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PETITIONER: B.C. MOHINDRA

       Vs.

RESPONDENT: THE MUNICIPAL BOARD, SAHARANPUR

DATE OF JUDGMENT: 20/11/1968

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. HEGDE, K.S.

CITATION:  1970 AIR  729            1969 SCR  (2) 794  1969 SCC  (1)  56

ACT: U.P.  Municipalities Act, 1916 s.  97--Scope  of--Agreements required to be in writing--List of bidders at auction signed by   winning  bidder  and  Board   Chairman--Board   passing resolution  confirming  respondent’s  bid-Whether   contract amounted to written agreement.

HEADNOTE: At  an  auction  held  on April 8, 1950  of  the  theka  for collecting  Tahbazari dues of a Mandi, the  appellant’s  bid was  accepted.   At the time  of auction a  meeting  of  the respondent  Board  was also held in  which the  auction  was confirmed by resolution and the usual conditions relating to the  payment  of auction money were amended to  provide  for payment  in four installments.  The appellant was asked   to execute   and  complete  an  agreement  in  favour  of   the respondent  according to the conditions  and rules,  but  he ’failed  to  do so.  In view of this and the  fact  that  he failed  to pay the second installment, the respondent  Board cancelled  the appellant’s theka and reauctioned it.   After taking  into account the money received from  the  reduction and the instalment paid by the defendant, the Board sued the appellant  for  the recovery of the   balance   and   future interest.   One question considered by the Trial  Court  was whether  the provisions of s. 97 of the U.P.  Municipalities Act,  1916, which required certain contracts made by  or  on behalf  of the Board be in writing, had been complied  with. The  Trial Court found that there was a list of  bidders  at the  auction  held  on  8th  April,  1950  which  bore   the signature   of  the  appellant and of the  Chairman  of  the respondent Board; it therefore considered that the  contract was  a written contract and decreed the suit. In appeal  the High  Court remanded the case as it took the view that   the question  of the applicability of and compliance with s.  97 of the Act had not been dealt with. On appeal to this Court,     HELD: On the facts, it was clearly proved that there was a  contract                        in  writing  within   the meaning  of  the proviso to s. 97(1) and the  provisions  of sub. s. (2).  The signed list of bidders and the  resolution of the Board passed at the time of the auction constituted a

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contract in writing within the meaning of s. 97 of the  Act. There  was  therefore  no justification in  the  High  Court remanding the case. [797 H; 798 F--G] Union  of  India  v. Ralla Ram, [1964] 3  S.C.R.  164,  173, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1036 of 1966.     Appeal  by  special leave from the  judgment  and  order dated  March 15, 1965 of the Allahabad High Court  in  First Appeal No. 268 of 1963. C.B. Agarwala and K.P. Gupta, for the appellant.     R..K.  Garg,  D.K.  Agarwal and M.V.  Goswami,  for  the respondent. 795 The Judgment of the Court was delivered by     Sikri, J. This is an appeal by special leave, and  while granting it this Court confined it only to the point arising under    s.   97   of   the   U.P.    Municipalities    Act, 1916--hereinafter referred to as the Act     The  facts  relevant to the point are  as  follows:  The Municipal  Board,  Saharanpur,  respondent  before  us   and hereinafter referred to as the plaintiff  brought a suit for the recovery of Rs. 12,044/-19 and future interest upto  the date of realisation from B.C. Mohindra, appellant before  us and hereinafter referred to as the defendant.  In brief, the case of the plaintiff was that there was an auction on March 29, 1960, of the theka for collecting tahbazari dues of  the mandi in Mazahir Gang alias Ganj Jadid, Saharanpur, for  one year  from April 1, 1950 to March 31, 1951, subject  to  the conditions of sale entered in the amended sale proclamation. The  defendant bid Rs. 40,000/- subject to the  confirmation by  the Board. The Board did not confirm the  auction  sale, and  on April 8, 1960, the tahbazari was re-auctioned.   The defendant  bid  Rs. 53,025/-.  At ,the time of  the  auction sale  a  meeting  of the Board was also held  in  which  the auction  aforesaid  was confirmed under  Resolution  No.  26 dated  April 8, 1950, in the presence of the defendant,  and only the condition relating to the payment of auction  money was  amended  to provide for payment in  four  installments. The  defendant had to deposit 1/4th of the bid on  April  8, 1950.   He  failed to deposit this instalment  on  April  8, 1950, but on April 10, 1950, he deposited the instalment and took  charge  of the mandi aforesaid and  began  to  collect tahbazari  dues.   The defendant was asked  to  execute  and complete   an   agreement  in   favour  of   the   plaintiff according  to the conditions and the rules but he  continued to  put off the matter.  As the defendant failed to  deposit the  amount  of  the  second  instalment  and  execute   the agreement,   the  plaintiff  cancelled  the  theka  of   the defendant  and began  to collect tahbazari dues through  its own staff and re-auctioned the theka on July 3, 1950.  After taking into account  the  money received from the re-auction on  July 3, 1950, and the money deposited by the  defendant, according  to  the  plaintiff there was a  shortage  of  Rs. 12,044/-19.     The  defendant did not dispute the fact that an  auction was held and that he made the last bid of Rs. 53,025/- which was  accepted.  He also admitted that he had  deposited  Rs. 13,256/4/-. But he ,alleged that the plaintiff had committed various  breaches  of the contract in contravention  of  the rules,  contract and the bye-laws as a result of  which  the defendant Suffered a loss of Rs. 9,685/-.

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796     The Trial Court flamed various issues arising out of the pleadings  but no issue was raised regarding  non-compliance with  s.  97 of the Act.  It appears that  an  argument  was raised  before the Trial Court regarding s. 97.   The  Trial Court observed:                     "On  the basis of this decision  (A.W.R.               1951 page 560), it was urged on behalf of  the               defendant that it was necessary in the present               case that a written contract should have  been               obtained by the plaintiff under section 97  of               the  Municipalities Act  .......  In a  public               auction,  the various bidders give their  bids               which may be called offers and the moment  the               auctioneer   knocks  the  hammer  down  at   a               particular  bid,  that bid is to be  taken  as               accepted between the parties.  It is the knock               of  the hammer which concludes  the  contract.               The  list of bidders is the only  evidence  of               the  contract  showing  that  out  of  various               offers, the highest bid was accepted.  In this               particular case, the list of bidders bears the               signature of the defendant and of the Chairman               of  the  plaintiff Board,  thus  reducing  the               contract into writing vide Ex. 17.                     The contract in this case is, therefore,               a  written contract evidenced from  paper  Ex.               17   ....   According  to  the  provision   of               section  97 of the Municipalities Act, such  a               contract should have been only in writing  and               this condition was fulfilled by drawing up the               list of bidders and obtaining the signature of               the highest bidder in whose favour the auction               was concluded on such a list."               The Trial Court decreed the suit.     The  defendant appealed to the High Court, and the  High Court (Srivastava and Jagdish Sahai, J J) by its order dated October 5, 1961, remanded the case on two issues:     (1)  Whether the agreement relied upon by the  plaintiff was  in  accordance  with sections 96 and  97  of  the  U.P. Municipalities Act of 1916 ?  If not, what is the effect ?     (2)  Whether  section  65 of  the  Indian  Contract  Act applied  ?  If  so,  what compensation,  if  any,  could  be recovered by the plaintiff from the defendant on account  of any  advantage  the  latter  may  have  received  under  the agreement ?     While  passing  the  order  of  remand  the  High  Court observed:       "While hearing arguments in this appeal we  discovered that a very important point was apparently missed 797 both by the parties and by the learned Civil Judge.  We feel that  the  case cannot be properly  decided  without  having findings  of  learned Civil Judge on that point.  The  point involves two questions." We  are  in  agreement with the contention  of  the  learned counsel for the plaintiff that there was no justification in remanding  the  case.  The Trial Court had  dealt  with  the question of s. 97 of the Act and this apparently escaped the notice of the High Court.     Be  that as it may, the Trial Court, in a  very  careful and reasoned order, dated August 24, 1962, held that on  the facts ss. 96 and 97 of the Act had been fully complied with.     The  High Court (Jagdish Sahai and Broom, JJ.), came  to the  conclusion that s. 97 of the Act did not apply  to  the

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facts of the case.  The High Court observed:                      "The  suit, therefore, is one  for  the               failure  to execute the contract deed  and  to               pay the amounts which have become due from him               by  way  of damages.  Section 97  of  the  Act               deals with contracts which have been executed.               It is for this reason that we have come to the               conclusion  that the provisions of Section  97               of  the Act are not attracted to  the  present               case."               Section 97 of the Act reads as follows:                      "Execution   of  Contracts  (1)   Every               contract  made  by  or on behalf  of  a  Board               whereof  the value of the amount  exceeds  Rs.               250/-  shall  be  in  writing;  Provided  that               unless the Contract has been duly executed  in               writing,  no  work  including  collection   of               materials in connection with the said Contract               shall be commenced or undertaken.               (2) Every such contract shall be signed-                      (a)   by  the  President  or  a   Vice-               President  and by the Executive Officer  or  a               Secretary, or                      (b) by any person or persons  empowered               under  subsection (2) or (3) of  the  previous               section  to sanction the contract  if  further               and in like manner empowered in this behalf by               the Board."     It  seems  to  us that on the facts of the  case  it  is clearly  proved that there was a contract in writing  within the  meaning  of proviso to s. 97(1) and the  provisions  of sub.-s.  (2).   We agree with the conclusion  of  the  Trial Court  in this respect.  The list of bids, Ex. 17,   at  the auction  sale  held  on April 8,  1950,  is  signed  by  the defendant,  the  Chairman and the  Executive  Officer.  This auction was held before the Board and Resolution No. 26 4Sup. CI/69--18 798 dated April 8, 1950, was passed on that day, which reads  as follows:        "Auction  of the tehbazari contract of Mandi  Mazabar Gunj for the year 1950-51 (Boards Reso. No. 431 dated  30-3- 50).        Auction  held  before the Board.  Terms  of  auction, were  announced.  During the auction, at the request of  the bidders,   the  Board  unanimously,  passed  the   following amendment in the terms of auction :-        "One-fourth of the auction money will be deposited at the  fall of hammer and the remaining amount in three  equal instalments at the interval of two months each      1st instalment today                8-4-50      2nd instalment on                   8-6-50      3rd instalment on                   8-8-50      4th instalment on                     8-10-50"       Auction  sanction  to  the highest  bidder  Shri  B.C. Mohindra  for  Rs.  53,025/- w.e.f.    9-4-50  to   31-3-51. Chairman Finance Committee to please deliver the  possession and to decide the disputes, if any." The original proceedings book was produced before the  Trial Court and it was proved by Ram Swarup, clerk. He proved that after the entire proceedings were over, it was signed before him by Shri Madho Prasad, Executive Officer of the Municipal Board, and Shri Jamshed Ali Khan, the Chairman.     In  our opinion the list of bids and the Resolution  No. 26  dated April 8, 1950, Ex. 18, constituted a  contract  in

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writing within the meaning of s. 97 of the Act.  It was held by  this Court in Union of India v. Rallia Ram(1)  that  for the  purposes of s. 175(3) of the Government of  India  Act, 1935, a valid contract could be spelt out of correspondence. It  seems to us that similarly it is not necessary  for  the purpose of complying with s. 97 of the Act that the contract should  be   contained in one document signed  by  both  the parties.     In  view  of  our  conclusion it  is  not  necessary  to consider  what would have been the rights of  the  plaintiff if. there had been no such contract in writing. In the result the appeal fails and is dismissed with costs. R.K.P.S.                                          Appeal dismissed. (1) [1964] 3 S.C.R. 164, 173. 799