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IN THE HIGH COURT OF ALLAHABAD
R. R. MISRA
CHHOTEY LAL GUPTA - Appellant
Versus
UNION OF INDIA - Respondents
Second Appeal 934 Of 1974
Decided On : 09/09/1986
CONTRACT - Tender - Acceptance - New Conditions - Effect - Mines Act, 1952 (35 of 1952), Ss. 3(b), 7, 17-22 - Civil Procedure Code, 1908 (5 of 1908), S. 34 - Interest on refund of security deposit.
Fact of the Case:
Plaintiff submitted a tender for the supply of stone ballast to the Union of India. The tender remained open for 90 days. During this period, the Divisional Superintendent wrote to the plaintiff, requiring him to provide basic labour amenities, a qualified blaster, and a qualified manager as required under the Mines Act in the quarry during the currency of the contract. The plaintiff refused to agree to these new conditions and informed the Divisional Superintendent that he was not bound to keep the tender alive. The Divisional Superintendent, however, informed the plaintiff that his tender had been accepted and reiterated the requirement for the plaintiff to appoint the necessary staff and provide the required amenities. The plaintiff filed a suit for the recovery of the security deposit and earnest money along with interest.
Finding of the Court:
The court held that the new conditions imposed by the Divisional Superintendent in his letters dated 26th September 1966 and 7th October 1966 were not part of the original terms of the tender and that the plaintiff was not bound to comply with them. The court further held that the plaintiff had not committed any breach of contract and was entitled to the refund of the security and earnest money deposited by him. The court also held that the plaintiff was entitled to interest on the refunded amount at the rate of 6% per annum up to the date of the expiry of the Fixed Deposit made by him and thereafter at the rate of 9% per annum with pendente lite and future interest till the date of payment.
Issues: 1. Whether the new conditions imposed by the Divisional Superintendent were part of the original terms of the tender? 2. Whether the plaintiff was bound to comply with the new conditions? 3. Whether the plaintiff had committed any breach of contract? 4. Whether the plaintiff was entitled to the refund of the security and earnest money deposited by him? 5. Whether the plaintiff was entitled to interest on the refunded amount?
Ratio Decidendi: 1. The court held that the new conditions imposed by the Divisional Superintendent were not part of the original terms of the tender because they were not mentioned in the tender document and were not discussed during the negotiations between the parties. 2. The court held that the plaintiff was not bound to comply with the new conditions because they were not part of the original terms of the tender and were imposed unilaterally by the Divisional Superintendent. 3. The court held that the plaintiff had not committed any breach of contract because he had refused to comply with the new conditions which were not part of the original terms of the tender. 4. The court held that the plaintiff was entitled to the refund of the security and earnest money deposited by him because he had not committed any breach of contract. 5. The court held that the plaintiff was entitled to interest on the refunded amount because the transaction was a commercial transaction and there was no contractual rate of interest.
Final Decision: The appeal was allowed. The judgment and decree passed by the lower appellate court were set aside, and the judgment and decree passed by the trial court decreeing the suit were restored with the variation that the plaintiff was entitled to recover the amount with interest at the rate of 6% per annum up to the date of the expiry of the Fixed Deposit made by him and thereafter at the rate of 9% per annum with pendente lite and future interest till the date of payment.
( 1 ) THIS second appeal is directed against the judgement and decree dated 14th April 1973 passed by the Second Additional District Judge, Allahabad.
( 2 ) THE plaintiff Sri Chhotey Lal Gupta, who died during the pendency of this appeal and whose heirs and legal representatives have been brought on record had filed a suit for recovery of Rs. 6450/- from the defendant Union of India on the allegations that the Union of India had invited tender for the supply of stone ballast through an advertisement which took place on 10th May, 1966. The plaintiff submitted his tender on 11th July 1966 and the said tender was to remain open up to 90 days. The plaintiff could not resile from the offer made in this tender within the aforesaid period of 90 days. The tender remained open till 9th Oct. 1966. By a later dated 26th Sept. 1966 the Divisional Superintendent, Lucknow, wrote to the plaintiff to provide basic labour amenities, qualified blaster and qualified manager as required under the Mines Act in the quarry during the currency of the contract. In paragraph 2 of the said letter it was further stated that in case the plaintiff was agreeable for the above, he is requested to attend the office of the Divisional Superintendent on 4th Oct. 1966 at 2. 00 p. m. for negotiations. The plaintiff met the Divisional Superintendent and told him that certain new conditions which were not in the original terms of contract have been added in the letter dated 26th Sept. 1966 for the execution of the contract and that he was not willing to agree to the same. Consequently the plaintiff prayed for refund of his earnest money and security deposit. The plaintiff communicated his refusal to execute the work in view of the new condition of the contract by his letter dated 6th Oct. 1966. The Divisional Superintendent, however, vide his letter dated, 7th Oct. 1966 informed the plaintiff that his tender has been accepted. In the said letter he also reiterated and required the plaintiff to appoint quarry Manager, a qualified blaster, other supervisory staff and also provide basic amenities to the labourers as required under the Mines Act before he starts his work in the quarry. The plaintiff, however, informed the Divisional Superintendent that in view of the new condition added by him, he was not bound to keep the tender alive and prayed for the refund of earnest money and security deposit made by him. The plaintiff also served the defendant with a notice under S. 80, Civil P. C. but to no effect. Hence the plaintiff filed a suit for recovery of the security deposit as well as earnest money along with interest.
( 3 ) THE defendant contested the suit on the ground mainly that no new condition has been imposed at any stage by the Divisional Superintendent and as the defendant had accepted the tender within the period of 90 days, the plaintiff was bound by his contract to carry on the work of quarry and he could not resile from the contract. In the view of the defendant since it was the plaintiff who had committed breach of contract, the amount of earnest money and security deposit claimed by him stood forfeited and by a letter dated 1st April, 1967 issued by the Divisional Superintendent, Lucknow, the plaintiff was informed that the said amount of earnest money and security deposit stood forfeited.
( 4 ) THE trial court framed a number of issues and after consideration of the evidence of the parties it held that as new condition had been added subsequently by the defendant, it was open to the plaintiff to resile from the contract and that the plaintiff was entitled to the refund of the security deposit and the earnest money and since the defendant had failed to pay the same, the plaintiff was also entitled to the interest thereon. On these findings. the suit was decreed by the trial Court. Aggrieved against the same, the Union of India preferred an appeal before the District Judge which was ultimately decided by the Second Additional District Judge
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