Basic Principles of Contract | Contract Law

Union of India & Ors. v. M/S. Bhim Sen Walaiti Ram

Union of India & Ors. v. M/S. Bhim Sen Walaiti Ram 

1970 SCR (2) 594

(Section 7 of Indian Contract Act -Acceptance must be absolute)

FACTS:

In an auction held for the sale of license of liquor shop, defendant offered the highest bid which was provisionally accepted “…subject to the confirmation of Chief Commissioner who may reject any bid without assigning any reasons.” Since defendant failed to deposit the required amount, Chief Commissioner rejected the bid. Holding the defendant liable for the difference between the bid offered by him and the highest bid accepted in re-auction, plaintiff started proceedings against him under the rule given in statute applying to person to whom “shop has been sold”.

ISSUE: Whether the defendant is entitled to any relief u/s 7 of ICA?

HELD:

U/s 7(a) of Indian Contract Act (ICA), the acceptance must be absolute and unqualified, leaving no ground for doubt or uncertainty. If the acceptance is conditional, no valid contract is formed, and the offer can be withdrawn at any moment till the absolute acceptance has taken place within reasonable time of such offer.

In present case, the “…contract for sale was not complete till the bid was confirmed by the chief commissioner and till such confirmation; the bidder was entitled to withdraw the bid.” Since there was never any sale of the license of the liquor shop to the defendant, therefore, he cannot be held liable.

 

Author: Vishrut Kansal (National University of Juridical Sciences, Kolkata)

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