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Case Comment on Sandhoo Lal Motilal v/s State Of M.P.

Writ Petition filed by Sandhoo Lal, Abdul Shakoor and Shyama Charan Gupta of writ petition No. 232 of 1970, 373 of 1970 and 374 of 1970 respectively were heard together as all the three petitions were related to tenders for the purchase of tendu leaves in the forest of the state, Madhya Pradesh issued by the state government, and also raised the questions of law which are more or less common in all the three petitions and therefore are disposed of by common judgment.[2]

Case Details:
Title of the Case: Sandhoo Lal Motilal Vs. State of M.P. AIR 1972 ALL 137[1]
Citation: AIR 1972 All 137
Court: High Court of Judicature at Allahabad
Parties Involved:
Appellant: Sandhoo Lal Motilal
Respondent: State of Madhya Pradesh
Bench: The Honourable Mr. Justice B. N. Lokur

Facts:
On the 13th February 1969, the Forest Department of Madhya Pradesh issued a Tender Notice which was published, dated the 16th February 1969, in the Madhya Pradesh Gazette Extraordinary inviting tenders in several Units of the Government Forest for purchase of tendu leaves. Under the Tender Notice of clause 9, it was detailed that the sealed tenders were to be submitted to the Conservator of Forests in whose jurisdiction the Unit was situated by 17.00 hrs. on March, 3rd of 1969; and under Clause 10 (a), the tenders were to be opened simultaneously at the specified places on the 6th March 1969, and on subsequent specified dates by the Conservator of Forests concerned.[3]

The petitioner Sandhoo Lal (Writ Petition No. 232 of 1970), submitted a tender for the purchase of tendu leaves in one of the Units enlisted under the Tender Notice. But he argued that the submission of the tender was in response to the Tender Notice which was hung on the Conservator of Forests Notice Board on the date of 5th April 1969 and was not submitted in response to the Tender Notice published in the state of Madhya Pradesh Gazette Extraordinary. Sandhoo Lal submitted the tender the same day but on the 13th of May 1969, he withdraws the tender by sending a telegram and followed up the telegram with a letter on the next day.

He also received a communication acknowledgement making a demand on the ground that due to his defaulting, the Unit had to be resold and the Government incurred a loss which the petitioner was called upon to meet. And the Government of Madhya Pradesh requested the Collector of Banda and the Tahsildar of Karvi, to make recovery from Sandhoo Lal. Hence, he challenged the authority of the Collector of Banda and the Tahsildar of Karvi on the ground that the recovery order was void since nothing was due from his side to the Government of Madhya Pradesh.[4]

Issue Raised:
  1. Whether there was an agreement of sale and purchase and Sadhu Lal be held liable for any loss caused to the Government of Madhya Pradesh because of his withdrawal of the tender?
  2. Whether Sadhu Lal committed a breach of the contract is he liable to reimburse the Government of Madhya Pradesh the loss caused as a result?

Arguments:
Petitioner's Argument:
  1. It was argued from the side of the petitioner before the court is that the tender submitted by Sadhoo Lal having been withdrawn before it was accepted, there was no agreement of sale and purchase and Sadhu Lal cannot be held liable for any loss caused to the Government of Madhya Pradesh because of his withdrawal of the tender.[5]
  2. It was also put forward that the communication, to fall within the scope of Sections 4 and 5 of the Contract Act, should be shown to be one correctly addressed to Sadhoo Lal and sent by post prepaid.[6]
  3. It was next argued by the learned counsel that mere posting the letter would not place it "out of the power of the acceptor" within the meaning section 4 of the Indian Contract Act - a condition which is compulsory to make the communication of acceptance complete as against the proposer.

Respondent's Arguments:
  1. It was argued from the side of The Government of Madhya Pradesh that the acceptance of the tender became complete in favour of Sadhoo Lal as soon as the communication was posted. [7]
     
  2. It was also argued, Under Section 4 of the Indian Contract Act, the communication of acceptance of a proposal is complete as soon as the proposal is put in the course of transmission and to be out of the power of the acceptor. And Section 5 of the Indian Contract Act states that a proposal made by a party can be revoked/ withdrawn at any time before the communication of its acceptance is completed as against the proposer[8].[9]
     
  3. It also put forward the Significant of the illustration, Section 5 of the Contract Act state that where 'A' proposes to sell his house to 'B' at a certain price by sending a letter by post and 'B' accepts 'A's proposal by a letter sent by post, 'A' may revoke his proposal at any time before or at the moment when 'B' posts his acceptance letter to 'A' but not afterwards.[10] And pointed the observations of the Bombay High Court in Baroda Oil Cakes Traders v. Parshotam Narayandass Bagulia, AIR 1954 Bom 491.[11] Therefore, It was evident from the above-stated illustration that Sadhu Lal breached the contract, so he is made liable to pay compensation to the Government of Madhya Pradesh for the loss incurred.

Court Decision & Judgement:
In this case, the tender that was offered by the party to the respective government was accepted later. But a telegram was subsequently sent to the Government of Madhya Pradesh withdrawing the acceptance. The court found strong evidence of the conclusion of the contract and was not able to find any reason to revoke or withdraw the contract. The reason behind the same is that as soon as the letter of acceptance was posted, the tender contract was decided. Thus, revocation could not be made. Thus, the result is that Writ Petition No. 232 of 1970 filed by Sadhu Lal is dismissed on the above-mentioned ground.[12]

Analysis & Conclusion:
A tender was submitted by Sandhoo Lal and its acceptance by the government was communicated to Sandhoo Lal by a letter dispatched on 28th April. Sandhoo Lal revoked his tender by telegram on 13th May. The Letter reached the government after the letter of acceptance was posted by the government. And Sandhoo Lal claimed the letter of 28th April which was posted by the government official was not received.

But the concerned officer stated on oath that the letter was duly posted. It was held that the contract was completed as soon as the letter of acceptance was posted by the government and the contract could not be revoked. However, considering the interpretation of the law involved, the courts dig deep into the question of the validity of the revocation and withdrawal of an offer.

It is undoubtedly evident from this case that the acceptance is a statutorily provided right of both parties and acceptance of proposal has an overriding effect over the revocation, and a proposal can't be revoked at any point of time after the communication of its acceptance is completed as against the proposer.

References:
  • Dhanraj Mills Ltd. Liability Co. v. Narsingh Prasad Boobna, AIR 1949 Pat 270
  • Baroda Oil Cakes Traders v. Parshotam Narayandass Bagulia, AIR 1954
  • State of Madhya Pradesh v. Nagarmal Bhagwan Das Marwari on 29 September, 1961
  • Firm Gobardhandas Kailasnath v. Collector, Mirzapur, AIR 1956 All 721
  • Mahanth Madan Kumar Das & Anr vs The State Of Bihar & Ors on 9 October 2014
  • Anand Kumar And Anr. vs State Of M.P. And Ors. on 16 February 1963
End-Notes:
  1. 1971 SCC OnLine All 176: 1971 All LJ 1269: AIR 1972 All 137
  2. Sadhu Lal v. State of Madhya Pradesh, 1971 SCC OnLine All 176: 1971 All LJ 1269: AIR 1972 All 137 at page 1269
  3. Sadhu Lal v. State of Madhya Pradesh, 1971 SCC OnLine All 176: 1971 All LJ 1269: AIR 1972 All 137 at page 1271
  4. Sadhu Lal v. State of Madhya Pradesh, 1971 SCC OnLine All 176: 1971 All LJ 1269: AIR 1972 All 137 at page 1271
  5. Ibid
  6. Sadhu Lal v. State of Madhya Pradesh, 1971 SCC OnLine All 176: 1971 All LJ 1269: AIR 1972 All 137 at page 1272
  7. Ibid.
  8. Section 5, The Indian Contract Act, 1872.
  9. Sadhu Lal v. State of Madhya Pradesh, 1971 SCC OnLine All 176: 1971 All LJ 1269: AIR 1972 All 137 at page 1271
  10. Section 5, The Indian Contract act, 1872
  11. 1954 SCC OnLine Bom 15: ILR 1954 Bom 1137: (1954) 56 Bom LR 575: AIR 1954 Bom 491
  12. Sadhu Lal v. State of Madhya Pradesh, 1971 SCC OnLine All 176: 1971 All LJ 1269: AIR 1972 All 137 at page 1275

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