Sanjib Banerjee, J.
1. The two suits are almost identical save the identity of the defendants. The defendant in either case has applied for rejection of the plaint on the primary ground that the respective suit is barred by law. It is submitted on behalf of the two defendants that a judgment on the one matter would govern the other.
2. The documents referred to in this judgment are those found in CS No. 65 of 2009.
3. The plaintiff states that the defendant is entitled to duty credits calculated as a percentage of the FOB value of its exports of raw cotton. The plaintiff claims that the defendant entered into an agreement with the plaintiff to transfer the duty credit licences that it was to obtain in favour of the plaintiff at a price of 60 per cent of the value of the licences. Such agreement, according to the plaintiff, would be evident from the defendant's letter of January 10, 2009 which was erroneously marked as January 10, 2008. The plaintiff says that by a government notification of February 17, 2009, exporters of cotton became entitled to VKUY duty credit scrips for exports made after April 1, 2008. The plaintiff has complained of the breach of the agreement evident from the defendant's letter of February 11, 2009 seeking to repudiate the contract. The plaintiff has alleged that the duty credit scrips are not ordinary articles of commerce and that they are of special value and interest to the plaintiff and not easily available in the market. The usual averments are all in place in the plaint before the following reliefs are claimed:
a) Decree for specific performance of the agreement as pleaded in paragraph 2 hereinbefore by directing the defendant to transfer and sale all DEPB/VKUY/FCS licences issued after January 10, 2009 to the defendant, in favour of the plaintiff;
b) Decree for perpetual injunction restraining the defendant from acting in breach of the terms of the agreement of January 10, 2009;
c) Decree for mandatory injunction directing the defendant to transfer all DEPB/VKUY/FCS licences issued to the defendant in favour of the plaintiff at the agreed consideration;
d) Decree for perpetual injunction restraining the defendant from transferring any DEPB/VKUY/FCS licences issued to the defendant after January 10, 2009 to any other person except to the plaintiff at the agreed consideration;
e) Decree for mandatory injunction directing the defendant to disclose the particulars of all applications made and the DEPB/VKUY/FCS licences issued to the defendant after January 10, 2009;
f) Receiver;
g) Injunction;
h) Attachment before judgment;
i) Costs;
j) Further or other reliefs.
4. The defendant asserts that the plaintiff is entitled to no relief at all. The defendant insists that the document bearing the date January 10, 2008 was, indeed, issued on such date and reflects only a standing offer. The defendant contends that even if the plaintiff had accepted such offer there would be no binding contract. The defendant submits that despite the last sentence of its letter of January 10, 2008, no offer or contract of the present kind is irrevocable notwithstanding the offer or contract recording its irrevocable nature. The letter of January 10, 2008 is short and contains the terms that the plaintiff seeks to specifically enforce:
With reference to the discussion the undersigned had with you, we hereby agree as under:
1. That we will transfer our DEPB/VKUY/FCS Licenses to be issued in future against our export of Cotton at a consideration rate of 60%.
2. We will issue necessary representation/letter, if required, to Govt. for introduction of the above benefits against our exports.
This commitment of ours is firm and irrevocable.
5. The defendant says that it would appear from its letter of February 11, 2009 that its offer had been made in the beginning of 2008 and not a month before it was sought to be revoked. The letter of February 11, 2009 would support such contention, but that is irrelevant in the present context. The letter of February 11, 2009 records:
Transfer of DEPB/VKUY/FCS Licences
1. This refers to our letter dated January 10, 2008 on the subject under reference.
2. Let us note down that
. Substantial time has elapsed ever since our issuing the letter containing the offer to transfer DEPB/VKUY/FCS Licences to be issued to us.
. The subject called for regularization through a process of executing an Agreement in this regard containing relevant terms & conditions governing the Agreement.
. Left with no other option, we are constrained to change our decisions and withdraw the offer as reflected in our letter dated January 10, 2008 issued in this regard with immediate effect without any future consequences.
3. We are free now to deal with matter as may be deemed appropriate without referring the subject to you any further which may please be taken note of.
4. Please treat the earlier letter dated January 10, 2008 on the above subject issued by us to you stand cancelled with immediate effect without any future commitment in this regard. Please return us the copy of the letter dated January 10, 2008 issued to you by us in this regard.
Hope, you will find this letter in order.
6. The defendant says that a suit for specific performance of a movable property would ordinarily not be maintainable. The defendant refers to the opening paragraph of the plaint where it has been averred that duty credit licences are freely transferable. The defendant suggests that if such licences are freely transferable, it would be open to the plaintiff or any body else to obtain the same from any other exporter who has been issued such duty credit scrip. The defendant submits that on the plaintiff's showing, it was not entitled to specific performance of the agreement; if there was any agreement at all.
7. The second limb of the defendant's argument is that a standing offer as the one recorded in the defendant's letter of January 10, 2008 would not amount to a contract; there could be many individual contracts under a solitary standing offer but the continuing offer itself would not be specifically enforceable. In support of such contention, the defendant relies on a passage at paragraph 230 of Halsbury's Laws of England (4th Ed.):
230. Tenders. An advertisement that goods or services are to be bought or sold by tender is not, prima facie, an offer to sell to the person making the highest tender. Normally, the actual tender will amount to an offer; for example a tender for work and labour (even though in the form of an estimate), or a tender for the sale or purchase of goods. It follows that in the usual case, acceptance of such a tender concludes a binding contract.
In one instance, however, such an acceptance does not usually have this effect. Ordinarily, a tender for the supply for such goods as may be required, no quantity being specified, is not an offer which may be accepted generally so as to form a binding contract, but is a continuing offer, which is accepted from time to time whenever an order is given for any of the goods specified in the tender. An acceptance of such a tender merely amounts to an intimation that the offer will be considered to remain open during the period specified, and that it will be accepted from time to time by orders for specific quantities, and does not bind either party unless and until such orders are given....
8. The defendant has brought two judgments to bear on the second count of challenge to the maintainability of the suit. In the judgment reported at : AIR 1954 SC 236 (Chatturbhuj Vithaldas Jasani v. Moreshwar Parashram) the matter before the Supreme Court arose out of a decision of the Nagpur Election Tribunal holding that the appellant before the Supreme Court had a contract with the Central Government and was as such disqualified. The appellant was a partner of a firm that had an arrangement for supply of bidi to government troops. The Central Government was desirous of stocking bidi for sale through its canteens. It entered into an understanding with the appellant's firm under which the firm was to sell, and the government was to buy from the firm, from time to time, two brands of bidi. It was contended against the appellant that the transaction amounted to a contract for supply of goods within the meaning of Section 7(d) of the Representation of People Act, 1951 and that the contract was embodied in four letters. The legal position is captured at paragraph 9 of the report:
9. We do not intend to analyse these letters in detail here. It is enough to say that in our opinion no binding engagement can be spelt out of them except to this extent: Moolji Sicka & Company undertook to sell to the canteen contractors only through the Canteen Stores and not direct and undertook to pay a commission on all sales. This, in our opinion, constituted a continuing arrangement under which the Canteen Stores i.e. the Government, would be entitled to the commission on all orders placed and accepted in accordance with the arrangement; and in fact the Canteen Stores did obtain a sum of Rs. 7500 in satisfaction of a claim of this kind. This money was paid long before the dates which are crucial here but the settlement illustrates that there was an arrangement of that nature and that it was a continuing one. In our opinion, it continued in being even after that and the mere fact that there was no occasion for any claim subsequent to the settlement does not indicate that it was no longer alive. But except for this, the letters merely set out the terms on which the parties were ready to do business with each other if and when orders were placed and executed. As soon as an order was placed and accepted a contract arose. It is true this contract would be governed by the terms set out in the letters but until an order was placed and accepted there was no contract. Also, each separate order and acceptance constituted a different and distinct contract: see Rose and Frank Co. v. J.R. Crompton & Bros. Ltd. 1925 AC 445.
9. In the judgment reported at : AIR 1966 SC 1724 (Union of India v. Maddala Thathaiah) the railways invited tenders for the supply of jaggery to railway grain shops. The respondent before the Supreme Court submitted his tender for supply of a specified quantity of cane jaggery during two months. The tender form contained a note to the effect that the administration reserved the right to cancel the contract at any stage without calling up the outstanding on the unexpired portion of the contract. The respondent's tender was accepted. The letter of acceptance called upon the respondent to remit a security deposit whereupon an official order would be placed. A further letter by the railways reiterated the acceptance of the tender subject to the respondent's acceptance of the terms and conditions printed on the reverse of such letter. This second letter specified the schedule of delivery of the entire quantum of jaggery. After the first of the four scheduled tranches of supply, the railways informed the respondent that the supply of the balance quantity had been cancelled and the contract closed. The railways relied on the stipulation that it had the unilateral authority to cancel the contract at any stage. The supplier sued for damages resulting from breach of contract. The trial court dismissed the suit on the strength of the Clause that gave unreserved authority to the railways to cancel the contract at any stage. On appeal the High Court held that the Clause was void and remanded the suit for disposal afresh. The Union of India carried such decision to the Supreme Court after obtaining special leave. It argued that the stipulation was valid and amounted to a provision in the contract for its discharge or determination. The respondent contended that the contract was for the supply of a specified quantity and the Clause on which the railways relied was repugnant to the contract and, even if valid, the railways could rescind the contract only for good and reasonable ground and not arbitrarily. The Supreme Court opined that the cancellation Clause referred to a right in the appellant to cancel the agreement for such supply of jaggery for which no formal order had been placed and did not apply to such supplies which were covered by a formal order that specified definite dates and amounts. The reasoning, at paragraphs 17 to 19 of the report, is founded on the illustrations in an authoritative treatise on the law of contracts:
17. Reference may also be made to what is said in Law of Contract, by Cheshire and Fifoot (5th Edn.) at p. 36
There is no doubt, of course, that the tender is an offer. The question, however, is whether its 'acceptance' by the corporation is an acceptance in the legal sense so as to produce a binding contract. This can be answered only by examining the language of the original invitation to tender. There are at least two possible cases. First, the corporation may have stated that it will definitely require a specified quantity of goods, no more and no less, as, for instance, where it advertises for 1000 tons of coal to be supplied during the period January 1st to December 31st Here the 'acceptance' of the tender is an acceptance in the legal sense, and it creates an obligation. The trader is bound to deliver, the corporation is bound to accept, 1000 tons, and the fact that delivery is to be by instalments as and when demanded does not disturb the existence of the obligation.
On the basis of this note, the acceptance of the respondent's tender by the Deputy General Manager may even amount to a contract in the strict sense of the term, but we do not consider it in that sense in view of the provisions of paras 8 and 9 of the tender requiring a deposit of security and the placing of the formal order.
18. The other case illustrated by Cheshire and Fifoot is:
Secondly, the corporation advertises that it may require articles of a specified description up to a maximum amount, as, for instance, where it invites tenders for the supply during the coming year of coal not exceeding 1000 tons altogether, deliveries to be made if and when demanded, the effect of the so-called 'acceptance' of the tender is very different. The trader has made what is called a standing offer. Until revocation he stands ready and willing to deliver coal up to 1000 tons at the agreed price when the corporation from time to time demands a precise quantity. The 'acceptance' of the tender, however, does not convert the offer into a binding contract, for a contract of sale implies that the buyer has agreed to accept the goods. In the present case the corporation has not agreed to take 1000 tons, or indeed any quantity of coal. It has merely stated that it may require supplies up to a maximum limit.
In this latter case the standing offer may be revoked at any time provided that it has not been accepted in the legal sense; and acceptance in the legal sense is complete as soon as a requisition for a definite quantity of goods is made. Each requisition by the offeree is an individual act of acceptance which creates a separate contract.
19. We construe the contract between the parties in the instant case to be of the second type. The note below para 2 of the tender form, reserving a right to cancel an outstanding contract is then consistent with the nature of the agreement between the parties as a result of the offer of the respondent accepted by the appellant and a similar note in the formal order dated 16th February, 1948 had no reference to the actual orders but could refer only to such contemplated supplies of goods for which no orders had been placed.
10. Neither case cited on behalf of the defendant is of any assistance in furtherance of its plea that the plaint relating to the suit ought to be rejected. In both Chatturbhuj Vithaldas Jasani and Maddala Thathaiah there were omnibus offers which contemplated individual orders to be placed thereunder by the offerees. In either case there was an umbrella arrangement that spelt out the terms as to commission or price, but such rates would come into effect only upon subsequent orders for supply being placed on the offeror. Once an order had been placed there would be a binding contract in respect of such order but the umbrella arrangement would not by itself be an enforceable contract. In Chatturbhuj Vithaldas Jasani the arrangement was not deemed to be a contract that would invite disqualification under Section 7(d) of the Representation of People Act, 1951. In Maddala Thathaiah since individual orders had been place specifying the dates and quantities to be supplied, the Clause conferring on the railways the unilateral authority to cancel the contract was held to be inapplicable and its application was restricted to the outstanding supplies for which no definite dates and quantities had been stipulated by the offeree.
11. The contract that the plaintiff has pleaded here is that the defendant would sell all the duty credit licences that it obtained to the plaintiff at 60 per cent of the respective values thereof. Whatever may be the merit of the claim and regardless of whether the alleged contract would be ultimately specifically enforced or not, if such an agreement was concluded it would not be a mere standing offer. The plaintiff has to be afforded an opportunity to prove the contract at the trial; that it would oblige the defendant to make over every duty credit licence that it obtained from the government to the plaintiff upon the plaintiff tendering 60 per cent of the value thereof. The benefit of any doubt at this stage must necessarily go to the plaintiff. Assuming, as one must at the moment, that there was a contract as pleaded, the offeror in this case would be obliged to make every duty credit scrip available to the plaintiff at the agreed consideration. Such obligation would not be dependant on anything to be done by the offeree. It is not necessary to consider at this stage that the plaintiff may or may not have a right to refuse every licence offered by the defendant, but that would not tell on the defendant's obligation to present the plaintiff with the choice each time it obtained a duty credit licence. If there is a contract as pleaded, it is quite distinct from the standing offers in either Chatturbhuj Vithaldas Jasani or Maddala Thathaiah.
12. As in every challenge of the present kind, the averments in the plaint have to be accepted. A defendant has no right to question the veracity of the statements contained in the plaint at this stage unless they are palpably absurd. The defendant here seeks to dwell on the improbability of the plaintiff's version of things and the apparent unmeritorious nature of the claim. But such matters are irrelevant in assessing whether the plaint ought to be rejected. The suit may fail on merits when there comes a time to assess the same, but the claim cannot be disregarded altogether as being not maintainable.
13. The plaintiff has averred that duty credit licences are not ordinary articles of commerce that are easily available in the market. The plaintiff has clearly invoked the second explanation to Section 10 of the Specific Relief Act. That the plaintiff has pleaded in the opening paragraph that a licence of such nature is freely transferable does not necessarily imply that it is freely available. There may not, ultimately, be any merit in the assertion found at paragraph 7 of the plaint and the defendant may demonstrate that such licences come a dime a dozen. But that would be by questioning a statement in the plaint and by demonstrating it to be incorrect. On a point of demurer as at the moment, the defendant is not afforded the luxury of questioning the contents of the plaint.
14. A claim may appear to be improbable but that would not warrant the rejection of the plaint. In an application for rejection of a plaint it is a high burden that a defendant takes upon itself by launching an attempt to arrest the action before it goes to trial. However much the defendant here may have pricked holes in the plaintiff's version, it has not been able to demonstrate that the suit is barred by the provisions of the Specific Relief Act.
15. There is the other aspect to the matter. Section 21 of the Specific Relief Act contemplates that notwithstanding specific performance of the contract being declined to a suitor the court may award compensation instead. Though the defendant asserts that it is not open to a plaintiff to convert a suit for specific performance that is not maintainable at its inception to a claim for damages, once it is found that there is a sliver of a chance for specific performance to be obtained on the strength of the second explanation to Section 10 of the Specific Relief Act, the plaint can no longer be thrown out.
16. The plaints in both cases survive, if only barely. GA No. 3356 of 2009 and GA No. 3388 of 2009 are dismissed with liberty to the defendant in either suit to urge the same grounds at the trial. There will be no order as to costs.
17. It is recorded that the plaintiff has not been called upon.
18. Urgent certified photocopies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities.