a) Maddalah Thaithiah won the case.

b) yes there was formal order given by the Union of India according to the letter dated February 16, 1948.

a. maddala thathaiah won the case. The SC simply said that decision given by HC was right i.e union of india had no right to cancel the contract.

The concept simply was of standing or open or continuing offer. in which contract is entered for the order placed of the total quantity.

union of india can cancel those for which order has not been placed. refer to rajendra kumar verma v. state of madhya pradesh for this.

b.yes some order where placed by union of india which it has to honour.

The facts giving rise to this appeal by special leave, are these:

2. The Dominion of India, as the owner of the Madras and Southern Mahratta Railway,

represented by the General Manager of that railway, invited tenders for the supply of jaggery

to the railway grain shops. The respondent submitted his tender for the supply of 14,000

imperial maunds of cane jaggery during the months of February and March 1948. The tender

form contained a note in Para 2 which was meant for the quantity required and the described

dates of delivery. This note was:

“This Administration reserves the right to cancel the contract at any stage during the

tenure of the contract without calling up the outstandings on the unexpired portion of the

contract”.

The Deputy General Manager of the Railways, by his letter, dated January 29, 1948, accepted

this tender. The letter asked the respondent to remit a sum of Rs. 7,900 for security and said

that on receipt of the remittance, official order would be placed with the respondent. In his

letter, dated February 16, 1948, the Deputy General Manager reiterated the acceptance of the

tender subject to the respondent’s acceptance of the terms and conditions printed on the

reverse of that letter. Among these terms, the terms of delivery stated: Programme of delivery

to be 3,500 maunds on March 1, 1948; 3,500 maunds on March 22, 1948; 3500 mounds on

April 5, 1948; and 3500 mounds on April 21, 1948. At the end of the terms and conditions

was a note that the administration reserved the right to cancel the contract at any stage during

the tenure of the contract without calling up the outstandings on the unexpired portion of the

contract. The dates for the delivery of the four instalments were slightly changed by a

subsequent letter, dated February 28, 1948.

3. By his letter, dated March 8, 1948, the Deputy General Manager informed the

respondent that the balance quantity of jaggery outstanding on date against the order, dated

February 16, 1948, be treated as cancelled and the contract closed. The protests of the

respondent were of no avail as the railway administration took its stand against the stipulation

that the right to cancel the contract at any stage was reserved to it. Ultimately, the respondent

instituted the suit against the Union of India for recovering damages resulting from breach of

contract. The trial Court dismissed the suit holding that the railway administration could

cancel the contract without giving any reason whenever it liked, without making itself liable

to pay any damages. The High Court held that the clause reserving the right in the appellant

to cancel the contract was void and in view of the trial Court having not decided the issue

about damages, remanded the suit for disposal after dealing with that matter. Supreme court upheld the judgment of the high court and dismissed the petition!