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Civil · Reportable judgment

M/s. Padia Timber Company (P) Ltd. vs The Board of Trustees of Visakhapatnam Port Trust through Its Secretary

Court
Supreme Court of India
Date
5 January 2021
Case No.
Civil Appeal No. 7469 of 2008
Result
Allowed
Bench
Navin Sinha, Indira Banerjee
Citation
[2021] 1 S.C.R. 229 : 2021 INSC 5
Supreme Court Reports [2021] 1 S.C.R. 229 : 2021 INSC 5
Headnote

Contract – Offer and acceptance of offer – Whether the acceptance of a conditional offer with a further condition results in a concluded contract, irrespective of whether the offerer accepts the further condition proposed by the acceptor – Held: It is a cardinal principle of the law of contract that the offer and acceptance of an offer must be absolute – When the acceptor puts in a new condition while accepting the contract already signed by the proposer, the contract is not complete until the proposer accepts that condition – An acceptance with a variation is no acceptance – It is, in effect and substance, simply a counter proposal which must be accepted fully by the original proposer, before a contract is made – High Court overlooked s.7 of the Contract Act – Both the Trial Court and the High Court over-looked the main point that, in the response to the tender floated by the Respondent-Port Trust, the Appellant had submitted its offer conditionally subject to inspection being held at the Depot of the Appellant – This condition was not accepted by the Respondent-Port Trust unconditionally – Respondent-Port Trust agreed to inspection at the Depot of the Appellant, but imposed a further condition that the goods would be finally inspected at the showroom of the Respondent-Port Trust – This condition was not accepted by the Appellant – It could not, therefore, be said that there was a concluded contract – There being no concluded contract, there could be no question of any breach on the part of the Appellant or of damages or any risk purchase at the cost of the Appellant – Contract Act, 1872 – s.7.

Allowing the appeal, the Court

HELD : 1.1. It is a cardinal principle of the law of contract that the offer and acceptance of an offer must be absolute. It can give no room for doubt. The offer and acceptance must be based or founded on three components, that is, certainty, commitment and communication. However, when the acceptor puts in a new condition while accepting the contract already signed by the proposer, the contract is not complete until the proposer accepts that condition. An acceptance with a variation is no acceptance. It is, in effect and substance, simply a counter proposal which must be accepted fully by the original proposer, before a contract is made. [Para 56][247-B-C]

Read the full headnote (4 more paragraphs)

1.2. The High Court overlooked Section 7 of the Contract Act, 1872. Both the Trial Court and the High Court over-looked the main point that, in the response to the tender floated by the Respondent-Port Trust, the Appellant had submitted its offer conditionally subject to inspection being held at the Depot of the Appellant. This condition was not accepted by the RespondentPort Trust unconditionally. The Respondent-Port Trust agreed to inspection at the Depot of the Appellant, but imposed a further condition that the goods would be finally inspected at the showroom of the Respondent-Port Trust. This Condition was not accepted by the Appellant. It could not, therefore, be said that there was a concluded contract. There being no concluded contract, there could be no question of any breach on the part of the Appellant or of damages or any risk purchase at the cost of the Appellant. The earnest deposit of the Appellant is liable to be refunded. [Para 59][247-F-H; 248-A-B]

Haridwar Singh v. Bagun Sumbrui and Ors. AIR 1972 SC 1242 and Union of India v. Bhim Sen Walaiti Ram (1969) 3 SCC 146: [1970] 2 SCR 594 – relied on. Mahesh Transport Co. v. T. & D. Workers’ Union, AIR 1974 SC 868 and M. V. Shankar Bhat and Anr. v. Claude Pinto since (D) by Lrs. and Ors., (2003) 4 SCC 86: [2003] 1 SCR 1212 – held inapplicable.

Rajasthan State Electricity Board and Others v. Dayal Wood Works AIR 1998 AP 381; Fateh Chand v.

Balkishan Das AIR 1963 SC 1405: [1964] 1 SCR 515; G.M.T.A.P. Co-op. Mkts. Ltd. v. Dy. Registrar, Co-op Societies, Raichur AIR 1998 Karnataka 354; Marimuthu Gounder v. Ramaswamy Gounder and Ors. AIR 1979 Madras 189; A.K.A.S. Jamal v. Moola Dawood Sons & Co. AIR 1915 Privy Council 48; M/s Saraya Distillery, Sardarbaggar v. Union of India and Anr. AIR 1984 Delhi 360; Murlidhar Chiranjilal v. M/s Harishchandra Dwarkadas and Anr. AIR 1962 SC 366 : [1962] 1 SCR 653; State of Maharashtra and Anr. v. Digambar Balwant Kulkarni AIR 1979 SC 1339 : [1979] 3 SCR 188; Visakhapatnam Port Trust, Visakhapatnam and Anr. v. Bihar Alloy Steels Ltd. and Ors. 1991 (1) A.L.T. 582; Raghunandhan Reddy v. The State of Hyderabad thr. The Secretary to Government Revenue Department AIR 1963 AP 110; Jawahar Lal Burman v. Union of India, AIR 1962 SC 378 : [1962] SCR 769; U.P. Rajkiya Nirman Nigam Ltd. v. Indure Pvt. Ltd. and Ors. AIR 1996 SC 1373 : [1996] 2 SCR 386 – referred to.

As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.

Full Judgment Text

The Judgment of the Court was delivered by INDIRA BANERJEE, J. 1. The short question involved in this appeal is, whether the acceptance of a conditional offer with a further condition results in a concluded contract, irrespective of whether the offerer accepts the further condition proposed by the acceptor. This question does not appear to have been addressed by the High Court or the Court below. 2. This appeal is against a common Judgment and Order dated 10.10.2006 passed by the High Court of Judicature at Hyderabad in Appeal Nos.2196 and 2197 of 2000 confirming a Judgment and Order dated
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