RAVI S. DHAVAN, J.

( 1 ) THIS writ petition, amongst many others, before the Court, raises a question whether the Court may have the power of absolution in making a new contract or in the alternative whether it could spell out new conditions of a contract. The facts which raise these questions arise out of a situation when a State agency invited tenders for the purchase of tendu leaves.

( 2 ) TRADING in tendu leaves was curtailed and settled on a state corporation, in effect, to create a State monopoly in the purchase and distribution of tendu leaves. This was done when the State of Uttar Pradesh enacted a legislation known as Uttar Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1972, hence forth referred to as the Act. In pursuance of the Act were framed the Uttar Pradesh Tendu Patta (Vyapar Viniyaman) Niyamawali, 1972, henceforth referred to as the Rules.

( 3 ) TENDU leaves are used in the manufacture of Bidis, in Uttar Pradesh amongst many other states. Bidi manufacturing, right from the stage of growing leaves, its sale and its consumption into a finished produce is a multi million rupees business in the country. The right to trade in tendu leaves has been intentionally created into a State monopoly. This is clear from the object of the Act, aforesaid. The objects recite: "an Act to provide in the public interest for the creation of State monopoly in the purchase and distribution of Tendu leaves and for the matters connected there with. " The monopoly is handled in the State through an agency. In reference to the context it is the Uttar Pradesh Forest Corporation.

( 4 ) THUS, the Uttar Pradesh Forest Corporation, referred after this as the Corporation inserted an advertisement in the local newspapers inviting tenders for the purchase of tendu leaves during the year 1989. The advertisement appeared in the newspaper on 19 July, 1989. Sealed tenders were solicited by 3 Aug. , 1989. The petitioner, Shyam Biri Works, Private Limited Company, in response to the advertisement submitted 181 tenders. The petitioner company is a Biri manufacturer. Along with the tenders the petitioner company also forwarded in accordance with the condition of the contract a cheque for rupees fifty lacs dt. 1 Aug. , 1989 drawn on the State Bank of India, Allahabad, as earnest money.

( 5 ) ONE condition upon which the finalisation of the contract was dependent became a matter of issue between the Corporation and the petitioner. The contract was not finalised within the time stipulated. Time was the essence of the contract.

( 6 ) CONDITION No. 10 of the conditions of the contract stipulates that should the purchaser making the tender be not intimated within forty days since when the tenders were made the purchaser must get in touch with the Corporation, failing which it will be presumed that the acceptance or the rejection of the tender, whichever be the case, would be assumed.

( 7 ) THE petitioner company was not informed either of the acceptance or the rejection of the tender within forty days. Consequently in accordance with the conditions of the contract, the petitioner company had inquiries made at the office of the Corporation at Allahabad and was intimated that no decision has been taken on the tenders by the Corporation. These facts are not disputed.

( 8 ) BY a letter of 18 Sept. , 1989 addressed to the Corporation at Allahabad, the petitioner company sought the return of its earnest monies. The petitioner company received a reply to this letter within twenty four hours. The Corporation replied that in reference to the request for refund, as in the letter of the petitioner company, the matter is sub judice at the High Court. It was further stated that after the decision of the High Court the matter would be considered further. The letter was signed by one S. P. Rao, the Regional Manager of the Corporation. Even this fact is not disputed. What is more important is that the petitioner had not filed any case against the Corporation in any proce

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