M/S. PADIA TIMBER COMPANY (P) LTD. versus THE BOARD OF TRUSTEES OF VISAKHAPATNAM PORT TRUST THROUGH ITS SECRETARY

Citation: [2021] 1 S.C.R. 229 · Decided: 05-01-2021 · Supreme Court of India · Bench: NAVIN SINHA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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M/S. PADIA TIMBER COMPANY (P) LTD.
v.
THE BOARD OF TRUSTEES OF VISAKHAPATNAM PORT
TRUST THROUGH ITS SECRETARY
(Civil Appeal No. 7469 of 2008)
JANUARY 05, 2021
[NAVIN SINHA AND INDIRA BANERJEE, JJ.]
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
   [2021] 1 S.C.R. 229
229
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SUPREME COURT REPORTS
[2021] 1 S.C.R.
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]
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 Respondent-
Port 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
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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. AI

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