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1989 Supreme(Ori) 114
High Court Of Orissa
G. B. PATTANAIK
EXECUTIVE ENGINEER, SUNDARGARH - Appellant
Versus
MOHAN PRASAD SAHU - Respondent
First Appeal 310 Of 1981
Decided On : 08/17/1989
A.K.SAHU
The highest bidder in an auction sale does not acquire any title to the goods unless the bid is accepted by the competent authority and the acceptance is communicated to the bidder.
Headnote:
AUCTION SALE - VALIDITY OF BID - RIGHT OF COMPETENT AUTHORITY TO CANCEL BID - CONDITIONS OF SALE - INTERPRETATION - CONTRACT ACT, 1872, S. 2(b).
Fact of the Case:
Plaintiff participated in an auction sale held by Defendant 1 and emerged as the highest bidder. He deposited the earnest money as required under the auction sale notice. However, Defendant 1 later cancelled the auction sale without assigning any reason. Plaintiff filed a suit seeking a declaration that the auction sale was valid and binding on the defendants and for delivery of the goods.
Finding of the Court:
The court held that the plaintiff did not acquire any title to the goods by being the highest bidder since his bid was not accepted by the competent authority and the order of acceptance was not communicated to him. The court further held that the competent authority had the right to cancel the bid without assigning any reason as per the conditions of sale.
Issues: 1. Whether the plaintiff acquired a valid title to the goods by being the highest bidder? 2. Whether the competent authority had the right to cancel the bid without assigning any reason?
Ratio Decidendi: 1. A tender notice is not an offer or proposal but merely an invitation to the contractors for making an offer. 2. The submission of a tender is in the nature of a proposal or offer, and unless the highest bid of a tenderer is accepted by the competent authority and the said acceptance is communicated to the tenderer, the contract cannot be said to be concluded between the parties. 3. An advertisement for the sale of goods by auction is a mere declaration and does not amount to a contract with anyone who may act upon it. 4. The auctioneer's request for a bid is not an offer which can be accepted by the highest bidder. It is the bid that constitutes an offer. 5. Therefore, unless that bid is accepted and acceptance is communicated to the bidder, there is no binding contract between the parties and, therefore, no title to the goods accrues in favor of the highest bidder pursuant to the fact that his bid was the highest one and he had deposited the earnest money in accordance with the conditions laid down in the sale notice. 6. The competent authority reserves the right to cancel a bid without assigning any reason therefor.
Final Decision: The court set aside the judgment and decree of the Subordinate Judge and dismissed the plaintiff's suit with costs.
G. B. PATTANAIK, J.
( 1 ) DEFENDANTS are the appellants against the judgment and decree of the Subordinate Judge, Sundergarh. The plaintiff filed the suit for a declaration that the auction sale of 33. 144 M. T. of rod held on 28-2-1979 is valid and binding on the defendants and for such other relief as the court may deem fit and proper in law and equity.
( 2 ) IT is alleged in the plaint that an auction sale notice had been issued by defendant 1 and was published in the daily 'samaj' for auction of 37. 144 metric tons of cut pieces rod and the auction was scheduled to be held on 28-2-1979. The intending bidders were required to deposit Rs. 342/- and accordingly the plaintiff deposited the said amount and participated in the auction. The plaintiff gave the highest bid of Rs. 40,200/- and the auction was knocked down in favour of the plaintiff and he was directed to deposit the earnest money. Accordingly, the plaintiff deposited Rs. 10,050/ -. Thereafter the plaintiff approached the authority to accept the balance auction amount and deliver the materials to him, but on some ground or the other, the defendants did not accept the balance money nor did they deliver the goods in question ultimately, on 16-4-1979, the plaintiff received a letter from defendant 1 intimating that the auction held on 28-2-1979 had been cancelled. The plaintiff then made a representation to defendant 1 with a copy to defendant 2 praying therein for reconsideration of the order, but the said representation having been turned down, the plaintiff served a notice under S. 80, C. P. C. , and ultimately filed the suit.
( 3 ) THE defendants in their written statement took the stand that the auction bid was subject to condition laid down in the auction sale notice and a highest bidder would not be entitled to have title over the property unless the bid is accepted by the competent authority and the acceptance is communicated to the bidder. It was also averred in the written statement that it was clearly stipulated in the tender notice that the competent authority was entitled to reject the highest bid without assigning any reason therefor. On these averments it was prayed that the suit was liable to be dismissed.
( 4 ) ON the aforesaid pleadings, the learned Subordinate Judge framed four issues and on issue 3 came to hold that the order of cancellation of bid was illegal, invalid and improper and not justifiable in law. On issue 2 he held that the plaintiff acquired valid title to the suit property notwithstanding Ext. 3 and on these findings he decreed the suit and directed the defendants to deliver possession of the goods in question within fifteen days to the plaintiff on plaintiff depositing the balance sum of Rs. 30,150/ -. It is this judgment and decree which are being assailed in the present appeal.
( 5 ) THE learned Advocate General appearing for the defendants-appellants contends that the plaintiff even if was the highest bidder had not acquired any title to the property in question and, therefore, the impugned judgment cannot be sustained in law. He further contends that the finding of the Subordinate Judge that the order of cancellation was not in accordance with law is wholly unsustainable and, therefore, must be set aside. Mr. Sahoo, the learned counsel appearing for the plaintiff-respondent, on the other hand, contends that the plaintiff having been held to be the highest bidder and having deposited the earnest money as required under the rules, the Subordinate Judge was wholly justified in holding that he had acquired a title to the property. The learned counsel further contends that the defendants not having produced the relevant files and not having justified the grounds for cancellation, the cancellation is arbitrary and whimsical and, therefore, the Subordinate Judge was right in his conclusion.
( 6 ) IN order to appreciate the correctness of the rival submissions, it would be necessary to examine the evidence as well as the law on the p
