Medapati Janardhana Reddy vs Sri Durga Nageswara Swamy Temple, ...
2022 Latest Caselaw 8369 AP

          THE HON'BLE Ms. JUSTICE B.S.BHANUMATHI


                     Appeal Suit No.236 of 2012

JUDGMENT:

This appeal is preferred against the judgment and decree,

dated 09.02.2010, passed in O.S.No.5 of 2004 on the file of the

Court of Senior Civil Judge, Avanigadda.

2. The pleadings of the parties, in brief, are as follows:

The plaintiff, by name, Sri Durga Malleswara Swamy temple,

auctioned the paddy payable to it towards rentals for 2002-2003 by

its tenants on 21.12.2002 within the premises of Sri

Subrahmanyeswara Swamy temple, Mopidevi. All the bidders were

made known about the terms of auction, and as per the terms, the

highest bidder alone is responsible for any loss caused to the paddy

after it was taken possession. The plaintiff is also not responsible

for any shortage in the quantity of paddy. Though, as per term

No.13 of the terms of auction, the highest bidder has to pay interest

at 24% per annum on the amount due if he does not pay before

15.02.2003, the rate of interest was reduced to 12% per annum as

per term No.17, as per the wishes of the bidder. The plaintiff was

declared as the highest bidder for a sum of Rs.745/- per bag of 75

Kgs., in respect of B.P.T variety of paddy and for a sum of Rs.555/-

BSB, J A.S.No.236 of 2012

per bag of 75 kgs., in respect of ordinary variety of paddy. The

defendant signed bid lists as highest bidder after the bids were

knocked down in his favour. The Commissioner of Endowments

Department, Hyderabad also confirmed the said auction, vide

proceedings dated 25.01.2003. The defendant deposited

Rs.20,000/- with the plaintiff before the auction. The defendant got

weighed the paddy, through its local agent, Sri Arza Rajagopala

Prasad, and kept the same in the godown of the plaintiff. The total

quantity of B.P.T variety of paddy collected and weighed was 860

bags and 5 kgs., while ordinary varieties of paddy collected and

weighed was 942 bags and 17 kgs. Out of the B.P.T variety of

paddy, the plaintiff utilized 63 bags 16 kgs. of paddy for its own use

and the rest was under the control of defendant. As per term No.7

of the terms of auction, if the highest bidder does not pay the prices

of paddy as per the bid rate and take delivery, the plaintiff has got

the authority to forfeit the deposit amount and resale the paddy in

auction. If the amount realized on resale is less than the bid amount

of bidder, the plaintiff is entitled to recover loss, i.e., the difference

of amount due from the defendant and the amount realized by

resale as per the said term.

(b) The defendant, in spite of several demands, did not pay the

amount and did not take away the paddy; the plaintiff got issued

legal notice, dated 24.03.2003, through its advocate demanding

BSB, J A.S.No.236 of 2012

lifting of the paddy after payment. The defendant received the

same, but kept quiet. The plaintiff again got issued legal notice,

dated 20.8.2003, to lift paddy after payment. The defendant with

full knowledge of its contents refused it. The plaintiff itself again

issued notice on 13.11.2003 to the defendant intimating forfeiture

of his deposit and intimating resale. The said notice was returned

with postal endorsement of 'continuously absent at home more than

7 days.' Then, the plaintiff again sent the said intimation to the

defendant and he acknowledged its receipt on 01.12.2003. But, the

defendant kept quiet. Hence, the plaintiff was obliged to conduct

auction of the paddy on 20.10.2003 after publication in newspapers.

But, the auction was cancelled as no reasonable bids were offered.

Hence, finally, the sale was held on 04.12.2003 by way of tenders

and negotiations. The B.P.T variety of paddy fetched Rs.502/- and

ordinary paddy fetched Rs.423.50/- per each paddy in that resale.

One Sri Vesangi Ganesh was the purchaser of B.P.T variety of paddy

while P.V.Ramana was the purchaser of ordinary variety of paddy.

Hence, the plaintiff filed this suit for damages caused by the default

in payment.

(c) The defendant filed written statement denying the plaint

averments and contending that there is no privity of contract of sale

in between the plaintiff/temple and the defendant and

consequently, the suit claim is unsustainable. Without any

BSB, J A.S.No.236 of 2012

agreement between the parties, the suit relief is void ab initio.

There are no bona fides in filing the suit. The suit is barred by

limitation. The plaintiff imposed a condition in its list that the paddy

shall be delivered to the highest bidder only after the approval of

the Commissioner of Endowments. Meanwhile, the defendant has

no right to take back the paddy until the approval is granted by the

Commissioner of Endowments. The Commissioner of Endowments

approved the bid only on 25.09.2003, i.e., after a lapse of nine

months. Later on, only this defendant is empowered to take back

the paddy after payment of cash. Meanwhile, the paddy rate was

decreased due to fluctuations in the market due to lapse of about 9

months from the date of auction. In case, the paddy was delivered

immediately by the plaintiff, the defendant expressed his readiness

to take back the paddy immediately within a week due to laches on

the part of the plaintiff. Consequently, the defendant refused to

take back the paddy and payment of the amount. Therefore, there

are no laches on the part of the defendant. The entire fault lies with

the plaintiff and its authorities. The defendant is not at all a

licencee of rice mill owner or his agent or broker or commission

agent to participate in the auction. The defendant is not having any

such authorization or powers to participate in the auction.

Therefore, participation of the defendant in the alleged auction is in

violation of Rules. Consequently, the suit claim is hit by Section 23

BSB, J A.S.No.236 of 2012

of the Contract Act. Condition No.2 of the condition list is violated.

There is no publication issued by the temple authorities about the

proposed auction of paddy on 21.12.2002. This defendant never

executed any letter in favor of Arja Prasad to obtain paddy from the

plaintiff's temple by execution of the authorized letter. The alleged

signatories, if any, in the said letter are not true and genuine. The

so called Arja Prasad is nowhere connected with the paddy

transaction. The subsequent publication regarding the auction of

paddy is also illegal and void. There is no cause of action for the suit

and the alleged cause of action is false. The suit is liable to be

dismissed with costs.

3. Basing on the above pleadings, the trial Court settled the

following issues for trial:-

1. Whether the plaintiff is entitled for recovery of damages against the defendant as prayed for?

2. To what relief?

4. During the course of trial, on behalf of the plaintiff, PW1 was

examined and exhibits A1 to A23 were marked. On behalf of the

defendant, DW1 was examined and no documents were marked.

5. On the above evidence and on hearing the counsel for the

parties, the trial Court decreed the suit with costs for Rs.4,84,849/-

BSB, J A.S.No.236 of 2012

and to pay subsequent interest at the rate of 6% per annum on the

same amount from the date of the suit till the date of realization.

6. Aggrieved thereby, the defendant preferred this appeal. The

defendant mainly contended that the trial Court ought not to have

held that there is no privity of contract between the parties when

once the plaintiff has violated his own terms and conditions of

auction. The trial Court ought not to have granted a decree when

the respondent miserably failed to comply the terms and conditions,

vide exhibit A1. The plaintiff failed to communicate to the appellant

about the approval of the auction proceedings and in the absence of

any intimation, no liability can be fastened on the appellant. There

is no nexus between exhibit A23 either with the plaintiff or the

subject matter of the suit. The trial Court ought to have seen that

the defendant cannot be made liable for fluctuation of the price of

the paddy. The trial Court ought to have held that the plaintiff

cannot take advantage of its own wrong. The trial Court failed to

give proper findings on the issues framed basing on the pleadings.

The trial Court ought not to have granted decree when the plaintiff

failed to reciprocate to discharge the obligations and it erred in

holding the appellant liable though there is no fault on the part of

the appellant.

BSB, J A.S.No.236 of 2012

7. Heard Sri Narasimha Rao Gudiseva, learned counsel for the

appellant/defendant and Sri K. Madhava Reddy, learned standing

counsel for Endowment, appearing for the respondent/plaintiff.

8. Though the defendant has taken a plea of no privity of

contract between the plaintiff and himself, the contention does not

stand good as he has signed exhibit A3, bid list, dated 21.12.2002,

which document is not denied by him. Further, it is also contended

that the terms of auction indicate that a person participating in the

auction should have government licence, whereas the defendant

has no such license and thus, the contract is not valid. However,

condition No.2 in exhibit A1 shows that the persons who are entitled

to participate in the auction are not just the owners of the rice mill

who have licence obtained from the government or their permitted

agents but also the persons who are paddy brokers or commission

agents of paddy. Since exhibit A1 is an admitted document and

none of the contents therein are under challenge, the defendant

cannot contend that he, being not entitled to participate in the

auction, there is no enforceable contract against him.

9. Nextly, it is contended that as per condition No.12 of exhibit

A1 unless a bid is approved by the Commissioner of Endowments

and the same has been communicated to the highest bidder, there

is no concluded contract and whereas in the present case, the

BSB, J A.S.No.236 of 2012

defendant has not been communicated any such confirmation of the

Commissioner and before any such communication, the defendant

has cancelled his offer, and therefore, there is no concluded

contract. In this regard, learned counsel for the respondent/plaintiff

contended that the order of the Commissioner confirming the bid is

an internal matter and the same has been communicated to the

officer concerned and that the defendant cannot contend that it has

not been communicated to him. He further submitted that a copy

of the same has been filed in evidence as exhibit A20 which was

passed on 25.01.2003 confirming the bid held on 21.12.2002. He

further submitted that the defendant says that the Commissioner

approved the bid on 25.09.2003, but it is only his oral saying and

there is no proof at all, and that too, the defendant says that he

was informed and the said statement has no legal validity. He

further submitted that when two notices were issued by the plaintiff

to the defendant, he has not chosen to raise any such ground and

on the other hand, he has given an undertaking vide exhibit A23

letter, and therefore, the contention raised by the defendant is not

tenable.

10. Learned counsel for the appellant relied on the decision in The

Food Corporation of India vs. Sri Surya Chandra Raw and

BSB, J A.S.No.236 of 2012

Boiled Rice Mill, Anaparthi, East Godavari and Ors1, in support

of the contention that as per Section 4 of the Contract Act, the

communication completes only when it reached the other side. It

was held at paragraph Nos.14, 15 & 16 as follows:

"14........In view of aforesaid decision, Section 5 of the Act provides that a proposal may be revoked at any time before communication of its acceptance is complete as against the proposer, but not afterwards. In the instant case, admittedly, the 1st defendant withdrew the offer made by it in his tender by the application dated 02.01.1987 well before acceptance thereof. In other words, the 1st defendant revoked proposal/offer well before acceptance thereof. Under the provision of the Indian Contract Act, the 1st defendant has the statutory right to withdraw/revoke offer for the purchase of substandard rice in the subject tender before acceptance thereof by the plaintiff's Corporation. It being a statutory right of the 1st defendant under the provisions of the Indian Contract Act entitling it to withdraw/revoke it's offer/proposal made in the subject tender before acceptance thereof by the plaintiff's Corporation and the 1st defendant having done so in the instant case, the contract for purchase of substandard rice in question could not be enforced on the 1st defendant and he cannot be saddled with the liability to make good the deficiency by the plaintiff. The plaintiff had miserably failed to prove that they received the letter of cancellation only after acceptance letter sent by them is received by the defendants.

15. Learned counsel for the plaintiff submits that they have received letter of withdrawal of the defendants dated 02.01.1987 only on 20.01.1987. Learned counsel for the

2018 (3) ALD 390

BSB, J A.S.No.236 of 2012

defendants submits that the plaintiff's Corporation being a statutory body and dealing with business, ought to have maintained the registers relating to its transactions. P.W. 1, being an Assistant Manager of the plaintiff's Corporation, ought to have produced relevant records maintained in the office to prove that they have received Ex. A3 only on 20.01.1987, but he failed to produce the registers pertaining to the same. In view of above, a presumption can be drawn in favour of the defendants that they have send Ex. A3 under Certificate of Posting on 03.01.1987 only. As rightly contended by the learned counsel for the defendants that plaintiff cannot rely on the weakness of the defendants' evidence and that it has to prove its own case on the strength of its evidence.

16. It is next contended by the learned counsel for the plaintiff that the defendants, having participated in the tender process and having entered into agreement, cannot resile from the same on untenable grounds, cannot be accepted for the reason that admittedly, defendants' withdrew the offer on 02.01.1987 and they have also failed to pay 7 1/2% of security deposit in pursuant to the letter addressed by the plaintiff's Corporation, as per the terms of the contract, as such there is no concluded contract between the plaintiff's Corporation and the defendants. That apart, as rightly contended by the learned counsel for the defendants, which was also observed by the Court below that the plaintiff's Corporation never protested about withdrawal of offer by the defendants from 1987 till 1989, in subsequent correspondence between them."

He further relied on the decision in The Andhra Pradesh

Industrial Infrastructure Corporation Ltd. and Ors. vs. Rama

BSB, J A.S.No.236 of 2012

Tubes Co. and Ors.2, wherein at paragraphs 22 & 23, it was held

as under:

"22. The restoration was conditional as can be seen from clauses-4 and 5. The time of 15 days was given for payment of the balance sale consideration and the balance 50% cost within six months. The willingness was also requested to be communicated within 15 days from the date of receipt of the said letter. A plain language interpretation of this letter shows that a decision was taken to restore the allotment on two conditions. 'Restoration' also clearly implies a prior cancellation and the undoing of what was done. It clearly implies an action of returning something to a former condition. The reply to Ex. B.8 is Ex. A.9. The offer made Ex. A.8 was not accepted by the first respondent. They agreed to pay the balance 50% of the cost in the names of three different companies. The payment of 50% of the land cost within 15 day as stipulated in Ex. A.8 was also not done. In fact, as per the respondent, Ex. A.8 was delivered in November 1984 only. Even if 15 days is reckoned from this date, it is clear that the payment made under Ex. A.11 is way beyond the 15 days period stipulated. Ex. A.11 is dated 04.12.1985 and even the date of cheque is 04.02.1985. The payment, which should have been effected in early December 1984 after the receipt of Ex. A.8, was made only in early February 1985. The cheque was also returned by the appellants' letter dated 26.02.1985 under Ex. A.12. The subsequent cheque from another third party which was sent, vide Ex. A.13 was also returned on 23.03.1985 by Ex. A.14. Therefore, the letters filed by the plaintiff/first respondent himself clearly shows that there was a negotiation for re-allotment of the land. The same was also conditional. The conditions were not met. It is settled law that an offer should be accepted as stipulated and must be

2018 (6) ALT 566

BSB, J A.S.No.236 of 2012

absolute. Section 7 of the Indian Contract that clearly states that a proposal can be offered into an acceptance if a) the acceptance is absolute and unqualified; b) if the proposal prescribes the manner in which it is to be accepted and the acceptance was made in such manner, the proposes may insist that the proposal should be accepted in the prescribed manner and not otherwise.

23. In the case on hand, the offer of the re-allotment stated that it would be restored on payment of 50% of the land costs at Rs. 13/- per square yard only within 15 days from the date of receipt of the letter. In addition, the willingness was also to be communicated within 10 days from the date of receipt of the letter. In the case on hand, it is clear that even if the delivery of the letter was only on 22.11.1984, the acceptance is not in terms of Section 7 (2) of the Contract Act. Immediately after letter dated 28.11.1984 Ex. A.9 was sent. In addition, subsequent correspondence also discloses that the amounts were refunded vide Exs. A.12 and A.14 on the ground that the requirements mentioned in the letter dated 10.08.1983 (Ex. A.8) were not fulfilled."

11. In fact, exhibit A23 is confined only to the signature of the

defendant on a letter said to have been executed by the defendant.

During the course of examination of DW1, the signature of the

defendant was got admitted on the said letter, and therefore, the

same signature alone is received in evidence and exhibited as

Ex.A23. Thereafter, no steps have been taken by the plaintiff to file

the entire document in evidence. The said letter has not been filed

originally in the evidence of PW1. When PW1 was examined it is

BSB, J A.S.No.236 of 2012

only exhibits A1 to A22 that were filed and marked. Therefore, the

contents of the letter cannot be looked into. Mere admission of

signature on the letter under these circumstances does not help the

plaintiff to rely on the contents of the said letter.

12. Though the defendant has contended that the Commissioner

has approved the bid on 25.09.2003, there is absolutely no valid

evidence to prove the same. On the other hand, the plaintiff has

filed exhibit A20 which is the proceedings of the Commissioner of

Endowments, dated 25.01.2003, confirming the bid held on

21.12.2002 in favour of the defendant herein. In the cross-

examination of PW1, this document is not denied about its validity

or its existence. Even in the evidence of DW1, there is no such

denial. Thus, exhibit A20 stands proved. Moreover, at no point of

time, the defendant raised the contention regarding the validity of

the contract for want of confirmation of the bid by the

Commissioner, as required by the terms of agreement exhibit A1.

Therefore, the defence taken in this regard is not valid.

13. The plaintiff has been asking the defendant to take the paddy

since March 2003, yet, the defendant has not taken the paddy. It is

only long thereafter, the defendant declined to take the paddy on

the ground that the value of the paddy has gone lower than what he

bid for. As per the terms of exhibit A1 (condition No.16) when

BSB, J A.S.No.236 of 2012

paddy is put to sale in 2nd auction, the loss whatever is sustained

due to difference of prices shall be borne by the 1st highest bidder.

Based on this term alone, the plaintiff has cause of action in the

present suit and laid the suit claim. Had the defendant withdrawn

from the contract at the earliest and the paddy was put to auction

immediately thereafter, there may be chance of selling the paddy at

the same rate or higher price so that no loss would be sustained

and thereby, the defendant may not be mulcted with any liability

under condition No.16. But having delayed the matter and after

incurring liability under condition No.16, the defendant cannot

withdraw from the liability. As such, there is no merit in the

defence. Since the trial Court has rightly decreed the suit, there is

no merit in the appeal.

14. Accordingly, the appeal is dismissed.

There shall be no order as to costs.

Miscellaneous petitions, if any, pending shall stand closed.

_________________ B.S BHANUMATHI, J 07th November, 2022 RAR