FIRST APPEAL No. 97 OF 1989 Against the Judgment and Decree dated 16.12.1988 passed by Sri Vidyut Prabha Singh, 3rd Subordinate Judge, Purnea in Money Suit No.12 of 1983 / 1 of 1987. SANTOSH KR. RANKA ………. Defendant/Appellant Versus THE FOOD CORPORATION OF INDIA ……… Plaintiff/Respondent ******** For the Appellant : Mr. Jagdish Prasad Bhagat, Advocate. For the Respondent : Mr. P. Tekriwal, Advocate Mr. Shashidhar Jha, Advocate. Dated : 5th day of January, 2011. P R E S E N T THE HON'BLE MR. JUSTICE MUNGESHWAR SAHOO J U D G M E N T 1. The defendant has filed this First Appeal against the Judgment and Decree dated 16.12.1988 passed by Sri Vidyut Prabha Singh, the learned 3rd Subordinate Judge, Purnea in Money Suit No.12 of 1983 / 1 of 1987 decreeing the plaintiff-respondent suit for Rs.84,196.02/-. 2. The plaintiff-respondent filed the aforesaid money suit claiming the said amount alleging that the defendant was appointed as regular handling and transport contractor for F.S.D. Koshi Colony and Maranga on 29.02.1980 for a term of two years under Tender No.F-3(69/79-80/CONT.vol.III dated 05.12.1979 through which the defendant had offered to work at 244 per cent above schedule rate which was accepted by the Regional Manager, Food Mungeshwar Sahoo, J. -2- Corporation of India, Patna with a direction to deposit security amount and to start the work by 07.03.1980 within the jurisdiction of District Manager, Purnea as per the terms and conditions of the contract with the Corporation. 3. The further case is that the defendant neither deposited the security amount nor started the work. Therefore, his appointment was terminated on 19.04.1980 and according to the terms of the contract, the earnest money was forfeited. According to the further terms and conditions of the contract, the defendant was liable to compensate the Corporation by way of damage incurred by the Corporation for the entire period. Because of failure on the part of the defendant to carry on the contract, the Corporation had appointed M/s North Bihar Transport Syndicate as the contractor for the F.S.D. Koshi Colony and Maranga at the rate of 411 per cent above the schedule rate by order dated 03.07.1980. The defendant made himself liable to make good the loss to the Corporation owning to his omission or commission as because of that act of the defendant, the Corporation engaged another contractor making higher payments thereby causing loss to the Corporation. The defendant was called upon to pay the loss caused by the Corporation on account of higher payments and sent the bills. The plaintiff- respondent in Schedule ’A’ of the plaint has given the details of the amount and also annexed the bills with the plaint. 4. The defendant-appellant appeared and admitted the fact that he was one of the tenderors and his rate was accepted by the Regional Manager, F.C.I., Patna who sent telegram to him to the effect that his offer dated 05.12.1979 at 244 per cent above schedule rates was accepted for two years and asked the defendant to furnish security deposit of Rs.18,750/- and take order to work within 7 days and also directed the defendant to furnish income -3- tax clearance certificate within 30 days. The further case is that the appellant was ill, so he had not received the telegram. He sent a letter to the Regional Manager, F.C.I., Patna on 30.07.1980 by registered post informing him that on account of illness, this defendant was not in a position to undertake the work allotted to him because Doctor has advised for a change of place and defendant has shifted to Rajasthan. The defendant was directed to deposit security money amounting of Rs.18,750/- but as he was at Rajasthan due to his illness and was not in a position to take of work did not deposit the security amount and did not take up the work. The clause ‘X’ of the terms and conditions of contract is not applicable because the defendant has not deposited the security money and had not agreed to work as communicated by the Regional Manager, F.C.I., Patna. This communication was not received by the defendant. Had the defendant deposited the security money then the appointment of the defendant would have been confirmed. The terms and conditions as contained in Clause ‘XI (F)’ is also not applicable because there was no contract so there is no question of termination of contract according to Clause ‘X’ of the contract. In any case, the defendant is not liable to pay damage said to have been sustained and suffered by the F.C.I. 5. The further case of the defendant is that there were 3 bidders. The offer of this defendant was 244 per cent above the schedule rate. One was 270 per cent above the schedule rate and the 3rd one was 411 per cent above the schedule rate and the plaintiff appointed the 3rd one, i.e., 411 per cent above the schedule rate instead of appointing the second one, i.e., 270 per cent above the schedule rate. Therefore, the defendant is not liable to pay any amount to the Corporation for making higher payment to the contractor, North Bihar Transport Syndicate. -4- 6. In view of the above pleading of the parties, the learned Court below framed the following issues : (i) Is the suit as framed maintainable? (ii) Whether the plaintiff has got any cause of action against the defendant? (iii) If the suit is barred by law of limitation, estoppel, waiver and acquiescence? (iv) Whether the acceptance of the offer was sent and received by the defendant and the contract was complete and binding upon the defendant? (v) Whether the defendant was liable to make good the loss or damage suffered or expenses incurred as a consequences of the failure of the defendant to perform the contract entered into between the parties? (vi) Whether the plaintiff is entitled to the relief claimed? 7. After trial, the learned Court below decreed the plaintiff-respondent suit finding that there was a concluded contract between the parties and the defendant is liable to pay the damage incurred by the Food Corporation of India. 8. The learned counsel appearing on behalf of the appellant assailed the impugned Judgment and Decree on the ground that there was no concluded contract. The learned counsel firstly submitted that because the telegram sent by the plaintiff-respondent was never received by the defendant-appellant, it cannot be said that there was a concluded contract. Secondly, the learned counsel submitted that the defendant-appellant never deposited the security amount and no income tax clearance certificate was filed, therefore, also there was no concluded contract. In such circumstances, the learned Court below has wrongly decreed the plaintiff-respondent suit. The learned counsel further submitted that the telegrams Ext.1 and 1/A is said to have been sent by the plaintiff-respondent do not bear the Memo number of the office and, therefore, those documents are not reliable and the -5- learned Court below could not have relied upon those telegrams. The learned counsel further submitted that the learned Court below has wrongly relied upon the other evidences and wrongly decreed the plaintiff suit. 9. On the other hand, the learned counsel appearing on behalf of the plaintiff-respondent submitted that there is no illegality in the impugned Judgment and Decree. The learned counsel placed Section 4 of the Contract Act and submitted that as soon as the telegram was put into a course of transmission to the person to whom it is made so as to be out of the power of person who makes it the acceptance was completed and, therefore, there was a concluded contract. The learned counsel further submitted that deposit of security money was not a condition precedent for acceptance of contract. The learned Court below considering all these aspects of the matter came to the finding that there was a concluded contract between the parties and the defendant is liable to pay the damage. On these grounds, the learned counsel submitted that this First Appeal is liable to be dismissed with costs. 10. In view of the above rival contentions of the parties, the only point canvassed by the appellant is that there is no concluded contract so the defendant is not liable to pay any damage and, therefore, the plaintiff suit is liable to be dismissed. Therefore, the only point arises in this case is as to whether the plaintiff has been able to prove that there was concluded contract between the parties and whether the defendant is liable to pay the compensation of damage as claimed by the plaintiff and whether the impugned Judgment and Decree are sustainable in the eye of law? 11. The learned counsel for the appellant submitted that the so called telegram Ext.1 and 1/A was never received by the appellant and the learned Court below has wrongly relied upon those telegram which were never put -6- into transmission and which were addressed to the defendant-appellant. So far this submission is concerned, it may be mentioned here that these telegrams are maintained in the office of the plaintiff in usual course of business. The said Exhibits have been proved by the plaintiff to show that two telegrams were sent. In the written statement as discussed above, the defendant has pleaded categorically that as a matter of fact telegrams were sent to him but it was not received by him. Section 4 of the Contract Act reads as follows : “4. Communication when complete – The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete – As against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor; As against the acceptor, when it comes to the knowledge of the proposer. The communication of a revocation is complete – As against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge. Illustrations (a) A proposes, by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter. (b) B accepts A’s proposal by a letter sent by post. The communication of the acceptance is complete, as against A, when the letter is posted; as against B, when the letter is received by A. (c) A revokes his proposal by telegram. The revocation is complete as against A when the telegram is despatched. It is complete as against B when B receives it. -7- B revokes his acceptance by telegram. B’s revocation is complete as against B when the telegram is dispatched, and as against A when it reaches him.” 12. In the present case, therefore, the sending of telegram is not disputed by the defendant. In view of the above provision of the Contract Act as soon as the telegram was put into the course of transmission, it become out of the power of the plaintiff and, therefore, the acceptance completed. So far the submission of the learned counsel that the telegram does not bear the Memo number is concerned, also I find no force because it may be a defect in the telegram only. As stated above, sending of telegram is not disputed. Now, therefore, if it is held that the defective telegram was sent then also it cannot be said that the acceptance was not completed. Whether it was received by the defendant or not it is immaterial. Moreover in the present case according to the pleading of the defendant himself that he replied by a letter to the plaintiff that he is ill and, therefore, not in a position to carry on the work. It is not the case of the defendant that he had no knowledge about the acceptance of his offer. It is well settled principal of law that as soon as the acceptance is posted or sent by telegram, the acceptance is completed against the proposer and the contract is concluded. In the present case as stated above the sending of acceptance by telegram is not disputed. I, therefore, find that there was a concluded contract between the plaintiff and the defendant. 13. The learned counsel for the appellant submitted that the address of the appellant was not complete in the telegram. So far this objection is concerned also, it is not acceptable because the address given by him in his offer is the same and as stated above, the defendant admitted the fact of sending of telegram. -8- 14. The learned counsel for the appellant next submitted that the defendant had not deposited the security money and had also not filed the income tax clearance certificate and, therefore, it cannot be said that there was a concluded contract. So far this submission is concerned, from perusal of the telegram Ext.1 and 1/A, it is apparent that in the telegrams, it is clearly mentioned that the offer of the defendant is accepted. Therefore, the said acceptance is unqualified acceptance and it was not accepted subject to deposit of security money. According to Section 7 of the Contract Act, the acceptance must be absolute and unqualified, it cannot be conditional as has been held by the Hon’ble Supreme Court in the case of Jawahar Lal Barman Vs. Union of India A.I.R. 1962 (S.C.) 378. 15. The learned counsel for the appellant next submitted that the plaintiff awarded the contract to the 3rd contractor whose offer was 411 per cent above the schedule rate instead of awarding, the second contractor whose offer was 270 per cent above the schedule rate, therefore, the defendant is not liable to pay. So far this submission is concerned, also I find no force because the Court is required to see as to whether the defendant violated the terms and conditions of the Contract entered into between the parties. As discussed above, it has been found that the defendant entered into the contract with the plaintiff. He admitted in the pleading that he did not perform his part of the contract and thereby caused loss to the Food Corporation of India. Now, therefore, he cannot dictate the plaintiff that the Contract should have been awarded to the second contractor. The fact is that the contract was done by the 3rd Contractors. Higher payment made by the plaintiff is not denied. This higher payment has been made by the plaintiff because of non-fulfillment of the terms and conditions of the Contract by the -9- defendant. In such circumstances, the plaintiff is not required to explain as to why the Contract was not given to the second contractor. I, therefore, find that on this ground, the impugned Judgment and Decree cannot be said to have been vitiated. 16. In view of my above discussion, I find that there was concluded contract between the parties and the defendant is liable to compensate the plaintiff for the damage caused to the plaintiff for not fulfilling the condition of the Contract by the defendant. The finding of the leaned Court below on these points are hereby confirmed. 17. In the result, I find no merit in this First Appeal and accordingly, this First Appeal is dismissed. In the facts and circumstances of the case, the parties shall bear their own costs. (Mungeshwar Sahoo, J.) Patna High Court, Patna The 5th January, 2011 Sanjeev/N.A.F.R.