PANNALAL Vs. STATE

JUDGEMENT

(1.) THIS appeal under Section 39 of the Arbitration Act is directed against the refusal to set aside an award and also against the decree which was passed in terms of the award by the Additional District Judge, Balaghat.

(2.) RIGHTS to collect and propagate lac in Patwari Circles No. 42 and 2 of Waraseoni Tahsil were auctioned for a period of three years on the 3rd October and the 4th October, 1951, respectively. The highest bids of Pannalal (hereinafter called the contractor) for Rs. 21,000 and Rs. 20,000 respectively were accepted. Pannalal deposited Rs. 500 as earnest money for each contract. He also deposited Rs. 5,500 on the 15th October, and Rs. 667 on the 21st November, on account of the first; and Rs. 6,667 on the 21st November on account of the second. However, the contractor did not work the contract. The case for the contractor is that the department did not enter into a written agreement as required by Article 299 of the Constitution, so that he rescinded it and asked for the refund of the deposited amount. The case for the department was that the contractor was not willing to execute an agreement and work the contract. Eventually the matter was referred for arbitration to the Deputy Commissioner, Balaghat. Shri J.P. Mishra, Collector, Balaghat, gave an award on December 20,1957, declaring that the contractor was not entitled to a refund of his deposit of Rs. 13,834 or to any damages from the State Government. On the contrary, he was liable to pay the outstanding of Rs. 27,666.

(3.) THE facts material for the determination of the contentions raised here are these. Auction took place on the 3rd and 4th October 1951. Under the conditions of auction every intending bidder was requried to diposit a minimum of Rs. 500 as earnest money for every contract that he wished to bid for. The deposit was to be returned to unsuccessful bidders. In the case of a successful bidder, the deposit was to be credited as part payment of the bid. The amount of consideration of lease' was payable by instalments specified in Clause 5. It will be convenient to reproduce certain clauses of the conditions of auction relied on by the parties. Clause 2 runs thus: