ORDER :-

VENKATARAMAN, J.

This is an appeal against the order of remand made by the Additional Judge of the City Civil Court, Madras. The suit (O. S. No. 3216 of 1968) was tried by an Assistant Judge of the Court. It was for the refund of a sum of Rupees 5,000. The defendant (Madras State Small Industries Corporation Ltd.) had invited tenders for the removal of (i) zinc dross, and (ii) zinc ash at Mettur Dam. The plaintiff made a tender and a deposit in accordance with the tender notice. Later the parties broke out and the plaintiff called upon the defendant to return the deposit. The defendant, however, contended that the plaintiff had committed breach of the contract and that the defendant was entitled to forfeit the amount clause 9 of the notice inviting tenders. Thereupon the plaintiff filed the suit.

2. The learned trial Judge found that the plaintiff had not committed breach of the contract, but, on the other hand, was willing to perform the contract and that, consequently, the defendant was not entitled to forfeit the amount. The learned Judge also observed that, even assuming that the plaintiff had committed breach of the contract, the plaintiff was entitled to a refund of the deposit on the principles laid down by their Lordships of the Privy Council in Murlidhar Chatterji v. International Film Co. Ltd., (ILR (1943) 2 Cal 213) as (AIR 1943 PC 34).

3. The defendant filled an appeal which was heard by the learned Additional Judge. Differing from the trial Judge, the learned appellate Judge held that the plaintiff had committed breach of the contract, but that, nevertheless, the defendant was not entitled to forfeit the amount of Rs, 5,000/- in view of the principles laid down by Ramaprasada Rao, J. in Meenakshinada Deikshtar V. Murugses Nadar, (1969-1 Mad LJ 474) : (AIR 1970 Mad 391). He therefore gave leave to the defendant to aver and prove damages. Aggrieved by the said order of remand, the plaintiff has preferred this appeal.

4. The first point raised by Thigu Vedantham Srinivasan, the learned counsel for the appellant, is that there was no concluded contract at all between the parties and that only negotiations were going on. The further submission is that, when there was no concluded contract, no question of the plaintiff having committed breach of contract would at all arise and that the defendant would not be entitled to prove any damages. Since this submission goes to the root of the matter, it is necessary to traverse in detail the correspondence between the parties : no oral evidence has been let in. By Ex B-1 dated 6-4-1967 the defendant invited tenders for the purchase of zinc dross and zinc ash and gave instructions to the tenderers. Clause 4 says :

"............... The Managing Director of Madras State Small Industries Corporation reserves the right of rejecting all or any part of the tenders without giving any reason for the same and split up the tender as be may deem fit."

Clause 7 says :

"Each tender must be accompanied by a deposit of Rs. 5,000/- earnest money in the form of cash or demand draft in favour of Senior Accounts Officer (Cash) of this Corporation."

Clause 9 says :

'If the tenderer fails to adhere to the terms and conditions prescribed in the tender or backs out when his tender is accepted, his deposit mentioned above will be forfeited to the Corporation in full. ......... If the tenderer fails to take delivery of the materials within the time-limit prescribed, the earnest money-deposit will be forfeited to the Corporation in full as a penalty. Besides, the materials will then be disposed of otherwise and loss if any in total value between the accepted tender rates and the value realised on such disposal will be made good from defaulting tenderers."

Clause 11 says :

"The successful tenderer will be required to execute an agreement within ten days of the aunouncement of the acceptance of the tender for the fulf

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