T. LINGA GOWDER Vs. STATE OF MADRAS

JUDGEMENT

(1.) THIS Second Appeal raises an interesting question in the law of contracts On 8th December, 1958, the District Forest Officer, Ootacamund Division, held an auction sale of the right to cultivate potato and vegetable crops along with blue -gum or wattle, in four plots of land each plot measuring about 5 acres. The plaintiff in the suit out of which the Second Appeal arises, the appellant herein, was the highest bidder in the auction for the said four plots of land He had to pay under the terms of his bid for the four plots, Rs. 725, Rs. 775, Rs. 775 and Rs. 800 respectively per year as lease amount. The lease was for a period of three years from 1st January, I959 or from the date of the agreement to be executed in Accordance with the conditions of the auction, whichever was earlier. The auction sale notice containing 36 conditions is exhibited as Exhibit B -1. Conditions 9 and 11 deal with the deposit of earnest money by an intending bidder He has to make an earnest deposit of Rs. 100 before the commencement of the sale and he has also to sign the auction notice in token of acceptance of all the conditions. The earnest money deposited by unsuccessful bidders is returnable at the close of the auction sale and that of the highest bidder will be retained towards part of the lease amount. The highest bidder of each field should pay an earnest deposit of Rs. 100 before he is a lowed to bid for another field. The plaintiff who has been the highest bidder in respect of the four plots, has deposited earnest money of Rs. 100 for each plot of land. Condition 15 lays down, that within ten days from the date of the receipt of the order confirming the sale, the successful bidder shall pay 1/4 of the sale amount less earnest deposit in the District Forest Officer or in the Range Office concerned. The balance of the sale amount, namely, of the sale amount, should be paid in one instalment on or before 1st June, 1959. In case of default, the lessee would be given time upto a maximum of one month with interest at 6 1/4 per cent from the date on which the instalment fell due. The District Forest Officer would evict the lessee, if there was default in the payment for more than one month and all the amounts paid by the lessee would be forfeited to the Government. Condition 15 (a) states that, if the last day for the payment of lease amount is a holiday or series of holidays, the lease amount shall be paid on the previous working day and the agreement should also be executed on the same day. There is a day and the agreement should also extension or voida will be granted, if the execution of the agreement is delayed by the contractor Also unless and until the security deposit is furnished and the agreement executed, no permission will be granted to commence work in the area relating to his contract. Condition 15 (c) stipulates that , if the lessee fails to execute an agreement in the prescribed form at the time of the payment of the lease amount, the earnest money deposit will be forfeited to the Government, the lease -hold right resold at his risk, and the lessee will be liable to make good the loss to the Government. In cases where resales are effected the defaulting bidder will not be permitted to bid at the resale. Condition 30 relating to the confirmation of the sale is important. The sale is subject to confirmation by the District Forest Officer or the Conservator of Forests, Coimbatore Circle, as the case may be, who reserve to themselves the right to accept or reject the bid without assigning any reasons therefor. Under condition 32, all the money due by the successful bidder or contractor, as the case may be, under the terms of the sale notice or the agreement executed by him shall, if not paid by him, be recoverable from him under Section 66 of the Madras Forest Act (V of 1882) as amended by Forest Act (I of 1934) by the attachment and sale of his property under Madras Act II of 1864 and any statutory modification thereof.

(2.) ADMITTEDLY , the auction sale in this case was held by the District Forest Officer, the 2nd defendant in the case. On the 19th of January, 1959, before the receipt of any order from the District Forest Officer confirming the sale of the leasehold right, the plaintiff, complaining that he had received no information in the matter and that the cultivation season had also passed, withdrew his bids and asked for the refund of the earnest deposit of Rs. 400. There was no response to this letter of the plaintiff withdrawing his bid, and without reference to the same, by proceedings dated 30th January, 1959 and 31st January, 1959, the District Forest Officer proceeded to confirm the plaintiff's bids and called upon him to execute agreements in the prescribed form. There is a separate confirmation order for each one of the four plots. Each order refers to the bid amount and requires the plaintiff to pay the balance due less the earnest deposit within 10 days of the receipt of the order in accordance with the conditions of the sale. The plaintiff refused to comply with the demands and the District Forest Officer proceeded to re -sell by public auction the leasehold right with regard to the four plots. By his letter, dated 3rd September, 1959, he intimated the plaintiff that the plots have been re -auctioned and that the plaintiff should pay a sum of Rs. 4,025, the loss sustained by the Government as a result of the re -sale, giving credit for the earnest deposit of Rs. 400. He initiated proceedings to recover the aforesaid amount under the Revenue Recovery Act through the Collector of Nilgiris. The plaintiff, thereupon, issued the necessary notice under Section 80, Civil Procedure Code, and commenced action for a declaration that the proceedings of the State of Madras represented by the District Forest Officer, Coimbatore, and the coercive action initiated under the Revenue Recovery Act are illegal and unsustainable in law and for refund of the earnest money deposit of Rs. 400. The plaintiff took the stand that there was no completed contract in the case, and that, before due acceptance of his highest bid by confirmation in accordance with the conditions of the sale, he had withdrawn his bid. The learned Subordinate Judge, Nilgiris, upheld the plaintiff's contention that there was no concluded contract and granted him the declaration as prayed for and decree for the refund of the earnest deposit. On appeal, the learned District Judge, Coimbatore, took the view that there was a definite acceptance of the plaintiffs bid at the auction and the sale was confirmed by the authority concerned. On that view, he reversed the decree of the trial Court and dismissed the suit.

(3.) THE argument of Mr. A. K. Sreeraman is to the following effect; There was no immediate acceptance by the District Forest Officer of the plaintiff's highest bid at the auction. Under the conditions of the auction sale the District Forest Officer or the Conservator of Forests, as the case may be, reserved to themselves the right to accept or reject the bid without assigning any reason and the sale is subject to confirmation. It was not signified in any manner at the time of the auction that the plaintiff's highest bid was accepted. There was, therefore, no concluded contract, and, before there was confirmation by the District Forest Officer, the plaintiff withdrew his bid. Even if in the circumstances the acceptance of the plaintiff's bid could he spelled out by implication. Article 229 (1) of the Constitution rules out implied contract with the Government. While reversing the decree of the trial Court, the learned District Judge says: