Appeal No 1807 of 1971
Appeal by special leave from the judgment and order dated May 6 1971 of the Patna High Court in CWJC No 41 of 197 1
L M Singhvi section C Dingra and U P Singh for the appellant
section V Gupte and B P Singh for respondents Nos
1 to 5
section N Prasad and D N Mishra for respondent No 6
The Judgment of the Court was delivered by Mathew J
The appellant filed a writ petition before the High Court of Patna_praying for quashing an order passed by the Minister of Forest Government of Bihar on December 13 1970 and for issue of a writ in the nature of mandamus directing the respondents 1 to 5 to give effect to the previous order of the Minister of Forest dated November 27 1970
The writ petition was heard by a Division Bench of the Court and the petition was dismissed
This appeal by special leave is from that judgment
There is a bamboo coup know as Bantha Bamboo coup in Chatra North Division of Hazaribagh district
On July 22 1970 the Forest Department of the Government of Bihar advertised for settlement of the right to exploit the COUP by Public auction  The auction was held in the Office of the Divisional Forest Officer on August 7 1970
Five persons including the appellant participated in the auction
Though the reserve price fixed in the tender notice was Rs 95000  the appellant s bid of Rs 92001  being the highest was accepted by the Divisional Forest Officer
The petitioner thereafter deposited the security amount of Rs 23800 and executed an agreement
The Divisional Forest officer reported about the auction We servator of Forests Hazaribagh Circle by his letter dated August 25 1970
As the price for which the coup was provisionally 632 settled exceeded Rs 500001  the Conservator of Forests forwarded the papers regarding the auction sale to the Deputy Secretary to Government of Bihar Forest Department for coation of the acceptance by the Government
Since the provisional settlement was made for an amount less than the reserve price the matter was also referred to the Finance Department
The Finance Department invited comments from the Divisional Forest Officer as to why the settlement was made for a lesser amount
The Divisional Forest Officer by his letter dated October 30 1 970
submitted his explanation for the provisional settlement at an amount below the reserve price
When the matter was pending before the Government the appellant expressed his willingness to take the settlement at the reserve price of Rs 95000 by his communication dated October 26 1970
The appellant thereafter filed an application on November 3 1970 praying for settlement of the coup on the basis of the highest bid
The Minister of Forest by his proceedings dated November 27 1970 directed that the coup may be settled with the highest bidder
namely the appellant at the reserve
price
A telegram was sent by the Government to the Conservator of Forests Hazaribagh Circle on November 28 1970 with a copy of the same to the Conservator of Forest Bihar confirming the auction sale to the appellant at the reserve price of Rs 95000 
As no intimation was received by the Divisional Forest Officer he did not cormmunicate the proceedings of the Minister to the appellant
One Md Yakub Respondent No 6 filed a petition on December 4 1970 before the Government of Bihar Respondent No 1
offering to take the settlement of the coup in question for Rs 101125 
A telegram was sent by the Government on December 5 1970 to the Divisional Forest Officer directing him not to take any action on the basis of the telegram dated November 28 1970 sent to him in pursuance of the proceedings of the Government dated November 27 1970
That telegram was received by the Divisional Forest Officer on December 10 1970
and the Divisional Forest Officer by his letter dated December 10 1970 informed the Government that the previous telegram dated November 28 1970 was not received by him and so it content was not communicated to the appellant
The whole matter was there after placed before the Minister of Forest and the Minister by his proceedings dated December 13 1970 cancelled the settlement of the coup with appellant and settled the same with Respondent No 6 for
101125 
The Government thereafter sent telegrams on December 21 1970 to the Conservator of Forests and the Divisional Forest Officer informing them that the coup had been settled with Respondent No 6
The Divisional Forest Officer
by his letter dated December 23 1970 directed Respondent No 6 to deposit the security amount and to pay the first instalment
Respondent No 6 deposited the same and executed an agreement
633 The contention of the appellant in the writ petition was that there was a concluded contract when the bid of the appellant was accepted by the Divisional Forest Officer though that was subject to confirmation by the Government and that when the Government confirmed the acceptance by its proceedings dated November 27 1970 it was no longer within the power of Government to make the settlement of the coup upon the 6th Respondent by its proceedings dated December 13 1970
It was also contended in the alternative that the settlement of the coup in favour of
the 6th Respondent was in violation of statutory rules and therefore in any event that settlement was invalid
As already indicated the High Court negatived these conten tions and upheld the validity of the settlement in favour of the 6th Respondent
The special conditions in the tender notice makes it clear that the Divisional Forest Officer has the right to accept a bid of less than Rs 50001  that acceptance of a bid of more than Rs 50001 by him is subject to confirmation by the Chief Conservator of Forests and the Forest Department of the Bihar Goverment that an auction sale for an amount of more than Rs 50001 would not be recognised until it is confirmed by the competent authority and that a bid made in auction and which has been provisionally accepted by the Divisional Forest Officer shall be binding on the bidder for two months from the date of auction or till the date of rejection by the competent authority whichever is earlier
Counsel for the appellant contended that there was a condi tional acceptance of the offer of the appellant by the Divisional Forest Officer that on confirmation by the Government that acceptance became unconditional and therefore there was a concluded contract when the Government confirmed the acceptance even though the confirmation was not communicated to the appellant
In support of this he relied on The Rajanagaram Village Cooperative Society vs Veerasami Mudaly1
There it was held that in the case of a conditional acceptance in the presence of a bidder the condition being that it is subject to approval or confirmation by some other person the acceptance though conditional has to be communicated and when that is communicated there is no further need to communicate the approval or confirmation which is the fulfillment of the condition
It was further held that a conditional acceptance has the effect of binding the highest bidder to the contract if there is subsequent approval or confirmation by the person indicated that he cannot resile from the contract or withdraw the offer and if there is approval
or confirma 1 1950 11 MLJ486
634 tion the contract becomes concluded and enforceable
This decision was considered in Somasudaram Pillai vs provincial Government of Madras1 where Chief Justice Leach speaking for the Court said that to have an enforceable contract there must be an offer and an unconditional acceptance and that a person who makes an offer has the right to withdraw it before acceptance in the absence of a condition to the contrary supported by consideration
He further said the fact that there has been a provisional or conditional acceptance would not make any difference as a provisional or conditional acceptance cannot in itself make a binding contract
The question whether by an acceptance which is conditional upon the occurrence of a future event a contract will become concluded was considered by Williston and this is what he says     A nice distinction may be taken here between 1 a so called acceptance by which the acceptor agrees to become immediately bound on a condition not named in the offer and 2 an acceptance which adopts unequivocally the terms of the offer but states that it will not be effective until a certain contingency happens or fails to happen
In the first case there is a counteroffer and rejection of the original offer in the second case there is no counter officer since there is no assent to enter into an immediate bargain
There is so to speak an acceptance in escrow which is not to take effect until the future
In the meantime of course neither party is bound and either may withdraw  More over if the time at which the acceptance was to become effectual is unreasonably remote the offer may lapse before the acceptance becomes effective
But if neither party withdraws and the delay is not unreasonable a contract will arise when the contingency happens or sti pulated event occurs In this case it is not the want of communication of the confirmation by the Government to the appellant that really stands in the way of there being a concluded contract but rather the want of confirmation by the Government of the conditional acceptance by the Divisional Forest Officer
The appellant s bid was for Rs 92001 
The acceptance of the bid by the Divisional Forest Officer was therefore subject to confirmation by Goverment
The proceedings
of the Minister dated November 27 1970 would show that he did not confirm the acceptance of the 1 AIR 194734 Madras 366
2 Williston On Contracts Vol
I 3rd Ed
Section 77A 635 offer by the Divisional Forest Officer
What the Minister did was not to confirm the acceptance made by the Divisional Forest Officer but to accept the offer made by the appellant in his communication dated October 26 1970 that he would take the coup for the reserved price of Rs 95000 
There was therefore no confirmation of the acceptance of the bid to take the coup in settlement for the amount of Rs 92001 
If the offer that was accepted was the offer contained in the communication of the appellant dated October 26 1970 we do not think that there was any communication of the acceptance of that offer to the appel lant
The telegram sent to the Conservator of Forest Hazaribagh by the Government on November 28 1970 cannot be considered as a communication of the acceptance of that offer to the appellant
The acceptance of the offer was not even put in the course of transmission to the appellant and so even assuming that an acceptance need not come to the knowledge of the offeror the appellant cannot contend that there was a concluded contract on the basis of his offer contained in his communication dated October 26 1970 as the acceptance of that offer was not put in the course of transmission
Quite apart from that the appellant himself revoked the offer made by him on October 26 1970 by his letter dated November 3 1970 in which he stated that the coup may be settled upon him at the highest bid made by him in the auction
We are therefore of the opinion that there was no concluded contract between the appellant and the Government
This takes us to the question whether the settlement in favour of the 6th Respondent was in violation of any statutory rule
The appellant s contention was that the settlement in favour of the 6th Respondent by a private treaty was in violation of the rules of executive business made under Article 1663
Rule 10 of the Rules provides  101 No department shall without previous consultation with the Finance Department authorise any orders other than orders pursuant to any general or special delegation made by the Finance Department which a either immediately or by their repercussion will affect the finances of the State or which in particular i involve any grant of land or assignment of revenue or concession grant lease or licence of mineral or forests rights or a right to water power of any easement or privilege in respect of such concession
    636 2 Where on a proposal under this rule prior consultation with the Finance Department is required but on which the Finance Department might not have agreed no further action shall be taken on any such proposal until the cabinet takes a decision to this effect
 A copy of the letter from the Deputy Secretary to the Government of the Accountant General Bihar dated November 22 1967 would show that some relaxation of Rule 101 of the rules of executive business was made by the Finance Department relating to lease of forest Coups or forest produce of the value of more than Rs 500001 
That letter reads as under  Subject  Revision of procedure in issuing any order involving any grant of lease sale or licence of minerals of forest rights if such order is issued by the Administrative Department at the Secretariat level
Sir I am directed to say that in relaxation of rule 10 of the Rules of Executive Business Government have been pleased to decide that the Forest Department shall authorise orders sanctioning leases of Forest coups or produce of the value of more than Rs 500001 rupees fifty thousand each subject to the following conditions that 1 Reserve price of the coup has been fixed before auction
2 Highest bid should be accepted
3 Highest bid should not be less than the reserve price
4 Any relaxation to the above conditions may not ordinarily be allowed except with the prior concurrence of the Finance Department
 Before the High Court the contentions of the 6th Respondent were firstly that the rule 101 is not a statutory rule and secondly that it did not concern lease of forest land
The High Court without deciding the question whether the rule is a statutory rule held that the rule has nothing to do with the lease of forest coups and said that there was nothing which prevented the Government from giving the coup on lease by private treaty
The High Court therefore held that there was no bar statutory or otherwise to the settlement of the coup in favour of Respondent 637 No 6 by private negotiation and as such the settlement in his favour was valid
 Counsel for the appellant argued that the High Court went wrong in its conclusion that rule 101 as relaxed did not apply to the grant of the lease of the coup in question and that it really prohibited a lease of forest land except by public auction
 We are not satisfied that the construction contended for is correct
Neither rule 101 nor the rule as relaxed says that forest land can be leased only by public auction
Rule 101 in so far as it is relevant to the present case only says that no department shall without prior consultation with the Finance Department authorise by any order the lease or licence of mineral or forests
The relaxation made to rule 101 as evidenced by the letter from the Deputy Secretary to the Government is to the effect that in the case of lease of forest land of the value of more than Rs 50000  if made by public auction it can only be made subject to the conditions mentioned there
In other words rule 101 as relaxed does not prohibit the grant of a lease by private treaty
The rule read in the context of its relaxation as mentioned in the letter of the Deputy Secretary would only show that consultation with the Finance Department is not necessary for a lease if the lease is of of the value of more than Rs 50000 and is granted in pursuance of a public auction held in conformity with the conditions mentioned in the letter of the Deputy Secretary
Now the question is whether the coup in question was settled in favour of the 6th Respondent in accordance with Rule 101
It is clear from the records relating to the proceedings for the grant of the lease in favour of the 6th Respondent that the Finance Department was not consulted before the Minister passed the order on December 13 1970 to grant the lease
But counsel for the Government of Bihar and 6th Respondent contended that rule 101 in so far as it requires prior consultation with the Finance Department is only directory in character and therefore even if there was no prior consultation the settlement was valid
So the question arises whether rule 101 which requires prior consultation with the Finance Department is mandatory or not
Several tests have been propounded in decided cases for determining the question whether a provision in a statute or a rule is mandatory or directory
No universal rule can be laid down on this matter
In each case one must look to the subject matter and consider the importance of the provision disregarded and the relation of that provision to the general object intended to be secured
Prohibitive or negative words can rarely be directory and are indicative of the intent that the provision is to be mandatory see Earl T Crawford
The Construction of Statues pp
523 4
638 Where a prescription relates to performance of a public duty and to invalidate acts done in neglect of them would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty such prescription is generally understood as mere instruction for the guidance of those upon whom the duty is imposed see Dattatreya Moreshwar Pangerkar vs The State of Bombay and others1
Where however a power or authority is conferred with a direction that certain regulation or formality shall be complied with it seems neither unjust nor incorrect to exact a rigorous observance of it as essential to acquisition of the right or authority see Maxwell Interpretation of Statutes 6th edition pp 649650
in this case we think that a power has been given to the Minister in charge of the Forest Department to do an act which concerns the revenue of the State and also the rights of individuals
The negative or prohibitive language of rule 101 is a strong indication of the intent to make the rule mandatory
Further rule 102 makes it clear that where prior consultation with the Finance Department is required for a proposal and the department on consultation does not agree to the proposal the department originating the proposal can take no further action on the proposal
The cabinet alone would be competent to take a decision
When we see that the disagreement of the Finance Department with a proposal on consultation deprives the department originating the proposal of the power to take further action on it the only conclusion possible is that prior consultation is an essential pre requisite to the exercise of the power
We therefore think that the order passed by the Minister of Forest Government of Bihar on December 13 1970 settling the coup in favour of the 6th Respondent was bad and we quash the order
We allow the appeal to the extent indicated but make no order as to costs
GC Appeal allowed
1  at p 624


Summary:
The right to exploit a bamboo coup in the Hazaribagh district of Bihar was auctioned in August 1970
The reserve price was Rs 95000but the appellant s bid of Rs 92001 being the highest was accepted by the Divisional Forest Officer
The petitioner deposited the security required and executed an agreement
The Divisional Forest Officer about the auction sale to the Conservator of Forests Hazaribagh Circle 
As the price for which the coup was provisionally settled exceeded Rs 500001 the Conservator of Forests forwarded the papers regarding the auction sale to the Deputy Secretary to the Government of Bihar Forest Department for confirmation of the acceptance by the Go Since provisional settlement was made for an amount less than the reserve price the matter was also referred to the Finance Department
When the matter was pending the appellant expressed his willingness to take the settlement at the reserve price of Rs 95000 by his communication dated October 26 1970
The appellant thereafter filed an application on November 3 1970 praying for settlement of the coup on the basis of the highest bid
The Minister of Forest by his proceedings dated November 27 1970 directed that the coup may be settled with the highest bidder viz the appellant at the reserve price
A telegram was sent by the Government to the Conservator of Forests Hazaribagh Circle on November 28 1970 with copy of the same to the Conservator of Forest Bihar co the auction sale at the reserve price of Rs 95000
As no intimation was received by the Divisional Forest Officer he did not communicate the proceedings of the Minister to the appellant
On December 24 respondent No 6 filed a petition to the Government offering to take the settlement of the coup in question for Rs 101125 
The Minister by his proceedings dated December 13 1970 cancelled the settlement of the coup with the appellant and settled the same with respondent No 6 for Rs 101125  The appellant filed a writ petition in the high Court contending that there was a concluded contract when the bid of the appellant was accepted by the Divisional Forest Officer though that was subject to the confirmation by the Government and when the Government confirmed acceptance by its proceedings dated number 27 1970 it was no longer within the Dower of the Government to make the settl ement of the coup upon the 6th respondent
It was also contended that the settlement of the coup in favour of the 6th respondent was invalid because a rule 101 of the Rules of Executive Business made under article 1663 of the Constitution as relaxed by the letter of
the Deputy Secretary to the Government dated November 27 1967 pro hibited the grant of lease by private treaty and b the requirement of 12 L1031SupCI72 630 prior consultation in r 101 with the Finance Department was mandatory and had not been complied with
The High Court rejected the appellant s contentions
In appeal to this Court by special leave
HELD  1 The acceptance of the appellant s offer was subject to confirmation by the Government and in the absence of such confirmation them could be no concluded contract
The appellant s bid was for Rs
92001 
The acceptance of the bid by the Divisional Forest Officer was therefore subject to confirmation by the Government
The proceeding of the Minister dated November 27 1970 would show that he did not confirm acceptance of the offer by the Divisional Forest Officer
What the Minister did was not to confirm the acceptance made by the Division 31 Forest Officer but to accept the offer made by the appellant in his communication dated October 26 1970 that he would take the coup for the reserved price of Rs 95000
There was there for no confirmation of the acceptance of the bid to take the coup in the settlement for the amount of Rs 92001 
634 G 635B If the offer that was accepted was the offer contained in the communication of the appellant dated October 26 1970 it could not be said that there was any communication of the acceptance of that offer to the appellant
The telegram sent to the Conservator of Forest Hazaribagh by the Government on November 28 1970 could not be considered as a communication of the acceptance of that offer to the appellant
The acceptance  of the offer was not even put in course of transmission to the appellant and so even assuming that acceptance need not come to the knowledge of the offer or the appellant could not contend that there was a concluded contract on the basis of his offer contained in his communication dated October 26 1970 as the acceptance of that offer was not put in the course of transmission
Apart from that the appellant himself revoked the offer made by him on October 26 1970 by his letter dated November 3 1970 in which he stated
that the coup may be settled upon him at the highest bid made by him in the auction
There was thus no concluded contract between the appellant and the government
635B D The Rajanagaram Village Cooperative Society vs Veeraswami Mudaly  distinguished
Somasundaram Pillai vs Provincial Government of Madras AIR 1947 Madras 366 applied
iiRule 101 in so far as it was relevant to the present case only says that no department shall without prior consultation with the Finance Department authorise by any order the lease of license of mineral or forests
The rule read in the context of its relaxation as mentioned in the letter of the Deputy Secretary would only show that consultation with the Finance Department is not necessary for a lease if lease is of land of the value of more than Rs 500001 and is granted in pursuance of public auction held in conformity with the conditions mentioned in the letter of the Deputy Secretary
The rule where before or after relaxation did not prohibit the grant of leave by private treaty
637C iiiIt was clear from records relating to the proceedings for the grant of the lease in favour of the 6th respondent that the Finance Department was not consulted before the Minister passed the order on December 13 1970
to grant lease
It could not be said that rule 101 in so far Is it requires prior consultation with the Finance Department is only drirectory and therefore even if there was no prior consultation the settlement 631 was valid
The negative or prohibitive language of rule 101 is a strong indication of the intent to make the rule mandatory
Further rule 102 makes it clear that where prior consultation with the Finance Department is required for a proposal and the department on consultation does not agree to the proposal the department originating the proposal can take no further action on the proposal
The Cabinet alone would be competent to take a decision
Prick consultation is therefore an essential prerequisite to the exercise of power
The order passed by the Minister of Forest Government of Bihar on December 13 1970 settling the coup in favour of the 6th respondent was therefore bad and the order must be quashed
637EF 638D F Dattatreya Moreshwar Pangerkar vs The State of Bombay and Others
applied