Supreme Court quashes Minister's order due to absence of contract & statutory violations

The Supreme Court quashed the Minister's order settling the coup with the 6th Respondent due to the absence of a concluded contract between the appellant and the Government and the violation of mandatory statutory rules necessitating prior consultation with the Finance Department. The appeal was allowed on these grounds, with no order as to costs.

---

---

Issues Involved:
1. Whether there was a concluded contract between the appellant and the Government.
2. Whether the settlement in favor of the 6th Respondent violated statutory rules.

Detailed Analysis:

1. Concluded Contract:
The appellant contended that there was a concluded contract when the Divisional Forest Officer accepted his bid, subject to Government confirmation, and that the Government's confirmation on November 27, 1970, finalized the contract. The Court examined whether the acceptance by the Divisional Forest Officer, subject to Government confirmation, constituted a binding contract. The special conditions in the tender notice stated that bids over Rs. 5,000 required Government confirmation and were binding on the bidder for two months or until rejection.

The Court referred to legal precedents, including *The Rajanagaram Village Cooperative Society v. Veerasami Mudaly* and *Somasudaram Pillai v. Provincial Government of Madras*, to discuss the nature of conditional acceptance. It concluded that a conditional acceptance does not create a binding contract until the condition is fulfilled and communicated. The Court found that the Minister's proceedings on November 27, 1970, did not confirm the acceptance of the bid of Rs. 92,001 but rather accepted the appellant's later offer to take the coup at the reserve price of Rs. 95,000. This acceptance was not communicated to the appellant, and the appellant had revoked this offer by November 3, 1970. Therefore, there was no concluded contract between the appellant and the Government.

2. Violation of Statutory Rules:
The appellant argued that the settlement in favor of the 6th Respondent violated Rule 10 of the Rules of Executive Business under Article 166(3), which required prior consultation with the Finance Department for orders affecting state finances. The High Court had held that Rule 10(1) was not statutory and did not apply to forest coups, allowing the Government to lease by private treaty.

The Supreme Court analyzed Rule 10(1) and its relaxation, which allowed leases over Rs. 50,000 to be sanctioned without Finance Department consultation if certain conditions were met. The Court found that the rule did not prohibit private treaty leases but required consultation with the Finance Department for any lease. Since the Finance Department was not consulted before the Minister's order on December 13, 1970, the Court deemed the order invalid.

The Court considered whether Rule 10(1) was mandatory or directory, concluding it was mandatory due to its prohibitive language and the requirement for Finance Department consultation before proceeding with proposals. The absence of such consultation invalidated the Minister's order settling the coup with the 6th Respondent.

Conclusion:
The Supreme Court quashed the Minister's order dated December 13, 1970, settling the coup with the 6th Respondent due to the lack of a concluded contract with the appellant and the violation of mandatory statutory rules requiring prior consultation with the Finance Department. The appeal was allowed to this extent, with no order as to costs.

---