order No. 566 of 1992, appellant is original plaintiff, while respondents are defendant nos. 1 and 2 respectively in aforesaid suit. For the sake of convenience, parties will be referred to hereinafter as the plaintiff and respective defendants at appropriate places.
( 3 ) IN Appeal From Order No. 546 of 1992, the appellant i. e. defendant no. 1 has challenged an order below application Ex. 5, while in Appeal From Order No. 566 of 1992, the original plaintiff has challenged the order below application Ex. 18, in aforesaid suit.
( 4 ) APPLICATION Ex. 5 was submitted by original plaintiff requesting the Court to grat an interim injunction restraining the defendant no. 1 from invoking/encashing the Bank Guarantee given by defendant no. 2 in favour of defendant no. 1, till final disposal of the suit. As per order below application Ex. 5, the learned Judge of the trial Court allowed that application Ex. 5 in favour of the plaintiff and directed defendant no. 1 restraining him from encashing the Bank Guarantee given by defendan no. 2, of Rs. 9 Lacs till the award is filed by the Arbitrator.
( 5 ) THE defendant no. 1 immediately after making appearance in the suit, filed application Exh. 18 dated 28/1/1991 under Sec. 34 of the Indian Arbitration Act, 1940 for staying the proceedings of the suit. That application Ex. 18 was also granted by the learned Judge of the trial Court by passing an order to the effect that suit is stayed till the award of the Arbitrator is filed. As against aforesaid common order below applications Exh. 5 and 18, respective aggrieved parties have preferred these two appeals separately to this Court. Appeal From Order No. 546 of 1992 is filed under Sec. 104 (1) (i) of the Code of Civil Procedure read with Order 43 Rule 1 (r) of the C. P. C. While Appeal From Order No. 566 of 1992 is filed under Sec. 39 (1) (v) of the Indian Artibration Act, 1940. (Same will be referred to hereinafter as the Act, for brevity ).
( 6 ) THE facts leading to these present two appeals in a nutshell are as follows:6. 1 on or about 5/1/1991, the original plaintiff Balaram Cements Limited which is a Compay incorporated under the Indian Companies Act, has filed Special Civil Suit No. 2 of 1991 in the Court of the learned Civil Judge (Senior Division) at Palanpur against defendant no. 1 -Oil Natural and Gas Commission, through Joint Director (MM) ONGC Technical Business Group, Baroda and defendant no. 2 -The Branch Manager of the Dena Bank, Palanpur. 6. 2 as per the plaint of that suit, the plaintiffs registered company is sitated at Karnavati Shopping Centre at Palanpur. Plaintiff Company is mainly engaged in manufacturing ordinary port-land cement. 6. 3 the defendant no. 1 had invited tenders publicly for the supply of ordinary port land cement vide tender dated 16/7/1990. That tenders were to be submitted as per notice inviting tenders, on or before 9th August, 1990. The defendant no. 1 was urgently needed different quantity of the cement for their different destinations namely Ahmedabad, Baroda, Cambay and Mahesana. The plaintiff is one of the participant
