THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO APPEAL SUIT No. 590 of 1992 JUDGMENT: The appeal is filed against the judgment and decree dated 29.11.1990 in O.S.No.16 of 1984 on the file of the Subordinate Judge, Nandyal. The suit was filed for recovery of a sum of Rs.1,31,744.75 ps. consisting of the damages and the loss suffered by the plaintiff. The allegations in the plaint go to show that a tender was published by the 1st defendant for construction of shopping complex at Nandyal and the tender was submitted by the plaintiff on 19.09.1980 and the plaintiff was called for discussion on 12.12.1980 and after mutual discussion the plaintiff offered in his letter to execute the construction work of B-Block No.1 at 18% above the approved schedule rates for the year 1980-81 and accordingly the plaintiff-Managing Partner executed a letter. After further discussion on 24.12.1980 the plaintiff undertook the work at 16% over the approved estimated rates and a letter was given by the plaintiff on 24.12.1980. The plaintiff has informed on 22.01.1981 that the tender was approved and requested the plaintiff to attend the office to conclude the agreement. The plaintiff attended the office on 30.01.1981 and he was asked to attend later. Thereafter, the plaintiff wrote a letter on 10.02.1981 that he came to know that the 1st defendant was trying to interpret the rates as those of the year 1979-80 but not the rates of the current schedule of the year 1980-81 and wanted the rates of 1980-81 to be approved. The plaintiff also informed 1st defendant that he employed labour and paid Rs.50,000/- for material, etc. By virtue of the letter dated 22.01.1981 there is a concluded contract and as such the plaintiff made arrangements. The plaintiff was also asked to attend the office on 12.03.1981 but the plaintiff wrote a letter on 07.03.1981 seeking clarification of his letter dated 10.02.1981. The plaintiff made a correspondence with the defendant but the 1st defendant did not respond properly even though the plaintiff attended the office of the 1st defendant. Subsequently, the plaintiff went to the 1st defendant office on 16.04.1981 and found that the agreement was prepared specifying 12.183% over the estimated rate as against the 16% over the estimated rates, which were accepted in the earlier correspondence. It was informed that the rate was determined for the year 1979-80. The above action of the 1st defendant is not legal. Therefore, the plaintiff issued a legal notice and filed the suit for refund of the sum of Rs.4,944.75 paise, which was the interest on the earnest money and for the sum of Rs.76,800/- with interest for the amounts spent by him towards labour and material and for Rs.50,000/- for the damages contending that a breach of contract was committed by the defendant. The 1st defendant filed written statement contending that on 12.12.1980 the plaintiff offered to execute the construction work at 18% above the approved claim of schedule rates of the year 1980-81 is not correct and on the other hand, he accepted to execute the works at 18% of estimated rates by the defendant. The plaintiff is now claiming the schedule rates, which is not correct. It is true that the defendant has asked the plaintiff to come to the office. The claim that in the letter dated 10.02.1981 he offered to do the work at 16% of the schedule rates is not correct. From the beginning the defendant is very sincere to have the construction work executed on terms mutually agreed upon. The plaintiff who appears to be highly educated in litigation, in his subsequent letter dated 07.03.1981 has reiterated that the clarifications sought by him in his earlier letter dated 10.02.1981 with regard to the rates to be followed (estimated rates or schedule of rates for 1980-81) are now answered by this defendant and till such time they are answered, he will not attend this defendant’s office to conclude the contract. This defendant had been insisting upon the plaintiff to present for concluding the contract as per his offer. Plaintiff refused to do so in his letter dated 21.03.1981 and 25.03.1981. The 2nd defendant to whom the offer submitted by the plaintiff was sent, has compared the rates offered by the plaintiff with reference to the estimated rates prepared by this defendant, with the current schedule of rates and worked out the same to be equivalent to 12.183% excess over the approved estimates. So this defendant has addressed a letter dated 18.04.1981 to the plaintiff and stated therein about the said percentage and also informed that the other contractors have concluded their contracts and required the plaintiff also to attend his office on or before 30.04.1981 and in the said letter it is clearly stated that if he fails to do so, it will be concluded that he has no interest in taking up the contract work and that steps will be taken to cancel the offer. The plaintiff is always in the habit of indulging in unwanted litigation than showing any anxiety in sticking on to the terms of his offer. It is absurd to contend that the plaintiff has employed labour and kept the material ready for the work of the defendant even before a concluded contract was executed between them and more so, when the plaintiff himself has stated that he will not attend the office of this defendant to conclude the contract. To the plaintiff’s letter dated 20.04.1981 the defendant caused a reply dated 22.04.1981. It is unnecessary for this defendant to narrate the contentions contained in all the correspondence that took place between the parties. It is sufficient for this defendant to submit that the plaintiff has invented a new theory for the first time in his letter dated 10.02.1981 pleading that the percentage offered by him is over estimates of current schedule of rates and thereby resiling from his earlier statements as already stated. The same has also been stated by the defendant in the reply dated 27.05.1981 caused by the defendant. The plaintiff cannot plead that this defendant should necessarily prepare the estimates basing upon the current schedule of rates for the year 1980-81 and such a plea was not pleaded by him earlier to 10.02.1981. Only with a view to have unlawful gain he has invented all this new theory. Therefore, the defendant pleaded that the plaintiff has committed the breach of the contract and the defendant is not liable to pay any compensation. On the basis of the above pleadings, the following issues were framed for trial: 1. Whether the plaintiff is entitled to the suit amount, damages, and interest, if so what amount? 2. To what relief? As per orders in I.A.No.125 of 1984, the following additional issues were framed on 04.02.1988:- 1. Whether the negotiated offer at 16% above the estimate rates made by the plaintiff is 16% above the estimate with schedule of rates of 1980-81 or of the preceding year 1979-80 at which the estimate was prepared by first defendant society? 2. Whether a concluded and binding contract legally existed between the plaintiff and first defendant society by virtue of the letter dated 22.01.1981 and 02.03.1981 written by the first defendant accepting the tender of the plaintiff and if so whether the written agreement required to be executed is a mere formality for evidencing the already concluded legally binding contract? 3. Whether there is a breach of contract on the part of plaintiff as alleged by the first defendant or whether the breach is by the first defendant as alleged by the plaintiff? 4. Whether the cancellation of contract by the first defendant society is justified and valid in law? On behalf of the plaintiff, P.Ws.1 to 3 were examined and marked Exs.A-1 to A-34 and on behalf of the defendants, D.Ws.1 and 2 were examined and no documents were marked. After considering the evidence on record, the learned Subordinate Judge, Nandyal found that there was no concluded contract and the claim of the plaintiff was only decreed towards the interest on the refund of the earnest money and other claim was rejected. Aggrieved by the said judgment and decree, the present appeal is filed. The points that arise for consideration are: 1) Whether the plaintiff is entitled for the suit amount as claimed? 2) Whether there is any concluded contract enforceable against the defendants? 3) Whether the judgment and decree passed by the learned Subordinate Judge is legal and sustainable? POINT NOS.1 to 3: There is no dispute about the fact that a tender was called-for for the construction of a shopping complex B-Block No.1 by the 1st defendant. It is also not in dispute that the plaintiff claims to have quoted in the tender 10% above the approved rate of the year 1981, whereas, according to the case of the defendant, there was no such agreement and what was agreed is with reference to the rates of 1979-80. It is not in dispute that when the plaintiff was directed to come to the office and execute the agreement, the dispute or clarification was raised by the plaintiff as to whether the rates of 1979-80 are to be adopted or the rates of 1980-81 are to be adopted. The plaintiff insisted that his claim for 16% over the approved estimates rates of 1980-81 have been accepted and the agreement should be like that. The plaintiff’s other grievance is that it came to know that the defendant wanted to prepare an agreement specifying the rates of the year 1979-80 and thereby the terms of the contract are not settled. Therefore, from the material evidence on record, it is quite clear that an agreement was not executed between the parties. Even at the stage of the negotiations and before an agreement could be entered into and either of side could be effected with regard to the rates for which year they have to be adopted. It is common knowledge that when a tender is called for and when it is only an invitation to offer and when the plaintiff has filed the quotations, unless it is accepted and a further agreement is entered into between the parties, no contractual obligation arises and no breach can be complained of. In fact, it is not a case where the parties contracted that there is no need for a written agreement. In this case, from the own showing of the plaintiff, it was asked to attend the office for execution of a written agreement between the parties. At that stage, the terms of agreement are not settled and a dispute arises. Therefore, in view of the above circumstances, when a conflict has arisen about the terms of the contract, it cannot be taken that mere addressing of letter to the plaintiff that the tender is accepted and inviting him for execution of an agreement creates any enforceable liability to the plaintiff against the 1st defendant. Learned counsel for the appellant relied on a decision reported in the case of Trimex International FZE Limited, Dubai v. Vedanta Aluminium Limited, India[1], wherein it was held that in case of unconditional acceptance of contract concluded orally or in the absence of written contract was held to be not very much material. He also relied on a decision reported in the case of Dresser Rand S.A. v. M/s Bindal Agro Chem Ltd. and Another[2], wherein it was held as to when a contract is said to have been concluded. The above two decisions will not help the plaintiff in this case. There was no unconditional acceptance and there is also no consensus between the parties and a dispute has arisen with regard to the rates to be applied and it is the plaintiff himself that has raised the issue. Therefore, unless the plaintiff claim has been accepted and an agreement has been entered into with the terms stipulated by the plaintiff with defendant that there is concluded contract. In this case, from the own showing of the plaintiff, he has not agreed for the rates of the year 1979-80. The learned Subordinate Judge, Nandyal has taken all these aspects into consideration and found that there is no concluded contract and a dispute has been raised by the plaintiff himself and, therefore, the plaintiff cannot complain of any breach. Furthermore, in any contract for construction work, the essential thing is that there shall be delivery of property and a work order to start the construction. In this case, there is no such order and there is no evidence on record to show that any of the departmental officials have promised or directed the plaintiff to invest money for purchase of the material or engaging of the labourers. The plaintiff by his own accord if engaged any labourer or purchased material without there being a valid contract, cannot say that the amount shall be paid by the defendant. In fact, the claim of the plaintiff on this count appears to be unnatural and unbelievable. Mere evidence of P.Ws.2 and 3 is of no avail when he cannot legally recover any amount from the defendant. So also damages of Rs.50,000/- as claimed for breach of contract are imaginary. There is no material as to on what basis such a claim was made. The learned Subordinate Judge, Nandyal had, therefore, considered all the aspects and found that there was no concluded contract and as rightly found by the learned Subordinate Judge i.e. the plaintiff that has raised the dispute with regard to the rates even before the work is to be entrusted and consequently this would be misconceived. Accordingly, the points are answered. In the result, the Appeal Suit is dismissed. No costs. ________________________ N.R.L.NAGESWARA RAO, J DATE: 10-08-2011 MR THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO APPEAL SUIT No. 590 of 1992 DATE: 10-08-2011 MR [1] (2010) 3 Supreme Court Cases 1 [2] AIR 2006 SC 871