RAM LAL Vs. STATE OF PUNJAB AND OTHERS

JUDGEMENT

(1.) THE State of Punjab prepared a scheme under the New Mandi Township (Development and Regulation) Act, 1960 to set up a grain market on the Kapurthaia -Sultanpur Road at Kapurthala and in furtherance of the said scheme, plots were auctioned on January 23, 1973. The auction was held according to the rules and on the conditions given in form 'A' appended to the Punjab New Mandi Township (Development and Regulation) Rules (hereinafter called the Rules). The final bid accepted by the Administrator, according to clause (4) of rule 3 of the Rules is subject to its approval by the State Government The plaintiff appellant gave a bid of Rs. 33,500 00 for plot No. 9 and it being the highest bid was accepted by the Administrator One fourth of the bid amount, as required by the conditions of auction, was deposited by the plaintiff on the fall of the hammer Before the bid was approved by the State Government he withdrew his offer vide registered letter dated June 23, 1973 However, thereafter the director of Colonization (Administrator) dispatched the letter of acceptance on July 24, 1973, intimating the plaintiff that his bid has been sanctioned by the Government on March 7, 1973 and asked the plaintiff to deposit within a month, the balance of the amount or the first instalment with interest at the rate of 6 per cent per annum. The plaintiff was further informed that in case of non payment of the balance amount or the first instalment before the due date, he would be liable to the imposition of penalty upto 10 per cent of the sale price. As the plaintiff had revoked the offer before its approval by the State Government, he filed the present suit far the refund of the said amount of Rs. 8,375 together with Rs. 820 71 on account of interest.

(2.) THE suit was contested by the Government who apart from taking some preliminary objections pleaded that the bid had been approved by the Government on March 7, 1973 and the letter communicating the same had been signed by the Administrator on June 21, 1973 though it was actually dispatched on July 24, 1973. It was further pleaded that there was no time limit for the approval of the bid by the Government and the plaintiff was not entitled to revoke his offer according to the terms and conditions of the sale. The receipt of the letter of the plaintiff dated June 20, 1973 was admitted. A number of issues were framed by the trial Court on the pleadings of the parties. After recording evidence, the trial Court decreed the suit for recovery of Rs. 8,375.00. Aggrieved by that judgment, the respondent, Punjab State and others, filed the appeal which was allowed by the learned District Judge, Kapurthala, vide judgment dated September 30, 1975. Dissatisfied with that judgment the plaintiff has come up in this second appeal.

(3.) MR . N.S. Bhatia, the learned counsel, appearing for the State however, contended that the Government had approved the bid on March 7, 1973, and the Letter of approval which was to be sent to the plaintiff had also been signed by the Administrator on June 21, 1973 before the letter of the plaintiff withdrawing the offer was received According to the learned counsel, the offer had been thus approved by the Government before it had been withdrawn by the plaintiff and the fact that it was communicated to the plaintiff later on would not be of any consequence because the valid contract came into being as soon as the approval was recorded by the Government on the official file. The contention of the learned counsel is wholly untenable and against the law of contract. A combined reading of sections 3 and 4 of the Indian Contract Act would show that the acceptance of offer is complete only when it is communicated to the proposer and the communication is complete against the proposer when it is put in the course of transmission to him so as to be out of the power of the acceptor. Consequently, the approval of the Government did not become final against the plaintiff, therefore, was within his right to withdraw the offer at any time before July 24. 1973 and the same having been withdrawn long before that date, its approval by the Government thereafter could not bind the plaintiff The lower appellate Court, therefore, went wholly wrong in holding that under the rules and conditions of auction the completed contract had come into being on January 23, 1973 when the bid of the plaintiff had been accepted at the spot and thereafter he was not competent to revoke his officer.