Appeal No 1036 of 1966
Appeal by special leave from the judgment and order dated March 15 1965 of the Allahabad High Court in First Appeal No 268 of 1963
CB Agarwala and KP Gupta for the appellant
R K Garg DK Agarwal and MV Goswami for the respondent
795 The Judgment of the Court was delivered by Sikri J
This is an appeal by special leave and while granting it this Court confined it only to the point arising under section 97 of the UP Municipalities Act 1916 hereinafter referred to as the Act The facts relevant to the point are as follows The Municipal Board Saharanpur respondent before us and hereinafter referred to as the plaintiff brought a suit for the recovery of Rs 12044 19 and future interest upto the date of realisation from BC Mohindra appellant before us and hereinafter referred to as the defendant
In brief the case of the plaintiff was that there was an auction on March 29 1960 of the theka for collecting tahbazari dues of the mandi in Mazahir Gang alias Ganj Jadid Saharanpur for one year from April 1 1950 to March 31 1951 subject to the conditions of sale entered in the amended sale proclamation
The defendant bid Rs 40000 subject to the confirmation by the Board
The Board did not confirm the auction sale and on April 8 1960 the tahbazari was re auctioned
The defendant bid Rs 53025 
At the time of the auction sale a meeting of the Board was also held in which the auction aforesaid was confirmed under Resolution No 26 dated April 8 1950 in the presence of the defendant and only the condition relating to the payment of auction money was amended to provide for payment in four installments
The defendant had to deposit 14th of the bid on April 8 1950
He failed to deposit this instalment on April 8 1950 but on April 10 1950 he deposited the instalment and took charge of the mandi aforesaid and began to collect tahbazari dues
The defendant was asked to execute and complete an agreement in favour of the plaintiff according to the conditions and the rules but he continued to put off the matter
As the defendant failed to deposit the amount of the second instalment and execute the agreement the plaintiff cancelled the theka of the defendant and began to collect tahbazari dues through its own staff and re auctioned the theka on July 3 1950
After taking into account the money received from the re auction on July 3 1950 and the money deposited by the defendant according to the plaintiff there was a shortage of Rs 12044 19
The defendant did not dispute the fact that an auction was held and that he made the last bid of Rs 53025 which was accepted
He also admitted that he had deposited Rs 132564 
But he alleged that the plaintiff had committed various breaches of the contract in contravention of the rules contract and the bye laws as a result of which the defendant Suffered a loss of Rs 9685 
796 The Trial Court flamed various issues arising out of the pleadings but no issue was raised regarding non compliance with section 97 of the Act
It appears that an argument was raised before the Trial Court regarding section 97
The Trial Court observed On the basis of this decision AWR 1951 page 560 it was urged on behalf of the defendant that it was necessary in the present case that a written contract should have been obtained by the plaintiff under section 97 of the Municipalities Act  
In a public auction the various bidders give their bids which may be called offers and the moment the auctioneer knocks the hammer down at a particular bid that bid is to be taken as accepted between the parties
It is the knock of the hammer which concludes the contract
The list of bidders is the only evidence of the contract showing that out of various offers the highest bid was accepted
In this particular case the list of bidders bears the signature of the defendant and of the Chairman of the plaintiff Board thus reducing the contract into writing vide exhibit 17
The contract in this case is therefore a written contract evidenced from paper exhibit 17 
According to the provision of section 97 of the Municipalities Act such a contract should have been only in writing and this condition was fulfilled by drawing up the list of bidders and obtaining the signature of the highest bidder in whose favour the auction was concluded on such a list The Trial Court decreed the suit
The defendant appealed to the High Court and the High Court Srivastava and Jagdish Sahai J J by its order dated October 5 1961 remanded the case on two issues 1 Whether the agreement relied upon by the plaintiff was in accordance with sections 96 and 97 of the UP Municipalities Act of 1916  If not what is the effect  2 Whether section 65 of the Indian Contract Act applied  If so what compensation if any could be recovered by the plaintiff from the defendant on account of any advantage the latter may have received under the agreement  While passing the order of remand the High Court observed While hearing arguments in this appeal we discovered that a very important point was apparently missed 797 both by the parties and by the learned Civil Judge
We feel that the case cannot be properly decided without having findings of learned Civil Judge on that point
The point involves two questions
 We are in agreement with the contention of the learned counsel for the plaintiff that there was no justification in remanding the case
The Trial Court had dealt with the question of section 97 of the Act and this apparently escaped the notice of the High Court
Be that as it may the Trial Court in a very careful and reasoned order dated August 24 1962 held that on the facts sections 96 and 97 of the Act had been fully complied with
The High Court Jagdish Sahai and Broom JJ came to the conclusion that section 97 of the Act did not apply to the facts of the case
The High Court observed The suit therefore is one for the failure to execute the contract deed and to pay the amounts which have become due from him by way of damages
Section 97 of the Act deals with contracts which have been executed
It is for this reason that we have come to the conclusion that the provisions of Section 97 of the Act are not attracted to the present case
 Section 97 of the Act reads as follows Execution of Contracts 1 Every contract made by or on behalf of a Board whereof the value of the amount exceeds Rs 250 shall be in writing Provided that unless the Contract has been duly executed in writing no work including collection of materials in connection with the said Contract shall be commenced or undertaken
2 Every such contract shall be signed a by the President or a Vice President and by the Executive Officer or a Secretary or b by any person or persons empowered under subsection 2 or 3 of the previous section to sanction the contract if further and in like manner empowered in this behalf by the Board
 It seems to us that on the facts of the case it is clearly proved that there was a contract in writing within the meaning of proviso to section 971 and the provisions of sub
section
We agree with the conclusion of the Trial Court in this respect
The list of bids exhibit 17 at the auction sale held on April 8 1950 is signed by the defendant the Chairman and the Executive Officer
This auction was held before the Board and Resolution No 26 4Sup
CI69 18 798 dated April 8 1950 was passed on that day which reads as follows Auction of the tehbazari contract of Mandi Mazabar Gunj for the year 1950 51 Boards Reso
No 431 dated 30 3 50
Auction held before the Board
Terms of auction were announced
During the auction at the request of the bidders the Board unanimously passed the following amendment in the terms of auction  One fourth of the auction money will be deposited at the fall of hammer and the remaining amount in three equal instalments at the interval of two months each 1st instalment today 8 4 50 2nd instalment on 8 6 50 3rd instalment on 8 8 50 4th instalment on 8 10 50 Auction sanction to the highest bidder Shri BC Mohindra for Rs 53025 wef
9 4 50 to 31 3 51
Chairman Finance Committee to please deliver the possession and to decide the disputes if any
 The original proceedings book was produced before the Trial Court and it was proved by Ram Swarup clerk
He proved that after the entire proceedings were over it was signed before him by Shri Madho Prasad Executive Officer of the Municipal Board and Shri Jamshed Ali Khan the Chairman
In our opinion the list of bids and the Resolution No 26 dated April 8  constituted a contract in writing within the meaning of section 97 of the Act
It was held by this Court in Union of India vs Rallia Ram1 that for the purposes of section 1753 of the Government of India Act 1935 a valid contract could be spelt out of correspondence
It seems to us that similarly it is not necessary for the purpose of complying with section 97 of the Act that the contract should be contained in one document signed by both the parties
In view of our conclusion it is not necessary to consider what would have been the rights of the plaintiff if
there had been no such contract in writing
In the result the appeal fails and is dismissed with costs
RKPS Appeal dismissed
1   173


Summary:
At an auction held on April 8 1950 of the theka for collecting Tahbazari dues of a Mandi the appellant s bid was accepted
At the time of auction a meeting of the respondent Board was also held in which the auction was confirmed by resolution and the usual conditions relating to the payment of auction money were amended to provide for payment in four installments
The appellant was asked to execute and complete an agreement in favour of the respondent according to the conditions and rules but he failed to do so
In view of this and the fact that he failed to pay the second installment the respondent Board cancelled the appellant s theka and reauctioned it
After taking into account the money received from the reduction and the instalment paid by the defendant the Board sued the appellant for the recovery of the balance and future interest
One question considered by the Trial Court was whether the provisions of section 97 of the UP Municipalities Act 1916 which required certain contracts made by or on behalf of the Board be in writing had been complied with
The Trial Court found that there was a list of bidders at the auction held on 8th April 1950 which bore the signature of the appellant and of the Chairman of the respondent Board it therefore considered that the contract was a written contract and decreed the suit
In appeal the High Court remanded the case as it took the view that the question of the applicability of and compliance with section 97 of the Act had not been dealt with
On appeal to this Court HELD On the facts it was clearly proved that there was a contract in writing within the meaning of the proviso to section 971 and the provisions of sub
section 2
The signed list of bidders and the resolution of the Board passed at the time of the auction constituted a contract in writing within the meaning of section 97 of the Act
There was therefore no justification in the High Court remanding the case
797 H 798 F G Union of India vs Ralla Ram   173 referred to