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of <h1>Coffee auction bidders liable for damages after invalid bid retraction and subsequent resale losses</h1> <h3>M. Lachia Setty and Sons Ltd. and Ors. Versus Coffee Board, Bangalore</h3> M. Lachia Setty and Sons Ltd. and Ors. Versus Coffee Board, Bangalore - (1980) 4 SCC 636 Issues Involved:1. Validity of bid retraction by the appellants.2. Authority of the Coffee Board to accept lower bids.3. Quantum of loss claimed by the Coffee Board.Issue-wise Detailed Analysis:1. Validity of Bid Retraction by the Appellants:The appellants contended that they had retracted their bids both orally and by telegram before the auction results were announced, thus no concluded contracts existed. They relied on the telegram sent on October 7, 1952, and an oral retraction made to the Assistant Coffee Marketing Officer before the results were declared. The respondent argued that telegraphic withdrawal of bids was barred under Condition No. 8 of the Conditions of Sale, and the oral retraction was ineffective as it was not made to the proper officer.The court held that Condition No. 8, which states, 'Telegraphic bids or telegraphic instructions regarding bidding will not be considered,' was broad enough to include withdrawal or retraction of bids. The court reasoned that the solemn procedure followed in 'pool auctions' necessitated that any instructions regarding bids, including retraction, should not be permissible by telegrams, which are often cryptic and lack authenticity. Additionally, the oral retraction made to the Assistant Coffee Marketing Officer was ineffective as it was not made to the Chief Coffee Marketing Officer, who was the proper authority. Therefore, the court concluded that there were concluded contracts between the appellants and the Coffee Board.2. Authority of the Coffee Board to Accept Lower Bids:The appellants argued that the Chief Coffee Marketing Officer had no power to accept lower bids when higher bids were submitted, as a lower bid lapses on receipt of a higher bid. They contended that Condition No. 6 of the Conditions of Sale did not confer any power on the Board to accept lower bids.The court held that Condition No. 6, which states, 'The seller does not bind himself to accept the highest or any bid. He is not bound to assign any reasons for his decision, and his decision shall be final and conclusive,' impliedly conferred power on the Board to accept lower bids. The court reasoned that the addition of the words 'or any bid' after 'the highest' indicated an intention to confer separate powers to decline the highest bid and to decline any bid. The court also noted that the respondent Board had a history of accepting lower bids in preference to higher bids to regulate coffee prices and prevent malpractices. Therefore, the court concluded that the Chief Coffee Marketing Officer was within his rights to accept the lower bids from Giri Coffee Works.3. Quantum of Loss Claimed by the Coffee Board:The appellants contended that the Coffee Board had an obligation to mitigate the loss arising from their failure to pay for and take delivery of the coffee. They argued that the Board had deliberately depressed coffee prices before the re-sale, making the loss unreal and not recoverable. They also contended that the re-sale was held after an inordinate delay.The court held that the principle of mitigation of loss requires the non-defaulting party to act reasonably to minimize the loss. The court found that the Coffee Board had taken steps to regulate coffee prices in response to Government directives and in the interest of consumers, not specifically to enhance the loss from the re-sale. The court also noted that the re-sale was held within a reasonable time, as the next 'pool auction' was conducted in December 1952 after issuing the notice of re-sale on December 18, 1952. Therefore, the court concluded that the loss claimed by the Coffee Board was real and the re-sale was held within a reasonable time.Conclusion:The court dismissed the appeals with costs, upholding the High Court's decrees in favor of the Coffee Board. The court found that the appellants' bids were validly accepted, the Coffee Board had the authority to accept lower bids, and the loss claimed by the Coffee Board was real and recoverable.
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