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1977 Supreme(Ori) 46
Orissa High Court
R. N. MISRA, AND N. K. DAS, JJ.
Sri Durga Saw Mill - Appellant
Versus
State of Orissa - Respondents
Original Jurisdiction Case No. 943 of 1975
Decided On : 7 July 1977
R. Mohanty, S.P. Mohapatra, S. Das and S. Mohanty, for Petitioner; Govt. Advocate, for Opposite Parties.
An offer can be withdrawn at any time before its acceptance, and a clause in a sale notice prohibiting withdrawal of a bid is meaningless and has no legal force if there is no consideration for the contract against withdrawal.
Headnote:
CONTRACT - Auction Sale - Withdrawal of Offer - Ratification of Offer - Maintainability of Writ Petition - Article 226 of the Constitution.
Fact of the Case:
Petitioner, a registered firm, participated in an auction sale for forest coupes and emerged as the highest bidder. Petitioner paid a security deposit and expected ratification of the contract within a month. However, ratification was delayed due to administrative reasons. Petitioner, along with other contractors, wrote to the Divisional Forest Officer and the State Government requesting a refund of the security deposit and withdrawal of the offer. Despite these requests, the State Government ratified the offer and communicated the period of the contract to the petitioner. Petitioner filed a writ petition challenging the ratification and seeking a refund of the security deposit.
Finding of the Court:
1. The offer made by the petitioner at the auction sale was not a concluded contract until it was accepted by the competent authority. 2. Petitioner was entitled to withdraw the offer before its acceptance, as there was no consideration for the contract against withdrawal. 3. The clause in the sale notice prohibiting withdrawal of the bid was meaningless and had no legal force. 4. Petitioner's letters to the Divisional Forest Officer and the State Government requesting a refund of the security deposit and withdrawal of the offer were effective in withdrawing the offer. 5. The State Government's ratification of the offer after the withdrawal was invalid and had no legal effect. 6. The writ petition was maintainable as it related to the protection of property rights under Article 19 of the Constitution.
Issues: 1. Whether the petitioner was entitled to withdraw the offer before its acceptance. 2. Whether the clause in the sale notice prohibiting withdrawal of the bid was valid and enforceable. 3. Whether the petitioner's letters requesting a refund of the security deposit and withdrawal of the offer were effective in withdrawing the offer. 4. Whether the State Government's ratification of the offer after the withdrawal was valid and had legal effect. 5. Whether the writ petition was maintainable.
Ratio Decidendi: 1. An offer can be withdrawn at any time before its acceptance, as per Section 5 of the Contract Act. 2. A clause in a sale notice prohibiting withdrawal of a bid is meaningless and has no legal force if there is no consideration for the contract against withdrawal. 3. A letter requesting a refund of the security deposit and withdrawal of an offer is effective in withdrawing the offer, even if the offer has been provisionally accepted. 4. Ratification of an offer after it has been withdrawn is invalid and has no legal effect. 5. A writ petition is maintainable if it relates to the protection of property rights under Article 19 of the Constitution.
Final Decision: The writ petition was allowed. The order of ratification of the offer was quashed, and the State Government was directed to refund the security deposit to the petitioner.
Judgement
R. N. MISRA, J. :- A registered firm by the name and style of Sri Durga Saw Mill owns a saw-mill and carries on the business of a forest contractor. In the Orissa Gazette of 6th of September, 1974, the opposite parties published a sale notice for the purpose of leasing of certain forest coupes within the Baripada Division for the year 1974-75. On the 27th of September, 1974, auctions were held; petitioner participated in the auctions and came out as the highest bidder in respect of kuldiha Coupe No. II, Lot No. I in the Divisional Lot No. 61 of 1974-75 for a sum of Rs. 1,80,000/-. Petitioner paid security deposit of Rs. 18,000/-. The bid money being more than rupees one lakh, ratification had to be made by the State Government in the appropriate Department.
As per the sale notice, the contract period for the Divisional Lot was eleven working months and was terminable on the last day of the last working month. According to the petitioner, ratification usually takes a period of about three weeks to a month and petitioner expected that the contract would be finalised by ratification by the competent authority by end of October, 1974, at the latest, so that the coupe could be worked out without delay as by then the rainy season would be over. As no confirmation came until the end of December, 1974, petitioner along with some other contractors applied to the Divisional Forest Officer who had held the auction to refund the security deposit and treat the offer as withdrawn. As no steps were taken on the application on 15th of February, 1975, petitioner along with some others applied to the State Government to the same effect and forwarded a copy thereof to the Divisional Forest Officer. When no action was taken on the several representations, petitioner filed this application on 12th of March 1975, asking for a direction of refund of the security deposit and for an order prohibiting the opposite parties from proceeding to accept the offer. On 7th of April, 1975, the counsel on behalf of the opposite parties wanted time to obtain instructions. On the 21st of April, 1975, the matter was again adjourned at the instance of the opposite parties. On 23-4-1975, in presence of counsel for both parties, the Court issued a rule nisi. Notices were actually issued in the second week of May, 1975.
The Divisional Forest Officer, Baripada Division, by letter dated 17th of June, 1975 (Annexure-2) informed the petitioner that Government had accepted the petitioner s highest bid and communicated that the period of contract would be from 17th June, 1975 till 30th of November, 1976 and the bid money would be payable in four instalments as indicated in that letter. Petitioner amended the writ application and asked for quashing of the order of ratification.
2. On behalf of the opposite parties, a common counter affidavit has been filed by the Deputy Secretary to Government in the appropriate Department. None of the material facts pleaded by the petitioner has been disputed. In paragraph 11, it has been stated that there have been several instances where four to six months of time for ratification has been taken. Petitioner s allegation that the delay was on account of continued negotiations with the Orissa Forest Corporation has been denied and it has been stated that Government were considering the liability of paying sales-tax on the contracts and taking a final decision with reference to sales-tax liability, took time.
3. On the pleadings, the following questions arise for determination:-
(1) In view of Clause 1 of the General Conditions of Sale in Part-III of the Sale Notification, was it open to the petitioner to rescind the contract between the date of bidding and the date of approval of the competent authority.
(2) Was it open to the petitioner to withdraw the offer and is the acceptance of the offer as communicated under Annexure-2 invalid?
(3) Whether the dispute raised in this matter can be appropriately adjudicated in a proceeding under the
