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Judgment
Rajiv Sharma, Judge
Since common questions of law and facts are involved in these writ petitions, the same were heard together and are being disposed of by this common judgment. However, in order to maintain clarity, the facts of CWP No. 2561 of 2010 have been taken into consideration.
C.W.P. No. 2561 of 2010.
Petitioner submitted an application on 14.08.2006 for supply of items/articles, i.e., galvanized wire. The rates offered by the petitioner were accepted by respondent No. 2 on 10.01.2007. Thereafter, the petitioner duly filled in schedule "A", "B" and "C" conveying the acceptance of his rates for the supply of G.I. Wire. Clause-6 of schedule "A" reads as under:
In case there is a revision of rates of the steal and zinc or duty on these by the Govt. of India/MMTC, the suppliers may be allowed corresponding increase or decrease in prices in relation to the change of cost of the raw material. The change shall have effect from the date of such revision of the rates of the raw material.
Thereafter, an agreement was signed between the parties on 16th January, 2007. The rates were finally approved vide letter 31st July, 2007. Petitioner completed all the codal formalities by filling up schedules "A", "B" and "C". The copy of schedule "A" was also supplied to the petitioner containing Clause-6, as quoted hereinabove.
Petitioner submitted a representation for the enhancement of rates for the supply of G.I. Wire on 25.05.2007. Certain objections were raised vide Annexure P-7 dated 13th July, 2007. These objections were removed by the petitioner and thereafter he has supplied the rates approved by the Steal Authority of India Limited. He also submitted increased rates of Zinc. Petitioner supplied the rates vide Annexures P-10 and P-11. However, fact of the matter is that the case of the petitioner was rejected by respondent No. 2 on 25th September, 2009.
C.W.P. No. 2562 of 2010-C.
In this case also, the rates of the petitioner were approved. The acceptance letter was issued in favour of the petitioner and thereafter, an agreement was entered into between the parties. The rates were finally approved as per letter dated 31st July, 2007. Petitioner also filled schedules "A", "B" and "C" supplied to him by the department. Petitioner has also signed schedules "A", "B" and "C". Petitioner has also quoted the increased rates from Steel Authority of India Limited and Hindustan Zinc Ltd.. Case of the petitioner was rejected on 25.09.2009 (Annexure R-III).
Mr. Atul Jhingan, learned counsel for the petitioner(s) has strenuously argued that his clients were entitled to enhanced rates of the items supplied after the cost of raw material has increased on the basis of Clause-6 of Schedule "A". He also argued that his clients have supplied the rates prevailing for the relevant period of Steel Authority of India Limited and Hindustan Zinc Limited. He then argued that the case of petitioner could not be rejected merely on the ground that user departments have not agreed for the increased rates.
Mr. Rajinder Dogra, learned Additional Advocate General and Mr. Vikas Rathore, learned Deputy Advocate General have argued that the rates have not been enhanced on the basis of objections raised by the user departments. They have also argued that there was paucity of funds.
I have heard the learned counsel for the parties and gone through the pleadings carefully.
The Court has also directed the respondent-State to produce the records. The records have been produced. The same has been perused carefully. What emerges from the facts enumerated hereinabove, is that the petitioners have participated in the tender process. Their rates were accepted. Thereafter, they were directed to complete all the codal formalities, including signing of schedules "A", "B" and "C". These schedules were signed. Thereafter, agreement was entered into between the parties. Their rates were finally approved. Clause-6 of schedule "A" provided that in case there was a revision of rates of the steel and zinc or duty on these by the Govt. of India/MMTC, the suppliers were to be allowed corresponding increase or decrease in prices in relation to the change of cost of raw material. The agreement entered into between the petitioner(s) and respondent No. 2 was final and binding. The terms and conditions contained therein could not be varied or modified. Petitioners have brought to the notice of respondent No. 2 that the rates of raw material of steel and zinc have increased. They have submitted the rates strictly on the basis of the rates quoted by the Steel Authority of India Limited and Hindustan Zinc Limited, as discussed hereinabove from time to time. The queries raised by respondent No. 2 were also met. Interestingly, respondent No. 2 has also recommended the case of the petitioners to respondent No. 1 on 7th April, 2008. Respondent No. 2 has recommended the case of petitioners strictly as per Clause-6 of Schedule "A". However, respondent No. 2 has finally rejected the case of the petitioners vide Annexures P-12 and R-III, dated 25.09.2009, respectively. The ground mentioned in Annexures P-12 and R-III is that major indenting departments such as Agriculture, Forests and I & PH have not agreed to give revised rates. Petitioner in C.W.P. No. 2561 of 2010 has also sought information under the Right to Information Act, 2005. The information supplied to the petitioner has been placed on record. The objection raised by the Director of Agriculture is that the payment of purchased material was released to the firms accordingly as per terms and conditions applicable at the relevant time. Similar objection was also raised by the Engineer-in-Chief. The Principal Chief Conservator of Forests, Himachal Pradesh has observed that the department was not in a position to bear the burden of any additional liability on account of increased rates. The parties were bound by Clause-6 of Schedule "A" and the petitioners were bound to be allowed the corresponding increase in prices. The rates quoted by the petitioners were competitive at the time when these were accepted. Petitioners have supplied the details of increase in the rates of raw material of steel and zinc to the respondent-department. The rates quoted by the petitioners were from the public undertaking, i.e., Steel Authority of India Limited and Hindustan Zinc Limited. In case there was any apprehension that the rates quoted by the petitioners were excessive, it was always open for the respondents to get them verified from the Steel Authority of India Limited or Hindustan Zinc Limited. Case of the petitioner(s) was approved by the respondent No. 2 strictly as per Clause-6 of Schedule "A" to the State Government. However, he himself has rejected the case of the petitioners on 25.09.2009. The independent decision was required to be taken by respondent No. 2 instead of seeking the comments of user departments. The paucity of funds, as argued by Mr. Rajinder Dogra, learned Additional Advocate General, will not defeat Clause-6 of schedule "A". Whatever has been agreed between the parties was required to be honoured. Mr. Rajinder Dogra, learned Additional Advocate General has also argued that the contract was valid up to 31.01.2008 and thereafter, the case of petitioner could not be considered. There is no merit in this contention. Mr. Rajinder Dogra, learned Additional Advocate General has failed to point out any Clause in the Schedules "A", "B" and "C" or in the agreement, on the basis of which the corresponding increase in the rates on the basis of increase in the raw material could be denied to the petitioners after the expiry of validity period, i.e., 31.01.2008. Petitioners have asked for the increase of rates in the year 2007.
Their Lordships of the Hon''ble Supreme Court in Bharat Sanchar Nigam Limited and another Vs. BPL Mobile Cellular Limited and others (2008) 13 SC Cases 597 have held that once a concluded contract is arrived at between the parties concerned, they are bound by the same and if variation, rectification and novation of contract takes place, the same has to be done on the same terms as are required for entering into a valid and concluded contract. Their Lordships have reiterated that the terms and conditions in the contract cannot be made unilaterally.
Their Lordships have held as under:
The respondent had two options. They were asked to choose one. Thus, a representation was made that they would be entitled to obtain lease the equipments (resources) at an R&G basis. Payments have been made on that basis. The question which would arise for consideration is as to whether the basis of making a demand itself can be changed. The answer to the said question, in our opinion, must be rendered in negative.
Section 8 of the Indian Contract Act reads as under :
Section 8. Acceptance by performing conditions, or receiving consideration-- Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.
It provides the acceptance of the proposal by conduct as against other modes of acceptance. It can be divided in two parts - (1) performance of the conditions of a proposal; and (2) acceptance of any consideration for a reciprocal promise which may be offered with a proposal. The latter corresponds to general divisions of proposals into those which offer a promise in exchange for an act or acts and those which offer a promise for exchange for a promise. The bills were raised on the basis of the said premise. They were accepted. The promise on the part of the appellant was acted upon by the respondent. Appellants, thus, now should not ordinarily be permitted to take a different stand. This aspect of the matter was considered in Amrit Banspati Co. Ltd. Vs. Union of India (UOI), wherein it was stated :
Section 8 of the Contract Act provides that performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal is an acceptance of the proposal. The language of the section is rather vague but its meaning is clear. It is based on the principle that if an offer is made subject to a condition, the offence cannot accept the benefit under the offer without accepting the condition. He cannot take the attitude, "I shall accept the benefit but reject the condition.
In the instant case, the resources to be leased out were subject to agreement. The terms were to be mutually agreed upon. The terms of contract, in terms of Section 8 of the Contract Act, fructified into a concluded contract. Once a concluded contract was arrived at, the parties were bound thereby. If they were to alter or modify the terms thereof, it was required to be done either by express agreement or by necessary implication which would negate the application of the doctrine of `acceptance sub silentio''. But, there is nothing on record to show that such a course of action was taken. The respondents at no point of time were made known either about the internal circulars or about the letters issued from time to time not only changing the tariff but also the basis thereof.
In the instant case also, the terms and conditions of Schedule "A" were binding and the petitioners are entitled to get the benefit of Clause-6 of the Schedule-"A". Accordingly, in view of the observations and discussions made hereinabove, these writ petitions are allowed. Annexures P-12 and R-III, dated 25.09.2009 are quashed and set aside. The respondents are directed to allow the petitioners the corresponding increase of prices in relation to the items supplied by them on the basis of the revised rates supplied, within a period of twelve weeks from today. The pending application(s), if any, also stands disposed of.