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Haridwar Singh v. Bagun Sumbrui And Others
Factual and Procedural Background
The dispute concerns the settlement of “Bantha Bamboo coup” in the Chatra North Division of Hazaribagh district, Bihar. The Forest Department advertised the right to exploit the coup and conducted a public auction on August 7, 1970. Although the reserve price was Rs 95,000, the appellant’s highest bid of Rs 92,001 was provisionally accepted by the Divisional Forest Officer (DFO) subject to Government confirmation. Because the bid exceeded Rs 50,000 and was below the reserve price, the papers were forwarded to higher authorities and to the Finance Department for comments.
While the matter was pending, the appellant offered on October 26, 1970 to take the coup at the reserve price and filed another application on November 3, 1970 seeking settlement on the basis of his auction bid. On November 27, 1970 the Minister of Forest directed that the coup be settled with the appellant at the reserve price, and a telegram dated November 28, 1970 so advised the Conservator of Forests. The DFO, however, never received that telegram and did not inform the appellant.
Respondent 6 (Md. Yakub) submitted a higher offer of Rs 1,01,125 on December 4, 1970. The Government wired the DFO on December 5, 1970 to withhold action on the earlier telegram. After considering the matter, the Minister of Forest on December 13, 1970 cancelled the proposed settlement with the appellant and awarded the coup to Respondent 6. Respondent 6 paid the requisite amounts and executed an agreement.
The appellant’s writ petition before the Patna High Court sought to quash the December 13 order and to enforce the November 27 decision. The High Court dismissed the petition. The present appeal, brought by special leave, challenges that dismissal.
Legal Issues Presented
- Whether a concluded contract arose between the appellant and the Government when the Minister of Forest issued the order dated November 27, 1970, notwithstanding that the acceptance was never communicated to the appellant.
- Whether the subsequent settlement of the coup with Respondent 6 on December 13, 1970 contravened Rule 10(1) of the Rules of Executive Business (as relaxed) requiring prior consultation with the Finance Department, and if so, whether such contravention renders the settlement invalid.
Arguments of the Parties
Appellant's Arguments
- The DFO’s provisional acceptance, once confirmed by the Government on November 27, 1970, became unconditional, creating a binding contract even without communication to the appellant.
- Alternatively, the December 13, 1970 settlement with Respondent 6 violated statutory requirements—specifically Rule 10(1) of the Rules of Executive Business—and was therefore invalid.
Respondent 6 and Government's Arguments
- Rule 10(1) is not a statutory rule concerning forest leases or, at most, is merely directory; hence absence of prior consultation with the Finance Department does not invalidate the settlement.
- Nothing in Rule 10(1), even as relaxed, prohibits the Government from granting the coup by private treaty.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Rajanagaram Village Cooperative Society v. Veerasami Mudaly, (1950) II MLJ 486; AIR 1951 Mad 322 | A conditional acceptance, once confirmed, binds the highest bidder without need for further communication. | Cited by the appellant; the Court distinguished it, holding that no confirmation of the original bid at Rs 92,001 ever occurred. |
| Somasundaram Pillai v. Provincial Government of Madras, AIR 1947 Mad 366 | For a binding contract, there must be an offer and unconditional acceptance; provisional acceptance alone is insufficient. | Considered consistent with the Court’s conclusion that no concluded contract arose here. |
| Dattatreya Moreshwar Pangarkar v. State of Bombay, AIR 1952 SC 181; 1952 SCR 612 | Guidelines for determining whether statutory provisions are mandatory or directory. | Used as authority in analysing whether prior consultation under Rule 10(1) is mandatory. |
Court's Reasoning and Analysis
On the existence of a concluded contract: The Court noted that the appellant’s auction bid at Rs 92,001 required Government confirmation. The Minister’s order of November 27, 1970 did not confirm that bid; instead, it purported to accept the appellant’s later proposal to pay the reserve price of Rs 95,000. Acceptance of that proposal was never communicated—indeed, it was never even put into transmission—to the appellant. Moreover, the appellant withdrew the October 26 proposal by his letter of November 3, 1970. Consequently, no concluded contract ever arose between the appellant and the Government.
On the validity of the December 13 settlement with Respondent 6: The decisive question was whether Rule 10(1) of the Rules of Executive Business, which requires prior consultation with the Finance Department for leases affecting State revenue, is mandatory. The Court applied tests from statutory-interpretation jurisprudence, emphasising (1) the prohibitive wording of Rule 10(1) and (2) Rule 10(2), which bars further departmental action when the Finance Department disagrees. These features signified legislative intent to make prior consultation an essential pre-condition. As the Finance Department had not been consulted before the Minister settled the coup with Respondent 6, the order dated December 13, 1970 was ultra vires and invalid.
Holding and Implications
Appeal Allowed in Part; Order dated December 13, 1970 Quashed.
The Court invalidated the settlement of the Bantha Bamboo coup in favour of Respondent 6 for non-compliance with mandatory procedural requirements. No costs were awarded. The decision restores the status quo ante, leaving the Government free to re-initiate settlement proceedings in accordance with Rule 10(1). The ruling turns on specific procedural violations and does not establish new substantive rights but underscores the mandatory nature of prior financial consultation in similar governmental transactions.
K.K Mathew, J.— The appellant filed a writ petition before the High Court of Patna praying for quashing an order passed by the Minister of Forest, Government of Bihar, on December 13, 1970 and for issue of a writ in the nature of mandamus directing the Respondents 1 to 5 to give effect to the previous order of the Minister of Forest, dated November 27, 1970. The writ petition was heard by a Division Bench of the Court and the petition was dismissed. This appeal, by special leave, is from that judgment.
2. There is a bamboo coup known as “Bantha Bamboo coup” in Chatra North Division of Hazaribagh district. On July 22, 1970 the Forest Department of the Government of Bihar advertised for settlement of the right to exploit the coup by public auction. The auction was held in the office of the Divisional Forest Officer on August 7, 1970. Five persons including the appellant participated in the auction. Though the reserve price fixed in the tender notice was Rs 95,000, the appellant's bid of Rs 92,001, being the highest, was accepted by the Divisional Forest Officer. The petitioner thereafter deposited the security amount of Rs 23,800 and executed an agreement. The Divisional Forest Officer reported about the auction sale to the Conservator of Forests, Hazaribagh Circle, by his letter, dated August 25, 1970. As the price for which the coup was provisionally settled exceeded Rs 50,000, the Conservator of Forests forwarded the papers regarding the auction sale to the Deputy Secretary to Government of Bihar, Forest Department, for confirmation of the acceptance by the Government. Since the provisional settlement was made for an amount less than the reserve price, the matter was also referred to the Finance Department. The Finance Department invited comments from the Divisional Forest Officer as to why the settlement was made for a lesser amount. The Divisional Forest Officer, by his letter, dated October 30, 1970 submitted his explanation for the provisional settlement at an amount below the reserve price. When the matter was pending before the Government, the appellant expressed his willingness to take the settlement at the reserve price of Rs 95,000, by his communication, dated October 26, 1970. The appellant thereafter filed an application on November 3, 1970 praying for settlement of the coup on the basis of the highest bid. The Minister of Forest, by his proceedings, dated November 27, 1970 directed that the coup may be settled with the highest bidder, namely the appellant, at the reserve price. A telegram was sent by the Government to the Conservator of Forests, Hazaribagh Circle on November 28, 1970 with a copy of the same to the Conservator of Forest, Bihar, confirming the auction sale to the appellant at the reserve price of Rs 95,000. As no intimation was received by the Divisional Forest Officer, he did not communicate the proceedings of the Minister to the appellant. One Md. Yakub, Respondent 6, filed a petition on December 4, 1970, before the Government of Bihar, Respondent 1, offering to take the settlement of the coup in question for Rs 1,01,125. A telegram was sent by the Government on December 5, 1970 to the Divisional Forest Officer, directing him not to take any action on the basis of the telegram, dated November 28, 1970 sent to him in pursuance of the proceedings of the Government, dated November 27, 1970. That telegram was received by the Divisional Forest Officer on December 10, 1970 and the Divisional Forest Officer, by his letter, dated December 10, 1970 informed the Government that the previous telegram, dated November 28, 1970 was not received by him and so its content was not communicated to the appellant. The whole matter was thereafter placed before the Minister of Forest and the Minister, by his proceedings, dated December 13, 1970 cancelled the settlement of the coup with the appellant and settled the same with Respondent 6 for Rs 1,01,125. The Government thereafter sent telegrams on December 21, 1970 to the Conservator of Forests and the Divisional Forest Officer, informing them that the coup had been settled with Respondent 6. The Divisional Forest Officer, by his letter, dated December 23, 1970 directed Respondent 6 to deposit the security amount and to pay the first instalment. Respondent 6 deposited the same and executed an agreement.
3. The contention of the appellant in the writ petition was that there was a concluded contract when the bid of the appellant was accepted by the Divisional Forest Officer though that was subject to confirmation by the Government and that, when the Government confirmed the acceptance by its proceedings, dated November 27, 1970 it was no longer within the power of Government to make the settlement of the coup upon the 6th respondent by its proceedings, dated December 13, 1970. It was also contended in the alternative that the settlement of the coup in favour of the 6th respondent was in violation of statutory Rules and, therefore, in any event, that settlement was invalid.
4. As already indicated, the High Court negatived these contentions and upheld the validity of the settlement in favour of the 6th respondent.
5. The special conditions in the tender notice makes it clear that the Divisional Forest Officer has the right to accept a bid of less than Rs 5000, that acceptance of a bid of more than Rs 5000 by him is subject to confirmation by the Chief Conservator of Forests and the Forest Department of the Bihar Government, that an auction sale for an amount of more than Rs 5000 would not be recognised until it is confirmed by the competent authority, and that a bid made in auction and which has been provisionally accepted by the Divisional Forest Officer shall be binding on the bidder for two months from the date of auction or till the date of rejection by the competent authority, whichever is earlier.
6. Counsel for the appellant contended that there was a conditional acceptance of the offer of the appellant by the Divisional Forest Officer, that on confirmation by the Government, that acceptance became unconditional and, therefore, there was a concluded contract when the Government confirmed the acceptance, even though the confirmation was not communicated to the appellant. In support on this, he relied on Rajanagaram Village Cooperative Society v. Veerasami Mudaly (1950) II MLJ 486, AIR 1951 Mad 322. There it was held that in the case of a conditional acceptance in the presence of a bidder, the condition being that it is subject to approval or confirmation by some other person, the acceptance, though conditional, has to be communicated and when that is communicated, there is no further need to communicate the approval of confirmation which is the fulfilment of the condition. It was further held that a conditional acceptance has the effect of binding the highest bidder to the contract if there is subsequent approval or confirmation by the person indicated, that he cannot resile from the contract or withdraw the offer, and if there is approval or confirmation, the contract becomes concluded and enforceable. This decision was considered in Somasundaram Pillai v. Provincial Government of Madras, AIR 1947 Mad 366 where Chief Justice Leach, speaking for the court said that, to have an enforceable contract, there must be an offer and an unconditional acceptance and that a person who makes an offer has the right to withdraw it before acceptance, in the absence of a condition to the contrary supported by consideration. He further said the fact that there has been a provisional or conditional acceptance would not make any difference as a provisional or conditional acceptance cannot in itself make a binding contract.
7. The question whether by an acceptance which is conditional upon the occurrence of a future event a contract will become concluded was considered by Williston, and this is what he says:
“A nice distinction may be taken here between: (1) a so-called acceptance by which the acceptor agrees to become immediately bound on a condition not named in the offer, and (2) an acceptance which adopts unequivocally the terms of the offer but states that it will not be effective until a certain contingency happens or fails to happen. In the first case there is a counter-offer and rejection of the original offer; in the second case there is no counter-offer, since there is no assent to enter into an immediate bargain. There is, so to speak, an acceptance in escrow, which is not to take effect until the future. In the meantime, of course, neither party is bound and either may withdraw. Moreover, if the time at which the acceptance was to become effectual is unreasonably remote, the offer may lapse before the acceptance becomes effective. But if neither party withdraws and the delay is not unreasonable a contract will arise when the contingency happens or stipulated event occurs.”
8. In this case, it is not the want of communication of the confirmation by the Government to the appellant that really stands in the way of there being a concluded contract, but rather the want of confirmation by the Government of the conditional acceptance by the Divisional Forest Officer. The appellant's bid was for Rs 92,001. The acceptance of the bid by the Divisional Forest Officer was, therefore, subject to confirmation by Government. The proceedings of the Minister, dated November 27, 1970, would show that he did not confirm the acceptance of the offer by the Divisional Forest Officer. What the Minister did was not to confirm the acceptance made by the Divisional Forest Officer, but to accept the offer made by the appellant in his communication, dated October 26, 1970 that he would take the coup for the reserved price of Rs 95,000. There was, therefore, no confirmation of the acceptance of the bid to take the coup in settlement for the amount of Rs 92,001. If the offer that was accepted was the offer contained in the communication of the appellant, dated October 26, 1970 we do not think that there was any communication of the acceptance of that offer to the appellant. The telegram sent to the Conservator of Forest, Hazaribagh by the Government on November 28, 1970 cannot be considered as a communication of the acceptance of that offer to the appellant. The acceptance of the offer was not even put in the course of transmission to the appellant; and so even assuming that an acceptance need not come to the knowledge of the offeror, the appellant cannot contend that there was a concluded contract on the basis of his offer contained in his communication, dated October 26, 1970 as the acceptance of that offer was not put in the course of transmission. Quite apart from that, the appellant himself revoked the offer made by him on October 26, 1970 by his letter, dated November 3, 1970 in which he stated that the coup may be settled upon him at the highest bid made by him in the auction. We are, therefore, of the opinion that there was no concluded contract between the appellant and the Government.
9. This takes us to the question whether the settlement in favour of the 6th respondent was in violation of any statutory Rule. The appellant's contention was that the settlement in favour of the 6th respondent by a private treaty was in violation of the Rules of executive business made under Article 166(3). rule 10 of the Rules provides:
“10. (1) No department shall, without previous consultation with the Finance Department, authorise any orders (other than orders pursuant to any general or special delegation made by the Finance Department) which —
(a) either immediately or by their repercussion, will affect the finances of the State, or which, in particular, —
(i) involve any grant of land or assignment of revenue or concession, grant, lease or licence of mineral or forests, rights or a right to water power or any easement or privilege in respect of such concession.
* * *
(2) Where on a proposal under this Rule, prior consultation with the Finance Department is required, but on which the Finance Department might not have agreed, no further action shall be taken on any such proposal until the cabinet takes a decision to this effect.”
A copy of the letter from the Deputy Secretary to the Government to the Accountant General, Bihar, dated November 22, 1967 would show that some relaxation of rule 10(1) of the Rules of executive business was made by the Finance Department relating to lease of forest coups or forest produce of the value of more than Rs 50,000. That letter reads as under:
“Subject: Division of procedure in issuing any order involving any grant of lease, sale or licence of minerals of forest rights if such order is issued by the Administrative Department at the Secretariat level.
Sir,
I am directed to say that in relaxation of rule 10(1) of the Rules of Executive Business, Government have been pleased to decide that the Forest Department shall authorise orders sanctioning leases of Forest coups or produce of the value of more than Rs 50,000 (rupees fifty thousand) each subject to the following conditions that:
(1) Reserve price of the coup has been fixed before auction.
(2) Highest bid should be accepted.
(3) Highest bid should not be less than the reserve price.
(4) Any relaxation to the above conditions may not ordinarily be allowed except with the prior concurrence of the Finance Department.”
10. Before the High Court the contentions of the 6th respondent were, firstly, that the Rule 10(1) is not a statutory rule and, secondly, that it did not concern lease of forest land. The High Court, without deciding the question whether the Rule is a statutory Rule, held that the Rule has nothing to do with the lease of forest coups and said that there was nothing which prevented the Government from giving the coup on lease by private treaty. The High Court, therefore, held that there was no bar, statutory or otherwise, to the settlement of the coup in favour of Respondent 6 by private negotiation and as such the settlement in his favour was valid.
11. Counsel for the appellant argued that the High Court went wrong in its conclusion that rule 10(1) as relaxed, did not apply to the grant of the lease of the coup in question and that it really prohibited a lease of forest land except by public auction. We are not satisfied that the construction contended for is correct. Neither rule 10(1) nor the Rule as relaxed says that forest land can be leased only by public auction. rule 10(1) insofar as it is relevant to the present case only says that, no department shall, without prior consultation with the Finance Department, authorise by any order, the lease or licence of mineral or forests. The relaxation made to rule 10(1) as evidenced by the letter from the Deputy Secretary to the Government is to the effect that in the case of lease of forest land of the value of more than Rs 50,000, if made by public auction, it can only be made subject to the conditions mentioned there. In other words rule 10(1) as relaxed does not prohibit the grant of a lease by private treaty. The Rule read in the context of its relaxation as mentioned in the letter of the Deputy Secretary would only show that consultation with the Finance Department is not necessary for a lease, if the lease is of land of the value of more than Rs 50,000 and is granted in pursuance of a public auction held in conformity with the conditions mentioned in the letter of the Deputy Secretary.
12. Now the question is whether the coup in question was settled in favour of the 6th respondent in accordance with rule 10(1). It is clear from the records relating to the proceedings for the grant of the lease in favour of the 6th respondent that the Finance Department was not consulted before the Minister passed the order on December 13, 1970 to grant the lease. But counsel for the Government of Bihar and 6th respondent contended that rule 10(1), insofar as it requires prior consultation with the Finance Department, is only directory in character and, therefore, even if there was no prior consultation, the settlement was valid. So, the question arises whether rule 10(1) which requires prior consultation with the Finance Department is mandatory or not.
13. Several tests have been propounded in decided cases for determining the question whether a provision in a statute, or a rule is mandatory or directory. No universal rule can be laid down on this matter. In each case one must look to the subject-matter and consider the importance of the provision disregarded and the relation of that provision to the general object intended to be secured. Prohibitive or negative words can rarely be directory and are indicative of the intent that the provision is to be mandatory (see Earl T. Crawford, The Construction of Statutes, pp. 523-4).
14. Where a prescription relates to performance of a public duty and to invalidate acts done in neglect of them would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty, such prescription is generally understood as mere instruction for the guidance of those upon whom the duty is imposed (see Dattatreya Moreshwar Pangarkar v. State of Bombay AIR 1952 SC 181, 1952 SCR 612 at 624, 1952 Cri LJ 955).
15. Where, however, a power or authority is conferred with a direction that certain regulation or formality shall be complied with, it seems neither unjust nor incorrect to exact a rigorous observance of it as essential to the acquisition of the right or authority (see Maxwell, Interpretation of Statutes, 6th Edn., pp. 649-650).
16. In this case, we think that a power has been given to the Minister in charge of the Forest Department to do an act which concerns the revenue of the State and also the rights of individuals. The negative or prohibitive language of rule 10(1) is a strong indication of the intent to make the Rule mandatory. Further, rule 10(2) makes it clear that where prior consultation with the Finance Department is required for a proposal, and the department on consultation, does not agree to the proposal, the department originating the proposal can take no further action on the proposal. The cabinet alone would be competent to take a decision. When we see that the disagreement of the Finance Department with a proposal on consultation, deprives the department originating the proposal of the power to take further action on it, the only conclusion possible is that prior consultation is an essential pre-requisite to the exercise of the power. We, therefore, think that the order passed by the Minister of Forest, Government of Bihar on December 13, 1970 settling the coup in favour of the 6th respondent was bad and we quash the order.
17. We allow the appeal to the extent indicated but make no order as to costs.
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