' This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, arises in the following circumstances.
' Respondent No,1, which is a Local Council constituted under the Punjab Local Government Ordinance, 1979, advertised its intention to auction the rights to collect fee/tax on transfer of immovable properties for the year 1990-91, through a notice published in daily `Nawa-i-Waqr of 12th of April, 1990. In accordance with the terms of the auction, petitioner furnished a Call Deposit Receipt for Rs,10,00,000 in the name of Chief Officer, District Council as earnest money.
2. Thre is no dispute that the auction was held on 2nd of May, 1990. According to the petitioner, he did not take part in the said auction, but instead informed the respondents through a written communication on 2nd of May, 1990, that he did not wish to participate in it. He urged that he went to the office of the District Council on 3rd May, 1990, to take back the Call Deposit Receipt but his request was refused by the respondents, on the ground that he made the highest bid of Rs,1,50,00,000 at the auction.
3. In this Constitutional petition, under Article 199 of the Constitution of Islamic Republic of Pakistan (1973), the petitioner has reiterated that he never participated in the auction and as such the respondents have no lawful authority to retain the Call Deposit Receipt. In the alternative, it is pleaded that as a concluded contract between the parties never came into being, the petitioner is entitled to refund of the earnest money.
4. The respondents in their written statement have asserted that the petitioner had, after depositing the Call Deposit Receipt, duly participated in the auction and gave the highest bid of Rs,1,50,00,000 but he slipped away without signing the bid sheet. It is further stated in the written statement that the auction in favour of the petitioner was confirmed by the Chairman of the Zila Council on 15th of May, 1990, and, threfore, the petitioner is not entitled to the refund of any amount.
5. The learned counsel appearing for the petitioner, in support of this petition, has raised the following contentions:---
(1) That it stands established on the record that the petitioner never participated in the auction and that the record produced by the respondents is forged and fabricated. It was pointed out by the learned counsel that in the bid sheet, all the bidders have signed against their names but signatures of petitioner are missing.
(2) That in any case, the offer made by the petitioner was never accepted by the Local Council, which alone had the authority to do so, and as such, the offer never matured into a contract.
(3) That even if it be assumed that the Chairman had the power to accept the bid, still as the petitioner had on 2nd May, 1990, having clearly signified his intention not to be bound by the offer and to withdraw it, its subsequent acceptance is of no avail.
6. The learned counsel for the respondents, on the other hand, argued that the petitioner fully participated in the auction and made the highest bid, whereafter he slipped away without signing the bid sheet and he cannot be allowed to make any capital out of his own wrong. As to the second contention of the learned counsel for the petitioner, it was urged that the bid was accepted by the sub-committee on the very day when it was made subject to the approval of the Chairman, which was subsequently granted and under the law, a contract came into being on the day on which the bid was accepted by the sub committee.
7. So far as the first contention of the learned counsel for the petitioner is concerned, it raises a factual dispute which cannot be adjudicated upon in the Constitutional jurisdiction of his Court.
The question as to whether or not the petitioner participated in the auction and whether the record has been fabricated by the respondents calls for an inquiry into facts and cannot be decided without recording evidence. Consequently, this contention of the learned counsel cannot be accepted.
8. The second point raised by the learned counsel for the petitioner has, however, force. Even if it be assumed that the petitioner did participate in the auction and made a bid at the auction held on 2nd of May, 1990, the next question which arises is as to whether a concluded contract ever came into being between the parties so as to entitle the respondents to forfeit the deposit made by the petitioner.
9. As regards the legal aspect, it is well-settled that a bid made at an auction is in the natwe of an offer which does not mature into contract till its acceptance. The auctioneer acts as an agent of the seller and if he has authority to accept the bid, a concluded contract comes into being the moment the bid is accepted either by a word of mouth or in any other customary method. If, however, the auctioneer is not vested with the power to accept the bid which is with another person or authority, the contract only comes into being when the bid is accepted by that authorized person. It is also well-settled that before communication of the acceptance of the bid by a person competent to do so, the bidder can retract the bid made by him.
10. In Dr. Azeem Shad v. Municipal Committee, Multan PLD 1968 Lah. 1419, a Division Bench of this Court was pleased to hold that as the acceptance of the offer may by the contractor was not communicated to him, no concluded contract came into being. In Muthu Pillai v. The Secretary of State through Collector of Madura AIR 1923 Mad. 582, it was observed that till such time the sale at auction is not confirmed by the authority competent to do so, there cannot be said to be a concluded contract between the parties.
11. The judgment of the Madras High Court in Somasundaram Pillai v. Provincial Government of Madras respresented by Collector of South Arcot AIR (34) 1947 Madras 366, is instructive. The dispute in that case related to auction of liquor shop licence by the Provincial Government.
According to the terms of the auction, the auctioneer could accept the bid provisionally which was subject to final acceptance by the Collector. It was further stipulated in the condition that no bid which had been provisionally accepted could be withdrawn. Notwithstanding that conditions, it was held that the plaintiff was entitled to withdraw the bid as in law, no concluded contract ever came into being in the absence of confirmation of the bid by Collector. The observation in para. 8 of the judgment may be reproduced with advantage:--- "8. In the present case there was a provisional acceptance by the Sub-Collector of the appellant's bids, but the Collector refused to confirm the acceptance and directed the sale to continue. He changed his mind , at a later stage and accepted the bids, but before this happened, the appellant had withdrawn them, which he was entitled to do in law as there was no consideration to support his implied acceptance of the condition that once a bid had been made it could not be withdrawn.
If the conditions of sale had statutory force, the position would of course be different but they had not statutory force. They were merely conditions which the Board of Revenue had directed should be imposed in respect of auctions of liquor shop licence. We are firmly of the opinion that the appellant was entitled to withdraw his bids because the prohibition against withdrawal had not the force of law and there was no consideration to bind him down to the condition. For these reasons, we allow the appeal and decree the suit with costs throughout."
12. Similarly, in M/s. Suraj Besan and Rice Mills v. Food Corporation of India AIR 1988 Delhi 224, it was observed that a person can withdraw or modify his offer or tender before communication of the acceptance is complete as against him i.e. before its acceptance is intimated to him. It was further observed that the Government by merely providing a clause in the tender notice, contract could not take away the legal right of a person. To the same effect is the judgment in Rejendra Kumar Verma v. State of Madhya Pradesh and others AIR 1972 Madhya Pradesh 131.
13. In the last notice may also be taken of the decision of the Indian Supreme Court in Union of India and others v. M/s. Bhimsen Walaiti Ram AIR 1971 SC 2295, holding that the auction-purchaser whose bid is provisionally accepted, subject to confirmation by the Chief Commission, is not liable for any shortfall on reauction unless the final confirmation by the Chief Commissioner has been communicated to him.
14. In the context of the above legal position, it becomes essential to find out as to whether the bid made by the petitioner was accepted by a competent person and if so by whom. As already observed, the contention of the learned counsel for the petitioner is that the power to accept the bid under the Punjab Local Councils (Lease) Rules, 1990, vests in the Local Zila Council itself and no one else. On the other hand, the stand taken in the written statement filed by the respondent is that the Chairman, in exercise of the powers delegated to him by the Local Council vide resolution No,14, dated 22nd February, 1988 had the authority to accept the bid and in exercise of that authority, he had approved the same on 15th May, 1990.
15. This plea of the respondents cannot be accepted in view of clear provision of rule 5 of the Punjab Local (Lease) Rules, 1990, which requires the Chairman to apprise the House of the bid made at the auction which alone is authorized to accept or reject his offer. This question was examined by the Court in Mumtaz Hussain v. Chairman, Zila Council, Jhang and others 1991 MLD 2191, where a similar dispute arose with regard to the power of the Chairman, to approve the bid made at the auction held for leasing out the rights to collect tax on transfer of immovable property.
After considering the provisions of Punjab Local Council Ordinance, 1979 and the Punjab Local Council (Lease) Rules, 1990, it was held that it was the Zila Council itself, which could accept or reject the bid and such a power was not capable of being delegated to the Chairman. To the same effect is the judgment of this Court in Muhammad Ajmal v. Chairman, Zila Council, Jhang and others 1992 CLC 1519, in which the dispute related to the lease of export tax. It is common ground between the parties that the bid of the petitioner was never placed before the Zila Council and as such even till today, there is no concluded contract between the parties.
16. Be that as it may, even if the position taken by the respondents in the written statement is accepted as correct, yet it would not improve their case inasmuch as it is not denied that much before the acceptance of the bid by the Chairman, the respondents had been informed by the petitioner that he had not made the bid in question and had demanded the return of earnest money as has been admitted in para. 5 of the written statement. This act of the respondents clearly purported as repudiation of bid made by him. In these circumstances, there was no authority vested in the respondents to accept the bid thereafter.
17. Learned counsel for the respondents has, however, taken up the position that according to the terms of the auction, the power to accept or reject the bid vested in the sub-committee, which accepted it on 2nd May, 1990, and the Chairman had only to approve the acceptance which was done on 15th May, 1990. Relying upon a passage from Pollock & Mulla, Commentary on Sales of Goods Act (Second Edition), it was contended that in cases where the auctioneer has the power to accept the bid but subject to approval of another the bid was subsequently approved, is deemed to have matured into a contract at the time of its acceptance by the auctioneer. Reliance was also placed by the learned counsel on The Rajanagaram Village Co-operative Society by its Secretary, Parthasarathi Pillai v. P. Veerasami Mudaly AIR 1951 Mad. 322 and Muthu Pillai v. The Secretary of State through Collector of Madura AIR 1923 Mad.
582.
18. This argument of the learned counsel for the respondents is without any merit and is negated by the terms of auction itself, according to which the power to accept or reject the bid was with the Chairman of Zila Council. Furthermore, this contention is contrary to the averments made in the parawise comments/written statement of respondent No,1. It has been asserted in para. 9 of the parawise comments filed by respondent No,1, that it was the Chairman, who, in exercise of the powers delegated to him by the Zila Council, was competent to accept or reject the bid. Similarly, in para. 4 of the comments, it has been stated that auction committee has recommended the bid in favour of the petitioner. In view of this clear admission, it is difficult to agree with the learned counsel that the auction committee had the power to accept the bid. Even otherwise, the argument is not sustainable, in view of the clear provisions of the Punjab Local Council Rules, 1980, while, as already observed, the power to accept the bid is with the Zila Council and not with the auction committee.
19. Reliance of the learned counsel for the respondents on The Rajanagaram Village Co-operative Society by its Secretary, Parthasarathi Pillai v. P. Veerasami Mudaly AIR 1951 Mad. 322, is misplaced for it is distinguishable on facts. In that case, the question before the Court was as to whether or not it was necessary to convey for the second time the acceptance of the bid once it had been approved by the authority competent to do so. It was held that as the acceptance had once been communicated by the auctioneer, before its approval, the second communication was not necessary. In the present case, as already held, the sub-committee had neither the power to accept or reject the bid nor did it do so.
20. It follows from the above discussion that the bid made by the I petitioner was never accepted by the competent authority i.e. the Local Council and as such it was open to him to withdraw the same. Even if the power to accept the bid is held to be vesting in the Chairman, still as the petitioner had withdrawn his bid prior to its acceptance by the Chairman on 15th May, 1990, no concluded contract ever came into being between the petitioner and the respondents. In paras. 3 and 7 of the petition, it has been asserted that on 3rd May, 1990 the petitioner had gone to respondents and also filed an application for return of Call Deposit Receipt. This assertion has not been denied in reply to these paras in which it has been stated that the petitioner having participated in the auction on 2nd May, 1990, was not entitled to the refund of . this amount.
' As a result of what has been stated above, the petition stands accepted, with no orders as to costs.