PUNUGANTI JALPATH RAO Vs. GOVERNMENT OF ANDHRA PRADESH

JUDGEMENT

(1.) On 6-12- 1966, the right to cut, collect and remove forest produce from Beroon Plot No. 4 in Karimnagar East forest division was sold by public auction by the Divisional Forest Officer. The plaintiff was the highest bidder for Rs. 1,33,500.00. Though according to condition No. 55 of Ex. B-l the Sale Notice generally applicable to auctions of forest produce in forest coupes, plantations and Beroon areas i. e. areas falling outside a reserve forest) the period of lease would be two years if the auction fetched a price of Rs. 60,000.00 or more, according to Ex. B-3 the Special Conditions for Beroon Plots attached to Exhibit B-1, the period of lease was only one year. The signatures of the plaintiff were taken in Exhibits B-l and B-3. Pursuant to condition No. 20 of the sale notice the plaintiff forthwith made Earnest Money Deposit (E. M. D.) of Rs. 10,000.00 as soon as the bid was knocked down in his favour. On 19-12-1966, the Chief Conservator of Forests confirmed the auction in accordance with condition No. 21. Condition No. 23 required the auction purchaser to deposit the balance of the first instalment and security deposit of 6 1/4% of bid amount within 10 days of the date of confirmation to the Chief Conservator. The plaintiff did not deposit the prescribed amounts. Instead, on 1-3-1967, the plaintiff issued a registered notice (Exhibit A-2) through his advocates claiming that the period of lease should be two years and not one year and that the special condition restricting the lease to one year was ultra virus of the powers of the Divisional Forest Officer. The plaintiff purported to revoke his bid and demanded that if the Government was not willing to grant him a lease for two years, the sum of Rs. 10,000.00 deposited by him should be refunded. The plaintiff did not state in the notice that he was not aware, at the time of auction, of the special condition that the period of lease was only for a year. No reply to Exhibit A-2 was received by the plaintiff. However, he appears to have made representations to the Government that he might be granted a lease for a period of two years instead of one year. In fact, even before the auction, several contractors appeared to have made representations to the Government that in the case of sale of Beroon plots in Karimnasar East Division governed by Special Conditions the clots might be leased for two years instead of one year, The Government rejected the representations and according to the Divisional Forest Officer the reply of the Government was read over to the bidders present before the commencement of the auction proceedings. The representations of the plaintiff subsequent to the auction also did not evoke a sympathetic reply The Govt. by G. O. Ms. No. 616-F & A dated 11-12-1967 (Ex. B-15) negatived the request of the plaintiff and directed the Chief Conservator of Forests to take further action. The G. O. itself shows that the Government had earlier granted a stay at the instance of the plaintiff. Pursuant to the G. O. the Divisional Forest Officer issued a notice Ex. A-14 dated 2-12-1967 informing the plaintiff that he should pay the amounts due to the Government and execute the agreement by 26-12-1967 without fail He was told that, otherwise, the sale would be cancelled and the plot resold at the risk and loss of the plaintiff. The plaintiff having failed to comply with the demand of the Divisional Forest Officer an order was passed on 29-12-1967 by the Divisional Forest Officer cancelling the sale and forfeiting the Earnest Money Deposit of Rs. 10,000.00. It was also ordered that the lease of the plot should be put to resale at the risk and loss of the plaintiff. A reference was made in the order to several notices dated 30-3-1987, 10-5-1967. 24-6-1967 and 23-12-1967 which had been issued to the plaintiff but returned unserved though sent to the correct address. This order was subsequently modified and instead of the sum of Rs. 10,000.00 a sum of Rs. 1,000.00 only was forfeited. The lease of the plot was subsequently sold by public auction for a sum of Rs. 51,000.00. Thereafter the Divisional Forest Officer called upon the plaintiff to pay the amount of Rs. 73,500.00 representing the loss suffered by the Government consequent on the re-auction. Credit was given to a sum of Rs. 9,000.00 out of the Earnest Money Deposit which was not forfeited. The plaintiff thereupon filed the suit out of which the present appeal arises for a declaration that the defendants were not entitled to collect this amount. It was pleaded that there was no valid contract between the plaintiff and the Government as the plaintiff did not execute any agreement in favour of the Government. In the absence of a concluded agreement It was not open to the Government either to forfeit any Part of the amount of Rupees 10,000/- or to demand to be compensated for any alleged loss suffered by the Government. It was alleged that the refusal Of the Government to grant a lease for two years was unreasonable and contrary to law. The learned District Judge of Karimnagar dismissed the suit and the plaintiff has preferred this appeal,

(2.) Sri P. Babul Reddy, learned counsel for the appellant raised the following five contentions (1) There was no enforceable contract between the plaintiff and the Government as there was no Compliance with the requirements of Article 299 of the Constitution. (2) Condition No. 29 did not provide that the plaintiff should pay the difference between the plaintiffs bid and the amount for which the plot was subsequently auctioned. (3) The Government was under a duty to minimise the damages, but the Government failed to do so by holding the auction almost at the end of the year. (4) Condition No. 27 if it was to be construed as empowering the Government to realise the difference between the plaintiffs bid and the amount for which it was sold at the reauction, was penal in nature and, therefore, the plaintiff should be relieved against the penal Clause (5) No proceedings could be taken under the Revenue Recovery Act to realise the amounts said to be due from the plaintiff.

(3.) In the plaint there is no reference to Article 299 of the Constitution. All that is said that there was no valid contract between the plaintiff and the Government as the plaintiff did not execute an agreement in favour of the Government Apparently what the plaintiff had in mind was the execution of the agreement as contemplated by Condition No. 26 of the Sale Notice. However, the question raised by Sri Babul Reddy that there was non-compliance with requirements of Article 299 of the Constitution was considered by the lower Court and we will, therefore proceed to consider that question. It is now well settled as pointed out in Union of India v. N. K. Private Ltd.. AIR 1972 SC 915 that though the words expressed and executed in Article 299 (1) might suggest that it should be by a deed or by a formal written contract, a binding contract by tender and acceptance can also come into existence if the acceptance is by a person duly authorised on this behalf by the President of India. Earlier in Union of India v. A. L. Rallia Ram, AIR 1963 SC 1685 it was held by the Supreme Court that the correspondence between the Chief Director of Purchases and the contractor was sufficient compliance with the provisions of Section 175 (3) of the Government of India Act which correspond to Article 299 of the Constitution having regard to the fact that the authority of Chief Director of Purchases to contract for sale of certain goods was not denied. It was also held that the failure of the Chief Director of Purchases to mention that he was signing on behalf of the Governor General of India did not mean that there was a failure to conform to the requirements of Section 175 (3) of the Government of India Act if on a fair reading of the contents of the letter it would be reasonable to hold that he was signing the letter on behalf of the Governor General, Shah, J. observed: