Gujarat High Court
Megh Pharmaceuticals vs State Of Gujarat on 10 December, 2025
NEUTRAL CITATION
C/FA/658/2001 JUDGMENT DATED: 10/12/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 658 of 2001
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE DEVAN M. DESAI
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Approved for Reporting Yes No
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MEGH PHARMACEUTICALS
Versus
STATE OF GUJARAT & ORS.
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Appearance:
MS VYOMA K JHAVERI(6386) for the Appellant(s) No. 1
MS RAJVI SHAH, AGP for the Defendant(s) No. 1,2
MR DG SHUKLA(1998) for the Defendant(s) No. 3
MR HARSHEEL D SHUKLA(6158) for the Defendant(s) No. 3
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CORAM:HONOURABLE MR. JUSTICE DEVAN M. DESAI
Date : 10/12/2025
ORAL JUDGMENT
1. The present First Appeal is filed under Section 96 of the Code of Civil Procedure, 1908 (hereinafter referred to as 'the Code') by the appellant-original plaintiff assailing the judgment and decree dated 25.02.2000 passed by the learned Judge, City Civil Court No.19, Ahmedabad in Civil Suit No.4460 of 1989.
2. Heard learned advocate Ms. Vyoma K. Jhaveri for the appellant, learned advocate Mr. D.G. Shukla for the Page 1 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined respondent No.3 and learned Assistant Government Pleader Ms. Rajvi Shah for the respondent-State.
3. The brief facts of the case are as under:-
3.1. Plaintiff-present appellant had filed a suit for a relief of decree of permanent injunction and declaration. It is the case of the plaintiff that in response to the tender published by the State of Gujarat, on 30.09.1988, plaintiff submitted the tender with the office of defendants. The tender was for the supply of tablets (Item No.2 Aluminium Hydroxide, Magnesium Hydroxide and Methyl Polysiloxin tablets). In the Tender, rate of Rs.25/- per 1000 tablets was filled in by plaintiff. As plaintiff found that some error has been made in quoting the price of the tablets, by a telegraphic note on 30.09.1988, plaintiff increased the price of the tablets from Rs.25/- to Rs.28.50/- per 1000 tablets. The telegram was duly received by the defendants. The offer dated 03.01.1989 which was Page 2 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined made by defendants was not accepted by the plaintiff, and therefore, there was not a concluded contract executed between the plaintiff and defendants. However, defendants issued a recovery order dated 29.08.1989 to recover an amount of Rs.35,991.38 paise from the plaintiff as defendants were compelled to purchase the material at a higher rate than as agreed upon by the plaintiff. Plaintiff filed the present suit seeking a relief against the defendants that the recovery order be quashed and set aside and further sought a declaration that defendants have no authority to issue a recovery order. On service of summons, defendants appeared and filed Written Statement at Exhibit-12 and denied the case of the plaintiff.
Following issues at Exhibit-26 were framed by learned trial Court:-
"(1) Whether the suit of the plaintiff is maintainable? (2) Whether the plaintiff proves that as he has not accepted the offer made by the defendant, he is not liable to pay any recovery made by the defendant? (3) Whether the defendants prove that as the plaintiff has backed out from entering into an agreement as per the tender inquiry conditions, they are legally entitled to recover the amount shown in the recovery notice? Page 3 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025
NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined (4) Whether the plaintiff is entitled to get the relief as prayed for? (5) What order and decree?"
3.2. Plaintiff produced recovery order, tender form, annexure of tender, letter of plaintiff to defendants, offer letter dated 03.01.1989, letters written by plaintiff to defendants dated 26.03.1989, 01.05.1989 respectively and the certificate of registration of partnership firm. Defendants also produced documentary evidence such as Appendix-A and B dated 29.09.1988 and 01.08.1989 respectively, original telegram and also produced Appendix-E. Both the parties declared before the learned trial Court that they would not be leading any oral evidence. After considering the documentary evidence produced by the parties, learned trial Court dismissed the suit and further directed to refer the matter to the learned Court Fee Inspector for proper adjudication of recovery of deficit Court fees, if any.
3.3. Being aggrieved and dissatisfied with the impugned Page 4 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined judgment and decree, appellant-original plaintiff has filed the present First Appeal.
4. Learned advocate for the appellant-original plaintiff contended that pursuant to an invitation to tender published by the defendants, plaintiff submitted tender on 30.09.1988 for the supply of tablets (Item No.2 Aluminium Hydroxide, Magnesium Hydroxide and Methyl Polysiloxin tablets). Plaintiff quoted the rates of tablets at Rs.25/- per 1000 tablets. However, on noticing mistake been committed in filling up the rates, immediately on the same day, a telegram was sent to the defendants and it was informed that the price of the tablets be considered at Rs.28.50 paise per 1000 tablets instead of Rs.25/- per 1000 tablets. The said telegram was duly received by the defendants. The defendants issued a communication dated 03.01.1989 intimating that the tender has been accepted and plaintiff was directed to pay Security Deposit of Rs.5,000/- by way of a Fixed Deposit in the Post Office / Page 5 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined Nationalized Bank for a period of upto one year. The plaintiff by a communication dated 05.01.1989 refused the offer. It is, therefore, submitted that no concluded contract was entered into between the plaintiff and defendants, therefore, the recovery order dated 29.08.1989 is wrong and illegal. It is further contended that acceptance of tender is not a concluded contract. The tender document Exhibit-36 also speaks that a successful tenderer will be required to pay Security Deposit in specified time to enter into a stamped agreement for the performance of the contract. Plaintiff did not pay the required Security Deposit as asked for by defendants. The tender also contemplates that a successful tenderer will be required to enter into agreement for the due performance of the contract. The agreement has to be stamped with the required stamp duty and should be signed before the Gazetted Officer. In the present case, the plaintiff, admittedly, did not accept the offer and did not execute the agreement as mentioned in the tender. Page 6 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025
NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined It is further contended that in absence of a concluded contract between the parties, the question of damages as per the terms of the contract, is not entertainable. Except above, no other submissions are canvassed by learned advocate for the appellant.
5. Per contra, learned Assistant Government Pleader for the respondent-State has supported the judgment and decree.
6. Learned advocate for the respondent No.3 has also supported the judgment and decree by contending that once the tender is accepted and the offer is made to the successful bidder, a contract stands concluded. It is further contended that as per the clause No.47 of the tender document, if any item is declared in favour of the tenderer, it will be incumbent upon the tenderer to supply the same during the currency of rate contract. The tenderer shall not escape from his liability of supplying the material as per the schedule. It is further contended that the tender of the plaintiff was opened on the Page 7 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined same day i.e. on 30.09.1988 and plaintiff was duly intimated about the acceptance of the tender on 03.01.1989. The communication dated 03.01.1989 Exhibit-32 is an offer. As plaintiff did not supply the agreed medicines, defendant was compelled to purchase the material at a higher price than agreed upon by the plaintiff and therefore, defendants are entitled to recover the difference of price from the plaintiff. The recovery order dated 29.08.1989 Exhibit-28 is, therefore, valid and legal. Learned trial Court has rightly interpreted the terms of the tender and the Annexure-A, which is part of the tender. As no justifiable grounds are made out by the appellant, the judgment and decree passed by learned trial Court be affirmed. Except above, no other submissions are made by learned advocates for the respective respondents.
7. I have heard the learned advocates for the respective parties and perused Record and Proceedings. It appears from the record that the parties to the suit by submitting a pursis Page 8 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined Exhibit-38 declared that they do not intend to lead any oral evidence. The suit has been proceeded on the basis of the documents produced by both the parties. On re-appreciation of the documentary evidence, it appears that an invitation to tender was issued by the defendants for the purchases in Central Medical Stores Organization, plaintiff was the successful bidder. Plaintiff, in the bid, quoted price of the tablets at Rs.25/- per 1000 tablets. The tender dated 30.09.1988 was opened on the same day. However, the plaintiff realized that a mistake being committed in filling up the price of the tablets, immediately, a telegram to defendants indicating that the price of the material be considered at Rs.28.50 paise per 1000 tablets instead of Rs.25/- per 1000 tablets, be considered. The tender of the plaintiff was accepted by defendants and plaintiff was sent an offer letter dated 03.01.1989. The contention of learned advocate for the appellant is that the plaintiff did not accept the offer and there Page 9 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined was not a concluded contract executed between the parties to the suit. On the other hand, it is the case of the defendants that an offer was made, which amounts to a concluded contract and therefore, plaintiff was supposed to supply the tablets as per the agreed rates. However, plaintiff undisputedly did not deposit the security amount and parties have not executed agreement. There is no execution of the rate contract with the plaintiff. Defendants issued a recovery order dated 29.08.1989 asking for an amount of Rs.35,991.38 paise from the plaintiff as material was purchased from outside agencies.
8. The core question which is under consideration in this appeal is that on the given set of facts, can it be said that a valid and concluded contract has been executed between the plaintiff and defendants? To appreciate the contentions of both the parties, it would be relevant to refer Condition Nos.44 and 45 of the General Terms and Conditions of Invitation to Tender and Instructions to tenderers (Exhibit-36). Page 10 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025
NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined "44. Successful tenderers will be required to pay Security Deposit as may be specified by the Director of Central Medical Stores Organization, Ahmedabad, in specified time to enter into stamped agreement for the performance of the contract. Failure to pay security deposit and execution of agreement in specified time will invite disqualifications for future quotations.
45. Successful tenderer will required to enter into the agreement for the due performance of the contract. As agreement form will be sent with the acceptance of tender. It should be stamped with required adhesive stamp and should be signed before any gazetted officer of this office or before a 1st Class Magistrate or Justice of Peace or notary Public."
Condition No.44 of the General Terms and Conditions of Invitation to Tender and Instructions to tenderers stipulates that the successful tenderer will be required to pay Security Deposit in a specified time to enter into a stamped agreement for the performance of the contract. Failure to pay Security Deposit, and execution of agreement in specified time makes a tenderer disqualified for future quotations. The condition precedent for making a contract concluded is the payment of Security Deposit in specified time and to enter into an agreement for the performance of the contract.
To make a contract concluded, Condition No.45 of the Page 11 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined General Terms and Conditions of Invitation to Tender and Instructions to tenderers speaks that a form of agreement will be sent with the acceptance of tender and the same has to be stamped and signed by the successful tenderer. The aforesaid two conditions make the intention of defendant clear that unless and until Security Deposit is paid in specified time and an agreement for the purpose of performance of the contract is executed, the offer remains an offer. The Indian Contract Act, 1872 (hereinafter referred to as 'the Act') stipulates that a contract is said to be executed once an offer of an offeror is made to the offeree and the offeree accepts the offer and said acceptance is communicated to the offerer. Unless the offer is accepted by the offeree and such acceptance is communicated to the offerer, no contract can be said to be a concluded contract for its enforcement. The position of parties, in the present case, is very much clear on perusal of Exhibit-32, which is an offer dated 03.01.1989. In the said Page 12 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined communication, the plaintiff was intimated by the defendants that the tender has been accepted and necessary rate contract will be issued in due course. A copy of agreement was annexed with this communication with a request to enter into the same within seven days. The Security Deposit of Rs.5,000/- by way of Fixed Deposit was also asked for by defendants. The said communication further states that in absence of any reply received within seven days of receipt of this offer, defendants would proceed further by accepting that the plaintiff is not interested in the offer. The offer Exhibit-32 was admittedly not accepted by the plaintiff by writing communication dated 05.01.1989, wherein the defendants raised the grievance of non-considering the telegram while accepting the tender. The evidence placed on record is sufficient to establish that the offer of defendants was never accepted and the rejection of the offer was in writing which was communicated to the defendants. It further appears that by Page 13 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined rejecting the offer, plaintiff neither paid the Security Deposit within the stipulated time nor signed the agreement which was annexed with the offer letter. To make the plaintiff liable for not supplying the material as agreed upon, defendants must establish that there was a concluded contract executed between the parties and as per the rate contract, plaintiff was required to supply the material as per the terms and conditions of the contract. The defendants must establish that the parties were ad idem on the agreed terms and conditions of the contract and as plaintiff failed to perform his part of the contract, defendants had to purchase the material at a higher price. However, the evidence, in the present case, as discussed above, is lacking on the aspect of a concluded contract being entered into between the plaintiff and defendants. For the difference in price in purchasing the material from other agencies, plaintiff cannot be held liable in absence of a concluded contract. Learned trial Court while dismissing the Page 14 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined suit, has failed to appreciate the settled proposition of law as well as an admitted fact surfaces on record that defendants, as per the offer letter dated 03.01.1989, was to supply rate contract in a very short duration. Defendants have not placed any evidence on record to establish that rate contracts were issued in favour of the plaintiff. Another eye-catching fact comes out from the record is that the offer put forward by the defendants was never accepted by the plaintiff. However, learned trial Court relied upon Condition No.47 of the General Terms and Conditions of Invitation to Tender and Instructions to tenderers. The said clause is reproduced as under:
"47. If any item is declared in favour of tenderer it will be incumbent on him to supply the same during the currency of rate contract. The sole responsibility for the supply of the approved items lies with the tenderer and he should reserve the quantity so as to enable to supply the stores government Officers/Institutions. The tenderer shall not escape from his responsibility of raw material import licence etc. once the offer is accepted by this organization. The tenderer will not have any liberty to withdraw the same. Such action will amount to breach of contract and shall be liable for disqualification in particulars future tenders of this organization, in addition to other penal action."
The said condition stipulates that any item declared in favour of the tenderer shall be supplied during the currency of Page 15 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined rate contract and tenderer shall not escape from his responsibility of raw material, import licence etc. and once the offer is accepted by the organization and any action of withdrawal by tenderer would amount to breach of contract which shall make a tenderer liable for disqualification in particulars, further tenders of the organization in addition to other penal actions. The said stipulation indicates that there has to be a rate contract under which the tenderer is required to supply the declared items. The tenderer cannot escape from his responsibility of raw material once the offer is accepted. The default clause in the said condition is that any action of withdrawal would tantamount to breach of the contract. Again, for invoking condition No.47, there has to be a contract executed between the tenderer and the offeror and on failure to comply with any of the terms and conditions of the contract, the action or inaction would amount to breach of the contract. The defendants, in such cases, shall be liable to disqualify the Page 16 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined plaintiffs for future tenders over and above other penal actions. As observed above, Condition No.47 also contemplates the execution of the contract between the parties. In my opinion, therefore, the learned trial Court has committed a grave error in interpreting the tender document and the conditions stipulated thereunder. Learned trial Court has committed further error by holding that the acceptance of tender is a concluded contract. Such findings are contrary to the basic provisions of the Act. Sections 3, 4 and 5 of the Contract Act are reproduced as under:-
"3. Communication, acceptance and revocation of proposals.--The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it.
4. Communication when complete.--The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.
The communication of an acceptance is complete,--
as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor;
as against the acceptor, when it comes to the knowledge of the proposer.
The communication of a revocation is complete,--
as against the person who makes it, when it is put into a Page 17 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge.
5. Revocation of proposals and acceptances.--A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards."
9. To summarize the provisions contained in Sections 3, 4 and 5 of the Act, an offer is accepted when the acceptance is communicated unequivocally. A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor. In the present case, applying the aforesaid proposition of law, the offer of the defendants was not accepted therefore, the question of revocation of acceptance before the communication of acceptance is complete, does not arise. The contention of learned advocate for respondent that Page 18 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025 NEUTRAL CITATION C/FA/658/2001 JUDGMENT DATED: 10/12/2025 undefined once the offer is made, it tantamounts to a contract is a misconceived contention and the same is rejected.
10. Considering the aforesaid facts and circumstances of the case, this Court is of the opinion that learned trial Court has erred in dismissing the suit, and therefore, the First Appeal deserves to be allowed and the same is allowed. Accordingly, the judgment and decree dated 25.02.2000 passed by the learned Judge, City Civil Court No.19, Ahmedabad in Civil Suit No.4460 of 1989 is hereby quashed and set aside. The suit is decreed accordingly. Decree be drawn accordingly. No order as to costs.
11. Record and Proceedings, if any, be sent back to the learned trial Court forthwith.
(D. M. DESAI,J) RINKU MALI Page 19 of 19 Uploaded by RINKU MALI(HC01574) on Tue Dec 16 2025 Downloaded on : Wed Dec 17 20:35:26 IST 2025