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Judgment
M. Thanikachalam, J.—The unsuccessful defendant before the trial Court is the appellant.
The respondent/plaintiff''s case in brief:
(a) The plaintiff/respondent had called for sealed tenders, for the disposal of bran, for the quarter ending 1.10.1980 to 31.12.1980, in which the
appellant/defendant had participated, by offering their estimate. The offer made by the defendant being the highest, for cone polished raw rice bran
as well as for cone polished boiled rice bran at Rs. 1186.70 and Rs. 1567.40 per metric ton, respectively, was accepted by the plaintiff
Corporation, as per the proceedings dated 28.1.1981. Thereafter, the acceptance was intimated to the defendant, requesting them to execute an
agreement, as well as to furnish security deposit of Rs. 10,000/-. Despite the fact the defendant had participated in the tender, had made offer,
which was accepted by the plaintiff, they failed to act as per the terms of the tender, resulting re-tender on 2.1.1981. Due to fluctuation in prices,
M/s. Foods, Fats and Fertilisers, Madras, had offered the rate of Rs. 950/- per metric ton, for cone polished raw rice bran and Rs. 600/- per
metric ton, for boiled raw rice bran, which was accepted by the plaintiff Corporation, as per the proceedings dated 2.9.1981.
(b) The plaintiff/respondent Corporation, because of the default committed by the appellant/defendant, in not acting as per the terms of the tender,
as well as due to breach of contract, sustained a total loss of Rs. 58,332.22, which is liable to be reimbursed by the defendant, even as per the
terms of the contract. The notice issued by the plaintiff corporation failed to realise the amount, thereby compelling the plaintiff to move the Court,
for the recovery of a sum of Rs. 58,332.22, with future interest from the defendant/appellant.
The defendant/appellant, in their written statement, denying the allegations in the plaint, would contend, that there was no concluded contract
between the parties, even as per the tender conditions, that the offer made by the defendant alone is not conclusive, to conclude that there was a
concluded contract, in the absence of follow up actions, such as deposit of security amount, execution of the agreement, that the plaintiff had not
acted bonafidely, since they failed to make available the cone polished bran, as required by the defendant in their tender, that there was no
bonafide on the part of the plaintiff in tendering for very low amount than quoted on the earlier occasion by M/s. Food, Fats and Fertilisers Ltd.,
and giving the tender to them, and that in any event, the damages claimed by the plaintiff is unlawful and usurious.
On the basis of the above pleadings, the trial Court proceeded with the trial of the case, after framing four issues. On behalf of the plaintiff, one
Thiru Narayanan has been examined as P.W.1, who sought the aid of Exs.A1 to A.16 to buttress the claim. To negative the above evidence, and
to seek strength for the defence raised in the written statement, one Chandrasekaran has been examined as D.W.1. No document has been
produced in support of his oral testimony.
The learned Principal Subordinate Judge, Vellore by scanning the materials and considering the legal aspects, came to the conclusion, that there
was a concluded contract between the parties, that in view of the breach committed by the defendant, the plaintiff had sustained loss, to the extent
of Rs. 58,322.22. Thus concluding, to compensate the loss sustained by the plaintiff Corporation, a judgment was rendered, granting a decree in
favour of the plaintiff on 28.4.1989, which is under challenge in this appeal.
Heard the learned counsel for the appellant, Mr. N.C. Rangarajan and the learned counsel for the respondent, Ms. V.J. Latha.
The learned counsel for the appellant/defendant submits, that there is no concluded contract between the parties, which could be enforced in a
Court of law and that in the absence of the concluded contract and in the absence of proof of damage, the plaintiff is not entitled to any relief. In
this view, he argues that the trial Court had committed an error, in concluding as if there was a concluded contract, as well as the plaintiff had
sustained loss, which are not in accordance with law, requiring reversal.
The learned counsel for the respondent, while opposing the above contentions submits, that the offer made by the defendant/appellant, in
pursuance of the tender, was accepted by the plaintiff Corporation, indicating a concluded contract, that admittedly, the defendant had not acted in
terms of the tender, thereby committed breach of contract, resulting retender, under which cone polished raw rice bran, as well as cone polished
boiled rice bran were sold below the previous tender rate, and that as per the tender clause, the defendant, who was the cause for retender and for
the loss sustained by the plaintiff corporation, is bound to compensate the same and in this view, the trial Court, considering all these facts into
consideration, based upon materials, reached an unerring conclusion, which does not warrant any interference by this Court.
From the pleadings and the above arguments, the points that arise for consideration are:
(i) Was there any concluded contract between the parties?
(2) Is the respondent/plaintiff entitled to compensation, if so to what extent?
The undisputed facts in this case are:
(i) that the plaintiff Corporation called for sealed tenders, for the disposal of bran, for the quarter ending 1.10.1980 to 13.12.1980,
(ii) that the defendant/appellant having participated in the tender, had made an offer, for the purchase of the above said bran at Rs. 1186.70 and
Rs. 1567.40 per metric ton, respectively, and
(iii) that after the offer was accepted, the appellant/defendant failed to comply with the other terms of the tender, resulting retender, in which for the
above said period, the cone polished raw rice bran, has been sold for lesser price viz., Rs. 950/- per metric ton for cone polished boiled rice bran
for Rs. 600/- per metric ton. This would indicate, because of the conduct of the defendant, the plaintiff Corporation sustained loss.
Under clause 7 of the tender (Ex.A1), there is a provision, to compensate the plaintiff Corporation in the event of loss sustained, due to the
conduct of the successful bidder, which reads:
In the event of failure to complete the movement payment within the aforesaid period of one week the Regional Manager, T.N.C.S.C. Ltd.
Vellore shall have the option to resell the stocks at the risk and cost of the original successful tenderer and also to recover the loss sustained by the
Corporation as a result of such failure from the security deposit or in any other manner. Any saving or profit or resale as aforesaid shall be
exclusively to the account of the corporation and the original buyer shall have no claim to any such gain"".
Invoking this clause, the plaintiff Corporation issued a notice as evidenced by Ex.A.12, demanding a sum of Rs. 58,332.22, which failed to
recover the amount, despite the acknowledgment of notice, resulting this suit.
The submission made by the learned counsel for the appellant, that there was no concluded contract appears to be not well founded. The main
thrust of the learned counsel for the appellant is, that after the offer made by the defendant/appellant, the so called acceptance of the offer made by
the defendant, was not properly intimated to them and therefore, they had no opportunity to comply with the conditions stipulated in the tender
notice and in this view, it should be held, that there was no concluded contract.
By going through the documents very carefully, as well as by scanning the evidence adduced on behalf of the parties, we are unable to
persuade ourselves, to accept the above submission. As seen from Ex.A2, the Managing Director of the plaintiff Corporation passed an order,
accepting the unconditional offer made by the defendant, directed the Regional Manager, Vellore, to release the stock of cone polished raw rice
bran, and cone polished boiled rice bran, to the successful tenderer viz., M/s. United Solvent Extracts Limited, Athur, following the usual tender
procedure. On the basis of the confirmation of the tender, a communication dated 20.2.1981 has been sent to the appellant/defendant, requesting
them, to pay security deposit amount of Rs. 10,000/-, for getting release order at once, as contemplated under the tender conditions. Though a
feeble attempt was made on behalf of the appellant to say, that the appellant has not received this communication, this attempt is thwarted by the
production of Exs.A15 and A16. The fact that the appellant would have received the order of acceptance, is evident from the evidence given by
P.W.1, which is also in a way supported by the oral evidence of D.W.1. The Assistant Manager of the Corporation, who has been examined as
P.W.1 has testified before the trial Court, about the despatch of acceptance order, placing reliance upon Ex.P.15. He has further asserted, that the
defendant had received and acknowledged the same under Ex.P.16, which are not challenged. D.W.1 also would state that his clerk had been to
Modern Rice Mill, Cheyyar, where the bran was identified, which is not in conformity with the tendered bran and therefore, they refused to take
delivery of the same. This evidence coupled with the oral evidence of P.W.1 supported by Exs.P.15 and 16, would make it clear, and suggest
positively, that the acceptance of the offer was promptly communicated to the appellant/defendant, within the reasonable time, thereby establishing
that the offer made by the defendant, in pursuance of the tender, was accepted and informed, completing the circle of negotiation, to have a valid
and enforceable contract. The trial Court, considering all these facts in detail, had come to an irresistible conclusion, that there was a concluded
contract between the parties and we find no reason to deviate from the said finding.
As submitted by the learned counsel for the appellant, true, the tender clauses contemplate some future acts also, such as deposit of security
amount, execution of an agreement, for the due performance of the contract, etc. Indisputably, the defendant/appellant, who participated in the
tender, had failed to deposit the security deposit as demanded as well as had not executed the agreement as contemplated under clause 11 of the
tender. Ex.A4 would indicate, that the appellant informed the plaintiff Corporation, to come to the office in person, when they were informed under
Ex.A3, regarding the acceptance of the offer, as well as the request made for deposit of security amount. The contention that Ex.A4 telegram was
not sent by the appellant company does not deserves credence, considering the oral evidence of D.W.1, as justifiably observed by the trial Court.
There is nothing on record, to take contra view, that Ex.A-4 would not have emanated from the defendant. Therefore, we are of the considered
opinion, that after the offer was accepted and when the same was informed to the appellant/defendant, they responded that they would attend in
person, in Ex.A4, but failed to do so. This is also sufficient to conclude, that there was an offer and unconditional acceptance, and communicated,
which are essential ingredients, for a concluded valid contract. The fact that some of the subsequent acts contemplated in the tender, such as
payment of deposit and formal execution of the agreement, certainly would not nullify the concluded contract. It is not the case of the appellant that
they withdrew the offer, before its acceptance. The subsequent acts contemplated in the tender are only for the effective purpose of enforcing the
contract and nothing more.
The contract emerges between the parties, when the offer of tender is accepted, by the party inviting tenders. In the case of tender, a contract
should be construed as concluded, only when the tender is accepted, despite further direction, to do certain consequential activities. While
accepting the tender, if the party inviting tender, had imposed any conditional acceptance, then it would amount to not accepting the offer, as such
made by the other party and in that case, it is very difficult to say, there was a concluded contract. A person, who made an offer, in pursuance of a
tender, is entitled to withdraw the same, before its acceptance, by communicating the same effectively. Here, it is not the case of the
appellant/defendant, as seen from the written statement, as well as from the oral evidence of D.W.1, that though an offer had been made, the same
was withdrawn, because of certain apprehended violations. In this view, if the offer is made and the same was accepted unconditionally, there is no
escape for the appellant, branding this contract as inchoate one. The tender was for the disposal of cone pressing bran crater B.R. And R.R. and
huller bran produced in the Modern Rice Mill, Cheyyar, for the period of three months from 1.10.1980 to 31.12.1980. The appellant is not a
stranger to this transaction and it seems, they had already participated in these kind of tenders and purchased bran, for extracting oil. In the tender,
there is no definite quantum or quality of stock guaranteed. In fact, the tenderers would be permitted to lift the stock, on payment of cost, as and
when the stocks are ready at mill point. Knowing the conditions of the tender, the appellant quoted the price for cone polished raw rice bran at Rs.
1186.70 per metric ton and for cone polished boiled rice bran at Rs. 1567.40 per metric ton, as per the sealed tender dated 2.1.1981, Ex.A6.
The offer was accepted without any condition, as seen from Ex.A2.
Ex.A2 contemplates only the collection of cost and the usual procedure to be followed such as collecting security deposit, as well as executing
an agreement, for the purpose of effective enforcement. A communication was sent to the appellant on 20.2.1981, which was acknowledged by
telegram, which was reiterated by the plaintiff, as seen from Ex.A5, when there was a default on the part of the appellant. Therefore, the case
spoken by D.W.1, as if they had not received the acceptance communication, is futile and the said evidence was given only to evade the
responsibility. Except the total denial, nothing is on record, to suggest that the evidence given by P.W.1 is unworthy, giving preference to the oral
evidence of D.W.1. In the communication dated 28.1.1981, the Managing Director of TNCSC instructed the Regional Manager, Vellore, to
release the stock on collection of cost, after observing usual tender procedure, which was informed to the appellant. Therefore, on the basis of the
unconditional acceptance, the appellant ought to have paid the security deposit and obtained an order of release from the Modern Rice Mill, which
he failed to do so. The execution of the further document, as mentioned in the tender, appears to be mere expression of the desire of the parties, as
to the manner in which the transaction already agreed to and in this view, it should be held, there is a binding contract and the reference to the
execution of the formal document, may be ignored and the same would not in any way affect a concluded contract, because of the unconditional
acceptance.
The case spoken by D.W.1, that the plaintiff failed to perform his part of the contract, as per the conditions in the tender, appears to be
unacceptable. He failed to say, which condition of the tender, was violated by the plaintiff company. The case spoken by DW1, that they offered
the price under the faith, that cone polished bran would be supplied, whereas such kind of bran was not available in the rice mill, is not supported
by any evidence. The tender itself says, cone pressing bran crater, B.R.& R.R. Knowing that condition alone, offer was made. If such kind of bran
or quoted bran were not available in the rice mill, then immediately, if the appellant/ defendant felt, that the plaintiff had violated the conditions of
the tender, they would have withdrawn the offer, thereby establishing that they are not a party to the concluded contract. Admittedly, from the
defendant''s side, no communication emanated, informing the corporation, such as, they have violated the tender conditions or accepting the offer,
they have failed to supply the bran, as indicated in the tender form. Therefore, it is too late, for the defendant to contend, that they failed to perform
their part of the contract, because of the violation committed by the plaintiff corporation. For the so called violation said to have been committed
by the plaintiff Corporation, we are unable to see any evidence, either in the form of oral or documentary, whereas we could see satisfactory
evidence, to conclude, that there was a concluded contract between the parties.
On 26.5.1981, the appellant was informed that because of the failure on the part of the plaintiff, in not depositing the security deposit, as well
as getting the order from the office, the plaintiff Corporation had called for re-tender, for the disposal of bran. They have also further informed, that
as per clause 7 of the tender condition, the loss sustained by the corporation, due to the re-tender will be collected from the defendant. For this
notice also, there was no reply. On the same day, re-tender was published, in which one Foods, Fats & Fertilisers Limited, participated and
offered to purchase the bran, at the rate of Rs. 950/- per metric ton, for boiled rice bran and Rs. 600/- per metric ton, for the cone polished raw
rice bran, which are less than the price quoted by this defendant previously. Therefore, the difference in value, should be construed as damage and
calculating the difference alone, a sum of Rs. 58,322.22 is claimed as damage, from the appellant/defendant. We find no reason to negative the
claim of the plaintiff, since the same is in accordance with the tender conditions, followed by the breach committed by the appellant.
The submissions of the learned counsel for the appellant, that the plaintiff Corporation ought to have taken necessary steps, adopted
reasonable means, in order to mitigate the damages said to have been incurred by the plaintiff and having failed to do so, the suit claim is highly
excessive are unacceptable to us, since we find no slackness on the part of the plaintiff Corporation. By going through the written statement, as
well as the evidence of D.W.1, we are of the view that no such defence has been specifically raised and in fact, no evidence has also been let in.
The burden of showing that the plaintiff as a reasonable corporation ought to have taken certain steps to mitigate the loss, consequent to the breach
committed by the defendant, lies only upon the person, who claims so; in this case, the defendant. D.W.1 except saying, if the plaintiff corporation
had not re-tendered, this kind of damage would not have occurred, failed to say, how the plaintiff Corporation failed in its duty. It is also admitted
by D.W.1, that the passage of time will reduce oil content in the bran. The original tender was accepted and intimated on 28.1.1981 and
20.2.1981. The plaintiff Corporation reasonably waited for the arrival of the defendant, since a telegram had been sent informing, that the
defendant will meet the plaintiff corporation in person.
Having realised, that the defendant had committed breach of trust, as well as breach of contract, steps had been taken in the month of May,
informing the defendant also. In this process, more or less four months have lapsed. There would have been fluctuation in the market also, which
could be seen from Ex.A9. The subsequent successful bidder informed the Corporation, that the result of the tender should be informed to them,
as early as possible, as the price of rice bran is fluctuating and the stock is already six months old. It is admitted by D.W.1 that the oil content will
be reduced, if time lapses. Because of this reason alone, it appears when re-tender was conducted, the bran was sold at lesser price, thereby
causing loss to the Corporation to the tune of Rs. 58,322.22, which the appellant is liable to compensate.
The plaintiff has claimed interest at the rate of 6% per annum, from the date of plaint till the date of payment. The damage or loss sustained by
the plaintiff is the difference in price, which had happened due to the breach of contract committed by the defendant. It is not the case of the
plaintiff Corporation, that the defendant enjoyed the benefit of the goods, by removing the same, but failed to pay the amount or something like
that. Under the facts and circumstances of the case, it is sufficient, if the plaintiff is compensated to the actual loss. It is not necessary that
compensation amount should carry interest from the date of the plaint. Therefore, in our considered opinion, it may not be proper to charge the
defendant, with interest from the date of plaint and justice would be met, if the defendant is directed to pay interest, from the date of the decree,
considering the peculiar nature and circumstances of the case. In this view, the interest awarded by the trial Court from the date of plaint has to be
modified, confirming the rest of the Judgment, as such, for the reasons assigned supra.
The result therefore is, the appeal is allowed in part and there shall be a decree in favour of the plaintiff for a sum of Rs. 58,322.22 with interest
thereon at 6% per annum, from the date of decree till the date of realisation, with costs. Considering the peculiar nature of the case and other
attending circumstances, the parties are directed to bear the cost of the appeal.