LexM. LACHIA SETTY & SONS LTD. ETC. ETC. versus THE COFFEE BOARD, BANGALORE
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88~1 A B c D E G H M. LACHIA SETTY & SONS LTD. ETC. ETC. V'. THE COFFEE BOARD, BANGALORE October 9, 1980 [V: D. TULZAPURKAR AND R. S. PATHAK, JJ) --- •, Auction sales-Auctioneer, if competent to impose his ·own terms for hold· ing a11ctions-Mitigat1'on of loss in resale of goods 'not taken delivery of-Right~ of defaulting and non-defaulting parties. One of the three methods followed by the respondent, IThe Coffee Board), for releasing raw coffee seeds to the trade for internal consumption was by "pool auctions" in wbich only dealers registered with the Board were permitted to participate. · The pool auction was conducted by a Sale Conducting Officer (who was Chief Marketing Officer of the Board). Condition 8 of the Condi: tions of Sale provides, "telegraphic bids or telegraphic instructions regarding bidding will not be considered." Condition 6 provides, "the seller does not bind himself to accept the high'est or any bid. He is not bound to assigll any reasons for his decision and his d<~cision shall be final and conclusive." , The bi~s offered by the two appell'ants, who were registered dealers, at a pool auction were accepted by the Sale Conducting Officer, even though the bids were not the highest. On their failure to take' delivery of the stocks and to pay the bid money wiihin the stipulated period, the Board, after giving due notice to the appellants re-sold the stocks two months later at another pool auction. The prices realised at the re-auction being much lower than the appellant's bids, the Board sought to realise the differences by way of suits. The appellants disclaimed liability to make good the loss to the Board mainly on the ground that there was no concluded contract between the parties in that the appellants had sent telegrams to the Board revoking their bids before the declaration of the results of the auction; that in one case in regard to five Jots there was no concluded contract as the Board ev'cn under clause 6 had no power to accept a lower bid on receipt of a higher bid which it did.; and that the appellan,ts were not. responsible for th~ loss which the Board had claimed as having arisen out of the resale of the stocks bid by them in that the Joss was the result of deliberate bringing down of prices by the Board and further there was inordinal<l delay in holding the re-sale. The Board, on the other hand, alileged that Condition s· did not permit telegraphic withdrawal or retraction of any bid and since the oral retraction had not been properly done to the. officer concerned there was a concluded contract; Condition 6 was framed to prevent the. mal-practice among dealers by cornering stocks by forming rings among themselves and puffing up prices to make unlawful gains to the detriment of the consumer and that lastly the Joss which resulted in the resale of stocks was the. result of fall in prices at the time of resale and therefore, was not unreal. ( M. L. SETTY v. COFFEE BOARD ·sss Accepting the appellants' contention the trial court dismissed the Board's A. suit for recovery of loss. On appeal by the 'Board the High Court substantially upheld its contentions and decreed the suits. Dismissing the appeals, HELD: 1. (a) Conditi~n No. 8. was wide enough to bar withdrawal or retraction of bids by telegrams: [891H] (b) Oo: the face of it "instructions regarding bidding" would mean any instructions, not merely instructions by way of clarification, modification, ampli- fication of bids but also withdrawal or .retraction of bids. Such instructions by telegram would be impermissible. Having regard to the solemn procedure ·prescribed and followed by the Board any instructions by telegram which more often are cryptic and lack in authenticity on their face are rightly prohibited . .The fact that nowhere else in the Conditions of Sale is the withdrawal or retrac- , tion of bids dealt with. would precisely be the reason why this Condition should be 'Yidely construed as including the topic of. instructions regarding withdrawal .• or retraction of bids. [891E-G] ' 2. There is no force in the contention that there were no concluded. con- tracts between the parties on account of oral withdrawal of the bids. Assuming that the oral retraction was made as claimed by the appellants, the fact that it was made to the Assistant Coffee Marketing Officer who had no authority ·to accept it (instead of to the Sale Conducting Officer who was i
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