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Padia Timber Company Ltd Vs The Board of Trustees of Visakhapatnam Port Trust Case Brief

Padia Timber Company Ltd Vs The Board of Trustees of Visakhapatnam Port Trust Case Summary

Appellants: Padia Timber Company (P) Ltd.

Respondent: The Board of Trustees of Visakhapatnam Port Trust

Citation: MANU/SC/0006/2021

Coram: Navin Sinha and Indira Banerjee, JJ.

Facts

It was a civil appeal filed before Hon’ble Supreme Court in the year 2008. Respondent Port Trust gave a notice for the opening of Tender for supply of wooden sleepers, which was supposed to be opened on 1/08/1990. On 1/08/1990, Appellant submitted a conditional offer, also did not accept clauses 15 & 16 of the Tender, and deposited Rs. 75,000. Then Tender opening was postponed to 8/8/1990. Again on this newly announced date, Appellants submitted a revised quotation offer reckoning inspection would only be done at the Appellant’s depot. After 2-3 days, Appellant agreed to supply as they had few discussions. It was also made clear that Appellant would charge 25% above the rate quoted by the Appellant if the respondent port trust still required inspection that their own site. The respondent port trust accepted the offer of Appellant but added some more conditions and also extended the time period of the delivery period. Appellant declined those additional conditions and also declined to extend the validity of its offer and also requested to return back the earnest money. After ten months, the Respondent port trust placed an order at a much higher rate. They also claimed damages suffered from the petitioner as there was a binding contract. Appellant said that there was no concluded contract as the respondent port trust did not fully accept the conditions of the offer, and the Appellant disagreed with the terms and conditions of the respondent port trust. 

Two suits were filed, one from the respondent port trust for seeking the damages and the other from the Appellant claiming the earnest deposit’s refund. Two suits were clubbed together and were heard by the First additional Senior Civil Judge Visakhapatnam. The Trial Court found that the contract was enforceable till its completion or its abandonment. The contract’s rescission and consequent forfeiture of the security deposit were proper and within the contract terms.

The Appellant filed an appeal in High Court, which was dismissed.

Issue: 

Whether the acceptance of a conditional offer with other conditions results in a concluded contract, irrespective of whether the promiser accepts the additional conditions proposed by the promise.

Arguments: 

Appellants argued that the negotiations between the Appellant and the Respondent-Port Trust did not fructify into a concluded contract since the Respondent-Port Trust did not accept the conditions of the offer of the Appellant fully and the Appellant did not agree to the terms and conditions on which the Respondent-Port Trust insisted

The respondent port trust argued that there was a binding contract. Due to breach of contract, Respondent suffered loss and demands damages suffered. 

Judgment: 

Supreme Court was of the contention that offer and acceptance must be absolute. When the acceptor puts in a new condition while accepting the contract already signed by the proposer, the agreement is not complete until the proposer agrees with that condition. The court also said that High Court overlooked section 7 of the Contract act 1872. Judgment and order of the High Court under appeal as also the common judgment and order of the Trial Court were set aside.

The Appellant was neither in breach nor liable to damages. Appellant was entitled to a refund of earnest money deposited with the Respondent-Port Trust. The earnest money shall be refunded within four weeks with interest @ 6% per annum from the date of institution of suit till the date of refund thereof. 

Cases Cited by the Supreme Court: 

  1. Haridwar Singh v. Bagun Sumbrui and Ors. AIR 1972 SC 1242
  2. Jawaharlal Burman v. Union of India, AIR 1962 SC 378
  3. Union of India v. Bhim Sen Walaiti Ram.(1969) 3 SCC 146

Present Status: 

The Judgment is still applicable. As the Division Bench gave the judgment, there was no dissenting or concurring opinion.

Conclusion: 

With this Judgment, it has been made clear that acceptance of a conditional offer with a further condition does not result in a concluded contract.

By – Dheeraj Diwakar

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