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Case Brief |Madho Ram vs The Secretary Of State For India

Madho Ram vs The Secretary Of State For India 

Citation: AIR (1934) 36 BOMLR 246 

Bench: G Lowndes, J Wallis, Macmillan 

Facts of the Case:

The plaintiff, Mahdo Ram is a contractor in Lahore Cantonment. He filed a suit for recovery of Rs. 37,500 from the defendant for breach of contract, entered into by the Supply and  Transport Corps with the sanction of the General Officer Commanding the Lahore Divisional  Area, for the supply of “oils of sorts other than kerosine”. 

The plaintiff has put in a tender in the prescribed form, later on, the written sanction of the  G.O.C. was obtained “for the period at the rates quoted” in the schedule to the tender after a  “comparative statement” was submitted, which no doubt showed the rates accepted in the preceding year. 

The sanction was duly recorded in the schedule to the tender, later on, that day the schedule was signed by the plaintiff and the Deputy Assistant Director of Supplies, communicated the acceptance of tender to the plaintiff. 

In the tender, the plaintiff agreed to supply so much oil of sorts as the officers specified “may  require, subject to the conditions mentioned in tender and schedule annexed.” 

One of the oils specified in the schedule was “oil petroleum,” at Rs. 3.12 per gallon, the  “estimated requirements” entered was 200 gallons. The tender for the preceding year 1916-17  included “oil petroleum,” at Rs. 4 per gallon, with estimated requirements of 10 gallons. “Oil petroleum” was never included in the accepted tender for 1915-16. 

ISSUES BEFORE THE COURT: 

Whether the plaintiff obtained a contract for the supply of all the petrol required by the Supply and Transport Corporation for five important military stations at a rate that was double the rate for petrol in 1917? 

JUDGEMENT: 

The plaintiff alleged that under the contract continued to supply petrol under “oil petroleum,”  up to July 17, 1917, and supplied over 200 gallons of petrol but subsequently, the defendant breached the contract and obtained supplies of petrol from other dealers during the running period of the contract obtained approximately 25,000 gallons. 

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He further went on to allege that during the period July 1917 to March 1918, the market price of petrol was Rs. 2.4 per gallon, as compared with the contract rate of Rs. 3.12, and that he had suffered a loss at the rate of Rs. 1.8 per gallon or around Rs. 37,500, which he sought to recover as damages. 

The defendant denied that the plaintiff had supplied petrol under the heading of “oil  petroleum” up to July 1917, and had supplied 200 gallons of petrol which were duly accepted 

and under “oil petroleum.” The schedule stated the supply of oil petroleum. The plaintiff  cleverly supplied petrol which was never knowingly received in the place of ‘oil petroleum.” 

DECISION OF LOWER COURT:

Lower Courts in its judgment gave an elaborative consideration on the question of whether the  English judgements, the acceptance of the plaintiff’s tender amounted to a contract binding to draw all of their supplies of the oils from the plaintiff. 

The Subordinate Judge on the question of the term “oil petroleum”, found that in the first place,  “oil petroleum” arid “petrol” were two different things and that “oil petroleum” meant crude oil used for cleaning rifles and guns.

Petrol was the distilled spirit used for driving motorcars,  in the contract both parties understood that the article to be supplied was petrol and accordingly gave the plaintiff a decree for Rs. 37,500 for damages.  

The Judge found that such a contract was proved, in his opinion, “oil petroleum” included petrol, given the decree in favour of the plaintiff. The defendant went for an appeal in the High Court of Andhra Pradesh.  

DECISION OF HIGH COURT:

The High Court held that the plaintiff was not entitled under the contract to get all or any of the supplies from the plaintiff and reversed the decree of the lower Court and dismissed the suit on that ground. 

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The Judges were of opinion that petrol was not included and on this ground, the appeal failed.  Tenders of this kind should be made clear beyond all doubt on the face it. 

“Oil petroleum, Russian lubricating,” is one of the supplies included in the Army Tables of a  Battery. As per the evidence produced by the defendant the “oil petroleum” was required for cleaning guns.

The words petroleum and petrol in the New English Dictionary show that in the early days of motoring, the motor spirit was known as the spirit of petroleum. In the year 1917, petrol was the only term in use for motor spirit both in England and in India. 

When the plaintiff first read the words “oil petroleum” in the tender he may not be aware of what exactly was meant and could have enquired, but failed to enquire before making his tender. But this was sufficiently from the fact that only 200 gallons were entered as the estimated requirements for five stations.

Whereas the plaintiff proved from the books of the defendant that the defendant under the contract year purchased 26,540 gallons of petrol for the contract stations. Also, it is not clear whether the quantities included the petrol obtained from other contractors under their contracts. 

Regarding the meaning of “oil petroleum,” he presumably ascertained that it was crude petroleum, used for cleaning guns and he tendered it at Rs. 3.12 a gallon. In this case, he cannot possibly suppose that “oil petroleum” included petrol. 

The plaintiff’s agent of the supply orders, deposed before the court was unable to explain why in this case the supply order was made out for oil petroleum and that he signed the order.

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The plaintiff’s claimed that it had come to the plaintiff’s knowledge that the previous contractor on two occasions was allowed to supply petrol wanted by the Armoured Motor  Unit in Lahore undersupply orders for oil petroleum made under his contract and the claim was once rejected by the Officer Commanding the Supply and Transport Corps. 

The appeal was therefore dismissed and the appellant was ordered to pay the cost of the suit. 

LEGAL PRINCIPLE INVOLVED:

A Tender is a legal offer or proposal to do or abstain from doing an act and it binds the party to perform to the party to whom the offer is made. A tender can be made concerning money or specific articles.

If the tender is not an offer then it falls in the same category as a  quotation of price. When the tender is accepted it becomes a standing offer. A contract can arise only when an offer is made based on the tender. 

Requisites of valid tender 

A tender is an offer. It is something that you invited and communicated to notify acceptance.  In general terms, the following are the requirements of a valid offer: 

  1. It must be unconditional. 

2. It must be done in the right place. 

3. They must conform to the terms of the obligation. 

4. It must be done at the right time. 

5. It must be done properly. 

6. The person making the bid must be able and willing to fulfil their obligation.

7. There must be a reasonable opportunity for inspection. 

8. The tender must be made to the right person. 

9. It must be of the total amount.

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