Allahabad High Court
Chhotey Lal Gupta (Deceased By L.Rs.) vs Union Of India (Uoi) on 9 September, 1986
Equivalent citations: AIR1987ALL329, AIR 1987 ALLAHABAD 329, 1987 ALL CJ 40
JUDGMENT R.R. Misra, J.
1. This second appeal is directed against the judgment 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 letter 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 Section 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 I o carry on the work of quarry and he could not resile from the contract. In the view of I he 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, Allahabad, vide his judgment dated 14th April, 1973.
5. In appeal before the lower appellate Court only one point was pressed on behalf of the defendant The contention was that no new condition was imposed by the Divisional Superintendent and the plaintiff had no right to resile from the contract and that since the-plaintiff had failed to comply with the terms and conditions of the tender which- had matured into a contract by virtue of the Divisional Superintendent having accepted the tender, the security deposit as well as the earnest money had been validly forfeited and [he trial court had erred in decreeing the suit On a consideration of Conditions Nos. 17 to 22 of the terms of the contract and the letters dated 26th Sept. 1966 and 7th Oct 1966, the lower appellate Court came to the conclusion that no new condition was added by the defendant subsequent to the aforesaid tender and that the plaintiff could not resile from the terms of the contract and is not entitled to recover the security deposit and the earnest money from the defendant which were rightly forfeited. It also held that the trial court was wrong in decreeing the claim for the recovery of the money with interest thereon. Accordingly the lower appellate Court allowed the appeal and set aside the judgment and decree of the trial Court and dismissed the suit with costs throughout. Aggrieved against the aforesaid judgment of the lower appellate Court, the plaintiff has preferred the above second appeal in this Court.
6. Dr. R.G. Padia learned counsel for the appellant has urged a number of points in support of this appeal He contended that having regard to the terms or conditions of the tender the provisions of the Mines Act of 1952 will not apply because of the provisions of Section 3(b) of the said Act. He has urged that the lower appellate Court is wrong in saying that the word "quarry" has not been defined and, therefore, it relied upon the dictionary meaning of the said word and has drawn on surmises. According to him, the word" quarry" has been defined in Section 2(kk) of the said Act. He contends that if the said definition of the word "quarry" is taken into consideration, the distinction drawn between the word ''mine" as defined under Section 2(j) of the Act and the word "quarry" becomes clear inasmuch as according to the learned counsel in the case of a mine, work is done under the ground while in the case of a quarry work is done not under the ground but above the ground He has further urged that Section 17 of the Mines Act which requires the appointment of a manager of the mine will not apply to the case of the plaintiff.
7. The next point he submits is that when under his letter dated 26th Sept. 1966 the Divisional Superintendent, Lucknow had called the plaintiff for negotiations, this by itself shows that some new condition was added and a need was felt for negotiations on the same. It is further urged on behalf of the appellant that the finding recorded by the lower appellate Court that the letter dated 7th Oct. 1966 issued by the Divisional Superintendent, Lucknow is a letter of acceptance, is self-contradictory and, therefore, there is all the more reason that the plaintiff must get his money back as claimed by him in the plaint
8. Sri Vinod Swaroop, learned counsel appearing for the Union of India, has vehemently urged that under the two letters dated 26th Sept. 1968 and 7th Oct. 1966 issued by the Divisional Superintendent, Lucknow no new condition was imposed and it may be that some words were loosely used. He referred to conditions Nos. 17 to 22 of the tender and also to Rules 21 and 22 of Mining rules regarding appointment of a qualified person as blaster. The counsel for the respondent submitted that the provisions of the Mines Act were applicable to the case of the plaintiff and he was required to comply with the terms stated in the tender.
9. In order to appreciate the short point involved in the case, it would be appropriate at this stage to reproduce the relevant Conditions Nos. 17 to 22 of the tender itself which are as follows : --
" 17. The contractor shall be responsible to comply with the instructions and provisions of all the Acts in force at the time of execution of the contract and passed during the currency of the contract.
18. The contractor shall at the times keep the railway administration indemnified against all penalties that may be imposed by the Government of India for infringement of any of the clauses of the Mines Act, or rules, made thereunder in respect of this quarry. For all purposes of Mines Act, the successful tenderer shall be deemed as the owner of the quarry for the period his agreement is in force.
19. The tenderers should in their own interest study the provisions of the Mines Act 1952 and rules made thereunder before tendring. He (they) shall be responsible for the provision of all facilities for compliance of the provisions of the said Act and/or rules thereunder.
20. The contractor shall comply with all the instructions issued by the Chief Inspector Mines in respect of safety of the workmen and the working of the quarries and maintain register in which shall be recorded such information for supply annually to Chief Inspector of Mines to the Government of India as required by him. In compliance of such instructions the orders shall be done to the satisfaction of the Divisional Engineer, and R. L M. and compliance reported in writing within two weeks after the receipt of such orders, failing which, necessary action will be taken by the Railway Administration and the cost incurred thereof recovered from the dues of the contractor.
21. The contractor shall provide necessary amenities to the labour in respect of supply of drinking water, sanitation and medical facilities and shall equip and maintain the canteens, restshelters, creches etc. They shall employ qualified men for blasting and shall use explosives of the type and in a manner approved by the Regional Inspector of Mines.
22. If the working of the quarry is partly or fully hampered or stopped by an order of the Regional Inspector of Mines, due to violation of the rules, prescribed by the Chief Inspector ,of Mines, from time to time, the contractor shall be deemed to have failed in his contract and action as per clause 62 of the General Conditions of the contract shall be taken to determine the contract.
10. A bare reading of the aforementioned conditions and the contents of letters dated 26th Sept 1966 and 7th Oct 1966 will disclose that the contentions raised on behalf of the appellant have force and in my opinion new conditions were sought to be added under the aforesaid two letters issued by the Divisional Superintendent, Lucknow. Firstly, under the letter dated 26th Sept. 1966 the plaintiff has been required to provide a qualified blaster and qualified manager as required under the Mines Act 1952 in the quarry during the currency of the contract. The condition mentioned above nowhere makes reference of such a provision in the terms of the contract. In my opinion a bare perusal of the terms of the contract, as stated above, will show that the said conditions do not lay down the method of quarrying. We do not know what method the plaintiff would have adopted for extracting stone ballst He might have used chisel and hammer method and in that method no blasting was necessary. The contractor if he so desired could have avoided the applicability of the provisions of the Mines Act. The purport of all the conditions laid down in the tender was that in case Mines Act applied and there is any breach committed by the contractor, the Divisional Superintendent stood indemnified by the contractor to that extent. In paragraph 21 of ,the conditions of tender, the last sentence mentions that the contractor shall employ qualified men for blasting The use of the words "shall employ qualified men" in plural itself shows that it does not include employment of a qualified blaster as required under the Mines Act Condition No. 21 stated that the contractor shall provide necessary amenities to the labour in respect to supply of drinking water, sanitation and medical facilities, whereas in the letter dated 26th Sept. 1966 an adjective of the word "basic" has been used along with the words "labour amenities". It is not clear as to what the Divisional Superintendent meant by using the words "basic labour amenities". The term is so vague that it may include even provision for helmets, clothes, lanterns etc thereby increasing the financial burden of the contractor. Moreover, the letter dated 26th Sept 1966 assumes that the provisions of Mines Act, 1952 are applicable to the case of the Contractor which is, in my opinion, a definite improvement and a new condition which was not originally there under the terms of the tender. It appears that the Divisional Superintendent himself was conscious of the afore mention new conditions and that is why in the second paragraph of the letter dated 26th Sept. 1966 he has clearly written as under : --
"In case you are agreeable for the above you are requested to please attend this office on 5th Oct. 1966 at 2 p.m. for negotiations".
11. At this stage it is necessary to quote the relevant extract from the letter dated 7th Oct. 1966 which runs as follows : --
"As required in the tender conditions please appoint qurry Manager, qualified Blaster, other supervisory staff and also provide all basic amenities as required under Mines Act, before you start the work in the quarry".
12. In my opinion there is considerable force in the arguments of Dr. Padia that the stage for appointing qualified Manager or Blaster or other supervisory staff arises only when work is started but the defendant emphasises that be fore the work is started all the conditions as now being imposed by letter 7th Oct. 1966 are to be complied with. The conditions of original tender in fact do not say so nor in the terms of the original tender there is any whisper or indication to the effect that before the plaintiff starts work, he will have to appoint certain persons and do something as required by letter dated 7th Oct. 1966. The question of appointment of other supervisory staff was not at all there under the original terms of contract. Furthermore as already stated above in case the plaintiff is able to manage his affairs in such a manner that the provisions of Mines Act will not apply to his case, it is redundant on the part of the Divisional Superintendent to ask the contractor to comply with all the terms of the Mines Act before work is started by the contractor because in my view it is left to the plaintiff under the terms of the tender to work in the manner he thinks fit and the defendant cannot insist on the plaintiff to complete all formalities under the Mines Act.
13. An argument has also been advanced, in the alternative, by the learned counsel for the appellant that in view of the provisions of Section 3(b) of the Mines Act 1952 the said Act will not apply to the case of the plaintiff. The relevant provision runs as follows : --
"Act not to apply in certain cases.-
(1) The provisions of this Act, except those contained in Sections 7, 8, 9, 44, 45 and 46 shall not apply to(a)........
(b) any mine engaged in the extraction of kankar, murrum, laterite, boulder, gravel shingle, ordinary sand (excluding moulding sand, glass sand and other mineral sands) ordinary clay (excluding kaolin, china clay, white clay or fire clay), building stone, road metal, earth, fuller's earth and lime stone:
Provided that-
(i) the workings do not extend below superjacent ground; or
(ii) where it is an open cast working-
(a) the depth of the excavation measured from its highest to its lowest point nowhere exceeds six meters;
(b) the number of persons employed on any one day does not exceed fifty; and
(c) explosives are not used in connection with the excavation."
The submission made on behalf of the appellant is that boulders, gravels, shingle etc. are only bigger and smaller forms of stone ballast, and in such a situation the legislature itself has thought it fit to exclude applicability of the Mines Act to a case as that of the plaintiff. Moreover, the learned counsel further submits that under the first proviso to the aforesaid Section 3(b) of Mines Act, all the two conditions mentioned in the proviso could arise only in a situation when work is started and not before. I find considerable force in these arguments and they are liable to be accepted. The question of applicability of the Mines Act can also be examined from another angle. The other angle is that the plaintiff might adopt such a course that he may not be required at all to provide the amenities mentioned under the Act. Therefore, it is not possible at this stage to state categorically whether the plaintiff had incurred the liability of providing labour amenities. As a matter of fact the stage for providing such amenities did not arise at all in the present case till the work was commenced
14. After arriving at the finding that in his letters dated 26th Sept., 1966 and 7th Oct., 1966 the Divisional Superintendent, Lucknow, had sought to impose new conditions, it has to be seen as to what is the legal effect of the same. Section 7 of the Contract Act 1872 provides that in order to convert a proposal into a promise, the acceptance must be absolute and unqualified. If this is not done and certain new conditions are added or in other words the acceptance is neither absolute nor unqualified, no valid contract comes into existence.
15. In Rao Girdhari Lal v. Societe Beige de Banque S. A., AIR 1938 Lahore 341, their Lordships have taken the view that when an offer containing certain conditions is made to a party and that party by adding to the conditions makes a counter offer then in such a situation the counter offer amounts to rejection of the original offer already made.
16. In Henry Earnest Meaney v. E C Eyre Walker, AIR 1947 All 332, their Lordships have taken the view that in case the acceptance is conditional there is no completed contract.
17. In Deep Chandra v. Mohammad Sajja Ali Khan, AIR 1951 All 93 (FB) the view aken is that the acceptance must be unconditional and absolute
18. In U.P. State Electricity Board v. Goel Electric Stores, AIR 1977 All 494 a Division Bench of our own Court has also taken the view that if there is a conditional acceptance, no contract comes into existence.
19. In Union of India v. Uttam Singh Dugal and Co., AIR 1972 Delhi 110 the Delhi High Court has also taken the view that acceptance must be absolute In this case also Utam Singh Duqal and Co., AIR 1972 Delhi 110 the Delhi High Court contract between the parties. In our case also it is pertinent to note that the tender remained open for acceptance for a period of 90 days, i.e. up to 9th Oct., 1966 and it is within this period of 90 days that under the afore mention contract between the parties. In our case also it is pertinent to note that the thender remained open for aceptance for a period of 90 days, i.e. upto 9th Oct., 1966 and it is, within this period of 90 days that under the aforementioned two letters dated 26th Sept., 1966 and 7th Oct., 1966 certain new conditions were sought to be added. As the plaintiff did not agree to the new conditions under the law no concluded contract came into existence.
20. In Badri Prasad v. State of Madhya Pradesh, AIR 1970 SC 706, their Lordships have taken the view that in case the alleged acceptance of the offer was conditional and qualified, no concluded contract came into existence.
21. To the same effect is the view taken by Chesire and Fifoot's in their book "Law of Contract" Eighth Edition published by Butterworths and Company Limited, London. At page 31 of the said book, the learned authors have summarised the position with regard to the new terms if they are sought to be introduced thus: --
"The offeree must unreservedly, assent to the exact terms proposed by the offerer. If, while purporting to accept the offer as a whole, he introduces a new term which the offerer has not had the chance of examining, he is in fact merely making a counter-offer. The effect of this in the eye of the law is to destroy the original offer."
22. Thus it is clear that in view of the new conditions imposed by the Divisional Superintendent in his letters dated 26th Sept., 1966 and 7th Oct., 1966, no concluded contract had taken place and in this view of the matter the plaintiff had not committed any breach of contract and the security and earnest money deposited by him was liable to be refunded. It is well settled that misconstruction of a document which is the basis of a suit can be interfered with in second appeal (See Bhusawal Borough Municipality v. Amalgamated Electricity and Co., AIR 1966 SC 1652). Since the lower appellate Court had misconstrued the aforesaid terms of contract the finding recorded by it to the effect that no new condition was imposed under the aforesaid two letters dated 26th Sept., 1966 and 7th Oct., 1966 is erroneous in law and is liable to be interfered with in second appeal.
23. This leads me to the claim of interest to be awarded to the plaintiff-appellant. The trial Court had awarded interest @ 6%. Since the lower appellate Court had dismissed the claim, there was no question of considering award of interest by it. In this connection, it is relevant to refer to the proviso to Section 34 of the Civil P. C which reads as follows: --
"Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions."
24. There can be no manner of doubt that the transaction with respect to which claim has been made by the plaintiff is a commercial transaction and there was no contractual rate. Hence the plaintiff is entitled to relief under the proviso to S. 34 of the Civil P. C. as regards award of interest.
25. In the result, the appeal is allowed The judgment and decree passed by the lower appellate Court is set aside and the judgment and decree as passed by the trial Court decreeing the suit is restored with the following variation with regard to interest The plaintiff shall be entitled to recover a sum of Rs. 6450-00 from the defendant with interest at the rate of 6% p. a up to the date of the expiry of the Fix ed Deposit made by him and thereafter from the said date at the rate of 9% per annum with pendente lite and future interest till the date of payment. The defendant shall pay costs of the appellant throughout.