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1996 Supreme(MP) 641

High Court Of Madhya Pradesh
C. K. PRASAD
J.K.ENTERPRISES - Appellant
Versus
STATE OF MADHYA PRADESH - Respondents
M. P. 1678 Of 1994
Decided On : 07/23/1996

Advocates Appeared:
A.G.Dhande, S.L.SAXENA

Blacklisting a contractor without notice or opportunity of hearing is a violation of natural justice.

Headnote:

TENDU LEAVES CONTRACT - ACCEPTANCE OF OFFER - COMMUNICATION OF ACCEPTANCE - FORFEITURE OF EARNEST MONEY - BLACKLISTING OF CONTRACTOR - NATURAL JUSTICE - [SECTION NOT APPLICABLE]

Fact of the Case:

Petitioner offered to purchase Tendu Leaves at a certain rate. Petitioner claimed that he never received the acceptance of the offer and withdrew his offer before acceptance. The respondents forfeited the earnest money and blacklisted the petitioner for 3 years.

Finding of the Court:

The court held that the offer was accepted when the communication of acceptance was put in transit on the address given by the petitioner. The court also held that the petitioner suffered a loss as the lot was sold at a lower rate in the reauction. The court further held that the blacklisting of the petitioner without notice or opportunity of hearing was a violation of natural justice.

Issues: 1. Whether the offer was accepted? 2. Whether the petitioner suffered a loss? 3. Whether the blacklisting of the petitioner was a violation of natural justice?

Ratio Decidendi: 1. The general rule is that a contract is formed when the acceptance of the offer is communicated to the offeror. However, an exception to this rule is that when acceptance by post or telegram is authorized, the contract is complete when the acceptance is put into a course of transmission. 2. The respondents suffered a loss as the lot was sold at a lower rate in the reauction. 3. Blacklisting a contractor ensues civil consequences and that is not permissible without following the principle of natural justice.

Final Decision: The petition was partly allowed. The order of forfeiture of the earnest money was maintained, but the order of blacklisting the petitioner for 3 years was quashed.

C. K. PRASAD, J.

( 1 ) BY this writ application, the petitioner challenges the order dt. 14-5-1993 passed by respondent No. 3, the Conservator of Forest Kanker, whereby, the petitioner has been black listed as a Contractor for a period of 3 years as also the order forfeiting the earnest Money.

( 2 ) ACCORDING to the petitioner in pursuance of invitation of the respondents, the petitioner offered to purchase Tendu Leave of lot No. 1095 at the rate of Rs. 30/- per standard bag. It is the stand of the petitioner that he was never informed that his offer has been accepted. In fact it is the stand of the petitioner that the acceptance of offer was sent under registered cover which did not contain full address of the petitioner and consequently not delivered to him.

( 3 ) ACCORDING to the petitioner, he made the offer on 11-1-1993 and when the did not get the acceptance till 3-3-1993 he withdrew its offer. Case of the petitioner further is that as he has withdrawn his offer even before its acceptance, the action of respondents in forfeiting the earnest money is clearly illegal and arbitrary. It has been further contended that the action of respondents in black listing the petitioner visits it with civil consequences. However, no notice or opportunity of hearing was given before passing the said order. In the aforesaid premises it has been submitted that the action of the respondents in black listing the petitioner for 3 years is in violation of well known principle of natural justice. Further stand of the petitioner is that the respondents were not put to any loss by non-acceptance of the offer by the petitioner and therefore, the earnest money cannot be forfeited.

( 4 ) IN the return filed on behalf of respondents Nos. 1 and 2 it has been stated that the offer of the petitioner dt. 11-1-1993 was accepted and communication under registered cover on the address disclosed by the petitioner itself, was sent by letter dt. 12-2-1993, which was returned. The stand of the respondents further is that the petitioner cannot be permitted to take advantage of its own wrong by not giving the complete address. In case the address given to the respondents was incomplete, the petitioner has to suffer for the same. The stand of the respondents further is that the registered cover was sent on the address given by the petitioner and when it was returned the same was served on him through the Managing Director posted at Indore and the same was served on the petitioner on 10-3-1993 (Annexure- R/6 ). Respondents further stated in their return that the alleged fax message dt. 3-3-1993 withdrawing the offer was not sent on incorrect fax number and the same was not received by the respondents. As such the petitioner cannot derive benefit from the same and claim that he has withdrawn the offer.

( 5 ) MR. Dhande appearing on behalf of the petitioner submits that communication pertaining to the acceptance of the offer of the petitioner having not received by him, and the petitioner having withdrawn the offer, the action of the respondents in forfeting the earnest money is illegal.

( 6 ) IN support of the aforesaid submission Shri Dhande has placed reliance on a Judgment of this Court in the case of Kalluram Kesharvani v. State of Madhya Pradesh, AIR 1986 MP 204 wherein it has been held (Para 4) : -"we have therefore to see whether the tender submitted by the petitioner was accepted, whether the said acceptance was communicated to the petitioner and whether the petitioner withdrew his offer before communication of acceptance. The general rule is that it is the acceptance of offer by the offeree and intimation of that acceptance to the offeror which results in a contract. See Karan Singh Chandran Singh v. Collector Chhatarpur, AIR 1980 MP 89 : 1980 MP LJ 231. One of the exceptions to this general rule is that when by agreement, course of conduct of usage of trade, acceptance by post or telegram is authorised, the bargain is struck and the contract is complete whe











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