Narayan Sakharam Kantode vs The State of Maharashtra

S.B. Shukre, J.—This appeal is preferred against the judgment and decree passed on 27/06/2003, in Special Civil Suit No. 33/1995, by Joint Civil Judge Senior Division, Bhandara.

The appellant is the original plaintiff and the respondents are the original defendants, against whom the appellant had filed a suit for declaration, permanent injunction, mandatory injunction and damages. The facts undisputed are stated as below:

(a) It is the case of the appellant that respondent no. 3, by publishing a notice in newspaper invited offers for appointment of an agent for collection of octroi during the period from 15/04/1994 to 31/03/1995. Minimum offer amount mentioned in the notice was of Rs. 31,40,000/- and during the period of the contract, the agent was to remit 2% of the amount of contract every week to respondent no. 3 for 50 weeks, irrespective of the amount collected as octroi on behalf of respondent no. 3, Municipal Council.

(b) In response to the notice, the plaintiff submitted his offer for Rs. 31,40,000/- and he being the only offerer, his offer was accepted. Acceptance letter was issued to him on 5/04/1994, which required him to furnish within 8 days a bank guarantee of any nationalized bank for an amount of Rs. 5,10,000/- as security deposit. The bank guarantee was furnished by the appellant on 30/04/1994 and, thereafter, agreement between the parties was executed on 30/05/1994. On the same day, work order was also issued to the appellant.

(c) On 8/06/1994, the appellant received a notice from respondent no. 3 informing him that he had committed default in payment of the installment due in first week. The appellant, however, sent a reply stating that the Council had misunderstood the concept of amount payable by the appellant under the agreement. The appellant also approached respondent no. 1, the Collector, u/s 308 of the Municipality Act with a request that proportionate reduction in the payment of contract amount should be made as the agreement was executed late and sufficient period was not available to the appellant for collection of the octroi. The Collector, however, by his letter dated 31/12/1994, rejected the request and even enhanced the installment amount from Rs. 62,800/- to Rs. 65,496/- per week. The order was challenged by the appellant before Director of Municipal Administration and Additional Commissioner, Nagpur by filing an appeal. However, the appeal came to be rejected on 14/02/1995, on the ground of lack of jurisdiction. The appellant was also not allowed by respondent no. 3 to work as agent for collection of octroi on behalf of respondent no. 3 with effect from 15/02/1995.

The main contention of the appellant is that he had submitted his offer with minimum offer amount of Rs. 31,40,000/- conditionally and the condition was that he would remit the amount of octroi collected by him at the rate of 2% not of the amount of contract i.e. Rs. 31,40,000/- but of the amount arrived at after deducting 50% amount from the contract amount on account of 30% establishment charges and 20% profit element of the appellant. The appellant submitted that he had at the time of submitting his tender form along with the offer documents, submitted a letter dated 4/04/1994 specifically mentioning this condition. He submitted that by this letter, the appellant had sought clarification on this issue as there was no mention in the tender notice dated 25/03/1994 about agent''s commission, profit element, establishment charges and incidental charges including contingencies. He submitted that if no clarification was given on this issue, it would be implied that the appellant had to pay 2% of the collected amount after deducting from it 50% amount on account of establishment charges and agent''s profit. He submitted that his such offer was accepted by respondent no. 3, when it issued a letter of acceptance to him on 5/04/1994.

The appellant further submitted that as per the terms of the contract he submitted bank guarantee towards security deposit, but even then the respondent no. 3 did not enter into any work agreement with him. Therefore, the appellant by his letter dated 17/05/1994 informed respondent no. 3 that his offer of Rs. 31,40,000/- stood cancelled and he demanded return of the bank guarantee. However, respondent no. 3 did not comply with it and telegraphically requested him to approach the office of the Council on 27/05/1994, for execution of the agreement and, ultimately, the agreement was executed between appellant and respondent no. 3 on 30/05/1994.

The appellant further submitted that in terms of this agreement, he was appointed as an agent for collection of octroi for respondent no. 3 for a period of one year from 30/04/1994 to 31/05/1995. The agreement had been executed belatedly, reducing the effective period of the agreement by almost 8 weeks and, therefore, the appellant had requested the respondent no. 3 to reduce the contract amount proportionately and believing that his request would be granted, the appellant executed the said agreement and also started working as octroi collection agent for respondent no. 3. The appellant also engaged number of employees and spent considerable amount in establishing the office.

It is further submitted by the appellant that on 8/06/1994, respondent no. 3 issued him a letter informing that he had committed default in payment of first installment and that the amount that was being paid by the appellant was less than 2% of the contract amount, which letter was suitably replied by the appellant. The appellant had once again informed respondent no. 3 that he had already remitted amount of Rs. 44,000/- by cheque and that respondent no. 3 was under misconception that the 2% amount that was payable was payable on the entire contract amount. However, the respondent no. 3 did not pay any attention to the communications of the appellant and kept on informing him that the appellant was committing defaults in the payment of weekly installment equal to 2% of the offer amount. In fact, according to the appellant, he had never agreed for payment of 2% of the contract amount i.e. Rs. 62,800/- as weekly installment.

The appellant further submitted that the minimum offer amount was not determined by respondent no. 3 in accordance with the directions issued by respondent no. 2, whereby it was required of the Municipalities, while appointing octroi collection agents, to calculate the estimated amount of offer by taking into account maximum income received in the preceding three years and adding thereto 20% of the said amount and also 50% of the expenditure incurred on the establishment of the staff in the octroi department. The appellant submitted that he had, on 22/09/1994, sent a letter to respondent no. 1, the Collector, Bhandara requesting him to refix the estimated amount and also revise the amount of weekly installments in accordance with the direction in the said circular, but to no effect.

The appellant further submitted that respondent no. 3 without giving any notice or passing any resolution did not allow him to work with effect from 15/02/1995 and which was illegal. He also submitted that he suffered loss due to such illegal action of respondent no. 3. Therefore, the appellant filed a civil suit against respondents claiming a declaration that the agreement dated 30/05/1994 was in force till 31/03/1995, action of respondent no. 3 in not allowing him to work as collection agent was illegal and the orders passed by the Collector and Director of Municipal Administration were without jurisdiction. The appellant also sought relief''s of permanent injunction restraining respondents from enforcing bank guarantee and terminating the agreement dated 30/05/1994, mandatory injunction directing respondents to allow him to continue to work and also for a decree for recovery of Rs. 15,13,830/- on account of the loss, expenses and damage suffered by the appellant.

Respondents no. 1, 2 & 4 did not file their written statement and therefore suit proceeded against them without their written statement.

Respondent no. 3, barring undisputed facts stated earlier, denied almost all the averments of the appellant. According to respondent no. 3, the offer of the appellant was unconditional and that he had offered to collect and remit amount of Rs. 31,40,000/- as minimum offer amount. It submitted that the appellant being the only offerer, his said offer was accepted on 4/05/1994 and, accordingly, acceptance letter was issued to him. It submitted that the offer of the appellant was never accepted by Municipal Council together with the condition that 2% amount that was to be remitted weekly would be after deducting 50% of the contract amount. It submitted that if there was any delay in execution of the work agreement, it was on account of the fact that appellant himself submitted belatedly the bank guarantee. It submitted that the agreement dated 30/05/1994 was voluntarily entered into by the appellant and it did not contain the condition allegedly put by the appellant as a part of his offer to collect octroi. It further submitted that since the appellant had agreed to remit 2% of the contract amount every week for 50 weeks, the weekly installment came to Rs. 62,800/-. It further submitted that the appellant, however, did not perform his part of contract in accordance with the terms and conditions thereof and he fell in arrears of Rs. 8,23,992/- as of 15/02/1995. The respondent no. 3 further submitted that collection of the octroi was the main source of income for the Council and the entire administration of the Council got affected due to defaults in payments made by the appellant. It further submitted that it even found it very difficult to pay the salaries of its employees. Therefore, respondent no. 3 further submitted that it had no other alternative than to take over the charge of the work of collection of octroi from the appellant, there being serious breach of contract having been committed by the appellant. It further submitted that for these reasons, it was constrained to encash the bank guarantee for Rs. 1,02,500/-. It further submitted that the appellant had made payment of only Rs. 14,52,100/- till 14/02/1995 and the appellant was still to pay to it an amount of Rs. 23,23,500/-. It also submitted that it suffered loss of interest amounting to Rs. 59,679.82 per annum. Thus, it suffered total loss of Rs. 17,674.96 due to breach of contract committed by the appellant.

I have heard Smt. Minaxi Iyer, learned Counsel for the appellant, Smt. Hiwase, learned Additional Government Pleader for respondents no. 1 & 2 and Shri M.I. Dhatrak, learned Counsel for respondents no. 3 and 4. With their assistance, I have carefully gone through the impugned judgment and decree and paper book of the appeal. Now, following points arise for my determination:

(i) Whether the appellant proved that the condition imposed by him while submitting his offer for collecting octroi was accepted in pursuance to which he was entitled to remit 2% amount on weekly basis after deducting from the contract amount, 50% amount being his expenses and commission?

(ii) Whether the appellant proved that the action of respondent no. 3 in not allowing him to work as octroi collection agent with effect from 15/02/1995 was illegal?

(iii) Whether the appellant proved that he was entitled to work as octroi collection agent till 31/03/1995?

(iv) Whether the appellant proved that he was entitled to receive amount of Rs. 15,13,830/- on account of damages, loss and expenditure?

(v) Whether the appellant proved that he was entitled to injunctions as prayed for by him?

Learned Counsel for the appellant''s first contention is that the conditional offer submitted by the appellant was accepted by respondent no. 3, as is evident from its letter dated 5/04/1994 and, therefore, the respondent no. 3 had no authority to claim and demand from the appellant an amount equivalent to Rs. 62,800/- being 2% amount of the offer or contract amount of Rs. 31,40,000/-. She submits that since the tender notice dated 25/03/1994 was ambiguous and did not contain any schedule giving details as to how the amount on which basis 2% amount was to be calculated, the appellant sought a clarification in that regard and also made it clear that absence of any clarification by the respondent no. 3 would be taken as implied consent of the Council to the condition imposed by the appellant while submitting his offer. The condition was that the appellant would remit to the Council 2% of that amount which would be arrived at after deducting from the offer or contract amount 50% of the amount on account of expenses (30%) and agent''s commission or profit (20%). She has taken me though the contents of the letter dated 4/04/1994 submitted by the appellant (Exhibit 98) and letter of acceptance dated 5/04/1994 (Exhibit 102) issued by respondent no. 3 to support her contention that the said condition was accepted by respondent no. 3.

On the other hand, learned AGP for respondents 1 and 2 and Shri Dhatrak, learned counsel for respondents 3 and 4 have submitted that said condition was never made part of the work agreement dated 30.5.1994 and, therefore, cannot be said to be accepted by respondent no. 3.

The trial Court has refused to read in evidence the letter dated 4/04/1994 (Exhibit 98) as the letter adduced in evidence of the appellant was found to be neither a carbon copy of the original nor a copy compared with the original. It was also noted by the trial Court that merely because the letter was exhibited, it did not mean that proof of the document was dispensed with. Learned Counsel for the appellant has taken strong exception to these reasons and refusal of the trial Court in admitting the said document in evidence stating that it was not objected to when it was marked as exhibit during the course of the evidence and that there is also an admission given about its receipt by respondent no. 3. I think learned Counsel for the appellant is right in view of the fact that no objection appears to have been taken at the time of its being marked as exhibit, and that there is an admission about its receipt given by respondent no. 3, which can be inferred from its mention in reference column of acceptance letter at Ex. 102. Therefore, this document can certainly be read in evidence.

The letter vide Exhibit 98 shows that at the time of submitting his offer, the appellant had imposed a condition that he would accept the offer on the presumption that he would have to pay 2% amount as remittance on account of octroi collection by calculating the same on the amount arrived at after deducting 50% of the amount from the offer or contract amount on account of establishment charges (30%) and agent''s profit (20%). This letter was submitted by the appellant together with tender form and also other necessary documents as required by the tender notice dated 25/03/994 (Exhibit 99). On 5/04/1994, the appellant being the only offerer, was communicated by respondent no. 3 about acceptance of offer as per the letter dated 5/04/1994 (Exhibit 102). Exhibit 102 letter refers to offer of the appellant dated 4/04/1994 and states that it has been accepted on the terms and conditions as well as the provision in the contract and forming part of the other documents submitted by the appellant. It also states about furnishing of bank guarantee and execution of the agreement and other conditions. This letter nowhere makes any specific reference to the condition imposed in the offer dated 4/04/1994 and it only states that the offer has been accepted on the terms and conditions as well as the provisions in the contract which form part of the other documents submitted by the appellant.

It is on the use of the expression "on the terms and conditions" that the learned Counsel for the appellant would like to place emphasis upon. According to her, this expression clearly refers to the terms and conditions imposed by the appellant while submitting his offer dated 4/04/1994. However, I am not inclined to accept the proposition as the expression is not in the nature that "on the terms and conditions prescribed by you". Even assuming that this expression refers to the terms and conditions stipulated by the appellant while submitting his offer dated 4/04/1994, still, it must be said that these conditions never crystallized into a binding agreement between the parties as they were never incorporated in the work agreement dated 30/05/1994 (Exhibit 146). There is no dispute about the fact that this agreement has been voluntarily executed between appellant and respondent no. 3 and it has never been the case of the appellant that it was vitiated by any fraud, undue influence, misrepresentation, coercion etc. It was also not his case that parties were not ad idem on the terms and conditions of the contract and about intentions of the parties. If such is the case, I do not think that it can be said that the offer dated 4/04/1994 was accepted by respondent no. 3 with alleged condition and therefore that condition formed an essential part of the agreement dated 30/05/1994 vide Exhibit 146.

Learned Counsel for the appellant has argued that the agreement vide Exhibit 146 itself lacks in certain necessary details of the terms and conditions of the contract and, therefore, it cannot be read in isolation and would have to be considered together with the offer made by the appellant. Learned Counsel for respondents do not agree. By taking me through the various clauses of the said agreement and also the pleadings of the appellant, they submit that there is no dispute between the parties that the agreed offer or contract amount was of Rs. 31,40,000/- and that the appellant was bound under the contract to remit 2% of the amount of the offer or the contract for a period of 50 weeks, which amount would come to Rs. 62,800/- per week.

It is true that it is not mentioned in the said agreement specifically as to what would be the contract amount and what would be the amount of weekly installments. But, the tender notice without any dispute showed that minimum offer amount should be of Rs. 31,40,000/- and in response to the same, the appellant had also submitted his offer for Rs. 31,40,000/- This is the case of the appellant himself. Therefore, absence of any specific contract amount in the agreement (Exhibit 146) would not mean that the agreement is not binding between the parties as regards the agreed contract amount. There is also specific mention in the said agreement of the amount that is to be remitted on weekly basis by the agent. It is specified to be 2% of the contract amount. This can be found in clause 3 of the said agreement. This clause specifically provides that the agent shall be entitled to retain with him by way of commission from out of amount of octroi calculated by him during one year, that much amount which would exceed the amount quoted by him in his offer as and by way of contract amount. It is further provided that the weekly remittance shall be at the rate of 2% of the contract amount and if total daily collection during any week is less than 2% of the contract amount, an obligation has been imposed upon the agent to ensure that at the end of the week 2% of the contract amount is remitted to the Council. Clause 5 of the agreement also states that the payment in these terms would be the essence of the contract. Therefore, I find no merit in the argument that the agreement of work vide Exhibit 146 is an incomplete document and has to be read together with other documents, particularly, the letter dated 4/04/1994. If the conditions stated in the letter dated 4/04/1994, which at best could be termed as a fresh proposal from the appellant, had been really accepted, they would have been incorporated in the work agreement vide Exhibit 146. However, that being not the position, it cannot be accepted that the said conditional offer of the appellant was accepted by the Council.

The learned Counsel for the appellant has further argued that respondent no. 3 did not calculate the minimum amount of offer in accordance with the directions issued in the Government order dated 28/02/1994 (exhibit 109) which fact has been admitted by respondent no. 3 in the resolution dated 5/04/1994. Learned Additional Government Pleader for respondents no. 1 & 2 and learned Counsel for respondents no. 3 & 4 have submitted that fixation of offer amount was a policy matter not falling within the province of a Civil Court and, therefore, this point cannot be raised by way of a civil dispute. They also submit that whatever might be the objection, it evaporates once the appellant had submitted his offer with minimum offer amount of Rs. 31,40,000/- and also executed a binding agreement with respondent no. 3.

Determination of minimum offer amount or contract amount is a matter of policy and I am afraid, Civil Court would have no jurisdiction to adjudicate upon it in any manner. It is also the matter of debate as to whether or not the Government order vide Exhibit 109 gave rise to any legally enforceable rights of the contractors. The Government order is in the nature of instructions given to its subordinate departments and if there is any grievance on account of compliance with these instructions, appropriate forum to approach for its redressal would be the concerned administrative authority and not the Civil Court. Even otherwise, as rightly submitted by the learned Additional Government Pleader for respondents no. 1 & 2 and the learned Counsel for respondents no. 3 & 4 that once the appellant submits his offer for amount of Rs. 31,40,000/- and also binds himself in a legally enforceable contract, the appellant is estopped from questioning the correctness of the offer or contract amount. If he had a dispute about it, the appellant should have raised it before entering himself into a binding contract with respondent no. 3.

Learned Counsel for the appellant has submitted that even the Collector in the Municipal Case No. 9/MUN-CRB-100/1994-95 filed by the appellant for refixation of the minimum offer or contract amount and recalculation of the contract amount in proportion to the period available with the contractor, did not consider appropriately the Government order dated 28/02/1994 and wrongly calculated the weekly remittance amount to be at Rs. 65,496/-. She submits that even though minimum offer amount was reduced to Rs. 27,22,782/-, the amount of weekly remittance was increased by the Collector in an illegal manner. She submits that Collector had no authority to increase weekly remittance amount in this manner. The appellant had in fact preferred an appeal against the said order of Collector passed on 31/12/1994 before respondent no. 4 which appeal was dismissed by him on the ground of lack of jurisdiction. Thereafter, the appellant did not challenge it by filing a Writ Petition or revision before the competent authority. Therefore, the order of the Collector has now become final and cannot be allowed to be reopened in a civil suit at the instance of the appellant.

For these reasons, I find that the appellant has failed to prove that as agreed between himself and respondent no. 3, he was required to pay 2% of the collection amount calculated as weekly remittance of octroi after deducting 50% of the amount on account of establishment charges (30%) and agent''s commission or profit (20%).

It is the grievance of the appellant that without giving any notice or passing any resolution by the Council, he was not allowed to work as octroi collection agent with effect from 15/02/1995 thereby causing him loss. It is also his case that he is entitled to work as octroi collection agent. The learned Additional Government Pleader for respondents no. 1 & 2 and learned Counsel for respondents no. 3 & 4 have submitted that since the appellant himself had committed breach of the contract, he was rightly prevented from working as octroi collection agent with effect from 15/02/1995.

So far as the short falls in remitting the installments towards octroi collection are concerned, there is no dispute about the same. According to appellant, he was not able to remit installments at the rate of Rs. 62,800/- as the period of the contract was not for full one year and that his condition that 2% amount shall be calculated after deducting 50% amount from the octroi collected was accepted by respondent no. 3 and these were the reasons that there were short falls in remittances. So far as the condition of deduction of 50% amount from the amount collected from octroi is concerned, I have already found that it was never accepted by respondent no. 3 and it did not form part of the contract between the parties. As regards the short duration of the work agreement, it must be said that the appellant cannot be allowed to agitate even this issue as he had voluntarily entered into the agreement vide Exhibit 146 and specifically agreed that he would work as octroi collection agent for the period from 31/05/1994 to 31/03/1995. This agreement would be binding upon the appellant and he cannot seek to vary its conditions in any manner except by way of a subsequent agreement validly entered into between the parties in that regard. He has not proved any such subsequent agreement varying the terms of contract. Therefore, his argument on this count cannot be accepted.

The condition no. 5 of the contract agreement (Exhibit 146) states that the payment as prescribed in the agreement is the essence of contract and in the event of failure on the part of the agent to make such payment the contract shall stand terminated forthwith without any notice to the agent and the security deposit shall stand forfeited to the Council. Relevant portion of clause 5, for the sake of convenience, is reproduced as under:

"5) The payment as aforesaid is the essence of contract and in the event of failure on the part of the agent to make such payment the contract shall stand terminated forthwith without any notice to the agent and the security deposit shall stand forfeited to the Council without prejudice to any rights or remedies of the Council under the contract, to claim any loss and damages and compensation being difference amount between the contract amount and actual amount collected by way of octroi for contracted period of one year."

From the above referred clause, it is clear that whatever has been done by respondent no. 3 is in pursuance of its right under the contract. There is no dispute about failure on the part of the appellant in making payment in the manner stipulated under the contract. Therefore, by virtue of clause 5, the contract stood terminated forthwith without any notice and consequently deposit also stood forfeited to the Council. The appellant cannot have any grievance on this issue as it is he who has committed breach of the contract. Therefore, the appellant was rightly prevented from working as octroi collection agent with effect from 15/02/1995, and that he was rightly found by the trial Court as not entitled to work so till 31/03/1995. Accordingly, points no. (I), (ii) and (iii) are answered in the negative.

Since the appellant himself was at fault in committing the breach of the contract, he would not be entitled to receive any amount as compensation for the loss suffered by him, on various counts as alleged by him. The trial Court has rightly rejected the claims of the appellant on all these counts and, I see no reason to make any interference with them. Besides, the work agreement itself was in its nature determinable and, therefore, no injunction could have been issued by the trial Court and, it has been rightly refused by it. Points no. (iv) and (v) are answered accordingly.

Thus, there is no merit in the appeal and it deserves to be dismissed with costs. The appeal stands dismissed with costs. Decree to be drawn up accordingly.