Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1976 Supreme(J&K) 29

IN THE HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
Mian Jalal-ud-Din, J.
Kohli Brothers - Appellant
Versus
State Of J&K - Respondent
Civil Suit No. 1/1972
Decided On : 15 April, 1976

Advocates Appeared:
Advocate For Appellant: R.N. Bhalgotra
Advocate For Respondent: R.P. Bakshi

In the case of a void contract, the plaintiff need not have waited for the order of the confiscation of the amount but should have claimed the refund immediately he discovered the agreement void.

Headnote:
LIMITATION ACT - ART. 119 - VOID CONTRACT - REFUND OF EARNEST MONEY - LIMITATION PERIOD STARTS FROM THE DATE OF DISCOVERY OF VOIDNESS OF CONTRACT AND NOT FROM THE DATE OF CONFISCATION OF EARNEST MONEY.
Fact of the Case:

Plaintiff submitted two tenders for the purchase of timber in different coupes, which were accepted. Plaintiff realized that the tender notice for one lease was issued by an incompetent authority and requested the Government to defer the working of one forest lease to some other date. The Government confiscated the earnest money and deregistered the plaintiff's firm for a period of 5 years. Plaintiff filed a suit for the refund of earnest money and damages.
Finding of the Court:

The tender notice issued by the Conservator of Forests was illegal as he was not the person authorized to issue it. The acceptance of the tender by itself did not constitute a concluded contract between the parties as there was no formal agreement executed afterwards as required by the relevant clause of the tender notice. The suit of the plaintiff is barred by limitation as the cause of action accrued to the plaintiff in March 1965 when he discovered the voidness of the contract and he should have brought the suit within six years from that date.
Issues: 1. Whether the tender notice issued by the Conservator of Forests was illegal? 2. Whether there was any valid contract between the parties as envisaged under section 122 of the Constitution of Jammu and Kashmir State? 3. Whether the amount of earnest money was not liable to confiscation when the plaintiff did not execute the agreement or remitted security for the same? 4. Whether any valid notice was issued under section 80 C.P.C.? 5. Whether the suit of the plaintiff is barred by limitation?
Ratio Decidendi: 1. The tender notice issued by the Conservator of Forests was illegal as he was not the person authorized to issue it. 2. The acceptance of the tender by itself did not constitute a concluded contract between the parties as there was no formal agreement executed afterwards as required by the relevant clause of the tender notice. 3. The suit of the plaintiff is barred by limitation as the cause of action accrued to the plaintiff in March 1965 when he discovered the voidness of the contract and he should have brought the suit within six years from that date.
Final Decision: The suit of the plaintiff is dismissed with costs.

1. The plaintiffs case is that in response to the notification issued by the Conservator of Forests inviting tenders for the purchase of timber in different coupes as mentioned in Para 1 of the plaint for the year 1965, the plaintiff submitted two tenders which were accepted. The plaintiff, however, realised that the tender notice of the conservator of Forests in respect of one lease e.g. compartment Nos 1 & 2 Billawar for Rs. 651000 was issued by an incompetent authority who had not been authorised to do so. Realising this illegality the plaintiff requested the Government that he would not be in a position to work out the forest lease and thus no contract could be concluded. The plaintiff further informed the defendant that since he was not in a position to work out the two leases simultaneously, working of one forest lease be deferred to some other date. The Government did not consider the prayer of the plaintiff and being conscious of the fact that the tender was illegal and acceptance thereof was not enforceable, illegally ordered on 1-2-66 the confiscation of the current money of Rs. 25,000/- deposited by the plaintiff alongwith the tender of lease and also deregistered the firm of the plaintiff for a period of 5 years. The earnest money was actually confiscated on 4-2-66 when the amount was adjusted towards the State Exchequer. The plaintiff has averred that both the orders of forfeiture of the earnest money as well as that of the deregistration of the plaintiffs firm were unauthorised and illegal as there was no existing contract between the parties as envisaged by Sec. 122 of the Jammu and Kashmir Constitution. The order of forfeiture being illegal the plaintiff served a registered notice on 21-8-72 to the Chief Secretary to the Government but the latter did not send any reply thereto, nor did it pay the amount claimed by the plaintiff. The plaintiff has, therefore, claimed a decree for the payment of Rs. 25,000/- with interest and also with costs of the suit. He has further stated that the cause of action accrued to him on 4-2-66 when the amount was wrongly and illegally confiscated.

2. In his written statement the defendant has pleaded that the suit is time barred and therefore is liable to be dismissed: On facts it is admitted that the tender notices were issued by the Conservator of Forests in respect of the aforesaid compartments but it is denied that the Conservator of Forests was not competent to issue the tender notices. "The tender notices were not illegal. The question of detecting and of realising any illegality in the tender notice by the plaintiff did not arise. The plaintiff had deposited the earnest money and was bound to perform the lease. He wilfully refused to perform his part of the contract. The lease could not, therefore, be deferred under rules. The amount of Rs. 25000/- has been validly and legally confiscated. The defendant suffered huge loss on account of non-performance of lease by the plaintiff. For non-performance of the contract the defendant is entitled to recover the additional amount from the plaintiff for which a separate suit will be filed. As between the parties by the acceptance of tender a legal and valid agreement had come into existence. The plaintiff is not therefore entitled to any decree.

3. Alongwith the written Statement the defendant has filed a number of documents namely copy of letter No. 5451-92/C VII-67 dated 18-3-1966.

(2) copy of letter No. 2575-70 dated 14-9-1968

(3) copy of Government Order No. FST/21/65 of 1965 dated 12-3-1965,

(4) copy of the Government Order No. FST/31/65 of 1965 dated 14-4-1965.

4. On November 2, 1972 the following issues were raised in the case and the plaintiff was asked to lead his evidence:-

1. Is the suit of the plaintiff barred by limitation ? O.P.D.

2. Was the tender notice issued by the Conservator of Forests illegal as the same was beyond his competence ? If so, what is its effect on the earnest money deposited by the plaintiff O.P.P.

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Judicial Analysis

1976 Supreme(J&K) 29

IN THE HIGH COURT OF JAMMU AND KASHMIR AT JAMMUMian Jalal-ud-Din, J.Kohli Brothers - AppellantVersusState Of J&K - RespondentCivil Suit No. 1/1972Decided On : 15 April, 1976

In the case of a void contract, the plaintiff need not have waited for the order of the confiscation of the amount but should have claimed the refund immediately he discovered the agreement void.

Judicial Analysis

IN THE HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
Mian Jalal-ud-Din, J.
Kohli Brothers - Appellant
Versus
State Of J&K - Respondent
Civil Suit No. 1/1972
Decided On : 15 April, 1976