Written By: Divya. K.
Edited By: Mariyam Sana.
INTRODUCTION:
The current paper will analyze the case of Adikanda Biswal v Bhubaneshwar Development Authority and comment and conclude based on the same. The present case deals with the offer and invitation to treat. The respondent, Bhubaneshwar Development Authority, announced making applications allotted with plots. In the announcement, it was made clear that the allotment will be made based on a first-come, first-serve basis and the payment of full consideration.
Applications were made, and the applicants deposited the amount in the bank. But instead, they were not allotted any plot, and it was further decided the applicants’ money would be returned to them. The appellants filed a writ petition in response to this. According to section 2(h) of the Indian Contract Act[1], 1872, a contract is an agreement that is enforceable by law. The first step in agreeing is to offer. Section 2(a)[2] of ICA, 1872 defines an offer as “when one person signifies to another his willingness to do or to abstain from doing anything to obtain the consent of that other to such act or abstinence, he is said to propose. There is a distinction between an offer and an invitation to offer. An invitation to offer is an invitation to negotiate and offer to receive offers. At the same time, an offer is a final willingness to make a contract based on the said terms. For instance, if a man advertises that he has got a stock of goods to sell, there is no offer to be bound by any contract. The current paper will analyze the case and conclude if it relates to the offering or invitation to offer.
- FACTS OF THE CASE:
In the case of Adikanda Biswal v Bhubaneshwar Development Authority (from now on referred to as BDA), the appellant/ petitioner is Adikanda Biswal, and others Bhubaneshwar development authority is the respondent.
- FACTS:
On 7th January 2000, BDA issued an advertisement in ‘the Samaya’ offering a plot of 2400 sq ft in Chandrasekharpur residential area at the cost of Rs. 240000/- only at the rate of Rs. 100/- per sq ft. it was also stated that there are 45 slots, and it will be allotted on a first-come, first-serve basis and that the applicants can deposit the money in the Oriental Bank of Commerce. The case of writ petitioners is that they deposited the money according to the advertisement. Still, the BDA did not allot any plot. Instead, they decided to cancel the whole process initiated by the ad and return the applicants’ money along with 4.5% interest and called for fresh-allotment at Rs 100/- sq ft and to allot them plots on a lottery basis. The petitioner’s plea was to order BDA not to quash the decision taken by BDA on 16th January 2000 and assign the property based on terms mentioned in the earlier advertisement.
Appellants claim:
- BDA made an offer, and in response to the said offer, the petitioner applied and deposited the amount in the bank and thereby accepted the stated request. There is, therefore, a concluded contract, and the BDA cannot unilaterally cancel this concluded contract.
- The decision taken by BDA is in the public interest and violates the principle of promissory estoppel.
Respondent claim:
- The advertisement released by BDA was an invitation to offer and not offer. Therefore, the contract wasn’t formed for it to be performed by BDA.
- JUDGEMENT:
The court decided in favor of the respondents, BDA saying that the advertisement published by the BDA was an invitation to treat and it was not a direct offer. Therefore, no concluded contract arises in this matter, and the petitioners cannot claim the violation of the doctrine of promissory estoppel. It is at the discretion of the BDA to decide if they want to accept the applications or return the deposited amount without allotting any plot.
- ISSUES:
The BDA canceled the advertisement published by it. It decided to return all the deposited money to the applicants at 4.5% interest because many eyebrows were raised. Many news articles were published expressing doubts about how such a massive amount of sum can be deposited by 58 persons one after the other in the bank the very day the advertisement was published. The petitioners approached the court, filing a writ petition with a plea that the court asks the BDA to quash its last decision and allot the plots to the applicants as per the earlier published advertisement. The petitioners claim that BDA offered the properties on a certain amount; they accepted and made depositions in the bank. It is a concluded contract, and the BDA cannot unilaterally cancel it. The BDA claims that their advertisement was an invitation to offer and not an actual offer.
- RULES:
The court observed whether this case is related to the offering or invitation to offer. Whether the BDA offered the plots on a certain amount or they made an invitation to offer which could be negotiated and is not the final proposal. Offer is defined under section 2(a) of the ICA,1872. It states that “when one person signifies to another his willingness to do or to abstain from doing anything to obtain the assent of that other to such act or abstinence, he is said to propose.” The invitation to offer is not included/ defined in ICA, 1872 but is accepted as a valid rule in the present case.
- ANALYSIS:
In the current case, Adikanda Biswal v Bhubaneshwar Development Authority, there were two problems: if there was an availability of concluded contract, and secondly, if BDA violated the doctrine of promissory estoppel. Analyzing the facts of the case, it is found that the advertisement published by the BDA is an invitation to offer and not the final offer, the acceptance of which by the petitioners would result from contracting. Invitation to offer is an indication by the person of their willingness to negotiate the contract. At the same time, an offer is made to get accepted and form an agreement. Invitation to offer does not give rise to legal consequences. For instance, if a man advertises that he has got a pile of books at a set price, that means he is proposing an invitation to offer, and any contract does not bind him. In Carlill v Carbolic Smoke Ball, the court observes that “such advertisements are offers to negotiate, offers to receive offers and offers to chaffer.”[3] In Kasinka Trading and Anr. vs. Union of India and Anr[4]. and Shrijee Sales Corporation vs. Union of India[5], the court observed that public interest has to be accepted as superior equity, which could override individual equity and, in such cases, the doctrine of promissory estoppel cannot be applied. In the present case, it is seen that the counter affidavit filed by BDA does not disclose any particular public interest for not fulfilling the clear promise made by BDA in the last advertisement. Thus, BDA is not liable for violating the doctrine of promissory estoppel.
BDA claimed that there were many eyebrows raised and newspapers raised doubts on how many people can deposit such a large amount of money on the first day of advertisement unless they had this knowledge beforehand. It is because of this they canceled the last ad. But when the court scrutinized the facts of the case, it observed that BDA did not take any steps to see if, in reality, any person who knew beforehand about the advertisement-related plot allotment had the upper hand/ advantage over the people who did not know. Therefore, the court directed the BDA to quash its decision to cancel the prior advertisement and allot the applicants with plots based on a first-come, first-serve basis.
- CONCLUSION:
In the present case of Adikanda Biswal v Bhubaneshwar Development Authority, the respondent, BDA, announced making an allotment of plots based on first-come, first-serve basis on payment of full consideration. When an application was created in response to this with full consideration, it was considered an offer and not acceptance of the offer. Therefore, there could be no concluded contract until the BDA accepts the offer. The court observed whether this case is related to the offer or invitation to offer. The court iterated that doctrine of promissory estoppel cannot be applied in the present case. Based on the analysis of facts, the court decided to favor the petitioners. It directed the BDA to issue/ allot plots based on prior advertisement and quash its latter decision to cancel the allotment process.
References:
[1] Indian Contract Act, 1872, § 2h, No. 9, Acts of Parliament, 1872 (India).
[2] Id, § 2a.
[3] Carlill v Carbolic Smoke Ball Co, (1893) 1 QB 256 (CA).
[4] Kasinka Trading and Anr. vs Union of India, AIR 1995 SC 874.
[5] Shrijee Sales Corporation vs Union of India, (1997) 3 SCC 398.