[Cites 5, Cited by 0]

Gujarat High Court

Megh Pharmaceuticals vs State Of Gujarat on 10 December, 2025

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                              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
                       ================================================================
                          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

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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

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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?

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(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

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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 /

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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.

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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

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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

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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

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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).

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"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

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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

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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

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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

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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

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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

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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

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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