UNION OF INDIA versus MADDALA THATHIAH

Citation: [1964] 3 S.C.R. 774 · Decided: 09-05-1963 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

1969 
Athmanathaswami 
D1t10Slhanam 
"· 
IC. Gof>olasw"'"I 
A.iyangar 
196J 
M.,9 
.774 SUPREME COURT REPORTS[l964] VOL. 
We therefore dismiss the appeal except in so 
far as it relates to the order of the High Court on the 
cross-objection filed 
by 
the appellant. We set 
aside the order dismissing the cross-objection. We 
order the appellants to pay the costs of the respon-
dent throughout. 
UNION OF INDIA 
v. 
MADDALA THATHIAH 
(K. SUBBA RAO, RAGHUBAR DAYAL and 
J. R. MunHOLKAR JJ.) 
Oontract-Con•truction--Agreement for supply-Tender-
Acceptance-Formal order for •Upply-Stipulation in the contract 
for cancellation at any stage-If effective even after formal order 
for •upply had been made. 
The General Manager of a Railway invited tenders for 
the supply of jaggery to the railway grain shops. Paragraph 2 
of the tender set out the quantity required and described d4tes 
of delivery. 'l here was a note in that para that "the Adminis-
tration reserved the right to cancel the contract at any.stage 
during the tenure of the contract without calling up the out· 
standings on the unexpired portion of the contract· " 
Under 
para 8 the successful tenderer was required to pay security deposit 
towards proper fulfilment of the contract. Paragraph 9 stated 
that a formal order for supply would be placed after the security 
deposit referred to in para 8 was made. The respqndent 
submitted his tender for the supply of 14000 maunds as men-
tioned in the tender, and by the letter dated January 29, 1948, 
the Deputy General Manager accepted the tender stating that 
the official order would be placed on the respondent on receipt 
of the remittance of security. In his letter dated February 16, 
1948, the Deputy General Manager reiterated the acceptance 
of the tender subject to the respondents' acceptance of the 
t<rms and conditions printed on the reverse of that letter, under 
which 3500 maunds each were to he delivered on March I, 
3 S.C.R. 
SUPREME COURT REPORTS 
775 
March 22, April 5 and April 21, 1948 respectively. At the 
end of the terms and conditions was a note that the adminis-
tration reserved the right to 
c~ncel the contract at any stage 
during the tenure of the contract without calling upon the 
outstandings on the unexpired portion of the coatract. By his 
letter dated March 8, 1948, the Deputy General Manager 
informed the respondent that the balance quantity of jaggery. 
outstanding on date against the order dated February 16, 
1948, be treated as cancelled and the contract closed. In the 
suit instituted by the respondent for the recovery of damages 
resulting from breach of contract, the appellant relied, by way 
of defence, on the stipulation in the contract that the appellant 
was at Jibery to terminate the contract at any stage. 
Held that, on the true construction of the contract, the 
condition mentioned in the note 2 of the tender or in the letter 
dated February 16, 1948 referred to a right in the appellant to 
cancel the agreement for such supply of jaggery about which no 
formal order had been passed by the Deputy General Manager 
with the respondent and did not •pply to such supplies of 
jaggery about which a formal order hau been placed specifying 
deimite amount of jaggery to be supplied and the definite date 
or definite short period for its actual delivery. Once the order 
was placed for such supply on such dates, that order amounted 
to a binding contract making it incumbent on the respondent 
to supply jaggery in accordance with the terms of the order 
and also making it incumbent on the Deputy General Manager 
to accept the jag~ery dehvered in pursuance of that order. 
Ohatturbhuj Vithalda" Ja•ani v. Moneshwar Para•hram, 
[1954] S.C.R. 817, referred to. 
CIVIL APPELLATE JURISDICTION : Civil Appeal 
No. 53 of 1961. 
Appeal by special leave from the judgment and 
decree dated August 9, 1!156 of the Madras High 
Court in O.S. Appeal No. 64 of 1952. 
Ii. N. Sanyal, Additionul Solicitor-General of 
India, K. L. Gosain and P. D. Menon, for the 
appelfant. 
A. V. Viswanatha Sastri and M. S. K. Sastri, 
for the respondent. 
·11.'J 
Uoi'!' of I,adio 
•• 
Modl4• I.ful!iiM 
. 1963 
U•ion of /niia 
•• 
Mali•/• Thathioh 
Razhuiar D~1•l J. 
776 
SUPREME COURT REPORTS(1964)VOL . 
1963. May 9, The Judgment of the Court was 
delivered by 
RAGHUBAR DAYAL J.-The facts giving rise 
to this appeal, by special leave, are these : 
. 
The Dominion of India, as the owner of the 
Madras and S0uthern Mahratta Railway, 

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