(Prayer: Appeal (disposed of on 11-12-1946) against the decree of the District Court of South Arcot in A.S. No. 158 of 1944 preferred against the decree of the Court of the District Munsif, Villupuram in O.S. No. 116 of 1943.)

Alfred Henry Lionel Leach, C.J.

This appeal raises a question of considerable importance with regard to the conditions prescribed by the Board of Revenue for the conduct of auctions of liquor shop licences.

On the 4th February, 1942, the Sub-Collector of Tindivariam put up for sale by public auction the licences to be issued in respect of certain arrack shops. The conditions of sale were in accordance with the conditions approved by the Board of Revenue for such sales. The auction was held by the Sub-Collector, but he had no power to accept a bid. He could signify provisional acceptance, but actual acceptance rested with the Collector himself. Clause IX(a) of the conditions provided that the order of the Collector confirming a bid provisionally accepted by the selling officer should be final, unless revised by the Board of Revenue for special reasons. Clause IX(b) was to the effect that if the Collector considered the bid to be inadequate he might postpone passing orders confirming or refusing to confirm the provisional acceptance and might direct that the sale should be continued from the point at which it was left. Clause IX(c) stated that a sale ordered to be continued under Clause IX(b) should begin with the bid provisionally accepted by the selling officer at the original sale and in the name of the individual who offered it. If at the subsequent sale a higher bid should be made and provisionally accepted by the selling officer the bid previously provisionally accepted should lapse, but if no higher bid should be accepted the matter should be reported by the selling officer to the Collector, who might pass orders confirming the bid provisionally accepted at the original sale or might again direct that the sale be continued from the point at which it was left at the original sale. Clause IX(e) stipulated that no bid which had been provisionally accepted by the selling officer should be withdrawn before it lapsed under Clause IX(c) or before orders were passed confirming or refusing to confirm it, and provided that if the bidder committed a breach of this condition he should be liable to make good any loss suffered by the Government.

The appellant was the highest bidder for four shops and his bids were provisionally accepted by the Sub-Collector, but the Collector accepted only two of them. He refused to confirm the bids made by the appellant for the other two licences which were in respect of shops numbered 30 and 32 respectively. Here he directed that the sales should be "continued" under Clause IX(b) of the conditions of sale. On the 17th February, 1942, the Tahsildar wrote to the appellant informing him that his bids for shops Nos. 30 and 32 had not been accepted and that the Collector had ordered that the auction sale should be continued from the bids already made by him at noon on the 20th February, 1942, at the Taluk Office, Villupuram. On the day fixed for the further auction, the appellant presented a petition to the Tahsildar in which he stated that he did not require shops Nos. 30 and 32 and asked that the amount of his deposit should be returned to him. The petition was rejected forthwith. On the 22nd February, 1942, the appellant wrote through his pleader pointing out that his bids had not been accepted by the Government, and contending that therefore he was entitled to withdraw them. On the 26th February, 1942, the Collector passed an order drawing the attention of the appellants pleader to Clauses IX(t) and IX(e) of the conditions of sale. By an order dated 27th March, 1942, the Collector accepted the bids made by the appellant on the 4th February, 1942, in respect of shops Nos. 30 and 32, but the appellant refused to take out the licences and consequently the Collector was compelled to direct a fresh sale to be held. This resulted in a loss to the Government of Rs. 1,148.

On the 15th February, 1943, the appellant filed in the Court of the District Munsiff of Villupuram the suit which has given rise to the appeal. He asked for a decree against the Provincial Government for Rs. 105 (the amount of his deposit) and for an injunction restraining the Provincial Government from taking action to recover from him the Rs. 1,148. The District Munsiff dismissed the suit on the ground that the conditions of sale had the force of law, their publication amounting to a notification under Section 69 of the Madras Abkari Act, 1886. His finding was accepted by the District Judge of South Arcct on appeal. The appellant then appealed to this Court. The appeal came before Chandrasekhara Aiyar, J., on the 29th October, 1946. The learned Judge referred it to a Bench for decision as he considered that it raised three questions, namely: (1) Whether the case fell within clause IX(b) of the conditions of sale; (2) whether the publication of the conditions of sale constituted a notification under Section 69 of the Act; and (3) if so, whether the notification was ultra vires the Provincial Government because the conditions of sale conflicted with the provisions of the Indian Contract Act, a statute passed by the Central Legislature.

The learned Advocate-General has very properly conceded that the publication of the conditions of sale did not amount to a notification under Section 69 of the Madras Abkari Act. The conditions of sale had been settled by the Board of Revenue, but not under any particular provision of the Act. They were merely rules drawn up by the Board for the conduct of sales of liquor shop licences and had no statutory force. This being the position the District Munsiff and the District Judge erred in holding that the conditions of sale had the force of law and the questions formulated by Chandrasekhara Aiyar, J., do not call for decision. The question which the Court has to decide is whether a bid made at such an auction and provisionally accepted can be enforced, notwithstanding that the maker withdraws it before acceptance by the Collector. In deciding the question the Court can only have regard to the law of contract.

It was held by a Division Bench of this Court (Coutts-Trotter and Ramesam, JJ.) in Champalal v. Ghansham Das (1922) 43 M.L.J. 132 : I.L.R. 45 Mad. 799 [LQ/MadHC/1922/101] that a bid at a Court auction sale is merely an offer which can be withdrawn at any time before it is accepted and the lot knocked down to the bidder. The present case does not fall within the four corners of the judgment in that case because the conditions of sale were different. There was no prohibition against the withdrawal of a bid pending its acceptance. Two of the cases considered by Coutts-Trotter and Ramesam. JJ., are, however, of importance here. They are Payne v. Cave (1789) 3 Term Rep 148 : 100 E.R. 502 and Cooke v. Oxley (1790) 3 Term Rep. 653 : 100 E.R. 785. In the former case it was said:

The auctioneer is the agent of the vendor, and the assent of both parties is necessary to make the contract binding; that is signified on the part of the seller by knocking down the hammer, which was not done here till the defendant had retracted. An auction is not unaptly called locus poenitentiae. Every bidding is nothing more than an offer on one side, which is not binding on either side till it is assented to. But according to what is now contended for, one party would be bound by the offer, and the other not, which can never be allowed.

Cooke v. Oxley (1790) 3 Term Rep. 653 : 100 E.R. 785 is even more in point. There a tobacco merchant offered to sell a quantity of tobacco to the plaintiff at a certain price. The plaintiff asked the tobacco merchant for time in which to decide whether he should buy the goods or not. The time for consideration was granted; but before it expired the tobacco merchant sold the, goods to a third party. The plaintiff claimed to be entitled to damages. It was held that the action did not lie. Lord Kenyon said that nothing could be clearer than that at the time of entering into the contract the engagement was all on one side. The other party was not bound and therefore it was a nudum pactum. In other words no consideration ha passed to bind the seller by his promise to give time and consequently he was entitled to ignore it.

To have an enforceable contract there must be an offer and unconditional acceptance. A person who makes an offer has the right of withdrawing it before acceptance, in the absence of a condition to the contrary supported by consideration. Does the fact that there has been a provisional acceptance make any difference We can see no reason why it should. A provisional acceptance cannot in itself make a binding contract. There must be a definite acceptance or the fulfillment of the condition on which a provisional acceptance is based. Our attention has been drawn to an observation made by Muttuswami Aiyar, J., in Agra Bank v. Hamlin (1890) I.L.R. 14 Mad. 235 where it was also held that it was competent for a bidder at a Court auction to withdraw his bid. In the course of his judgment, Muttuswami Ayyar, J., said:

It appears that, in the case under reference it was not one of the conditions of sale that bidders were not at liberty to withdraw their bids.

We do not regard this statement as a definite acceptance of the proposition that where there is such a condition a bid cannot be withdrawn. If Muttuswami Ayyar, J., intended so to hold, we can only express our dissent.

The learned Advocate-General has suggested that the decision of this Court in Chitibobu Adenna v. Garimalla Jaggaraydu (1913) 28 M.L.J. 617 recognises that there can be in law a conditional acceptance which will constitute a contra t. We have already indicated that where there is a conditional acceptance and the condition is subsequently fulfille. there is a contract and that was all that was said in that case. Certain occupancy rights in jeroyiti lands had been put for sale by public auction by the amin of the Maharaja of Vizianagaram. The amin accepted a bid subject to the approval of the special agent. The special agent gave his approval whereupon the sale became irrevocable.

In the present case there was a provisional acceptance by the Sub-Collector of the appellants 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, he position would of course be different but they had not statutory for e. They were merely conditions which the Board of Revenue had direct should be imposed in respect of auction of liquor shop licences. We are firmly of the opinion that he 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.