D. P. Wadhwa ( 1 ) THE Union of India, the plaintiff, filed this suit for recovery of Rs. 2,89,9 57. 00against the defendant contractor, M/s Victor Cables Corporation, and also claimed interest at the rate of 12% per annum on the above amount. The facts are quite brief. ( 2 ) THE Union of India entered into a contract with the defendant under which the defendant was to supply 49 kilometres of railway signalling cables of a certain description of a total value of Rs. 6,61,500. 00. First, there was advance acceptance of tender which was communicated to the defendant contractor thereafter, a formal acceptance of tender (A/t) was issued. The contractor supplied only 9. 977 kms. of cable. As there was default in supplying the contracted stores, the contract for the balance quantity was cancelled at the risk and cost of the contractor. Fresh tenders were thereafter invited by the Union of India for 39. 023 kms of cable. Though M/s Victor Cables Corporation, the defendants, also submitted its tender and its tender was the lowest, it was not accepted and the reasons for non-acceptance have not been given in the plaint. The contract was, therefore, placed with the next lowest acceptable offer and in this process the Union of India incurred a loss of Rs. 2,89,957. 00. In the written statement, the defendant has raised various pleas. A replication was also filed ( 3 ) ON the pleas of the parties, the following issues were framed : 1. Is there or is there not a binding, conclusive and valid contract between the parties ? 2. Was the supply of 9. 977 kilometres of cables made by the defendants on the assurance that the contract contained in the A/t would be amended and if not what is its effect ? 3. Was the balance 39. 023 kilometres of cables not supplied because the consignee asked the defendant not to supply the same ? If so, what is its effect ? 4. Is the defendant estopped from pleading that there is no concluded and binding contract on the ground of conduct, i. e. , accepting the tender and even supplying the goods thereunder ? 5. Whether the cancellation of the contract was not in accordance with the terms and was, therefore, ineffective ? 6. If so, what is its effect ? 4. Is the defendant estopped from pleading that there is no concluded and binding contract on the ground of conduct, i. e. , accepting the tender and even supplying the goods thereunder ? 5. Whether the cancellation of the contract was not in accordance with the terms and was, therefore, ineffective ? 6. Whether the plaintiff made a risk re-purchase under the terms of the contract for which the defendant is liable in respect of the additional expenses ? 7. What is the effect of the plaintiff refusing the tender made by the defendant at the time of the risk re-purchase or insisting on furnishing a security before considering the acceptance of the same ? 8. To what amount, if any, is the plaintiff entitled ? 9. Relief. ( 4 ) THEREAFTER, it appears that the plaint was amended inasmuch as it was found that the contractor, viz. , M/s Victor Cables Corporation, was taken over by M/s Delhi Iron and Steel Company Limited, which was thus also impleaded as defendant No. 2 in the suit. On addition of this defendant, two more issues were framed, which are : 1. Whether this court has no jurisdiction to try the suit against defendant No. 2 ? O. P. D. 2. Whether defendant No. 2 had taken over all the assets and liabilities of defendant No. 1 ? If so, to what effect ? O. P. P. ( 5 ) THE Union of India in support of its plea examined two witnesses. One is the Director of Supplies in the Office of the Directorate General of Supplies and Disposals, (DGS and D) and the other is the Sales Manager of Moti Electric Indurtries Private Limited, on which company the risk purchase tender was placed. The defendants have also examined two witnesses. One is their Sales Officer and the other was the partner of M/s Victor Cables Corporation during the relevant period. ( 6 ) VARIOUS documents being the contract and other correspondence have also been brought on record in evidence. ( 7 ) I have not been able to appreciate the two additional issues which were framed after defendant No. 2 was impleaded. Merely because defendant No. 2 has an office in Ghaziabad, U. P. , does not mean that the Delhi court has no jurisdiction. The cause of action did arise in Delhi. Mr. ( 7 ) I have not been able to appreciate the two additional issues which were framed after defendant No. 2 was impleaded. Merely because defendant No. 2 has an office in Ghaziabad, U. P. , does not mean that the Delhi court has no jurisdiction. The cause of action did arise in Delhi. Mr. S,p. Aggarwal, learned counsel for the defendants, was unable to sustain this plea. It was admitted that defendant No. 2 did take over all the assets and liabilities of defendant No. 1. Both these additional issues are thus decided accordingly, and it has to be held that this court has jurisdiction to try the preasent suit. ( 8 ) THE facts are not much in dispute. By letter dated 22. 6. 1973 (Ex-D-l), defendant No. 1 submitted his tender. It was mentioned that this offer would remain open for acceptance upto 27,8. 1973. It was also mentioned that any variation in dutes (excise) or other imposition by Central/slate Governments will be the liability of the Union of India and that the prices quoted were inclusive of excise duty at the current rate at this time. By letter dated 12. 7. 1973 (Ex. D-2) certain clarifications were sought from defendant No. 1 by the DGS and D. This was replied to by letter of defendant No. 1 dated 17. 7. 1973 (Ex. D-3 ). On 27. 8. 1973 an advance acceptance of tender was sent to defendant No. 1 (Ex. D-4 ). It was stated in this letter that a formal acceptance of tender giving full details regarding delivery etc. was under issue. On the same day, another letter was addressed by the DGS and D to defendant No. 1 requesting for keeping the offer of defendant No. lopentill26-9. 1973 (Ex. D-5 ). This extension was not agreed to by defendant No. 1 by its letter dated 6. 9. 1973 (Ex. D-6 ). However, as stated above an advance acceptance of tender dated 27. 8. 1973 has already been sent to defandant No. 1. On 25. 9. 1973, the DGS and D wrote a letter (Ex. D-7) to defendant No. 1 that the indentor had since informed the DGS and D that full quantity of the ordered material was not required by the indentor. The defendant No. 1 was, therefore, asked to agree for cancellation of 42 kms of the cable. On 25. 9. 1973, the DGS and D wrote a letter (Ex. D-7) to defendant No. 1 that the indentor had since informed the DGS and D that full quantity of the ordered material was not required by the indentor. The defendant No. 1 was, therefore, asked to agree for cancellation of 42 kms of the cable. This was not agreed to by defendant No. 1 as it was stated that part of the material had already been manufactured and the balance goods were in the process of production. This was by letter dated 18. 10. 1973 (Ex. D 8 ). Thereafter, the formal acceptance oftenderwasissuedonl7. 11. 1973 (Ex. D-9 ). It was accompanied by a list of consignees (Ex. D-10), and these were the District Controller of Stores (Inspection), Central Railway, Bombay (19 kms) ; and the District Signal and Telecommunication Engineers (Construction), South Central Railway, Secun- derabad, Andhra Pradesh (15 kms) and Sholapur, Maharashtra (15 kms ). While in the advance acceptance of tender, delivery period was upto 21. 11. 1973 in formal acceptance of tender delivery period was extended by the DGS and upto 20,2. 1974 without there being any request on the part of defendant No, 1. I may also note that with the advance acceptance of tender no list of consignees was sent. ( 9 ) ON the receipt of the formal acceptance of tender, defendant No 1 raised certain objections and these were communicated to the DGS and D by letter dated 24-11-1973 (Ex. DW 2/1 ). These objections were regarding payment of excise duty and the prices. The DGS and D did not accept that this letter was received by his office. However, thecircumstances, as hereinafter mentioned, show that this letter was in fact sent by defendant No. 1. On 4-1-1974 defendant No. 1 wrote a letter to the Controller of Stores, Central Railway, Bombay (Ex. D-ll), with reference to certain discussions held with him, to confim to the effect that the requirement was only to the extent of 9. 977 kms of cable which had already been despatched on 1-1-1974 ; that further quantity out of 19 kms was not required and that the cancellation of the balance quantity would be without financial repercussion on either side. This letter was acknowledged by the Controller of Stores by his letter dated 19-1-19/4 (Ex. 977 kms of cable which had already been despatched on 1-1-1974 ; that further quantity out of 19 kms was not required and that the cancellation of the balance quantity would be without financial repercussion on either side. This letter was acknowledged by the Controller of Stores by his letter dated 19-1-19/4 (Ex. D-12) and defendant No. 1 was asked to await further advice in the matter from the DGS and D. Then, there is a letter dated 13-2-1974 from the Controller of Stores to the DGS and D. In this letter it is mentioned that defendant No. 1 had already despatched 9. 977 kms cable to the Central Railway ; and that defendant No. 1 was agreeable to accept cancellation of the balance quantity of 9. 023 kms cable without any financial repercussions on either side. It was further mentioned in this letter that none of the Railways required this quantity of the cable and that the A/t (contract) might be cancelled for the balance quantity without any financial repercussions on either side. This letter is stated to have been received by the DGS andd on 16-2-1974. Though no exhibit mark was put on this letter, Mr. U. L. Watwani, learned counsel for the Union of India, admitted the existence of this letter. His only objection was that it was an inter-department commonication and that no advantage could be taken by the defendants of this letter. This letter in any case stands proved. The fact thus remains that the balance quantity of cable was not required and the A/t was sought to be cancelled by the indentor. On 28. 6. 1974 defendent No. 1 wrote a letter (Ex. D-13) to the DGS and D wherein reference was made to letter dated 24-11-1973 of defendant No. 1 pointing out certain discrepancies in the A/t. It was also mentioned in this letter that the Central Railways had advised defendant No. 1 that the Railways did not require the balance quantity of the cable and had given a copy of letter dated 13-2-1974 to defendent No. 1. It was stated that the A/t might be cancelled immediately without any financial repercussions on either side and it was also mentioned that in case stores still required the date for delivery period be extended by four months. By a letter of the same date ie. 28-6 1974 (Ex. It was stated that the A/t might be cancelled immediately without any financial repercussions on either side and it was also mentioned that in case stores still required the date for delivery period be extended by four months. By a letter of the same date ie. 28-6 1974 (Ex. D- 14), the DGS and D informed defendant No. 1 that the delivery period expired on 20-2-1974 and as the time and date for delivery of stores were of the essence of the contract and there was a default on the part of defendent No. 1, the contract was cancelled at the risk and expense of defendant No. 1. At this stage, it will be interesting to see as to how the matter was processed in the office of the DGS and D. In statement of Public witness 1, two documents were filed. One is letter dated 25-2-1974 from the DGS and D to the Director of Inspection, N. I. Circle, New Delhi (Ex. Public witness 1/1), and the other is a noting sheet from the relevant file of the DGS and D concerning the contract in question which is Ex. Public witness 1/2. Ex. Public witness 1/1 shows that a copy of this letter was sent to the Controller of Stores, Central Railway, Bombay, and was with reference to the letter dated 13 2-1973 aforesaid. In the endorsement it was stated that the delivery period under the contract had already expired on 20-2-1974 and no further supply would be made to the Central Railway. A copy of this letter was also sent to the Controller of Stores, South Central Railway, Secunderabad, and the endorsement shows that this was with reference to the letters dated 12-12-1973, 21-12-73 and 26-12-1973 of the South Central Railway. It was also mentioned in the endorsement that defendant No. 1 had not applied for extension of delivery period and that the request of South Central Railway tor deferment of supply would be considered on receipt of the request from defendant No. 1 for extension of delivery period. In this letter of 25-2-1974 (Ex. It was also mentioned in the endorsement that defendant No. 1 had not applied for extension of delivery period and that the request of South Central Railway tor deferment of supply would be considered on receipt of the request from defendant No. 1 for extension of delivery period. In this letter of 25-2-1974 (Ex. Public witness I 1/1), the Director of Inspection was informed that no inspection beyond the delivery period might be carried out and no action should be taken to keep the contract alive beyond the delivery period as "the Central Railway has intimated that they may not require the outstanding quantity against the A/t and South Central Railway has requested for deferment of supply beyond 1-4-1974". In the noting of 17-7-1974, recorded by Assistant Director in the office of the DGS and D, it it mentioned that the case was discussed with B. K. Gupta, Manager of defendant No. 1, in the room of DS (DS) when the defendant No. 1, was requested to furnish a copy of its letter dated 24-11-1973. A copy of this letter was produced at that lime, but it was without any covering letter. It was also recorded that B. K. Gupta had stated that earlier Central Railway had requested for cancellation of balance quantity of 9 Kms meant for it and that therefore this quantity should be cancelled from the A/t. Defendant No. 1 was requested to furnish a copy of its letter dated 24-11-1973 with a covering letter and defendant No. 1 was also asked to make a formal request in writing. As the value of the A/t was Rs. 6. 60 lacs the file was placed before the Deputy Director-General who by his noting dated 20-7-1974 wanted to know if it was correct that Central Railway had requested for cancellatton of balance quantity of 9 Kms as mentioned in the noting of 17-7-1974. On this it was recorded that Central Railway by its letter dated 13-2-1974 desired cancellation stating that Central Railway and also the other Railways did not want the material. Meanwhile, it appears that Central Railway sent a letter to the DGS and D stating that Central Railway would now require the material and that extension of delivery period might be given to defendant No. 1. It was also noted that defendant No. 1 had not yet furnished a copy of its letter dated 24-11-73. Meanwhile, it appears that Central Railway sent a letter to the DGS and D stating that Central Railway would now require the material and that extension of delivery period might be given to defendant No. 1. It was also noted that defendant No. 1 had not yet furnished a copy of its letter dated 24-11-73. The letter from Central Railway requiring the material would have been received some time be ween 17-7-1974 and 20-7-1974. Thereafter, the Deputy Director General recorded note that as risk purchase tenders were due to open on 9-8-1974 and the contract stood cancelled, the DGS and D might try to conclude a valid risk purchase within the permissible time after opening of the tenders. ( 10 ) WHEN the material was re-tendered, defendant No. 1 was also one of the tenderers and its tender was the lowest. Meanwhile, on 23-7-1974 defendant No. 1 wrote a letter to the DGS and D with reference to discussions held on 17-7-1974 (Ex. D-15 ). In this letter, it was mentioned that quantity of 9. 023 Kms might be reduced from the outstanding quantity without any financial repercussions on either side as per the letter dated 13-2-1974 from the Central Railway and that clause 19 (d) relating to excise duty be amended in original A/t dated 17-11-1973 and further that delivery period might be refixed as completion by 20-12-1974. There is no evidence on record as to what transpired after this letter (Ex. D-15) of defendant No. 1 though, with reference to the office file which had been brought to the Court, Mr. Watwani pointed out that this letter was further processed and was not agreed to. It may, however, be mentioned that by letter dated 28-6-1974 (Ex. D-13) defendant No. 1 had specifically stated that in case stores were still required delivery period might be refixed allowing four months time from the date of issue of the amendment letter complete in all respects of all amendments as per offer dated 22-6-1973 andletter dated 24. 11-1973. ( 11 ) FROM the above discussion, it is quite clear that much before the expiry of the delivery period it was made clear to the DGS and D as well as to defendant No. 1 that Central Railway did not need the balance quantity of the stores and South Central Railway wanted deferment of supply after 1-4-1974. 11-1973. ( 11 ) FROM the above discussion, it is quite clear that much before the expiry of the delivery period it was made clear to the DGS and D as well as to defendant No. 1 that Central Railway did not need the balance quantity of the stores and South Central Railway wanted deferment of supply after 1-4-1974. Earlier the delivery period had been extended by the DGS and D without there being any request on the part of defendant No. 1. As noted above, with the advance acceptance of tender to list of consignees was sent to defendant No. 1. All these circumstances show that time could not be of the essence of the contract. It appears to me that a trap was laid for defendant No. 1 and although the DGS and D had clear instructions from the consignees and defendant No. 1 had agreed that the contract could be cancelled without any financial repercussions on either side yet the DGS and D did not write to defendant No. 1. One wonders what would have been the position of the DGS and D if defendent No 1 had supplied the stores irrespective of the fact that these were not needed by the consignees. I am sure it is certainly the concern of the DGS and D that stores which are needed are supplied and unnecessary loss to the Government is avoided. Mr. Watwani learned counsel for the Union of India argued that consignees were not authorised to communicate with defendant No. 1 and that defendant No 1 was bound to supply the stores unless the DGS and D cancelled the contract. I do not think, the Union of India can take advantage of such a technicality. Rather, with the facts that are on record, this type of argument appears to be one of despair. By not supplying the stores since defendant No. 1 was instructed by the consignees not to do so, I would say defendant No. 1 saved unnecessary loss to the Government. It may also be noted that defendant No. 1 was even prepared to supply the stores on the same rates and had sought extension of the delivery period. By not supplying the stores since defendant No. 1 was instructed by the consignees not to do so, I would say defendant No. 1 saved unnecessary loss to the Government. It may also be noted that defendant No. 1 was even prepared to supply the stores on the same rates and had sought extension of the delivery period. I have already reproduced above the noting in the Government file of the meeting held on 17-7-1974 Much argument was addressed on the fact that a copy of letter dated 24-11-1973 of defendant No. 1 was not given. For one thing I find that this letter was addressed by defendant No. 1 to the DGS and D and it also finds mention in a subsequent letter of defendant No. 1. When a copy of this letter was sought to be handed over to the DGS and D on 17-7-1974 it was not taken on record on the plea that it was not accompanied by a covering letter. This is really a strange stand to take. I am not aware of any rule or regulation or even any office practice under which a copy of the letter dated 24-11-1973 ought to have been sent with a covering letter. The grievance on this score of the Union of India is baseless and it could be no ground to terminate the talks held on 17. 7-1974 pursuant to which letter Ex. D-15 was written by defendant No. 1. Too much stress has been laid on this letter by Union of India which leads one to believe that perhaps there was no valid and concluded contract between the parties as has been contended by defendant No. 1. Mr. Watwani submitted that after the receipt of the formal acceptance of tender stores were supplied by defendant No. 1 and this would mean that a valid and legally binding contract had come into existence. Defendant No. 1 has explained that as part of the stores had already been manufactured is pursuance of the advance acceptance of tender these were supplied, but that would nor mean that there was a legal and valid contract between the parties inasmuch as the DGS and D had not agreed to the conditions communicated by letter dated 24-11-1973 of defendant No. 1. Be that as it may, I am of the considered opinion that on the facts and circumstances of the case, the contract could not have been cancelled on the ground that stores were not supplied before the expiry of the delivery period. Further, when tenders were again called for after the termination of the contract, the defendant No. 1 s was the lowest tender. Its tender was not accepted and reason given is to be found in the replication, and it is that,- "since the defendants had already defaulted once in the supply of the material, to safeguard the second default, the firm was asked to to pap 10% security in advance in the event their being considered for placing the order on time. The defendants did not agree to pay the security amount and as such their offer was not considered. The plaintiffs did not want to run the risk of being run down for the second time. The offer of the defendants was thus ignored and the order was placed with the next acceptable tenderer. "it will be seen that these averments are far from the truth. Public witness 1 Mt. Mullik who is the Director of Supplies in the office of the DGS and D, stated that it was correct that the DGS and D refused to accept the tander of defendant No. 1 because it had failed to pay 10% security deposit as required by tender conditions and that this was as per the DGS and D 1968 (Revised) Terms and Conditions. With reference to the Conditions of Contract as per the DGS and D 1968 (Revised) Terms and Conditions, I have not been shown any such. ( 12 ) THERE is only Cl. 7 which dealt with security deposits and there is nothing in this to show that defendant No. 1 could be singled out to give security as damanded of it. Nothing has been brought on record to show as to how the insistence of security from defendant No. 1 was justified. It is the admitted case that defendant No. 1 s was the lowest tender. Defendant No. 1, therefore, could not be saddled with any liability which Union of India might have incurred in the risk purchase. ( 13 ) WITH reference to Issues Nos. It is the admitted case that defendant No. 1 s was the lowest tender. Defendant No. 1, therefore, could not be saddled with any liability which Union of India might have incurred in the risk purchase. ( 13 ) WITH reference to Issues Nos. 5, 6 and 7, I would thus hold :- (1) the cancellation of the contract was not in accordance with terms and was ineffective (issue No. 5); (2) there was no proper risk purchase under the terms of the contract for which the the defendants could be made liable of the additional expenses incurred by the Union of India (issue No. 6); and (3) since Union of India refused to accept the lowest tender that of defendant No. 1, it could not hold defendent No. 1 responsible for extra expense incurred by Union of India in purchasing the balance quantity of stores under the contract with defendant No. 1 (issue No. 7 ). ( 14 ) I would hold issue No. 3 in favour of the defendants that the defendants were justified in not supplying the material because the consignees had asked them not to supply the same. ( 15 ) MY findings on the above issues are on the assumption that there was a valid, binding and conclusive contract between the parties though I need not return any finding on the other issues as findings on issues Nos. 3, 5, 6 and 7 are sufficient to dispose of the present suit. ( 16 ) THE suit of the plaintiff, therefore, fails, and is dismissed with costs.