Case: M/S. Kalyanji Vithaldas &amp; Sons Vs. The State Of M.P. &amp; Ors

2. The admitted facts are that the appellant-firm had entered into an agreement with the Government for purchase of Tendu leaves in Unit No. 14, Chowki in South Division for three years ending on December 31, 1970 on the terms and conditions mentioned in the agreement dated November 30, 1968. One of the terms was that the lease is renewable every year. The lease commences from February 1 of the year and end on January 31 of the next year. In this case, the agreement of the appellant commenced from March 2, 1968 and it was to end on January 31, 1968. As per the terms of the agreement, the appellant had to opt for renewal within 15 days prior to December 31 and the leases were to be renewed within 15 days from the date of the issue and was to be accepted by the Department. The admitted position is that the appellant had offered for renewal on December 7, 1968. It is seen from the record that the Government had accepted the offer on January 31. 1969 and communication was sent to the appellant on February 7, 1969; but he refused to received the same. On February 9, 1969, the appellant had sent a telegram withdrawing from the offer of the renewal. Since the appellant had refused to accept the communication, it was sent by the Divisional Officer on February 12, 1969 and was received by the appellant on February 17, 1969. Consequently, a letter was sent on May 20, 1970 calling upon the appellant for payment of Rs. 93,821.23 towards the loss caused by the appellant due to non-execution of the renewal deed and also for non- collection of the Tendu leaves for the period since it was not sold to any other agency. The appellant challenged it by filing a writ petition in the High Court. The High Court in the impugned order dismissed the same holding that before the appellant had withdrawn the offer, the Government had already accepted the offer of the appellant and, therefore, he was liable to pay the damages.

Court's reasoning:
5. It is seen that the appellant had a contract for three years ending on December 31, 1970. He worked out the contract in the year 1968 ending on January 31, 1969. Under Clause (1) of the proviso, unless earlier determined under the terms of the agreement, there will be yearly renewal of agreement by 31st January each year by issue of an order by Government in writing provided Government is satisfied that purchaser had fulfilled the conditions enumerated subsequently. It is true, as contended by Shri S.V. Deshpande, that the word issue implies service of notice. Unless the contractor receives acceptance by the Government he will not be in a position to know whether or not his offer has been accepted by the Government. Therefore, the date of the receipt would be the date of issue. For this proposition, there would not be anyis seen that originally, the contract was for three years. Therefore, he is entitled for renewal unless it was either determined earlier and offer of renewal was rejected by the Government. Admittedly, the appellant had given his offer for renewal before the expiry of the period and the Government also had accepted the offer before 31st January, 1969. Obviously, it would take time for communication thereof. It being a continuing contract which the appellant otherwise would have for three years, there is no hiatus in continuity unless and step was taken by the Government in the interregnum to have his lease terminated in terms of the contract. In this case, the contract has not been terminated. Resultantly, the acceptance of the offer communicated to the appellant by Government having been made within time, namely, on January 31, 1969. what remained to be done was only execution of the renewal lease deed for a further period of one year in terms of the contract. The appellant had withdrawn his offer only after the acceptance was communicated to him on February 7, 1969. No doubt, there was a defect in communication of the order to the appellant had withdrawn his offer only after the acceptance was communicated to him on February 7, 1969. No doubt, there was a defect in communication of the order to the appellant but as regards the address furnished by the appellant and sent to the Government, there was no defect. There may be some typographical error in the name of the appellant-company. The appellant appears to have taken undue advantage of it and sought to resile from the offer accepted by the Government. Having allowed the contract to lapse resulting in loss caused to the State due to non-execution of the contract, the resultant loss has to be recovered from thethe view as we have stated earlier, the same Branch appears to have taken inconsistent view without reference to the judgment under appeal. Therefore, the later view expressed by the High Court on the liability is not correct in law.A reading of these provisions would clearly indicate that the recovery of public demands by enforcement of process is recoverable as arrears of land revenue, since all moneys fall due to the State Government, under any grant, lease or contract shall be recoverable in the same manner as arrears of land revenue. Therefore, the Government is clearly empowered to recover the arrears of the dues as land revenue from the appellant-contractor towards loss caused to the Government in not collecting the Tendu leaves the contract.