Delhi High Court
Himachal Pradesh State ... vs M/S Sumer Chand & Sons on 24 October, 2011
Author: S. P. Garg
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision : October 24, 2011
+ RFA(OS) No. 8/2001
HIMACHAL PRADESH STATE ELECTRICITY BOARD
....Appellant.
Through: Divjeet Singh Vohra, Advocate
versus
M/S SUMER CHAND & SONS ...Respondents
Through: Mr.Rahul Sain, Advocate.
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MR. JUSTICE S.P.GARG
1. Whether the Reporters of local papers may be allowed
to see the judgment?
2. To be referred to Reporter or not?
3. Whether the judgment should be reported in the Digest?
S.P.Garg, J. (Oral)
1. Appellant has challenged the judgment and decree dated
22.02.2000 passed by the learned Single Judge dismissing
the suit filed by the appellant against the respondent.
Appellant filed a suit claiming a sum of `2,66,400/- from
the respondent being the loss suffered by it due to failure
of the respondent to supply the goods as per the stated
concluded contract between the parties.
2. The appellant invited offer as per tender No.28 in terms of
the general conditions of the contract detailed in para No.
3 of the plaint for supply of galvanized mild steel tubes
with the schedule of requirement and dispatch as
mentioned therein on 19.06.1973. Last date for
submission of tender was 23.07.1973. On 23.07.1973 the
respondent submitted offer along with a cheque in the
sum of `5,000/-; by way of earnest money. On 18.08.1973
the appellant accepted the offer made by the respondent
in respect of pipes of different sizes but at different rates
mentioned therein. Thereafter supply order was placed
on the respondent on 18.08.1973 itself. In continuation of
the said order the appellant wrote a letter dated
31.08.1973 giving details of material, delivery and other
terms and conditions as noted in para No.6 of the plaint.
As the appellant did not receive any reply, another letter
dated 08.10.1973 was sent to the respondent asking it to
acknowledge the receipt of the said supply order and also
to execute a contract which was only a formality.
Respondent replied by sending letter dated 08.10.1973
repudiating the supply order, which was received by the
appellant on 18.10.1973. By this letter, the delivery was
repudiated on the ground of deviations in the conditions
of the contract.
3. It was claimed by the appellant before the learned Single
Judge that with the placing of supply order on 18.08.1973,
acceptance of the tender by the respondent, the contract
was concluded.
4. Case of the respondent before the learned Single Judge
was that no valid contract came into existence between
the parties. There was no unconditional acceptance of
the offer by the appellant. The respondent filed a
counter-claim claiming earnest money tendered along
with interest.
5. After considering rival contentions of the parties and
scanning the testimonies of the witnesses for the parties,
the learned Single Judge dismissed the suit filed by the
appellant. It also dismissed the counter-claim of the
respondent, holding the same to be time barred.
6. Aggrieved by the dismissal of the suit, the appellant has
come up in appeal.
7. We have heard the learned counsel for the parties and
have scrutinized the evidence on record.
8. It is not disputed that the appellant had issued a notice
inviting tender for supply of GI pipes in 1973, it being
tender No.28. The description of the goods to be supplied
was detailed in the tender document. The respondent
was one of the offerer and its offer was considered. On
the alleged acceptance of the offer, a supply order Ex.P-1
was placed on the respondent. The offer dated
23.07.1973 submitted by the respondent was
accompanied by document Ex.P-2. It is also not in
controversy that before the offer was allegedly accepted,
there were negotiations with the respondent. Conditions
of the tender were discussed and allegedly the conditions
were finalized and thereafter the offer was accepted. It is
also not disputed that purchase order (Ex.PW-1/1) was
placed upon the respondent on 18.08.1973. Detailed
supply order was also placed on the respondent which is
Ex.PW1/2. It is also not disputed that no goods were
supplied by the respondent on the basis of the supply
order placed upon it by the appellant.
9. Short question for consideration arises "Whether
concluded contract between the parties had come into
existence at any time?"
10. In the cross-examination PW-1 A.K.Srikanta working as
Chief Purchase Officer with the appellant admitted that
invitation for tender was published in the newspaper as
well. D-1 is the tender cutting from the newspaper
advertising the invitation of tender. The respondent was
one of the offerer and it submitted an offer Ex.P-1 dated
23.07.1973. The terms and conditions as mentioned by
the respondent in Ex.P-1 were never accepted by the
appellant. In the further cross-examination, PW-1
A.K.Srikanta deposed that at the time when the offer
Ex.P-1 was submitted, no one from his office pointed out
that terms offered by the respondent were different than
those given in the invitation to tender. He further
submitted that the terms quoted by the defendant might
be different than those given in the tender document. It
shows that the terms and conditions as detailed in the
offer submitted by the appellant were never accepted
absolutely by the respondent. The very fact that the
representative of the respondent was invited at Simla for
negotiation reveals that the parties were not having
meeting of mind of all about the terms and conditions of
the offer. The representative of the respondent had
visited Simla for negotiation and there was change of
terms and conditions for which the respondent was asked
to agree. The appellant has placed on record letter dated
31.08.1973 Ex.P-1/2 (which was not admitted by the
respondent) in which it is mentioned that "in continuation
of the office letter dated 18.08.1973 and as agreed by
you during negotiation held on 18.08.1973 at Simla, your
tender for supply of GI pipes has been accepted."
However, the changed terms and conditions as per any
settlement after negotiation between the parties at Simla
were never reduced into writing. There is nothing on
record to show if the changed terms and conditions were
ever accepted by the respondent at any time. No contract
containing such changed terms and conditions was
executed between the parties. Rather, unilaterally the
appellant placed an order upon the respondent for supply
of the goods. Since the respondent had never accepted
the terms and conditions of the appellant absolutely, in
our view, no concluded contract came into existence
between the parties at any time requiring the respondent
to supply the goods to the appellant on the basis of
purchase order. The respondent was under no legal
obligation to supply goods.
11. Under Section 7 of the Contract Act, in order to convert a
proposal into a contract, the acceptance must be absolute
and unqualified. An acceptance with a variation is in
effect a counter offer and not an acceptance. Absolute
acceptance of an offer to result in a binding contract must
extend to all the terms of the contract under negotiation.
In the present case when there was change in the terms
and conditions contrary to the one in the tender
document, there was no unconditional and absolute
acceptance by the respondent. The purchase order
placed by the appellant was rather an offer on changed
terms and conditions to the respondent and that offer
was never accepted by the respondent.
12. We find no substance in the plea of the learned counsel
for the appellant that the variation in the terms and
conditions of the tender document were not material and
had no affect on the acceptance of the offer. It is well
settled that when there is variance between the offer of
acceptance in respect of any material term, acceptance
cannot be said to be absolute and unqualified and the
same will not result in the formation of a legal contract.
To constitute an agreement it is essential that the offeree
should give in return for the proposer's act or promise
exactly the consideration which the proposer requests. If
an act is requested, the offeree must give that very act
and no other. The least variation of any material term or
any substantial modification has the effect of rejecting
the proposal.
13. In the present case the respondent had pointed out that
there were variation of term Nos.4,5,6,7,8,9, and 10.of
the tender document, the negotiation between the
parties at Simla vindicated the stand of the respondent
that the purchase order placed by the appellant was not
as per the terms and conditions offered by him. These
terms and conditions cannot be termed to be minor or
immaterial.
14. The learned counsel for the appellant has failed to show
any material irregularity in the impugned order of the
learned Single Judge.
15. We find no merit in the appeal filed by the appellant and
the same is dismissed.
16. No costs.
(S.P.GARG)
JUDGE
(PRADEEP NANDRAJOG)
JUDGE
October 24, 2011
sa
