Nishitendu Chaudhury, J.@mdashWhether communication of acceptance containing counter offer without there being a formal contract preceded by payment of earnest money constitutes a concluded contract, is the central question in the present first appeal. By challenging the judgment and decree dated 07.07.2003 passed by the learned Civil Judge (Senior Division), Jorhat in Money Suit No. 34/1998, the appellant has raised this question. According to the appellant, there was no concluded contract with the respondent/plaintiff and in that view of the matter the impugned judgment and decree for realization of Rs. 9,49,526/- (Rupees nine lakh forty nine thousand five hundred and twenty six), being compensationed, is untenable and is liable to be set aside in cost. The respondent, as plaintiff, instituted Money Suit No. 34/1998 in the Court of learned Civil Judge (Sr. Divn.), Jorhat stating that pursuant to Notice Inviting Tender (hereinafter referred to as ''the NIT'') dated 25.02.1992 for construction of first floor of vertical extension of the laboratory building at Regional Research Station, Diphu, the plaintiff submitted tender along with 8 (eight) others quoting Rs. 24,52,060/- (Rupees twenty four lakh fifty two thousand and sixty) under Rule 13 Schedule III of the D.A.F.P. Rules, 1988 of the Assam Agricultural University Act. The Director, Physical plant of the appellant university informed the respondent on 07.08.1992 that works had been allotted to the plaintiff at the quoted rate of 20% above the A.P.W.D. Schedule of rates (building) for 1990-91 and 89% above the APWD Schedule of rates (Sanitary & Water Supply) for 1981-82 at the total tender value of Rs. 24,52,060/- (Rupees twenty four lakh fifty two thousand and sixty) and thereby directed the plaintiff to deposit an earnest money of Rs. 49,050/- (Rupees forty nine thousand and fifty) within 15 days for signing the formal tender agreement of work. Plaintiff claimed to have deposited a Bank Guarantee of the aforesaid amount and thereupon an agreement was signed on 18.08.1992. According to the plaintiff, even prior to signing of the agreement dated 18.08.1992, the defendant No. 3 issued final Work Order to him asking him to start the work in consultation with Executive Engineer-II, Director Physical Plant (DPP), Assam Agricultural University (AAU), Jorhat, within 15 days and to complete the work within 12 (twelve) months from the date of issue of the order. The plaintiff, accordingly, started work as per approved drawing and placed order for steel windows with ventilator of size 94.86 Sq.mtrs, Tubular truss of 988 Sq. mtrs. steel rod of 6, 8, 16 and 20 mm weighing 4000 Kgs. and also for construction of labour shed/Brick of 4 (four) trucks, Sand 3 (three) trucks, Chips 3/4" 5 (five) trucks and also performed other miscellaneous works like dismantling of existing house. The plaintiff claimed to have made advance payment to mason, carpenter and others amounting to Rs. 7,00,000/- (Rupees seven lakh). In the mean time on 19.11.1992 the defendant No. 3 issued a letter informing the petitioner that the bank guarantee submitted by the petitioner could not be accepted and thereupon the plaintiff was asked to deposit Rs. 49,050/- in the shape of Deposit at Call. By letter dated 12.12.1992, the plaintiff expressed his inability to do so and renewed his prayer for acceptance of the Bank Guarantee which was turned down by the University on 18.02.1993. However, on 20.03.1993 defendant No. 3 purporting to represent the university, asked the plaintiff to sign an addendum containing recital to the effect that the plaintiff could not deposit 2% earnest money in cash due to non-receipt of huge amount due to him from the University against works already done by him and so as per letter dated 31.10.1992, issued by the Legal Advisor, the Bank Guarantee in lieu of bank draft be accepted for accepting the agreement subject to the condition that amount covered by the bank guarantee would be recovered from the contractor at the earliest opportunity from his outstanding dues. But thereafter on 10.06.1993, the same defendant No. 3 informed him that the allotted work has been deferred for twin reasons, namely, lack of formal acceptance of tender and ongoing financial crisis of the university. A formal letter to that effect was also issued by the Director of Physical Plant on 07.09.1993. Despite several representations, the plaintiff was not permitted to resume the work and thus the plaintiff became entitled to the money for the work already done for which Executive Engineer also submitted L.O.C. for Rs. 3,00,000/- for payment to the plaintiff. The Director of Physical Plant, retired in the mean time on 31.03.1993 and one Sri S.K. Gogoi assumed the charge and thereafter on 01-03-1996, the plaintiff found that there was an advertisement in the Daily Sentinel issued by the defendant No. 3 inviting tenders for construction of numbers of works including the work which was allotted to him and 30.05.1996 was fixed for submission of tenders which, however, was subsequently deferred to 09.07.1996. According to the plaintiff, the subsequent NIT, dated 01-03-1996 was illegal and this is why he preferred a writ petition before this High Court vide Civil Rule No. 2656/1996 whereupon this Court issued Rule and passed an interim order staying tender process on 10.06.1996. The plaintiff stated that total cost materials spent by him is Rs. 6,49,526/- and he was entitled to payment of this amount by the defendants in addition to another sum of Rs. 3,00,000/- being cost of agony suffered by him. The plaintiff also claimed interest at the rate of 20% per month. The suit for realization of Rs. 9,49,526/- with 20% interest with effect from 01.03.1996 was the prayer made in the plaint.
2. In paragraph 23 of the plaint, the plaintiff has disclosed the cause of action of the suit. It is pleaded that on 07.08.1992 and 04.09.1992 when the work was allotted to the plaintiff and on 01.03.1996 when fresh advertisement was published in the daily Sentinel inviting tender for the same work and also on 26.03.1996 the day on which notice under Section 80 of the C.P.C. was issued by the counsel of the plaintiff, the cause of action of the suit arose. The plaint was presented to the court on 22.07.1998.
3. The defendants by filing written statement contested the suit. It is the case of the defendants that in terms of the NIT dated 25.02.1992, the Director was supposed to deposit 2% of the earnest money in the form of CDR/FDR duly pledged to Executive Engineer-II, DPP, AAU. Even by letter dated 07.08.1992 the plaintiff was directed in terms of the NIT to make deposit of Rs. 49,050/- in the shape of deposit at call as contained in clause 5 of the NIT but the plaintiff defaulted to comply with the requirement of depositing the earnest money. In paragraph 7 of the written statement a specific stand has been taken by the defendants saying that no contract was concluded between the plaintiff and the defendants with a binding effect. It was also stated that in the absence of a formal contract there is no question of complying with the work order. In paragraph 10, on the other hand, it was pleaded that the addendum dispensing with a deposit of 2% of the earnest money was not accepted by the defendant No. 3 and accordingly the plaintiff was duly informed that agreement could not be executed in absence of the deposit of earnest money. Stand taken by the plaintiff at paragraph 10 of the plaint that 1% of the money was deposited by plaintiff by FDR has been specifically denied by paragraph 11 of the written statement reiterating the earlier stand. It was further pleaded at paragraph 17 that no contract was entered into between the plaintiff and the defendants and that conduct of S.K. Gogoi, who later on took over office of defendant No. 3, was not binding on the defendants. The defendants specifically denied the expenditure and the quantum thereof claimed to have been made by the plaintiff vide paragraph 19 of the plaint. In paragraph 22, on the other hand, it was stated that on 10.06.1993 itself the plaintiff was informed that the work under the NIT had been deferred. With all these averments apart from specific denial of the recital made in the plaint the defendants prayed for dismissal of the suit with cost.
4. The learned trial court by order dated 28.06.1989 framed as many as 7 issues. These issues are quoted below:
"i) Whether the plaintiff has any cause of action?
ii) Whether the work order No. AAU/PP/T-172/pt/92-93/3525 dated 04.09.1992 and acceptance of Bank Guarantee in lieu of fixed deposit and signing of addendum as per letter dated 20.03.1993 created a valid contract?
iii) Whether the plaintiff made a fresh deposit on 25.05.1993 for Rs. 24,550.00 i.e. 1% earnest money as per request of Shri S.K. Gogoi, Director of Physical Plant?
iv) Whether the plaintiff incurred an expenditure of Rs. 6,49,526/- in execution of the contract work?
v) Whether the defendants are justified in inviting a fresh tender on 01.03.1996?
vi) Whether the plaintiff is entitled to be sum, he has claimed?
vii) To what relief or reliefs the parties are entitled to?"
5. Plaintiff examined as many as 4 (four) witnesses and adduced some 30 (thirty) documents. The defendants did not examine any witness and did not adduce any document.
6. Learned trial court after conclusion of the trial passed judgment and decree on 07.07.2003 decreeing the suit for Rs. 5,72,526/- against the defendants jointly and severally and directed them to make the payment within 2(two) months from the date of decree failing which interest @ 2% per month from the date of decree till full and final realization was also ordered. This judgment passed by the learned trial court has been challenged in the present first appeal on various grounds.
7. I have heard Mr. P. Kataki, learned counsel for the appellants and Mr. B.D. Goswami, learned counsel for the respondent. I have also perused the depositions of all the 4 (four) witnesses and all the exhibits adduced by the plaintiff. The questions that fall for a determination by this court are as follows:
"i) Whether there was any concluded contract between the plaintiff and the defendants?
ii) Whether the money decree of Rs. 5,72,526/- passed by the learned trial court against the defendants is tenable in law?"
8. PW 1, one Kamal Das is the owner of M/s. Maa Kamakhya Hardwares. He exhibited Ext. 1, 2 and 3. He deposed that M/s. Maa Kamakhya Hardwares placed a bill against plaintiff for Rs. 18,750/- vide Ext. 1. Ext. 2 is another bill for Rs. 21,400/- against supply of sand, brick and stone chips to the plaintiff whereas Ext. 3 is a bill for Rs. 61,448/- against supply of rods. He stated that he had received an advance of Rs. 54,000/- against the supply of the goods and was yet to get a sum of Rs. 7,448/- from the plaintiff. In course of cross-examination, this witness admitted that there was no written agreement between he and the plaintiff for constructing labour shed. He said that no cash memo was issued against bill Nos. 1 and 2 and he denied that supply of rod was not false although he could not remember the date on which the rods were sold. The suggestion made to him that he was deposing falsely in favour of the plaintiff was also denied by him.
9. PW 2 is Padma Lochan Phukan who claims to be the owner of a firm known as P Fabrication at Khanapara. He deposed that plaintiff placed a requisition with him for making steel windows and ventilators and he received an advance of Rs. 1,00,000/- against which he issued Ext. 4 receipt. By Ext. 5 he acknowledged receipt of another sum of Rs. 10,000/- from the plaintiff and he proved Ext. 6, bill for Rs. 1,34,600/-, against making windows and ventilators. He said that out of the sum of Rs. 1,34,600/-, billed by Ext. 6, he received a sum of Rs. 1,10,000/- and still an amount of Rs. 24,640/- was due to him. He also claimed another sum of Rs. 5,654/- towards a gate and thus his total claim against the plaintiff was Rs. 30,294/-. However, at the last part of the examination-in-chief he stated that due to some problems plaintiff could not take delivery of the goods and has not taken them as yet for which he cut them into pieces and sold them to market. This, he communicated to the plaintiff by letter dated Ext. 7 and 8.
10. In course of cross examination, this witness stated that in connection with his works, the plaintiff occasionally places work orders with them but Ext. 4 does not show in respect of which contract was the receipt issued. Same is the case with Ext. 5. It also does not show in which of the contract works, done by the plaintiff, the said money receipt was given.
11. The plaintiff examined himself as PW 3. He proved NIT as Ext. 9. He claimed that by Ext. 10 preliminary work order was issued to him and that his tender was accepted at tender value of Rs. 24,52,060/-. The plaintiff claimed that he was asked to give bank guarantee of Rs. 49,050/- as security which he gave and signed the agreement but the document is lying with the defendants. He stated that on receipt of the security, the final work order was issued on 04.09.1992 which is Ext. 11. By this, he was told to complete the work within 12 (twelve) months. He was also given a final drawing which is Ext. 12 and thus he started work from 19.09.1992. For so doing, he had to demolish some previous structures and he was required to prepare a labour shed for which he ordered steel frames for doors, ventilators and windows. He also placed orders for brick, sand and stone chips by paying advance. He placed order with Biswakarma Firm at Diphu for tubular cross. Exts. 13, 14, 15 and 16 are the letters received from M/s. Biswakarma Farm. He claimed to have made payment of Rs. 1,50,000/- to the owner of M/s. Biswakarma Farm on 19-10-1992, Rs. 1,30,000/- on 03.11.1992 and Rs. 1,00,000/- on 23.10.1992. Exts. 17 and 18, according to him, are the receipts of these payments. He also stated that by Ext. 1 he paid Rs. 18,750/-. Rs. 21,400/- was also paid by him to Kamal Das on 30.10.1993. By Ext. 3 he paid Rs. 61,448 to M/s. Maa Kamakhya Hardwares of which Ext. 6 is the bill and Exts. 4 and 5 are the money receipts. Plaintiff claimed, in course of examination-in-chief, that Ext. 19 is the register maintained by him regarding payments made to workers which shows that he paid Rs. 25,000/- to them. According to the plaintiff, he received a letter from the AAU on 19.11.1992 informing him that his bank guarantee could not be accepted and that he should give cash security although he made request to them to accept the bank guarantee yet they expressed then-inability and reiterated the demand of earnest money either by cash or through FD. Ext. 20 is the letter dated 10.02.1993. He also proved a letter of defendant No. 3 as Ext. 21 and copy of addendum as Ext. 22 showing that there was recommendation of the legal advisor of the University for accepting his bank guarantee. He said that by Ext. 23, letter dated 10.06.1993, he was asked to sign Ext. 22 and to send it to them. He signed Ext. 22 and sent it to the University and was working. According to him, once he informed the defendant No. 3 that he had already deposited 1% of earnest money by FDR, he was asked to make further deposit of Rs. 24525/- by FDR. He stated that defendant No. 3 refused to accept the FDR as it was short of 2% and under such circumstances, he encashed the draft for his use. According to him, by Ext. 23 letter, he was informed by the University that the work has been deferred because of financial constraints. Ext. 24 is the letter issued by the University against his letter addressed to the Vice Chancellor. The plaintiff stated that the defendants did not accept the draft intentionally. Ext. 25 is the letter seeking L.O.C. University invited fresh tender without cancelling his contract for which he preferred writ petition before the High Court and thereupon allotment of fresh work was stayed. Ext. 26 is the fresh tender and Ext. 27 is the stay order by High Court. He denied that contract was not finalized for non-payment of earnest money in entirety. He stated that he filed the suit for compensation of the loss sustained by him. In course of cross examination, he admitted that he did not mention anything about payment of money to Kamal Das or M/s. Maa Kamakhya Hardwares or M/s. Biswakarma Firm and that he did not mention any date on which the payment was made to these firms and the same has not been mentioned in the schedule to the plaint. He denied the suggestions that Exts. 1 to 8 and Exts. 13 to 18 were subsequently manufactured for the purpose of the suit. He, however, admitted that prior to issuance of the work order in August, 1992, he had not executed any contract agreement. He admitted that by Ext. 10 work order, he was asked to deposit earnest money of Rs. 49,050/- either by CDR or by FDR and he did not make that payment. He claimed to have given the earnest money in the form of bank guarantee but it was returned to him on 20.05.1993. The bank guarantee was furnished on 13/14 August, 1992 which was valid for one year. According to him, he did not make any fixed deposit or call deposit as Director Lambadar Bora verbally told him that a bank guarantee would suffice. Lambadar Bora retired in March, 1993 whereafter Surya Kumar Gogoi became Director who told him verbally that payment of 1% through draft would be enough. But once the Director was informed that cashier did not accept 1% of contract value then he insisted on deposit of 2%. He admitted that he does not have any proof to show that he made payment of 1% of contract value as earnest money. He stated that work order was not for construction at the ground floor but it was for construction at the first floor. He also admitted that before starting of every work, an agreement has to be made which is followed by work order and that work has to be started after issuance of work order only. He denied the suggestion that he had not signed any agreement. He claimed that the agreement signed by him was with the defendants. Of course, he admitted that he did not take any step for calling that document from the custody of the defendants. He said that he did not submit any accounts of measurement of the demolition work he had to undertake. The writ petition filed by him against re-tendering of the work was still pending. He said that Ext. 19 does not bear any date or signature. Of course, he denied to have manipulated Ext. 19.
12. PW4, the last witness, is Surya Kumar Gogoi who was a Superintending Engineer under the Department of University. He said that they allotted contract works to the plaintiff to construct a house for the AAU. The tender submitted by the defendant was accepted on 17.03.1993 for Rs. 24,52,060/- and allotment was issued on 07.08.1992. Ext. 10 is the allotment order. He proved Ext. 28 letter, whereby bank guarantee was refused. He also proved Ext. 29, addendum. He said that plaintiff was asked to deposit 2% of the contract value as earnest money. The matter was referred to the legal advisor Kumar Padma Prasad to decide as to whether bank guarantee could be accepted. Ext. 30 is the reply by the said advocate issued on 31.10.1992. He again said that the matter was referred to Jatindra Nath Bora, Advocate, to give opinion as to whether bank guarantee could be accepted who said that bank guarantee could be accepted as the plaintiff owed almost Rs. 3,82,240/- to the University. The note was dated 16.02.1993. He stated that Ext. 10 is the preliminary work order issued by their office, Ext. 11 is the final work order which stipulated that work must be completed within 12 (twelve) months and that the University would not supply any material. He admitted that he did not go to Diphu to oversee the construction work but he denied collection of iron rod, cement at Diphu by the plaintiff. He being the witness of the plaintiff denied the claim of plaintiff that he had suffered great loss as the work was stopped or that plaintiff is entitled to compensation of Rs. 26,49,524/-. He stated that there was no agreement with the plaintiff. The plaintiff did not deposit earnest money as per me terms and conditions or as per the contract. Even by Ext. 10 plaintiff was asked to deposit earnest money in the shape of CDR or FDR and Ext. 10 was conditional. The PW4 stated that plaintiff did not work as per the contract. He did his own arrangement only. He also stated that Ext. 25 is not L.O.C. Ext. 25 does not contain any signature of any one. By Ext. 28, the plaintiff was asked to sign the addendum asking him to deposit earnest money at the rate of 2% of the value of contract in the shape of CDR or FDR and he violated the terms by not making the deposit. He said that agreement could be signed only after deposit of the earnest money. Since the plaintiff did not deposit the earnest money, no agreement was signed.
13. From the depositions of the witnesses of the plaintiff it emanates that Ext. 10, Ext. 11, Ext. 20, Ext. 21, Ext. 22, Ext. 23 and Ext. 24 are the 7 (seven) documents which were issued by the University to the plaintiff from time to time. The plaintiff has mainly placed reliance on Ext. 10 and Ext. 11 to show that work order was issued to him. Ext. 10 was issued on 07.01.1992 informing him that work was allotted to him at Rs. 24,52,060/- and by the same letter he was asked to deposit Rs. 49,050/- in the shape of CDR/FDR duly pledged in favour of the Executive Engineer-II, DPP, AAU, Jorhat and thereafter to attend the office within 15 days for signing the formal tender agreement of work. The intent of the letter is clear. It says that a proposal given by the plaintiff of doing the work at Rs. 24,52,060/- was acceptable to the defendants. The formal agreement could be signed on fulfillment of two conditions. First, the plaintiff should deposit Rs. 49,050/- in the form of CDR/FDR pledged in favour of Executive Engineer-II, DPP, AAU, Jorhat and secondly, to attend the office of the defendants within 15 days for signing the formal agreement. This is a counter proposal with conditions. The condition as to deposit of 2% of the contract value in the form of CDR/FDR is not new. It was mentioned in the NIT which has been proved as Ext. 9 by the plaintiff himself. The plaintiff does not claim that he has performed any of these two pre-conditions which were mentioned in the acceptance letter (Ext. 10). A month thereafter, Ext. 11 letter was issued to the plaintiff on 04.09.1992 informing him about the allotment of work at the aforesaid amount and informing him further that the work will have to be completed in all respects within 12 (twelve) months from the date of issue of the order as per the approved drawing and that no material would be supplied by the University. This letter issued by the Director of Physical Plant does not say that agreement has already been entered into or that plaintiff had already complied with me two conditions mentioned in Ext. 10 letter, issued to him a month ago. The next letter exhibited by the plaintiff is the letter dated 07.08.1992 as Ext. 20. Ext. 20 and Ext. 10 were issued by the Directorate of Physical Plant of the defendant University on the same date. Combined effect of the Ext. 10 and Ext. 20 is that me bank guarantee furnished by the plaintiff in lieu of deposit of earnest money in the form of CDR/FDR was not acceptable to the defendant University and that he was asked to deposit 2% of the contract value in the form of CDR/FDR. A year thereafter, another letter was issued by the Directorate of Physical Plant to the plaintiff on 20.03.1993. This appears to have been issued by none other than PW 4. He asked the plaintiff to sign on an addendum saying that the legal advisor of the University had given opinion for accepting bank guarantee in lieu of deposit of earnest money in the form of CDR/FDR. The letter dated 20.03.1993 was described as addendum to the original condition of contract but 3 (three) months thereafter, Ext. 23 letter dated 10.06.1993 was issued informing him that formal acceptance of tender work was not yet finalized because of delay in deposit of earnest money by the plaintiff in the shape of CDR/FDR. The plaintiff was also informed that because of financial constraints, the work was put on hold. So from letter dated 10.06.1993, the plaintiff was aware that agreement with him was not yet finalized because of his failure to make deposit of earnest money. Plaintiff did not challenge this view of the defendants within 5 years and kept on sitting over it. It is only after a re-tendering was made by the University, the plaintiff challenged the same before this High Court by a writ petition being Civil Rule No. 2656/1996 and obtained a stay order on 10.06.1996. Ext. 27 is the said stay order passed by the High Court. The plaintiff thereafter remained silent and after expiry of two more years instituted the suit on 22.07.1998 claiming compensation of Rs. 9,49,526/- with 20% interest thereon w.e.f. 01.03.1996 i.e. the date of re-tender in the newspaper. It is important to note here that plaintiff has not made any prayer for declaring the letter dated 10.06.1993 (Ext. 23) as illegal or inoperative. This stand taken by the defendants that there was no agreement with the plaintiff for the failure of the latter to pay earnest money in time in the form of CDR/FDR remains unchallenged. In that view of the matter the specific stand taken in the written statement by the defendants that there was no concluded contract between the plaintiff and the defendants cannot be brushed aside.
14. On such background facts, now, it is necessary to see what is the law governing formation of a concluded contract. Section 2 of the Contract Act, 1872 needs to be referred to in this regard. Section 2 is quoted below:
"2. Interpretation-clause.--In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:
(a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal;
(b) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise;
(c) The person making the proposal is called the "promisor", and the person accepting the proposal is called the "promisee";
(d) When, at the desire of the promisor, the promise or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;
(e) Every promise and every set of promises, forming the consideration for each other, is an agreement;
(f) Promises which form the consideration or part of the consideration for each other, are called reciprocal promises;
(g) An agreement not enforceable by law is said to be void;
(h) An agreement enforceable by law is a contract;
(i) An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract;
(j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable."
15. There is no doubt that by Exts. 10 and 11, plaintiff was communicated about the decision of the defendants to allot him the work. The question arises whether Exts. 10 and 11 amounts to acceptance within the meaning of Section 2(b) read with Sections 3 and 4 of the Contract Act. Section 3 provides for communication, acceptance and revocation of proposals and Section 4 provides as to when communication is complete. Under Section 4, a communication of a proposal is complete when it comes to the knowledge of the person to whom it is made and the communication of acceptance is complete as against the proposer when it is put in course of transmission to him so as to be out of the power of the acceptor and as against acceptor when it comes to the knowledge of the proposer. Now Section 5 provides for revocation of proposal and acceptance. As per Section 5, a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards and acceptance also may be revoked at any time before the communication of acceptance is complete as against the acceptor but not afterwards. Section 6 provides as to how a revocation can be made. Section 7 provides that acceptance must be absolute. In order to convert a proposal into a promise, the acceptance must be absolute and unqualified. It also must be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the acceptance. Here in Ext. 10 while communicating acceptance of the proposal of the plaintiff, the defendants put forward a counter proposal in the form of condition. If Ext. 10 is to be considered as a mere acceptance letter and not a counter proposal, then acceptance by Ext. 10 would be incompetent for being hit by Section 7(1) of the Contract Act, 1872 because of imposition of two conditions, namely, deposit of earnest money amounting to 2% of the contract value in the form of CDR/FDR and reporting to the office of the defendants within 15 days for signing formal agreement. Ext. 10 also reveals that execution of a formal agreement is necessary. The admission made by the plaintiff in course of his cross examination cannot be lost sight that before a work is started and before work order is issued, there has to be execution of formal agreement. Although, a stand has been taken by the plaintiff, though faintly, that there was execution of agreement and that the agreement lies with the defendant but admittedly plaintiff not having asserted on this admission and not having called for the document from the custody of the defendant, the plaintiff failed to stand by his own assertion. The position, therefore, that existed as on the date of issuance of Ext. 10 on 07.08.1992 is that there was no formal agreement and it was to be executed 15 days thereafter when the plaintiff would have deposited earnest money of Rs. 49,050/- in the form of CDR/FDR. The two conditions if not seen as conditions of acceptance but as counter proposal, failure of the plaintiff to make the deposit as demanded has resulted in failure of the contract as a whole without maturing into a concluded contract.
16. Failure of a condition subject to which offer was made came under consideration of Cheshire and Fifoot''s "an offer, no less than an acceptance, may be conditional and not absolute; and if the condition fails to be satisfied, the offer will not be capable of acceptance. The condition may be implied as well as expressed". Discussing the case of Financings Ltd. v. Stimson, reported in (1962) 3 All ER 386, learned author held that the so called agreement said to have been entered into between the parties in the aforesaid case was in truth an offer by the defendant to make a contract with the plaintiffs but it was subject to implied condition which was not satisfied and as the implied conditions have been broken, the offer had ceased to be capable of acceptance and no contract had been concluded. The present facts of the case if seen through the glass of the aforesaid comment of the learned authors it appears that once the defendants by Ext. 10 asked the plaintiff to perform some pre-conditions for entering into formal agreement and thereafter by Ext. 11 asked him to work and further when admittedly the conditions referred to in Ext. 10 were not complied by the plaintiff, the counter proposal of the defendants of giving the work on contract to the plaintiff on those conditions ceased to be capable of acceptance and thus there was no concluded contract between the parties. Thus viewed from whatever angle, it is not possible to hold that there was a concluded contract between the parties. If Ext. 10 is claimed to be an act of acceptance then such acceptance is vitiated for being hit by Section 7(1) of the Contract Act, 1872 and if it is construed to be a counter offer then the transaction between the parties did not mature into concluded contract because of failure on the part of the plaintiff to accept the counter offer. The first point for determination, therefore, stands adjudicated against the respondent/plaintiff and in favour of the appellants/defendants.
17. The next point for determination is whether the money decree as passed by the learned trial court is tenable in law. The discussions made in regard to the first point for determination have shown that there was no concluded contract between the parties. Under such circumstances, it becomes difficult to hold that the defendants were liable to compensate the plaintiff in any way as against the claim made by him. When the plaintiff himself knew that there was no formal agreement between them for proceeding with the construction work, the plaintiff acted at his risk in placing orders with various firms for supplying construction materials. The statements of PW 1 and PW 2 in course of cross examination, as pointed out above, are also important in this regard. The money receipts issued by P.W. 1 or PW2 do not show as against which work of the plaintiff the said bills were placed. None of these witnesses had any occasion to prove to the hilt that the work in question was the reason for placement of the indents by the plaintiff with them. These PWs candidly admitted that plaintiff has many contract works and that he used to place orders with them for supply of construction materials from time to time. Under such circumstances, burden fell heavily on the plaintiff to show that the bills, if genuine, were really in regard to the contract work in question. So, even if it is assumed that there was a concluded contract and the plaintiff was supposed to perform it, even then it does not prove that the bills given by PW 1 or PW 2 and allegedly paid by the plaintiff are in regard to this work. Consequently, plaintiff cannot claim that these works or these materials have gone in vain for refusal to award the contract in his favour. First, when there was no contract between the parties, there was no reason for the plaintiff to place orders for the building materials. He should not have gone for demolition of the previous structures or for construction of labour shed if at all he had done so. The plaintiff did so only as a matter of abundant caution so that he could complete the work within fixed time if the contract finally was signed with him. This being mere speculation by the plaintiff, he cannot claim any compensation for such speculative act. Secondly, the plaintiff was informed on 10.06.1993 itself vide Ext. 23 that the agreement was not finalized due to his failure to deposit earnest money. He was also informed that the work was put on hold sine the for stringent financial conditions looming over the University. In that event cause of action, if there be any for compensation arose on that day itself when the plaintiff knew that there was no contract with him in regard to the work in question and as such he could have instituted the suit within 3 (three) years thereafter. But suit has been filed on 22.07.1998. So, the claim is clearly time barred one. Under Section 3 of the Indian Limitation Act, 1963, it becomes a duty on the court to see as to whether a particular claim is time barred or not irrespective of whether an objection of limitation is taken by the defendants in the written statement. Be that as it may, even without the bar of limitation, the plaintiff has miserably failed to show that he is entitled to any compensation not to speak of the amount decreed by the learned trial court. To prove the liability of the defendants to pay compensation, concluded contract between the parties is a must as otherwise it cannot be said that the defendants were bound to indemnify the plaintiff for their failure to proceed with the contract work. The first point for determination assumes importance for this reason only as legally there was no binding contract between the parties. Issuance of Ext. 11 asking the plaintiff to proceed with the work was nothing but a measure to ensure that it can be completed within 12 (twelve) months. The plaintiff was not under any obligation to place orders with the suppliers before a formal contract was executed between the parties.
18. The claim of the plaintiff that he had demolished previous structures, that he made labour shed and that there were building materials at site could not be proved by cogent and credible oral evidence as required under Section 60 of the Evidence Act. On consideration of totality of these circumstances, the defendants/appellants cannot be held to be liable to compensate the plaintiff for the claims made by him. Consequently, the appeal by the defendants is liable to be allowed by setting aside the decree passed by the learned trial court. The appeal is accordingly allowed. Judgment and decree passed by the learned trial court is hereby set, aside. No order as to costs.
