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PETITIONER: M/S. KALYANJI VITHALDAS & SONS

       Vs.

RESPONDENT: THE STATE OF M.P. & ORS.

DATE OF JUDGMENT:       17/09/1996

BENCH: K. RAMASWAMY, G.B. PATTANAIK

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      This appeal  by special  leave arises from the judgment of the  Division Bench  of the  M.P. High  Court at Jabalpur made on  January 24,   1979  in  Miscellaneous  Petition  N. 370/71.      The admitted  facts are  that  the  appellant-firm  had entered into  an agreement  with the Government for purchase of Tendu leaves in Unit No. 14, Chowki in South Division for three years  ending on  December 31,  1970 on  the terms and conditions mentioned  in the   agreement  dated November 30, 1968. One of the terms was that the lease is renewable every year. The  lease commences  from February  1 of the year and end on  January 31  of the  next year.  In  this  case,  the agreement of  the appellant commenced from March 2, 1968 and it was  to end  on January 31, 1968. As per the terms of the agreement, the  appellant had  to opt  for renewal within 15 days prior  to December 31 and the leases were to be renewed within 15  days from  the date  of the  issue and  was to be accepted by  the Department.  The admitted  position is that the appellant  had offered  for renewal on December 7, 1968. It is  seen from the record that the Government had accepted the offer  on January 31. 1969 and communication was sent to the appellant  on  February  7,  1969;  but  he  refused  to received the  same. On  February 9,  1969, the appellant had sent a  telegram withdrawing  from the offer of the renewal. Since  the     appellant   had   refused   to   accept   the communication, it  was sent  by the  Divisional  Officer  on February 12,  1969 and  was received  by  the  appellant  on February 17,  1969. Consequently,  a letter  was sent on May 20, 1970  calling upon  the appellant  for  payment  of  Rs. 93,821.23 towards  the loss  caused by  the appellant due to non-execution  of   the  renewal  deed  and  also  for  non- collection of  the Tendu  leaves for the period since it was not sold to any other agency. The appellant challenged it by filing a  writ petition in the High Court. The High Court in the impugned  order dismissed  the same  holding that before the appellant  had withdrawn  the offer,  the Government had already accepted  the offer of the appellant and, therefore, he was liable to pay the damages.      Shri S.V.  Despande, learned  counsel for the appellant

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raised   two-fold    contentions.   Firstly,    since    the communication was  not sent  to the  appellant  before  31st January, the    deadline,  the  appellant  was  entitled  to withdraw from  the  offer.  He  had  duly  withdrawn  it  on February 9,  1969 by  issuing   a telegram to all concerned. Therefore,  the   appellant  cannot   be  saddled  with  the liability for  the resultant  loss. We find  no force in the contention.      Clause (2) of the contract provides as under :      "This agreement shall commence from      2.3.1968 and  shall remain in force      upto  31.12.1968   unless   earlier      determined    under    the    terms      hereinafter appearing.      Provided that :-      (1) Unless  earlier determined  the      terms of  the Agreement  there will      be yearly  renewal of  Agreement by      31st January  each year by issue of      an order  by Government  in writing      provided, Government  are satisfied      that purchaser  has  fulfilled  the      following conditions each year :-      (a)   the    quantity   of   leaves      collected  during   the  year   has      exceeded by  10 per  cent  or  more      over the quantity notified and also      10  per   cent  or  more  over  the      quantity  collected   in  the  unit      during the preceding year.      (b) There  was no serious breach of      the Act  and Rules  made thereunder      and the Agreement.      (c) The purchaser had paid all dues      including  penalty,     fine,  etc.      promptly and in accordance with the      provisions of the Agreement.      (2) Purchase  rate per standard bag      applicable for  every renewed  year      shall be  the  rate  calculated  by      increasing   the    purchase   rate      applicable to  the proceeding  year      by 5  per cent and adding to it the      total increase  in rated of all the      following items  during the renewed      year as compared to rates fixed for      the same   items  in the  preceding      year :-      i) Purchase rate payable to grower,      ii) remuneration payable to Agent,      iii)  handing  charges  payable  to      agent.      (3) The  purchaser  shall,  execute      the fresh  Agreement within 15 days      from the  date of  the issue of the      order   granting   renewal,   after      completing all formalities required      under conditions   of Tender Notice      for  executing   Agreement  failing      which the Agreement shall be liable      to be  terminated by Government and      all  consequences   of  termination      given in  the  Agreement  shall  be      binding  and  applicable.  Loss  to      Government  if  any  in  subsequent

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    sale of leaves if any in subsequent      sale of leaves in the unit shall be      recoverable   from   the   previous      purchaser."      It is  seen that the appellant had a contract for three years ending  on  December  31,  1970.  He  worked  out  the contract in  the year 1968 ending on January 31, 1969. Under Clause (1)  of the  proviso, unless earlier determined under the terms  of the agreement, there will be yearly renewal of agreement by  31st January each year by issue of an order by Government in  writing provided Government is satisfied that purchaser  had   fulfilled     the   conditions   enumerated subsequently.  It   is  true,  as  contended  by  Shri  S.V. Deshpande, that  the word ’issue’ implies service of notice. Unless the  contractor receives acceptance by the Government he will  not be  in a  position to  know whether  or not his offer has  been accepted  by the  Government. Therefore, the date of  the receipt  would be  the date  of issue. For this proposition,  there   would  not  be  any  controversy.  The question is : whether on expiry of 31st January of the year, the previous  contractor is  absolved of  his liability  for non-execution  of  the  renewal  date  ?  It  is  seen  that originally, the  contract was for three years. Therefore, he is entitled  for renewal  unless   it was  either determined earlier and offer of renewal was rejected by the Government. Admittedly, the  appellant had  given his  offer for renewal before the  expiry of the period and the Government also had accepted the offer before 31st January, 1969. Obviously,  it would take  time  for  communication  thereof.  It  being  a continuing contract which the appellant otherwise would have for three years, there is no hiatus in continuity unless and step was  taken by the Government in the interregnum to have his lease terminated in terms of the contract. In this case, the contract  has  not  been  terminated.  Resultantly,  the acceptance of  the offer  communicated to  the appellant  by Government having  been made within time, namely, on January 31, 1969. what remained to be done was only execution of the renewal lease deed for a further period of one year in terms of the  contract. The appellant had withdrawn his offer only after the  acceptance was communicated to him on February 7, 1969. No  doubt, there  was a defect in communication of the order to  the appellant  had withdrawn  his offer only after the acceptance  was communicated to him on February 7, 1969. No doubt,  there was  a defect in communication of the order to the appellant but as regards the address furnished by the appellant and  sent to  the Government, there was no defect. There may  be some  typographical error  in the  name of the appellant-company. The appellant appears to have taken undue advantage of it and sought to resile from the offer accepted by the  Government. Having  allowed the  contract  to  lapse resulting in  loss caused  to the State due to non-execution of the contract, the resultant loss has to be recovered from the appellant.      Shri  S.V.   Despande,  learned   counsel,  has  placed reliance on  the judgment  of the same Bench in another case in Shiv  Saran Lal  vs. State  of M.P. & Ors. [AIR 1980 M.P. 93]. Therein,  learned  Judges  have  held  that  since  the communication of  acceptance was  not made before the expiry of January 31 of the succeeding year, the contractor was not liable for  the payment  thereof. On  the principle  of  the communication, as  stated earlier,  there is  no quarrel but the learned  Judges have  not considered the further aspect, viz., whether  in a  case  of  continuing  contract,  is  he absolved of  the liability  ? In  the view as we have stated earlier, the  same Branch appears to have taken inconsistent

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view  without   reference  to  the  judgment  under  appeal. Therefore, the later view expressed by the High Court on the liability is not correct in law.      The question then is : whether the arrears due from the lessee-contractor would  be recovered  as  arrears  of  land revenue ?  Section 155 of the Land Revenue Code and  Section 3 and  4(2) of  the Revenue  Recovery Act  of 1890  reads as under :      "155. The  following monies, may be      recovered, as  far as  may be under      the provisions  of this  chapter in      the same  manner as arrears of land      revenue ;      (a)XXXXX XXXX   XXXXX      (b) all  monies falling  due to the      State Government  under any  grant,      least or  contract  which  provides      that they  shall be  recoverable in      the same  manner as  an arrears  of      land revenue."      Section 3  of the  Revenue Recovery      Act.      "3. Recovery  of public  demands by      enforcement   of process  in  other      districts than  those in which they      become payable  (1) where an arrear      of   land   revenue,   or   a   sum      recoverable as  an arrear  of land-      revenue is  payable to  a Collector      by  a  defaulter  being  or  having      property in  a district  other than      that in which the arrear accrued or      the sum  is payable,  the Collector      may send  to the  Collector of  the      other district a certificate in the      form as  nearly as  may be  of  the      Schedule, stating -      (a) the  name of  the defaulter and      such other   particulars  as may be      necessary for  his  identification,      and      (b) the  amount payable  by him and      the account on which it is due .      (2) The certificate shall be signed      by the  Collector making  it (or by      any  officer  whom  such  Collector      may, by  order in writing, delegate      this duty)  and save,  as otherwise      provided  by  this  act,  shall  be      conclusive  proof  of  the  matters      therein stated.      (3)  The  Collector  of  the  other      district shall,  on  receiving  the      certificate, proceed to recover the      amount stated therein as if it were      an arrear of land-revenue which had      accrued in his own district."      Section 4(1)      "4.  Remedy   available  to  person      denying  liability  to  pay  amount      recovered  under   last   foregoing      section (1)  when  proceedings  are      taken against  a person  under  the      last  foregoing   section  for  the      recovery of  an amount  stated in a

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    certificate that  person may  if he      denies his  libility to  pay amount      or any  part thereof  and pays  the      same under  part thereof  and  pays      the  same  under  protest  made  in      writing at the time of protest made      in writing  at  the  same  time  of      protest made  in   writing  at  the      time of  paying and   signed by him      or his  agent, institute a suit for      the repayment of  the amount or the      part thereof so paid."      A reading  of these  provisions would  clearly indicate that the  recovery  of  public  demands  by  enforcement  of process is recoverable as arrears of land revenue, since all moneys fall  due to  the State  Government, under any grant, lease or contract shall be recoverable in the same manner as arrears  of  land  revenue.  Therefore,  the  Government  is clearly empowered to recover the arrears of the dues as land revenue from the appellant-contractor towards loss caused to the Government  in  not  collecting  the  Tendu  leaves  the contract.      We  are   informed  that   the  appellant  has  already furnished the  bank guarantee.  The Government is at liberty to enforce  the bank guarantee and recover the same. In case of any short fall of the amount already given under the bank guarantee, the Government is at liberty to recover the same.      The appeal  is accordingly  dismissed  with  the  above directions but, in the circumstances, without costs.