SURINDER KUMAR SHARMA vs. PUNJAB NATIONAL BANK

$~R-19
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA 133/2005
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Decided on 26 August, 2014

SURINDER KUMAR SHARMA ..... Appellant
Through: Mr. S.P. Pandey, Adv.

Versus

PUNJAB NATIONAL BANK ..... Respondent
Through: None.

CORAM:
HON'BLE MR. JUSTICE A.K. PATHAK

A.K.PATHAK, J.(ORAL)

1. Appellant filed a suit for recovery of goods and money against the
respondent before the trial court praying therein that respondent be directed
to deliver 26.767 metric tonnes of first quality paper and 13.093 metric
tonnes of second quality paper of totalling to 39.807 metric tonnes and/or in
the alternative pay ` 2,07,543/- being the market value of the said goods. It
was further prayed that a decree of ` 3,70,926.48 details whereof were given
in para 18 of the plaint, be also passed.
2. In para 18 of the plaint bifurcation of ` 3,70,926.48 has been given, as
under :-
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3. Appellant alleged that he had agreed to purchase stock of coated
paper for 9.58 lacs from the respondent. The said paper was manufactured
`
by M/s Regal Papers Mills Ltd. which was under liquidation. The stock was
lying in the factory premises of M/s Regal Papers Mills Ltd. but was in
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possession of the respondent bank as it was hypothecated by M/s Regal
Papers Mills Ltd. with the respondent. Appellant had agreed to purchase the
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coated papers vide Agreement of sale dated 3 October, 1981. The prices
were fixed at the ex-mill rates plus 24% above the said price. The stock was
to be lifted by the appellant on „as is where is‟ basis. Transportation charges
were to be borne by the appellant. Sales tax and excise tax were to be borne
by the respondent.
4. Appellant lifted 77.062 metric tonnes of papers and paid ` 7,50,457.37
to respondent. However, remaining stock could not be lifted on account of
hurdles created by the respondent. Respondent changed the terms of sale
and had illegally taken cash security of ` 50,000/- from the appellant. One
truck carrying stock of papers was intercepted and impounded by the Excise
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Department at Ghaziabad and could be released only on 18 August, 1982
pursuant to the order passed by the High Court. Appellant had to pay
` 20,000/- to the truck owner which amount he was entitled to recover from
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the defendant @ 12% per annum with effect from 22 July, 1982. It was
further alleged that stock of papers consisted of paper strips as well for
which the market price at ex-mill rate with 24% extra cater to 1.92 per kg.
`
As against this, respondent charged ` 6.20 per kg. Thus, appellant was
RFA 133/2005 Page 3 of 14


entitled for refund of difference @ ` 4.28 per kg amounting to ` 34,240/-. It
was further alleged that respondent had charged excess amount by 24%
amounting to 1,71,892.16 and appellant was entitled to refund of this
`
amount as well. Delay was caused by the respondent as its officials who
created hurdles, inasmuch as, quality of paper deteriorated due to moisture.
It was further alleged that appellant was not allowed to lift the remaining
paper from the godown, inasmuch as, value thereof was too exaggerated.
5. In the written statement, it was alleged that appellant was not entitled
to a decree of specific performance since it had made an alternative prayer
for recovery of 2,07,543/-. Requisite court fee had not been paid.
`
Respondent alleged that appellant had filed incomplete copy of Agreement
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dated 3 October, 1981 and had intentionally suppressed Annexure I
appended with the Agreement. In the said annexure, description of each
category of goods and the rates of goods of „standard size‟ and „off size‟
agreed to be sold had been given. The said annexure contained the price as
mentioned by M/s Regal Papers Ltd. Annexure I was integral record of
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Agreement dated 3 October, 1981. It was stated that respondent had
allowed credit facilities to M/s Regal Papers Mills Ltd. which had gone
under liquidation. According to the terms of Agreement of hypothecation
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respondent had taken possession of hypothecated goods. Vide order dated
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5 December, 1980 passed in Company Application No. 599/1980 filed in
Company Petition No.24/1980, Delhi High Court directed the respondent to
dispose of the stocks, accordingly, a letter was circulated to several paper
merchants including the appellant, dealing in the trade, inviting quotations
for the sale of 58.758 metric tonnes of first quality and 58.174 metric tonnes
of second quality creased paper. On receiving quotations papers were sold
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to appellant vide Agreement dated 3 October, 1981. Value of the stock
was roughly estimated at ` 9.58 lacs. This figure did not include 24% over
and above the „ex-mill rate‟ as per Annexure I provided in clause 2 of the
Agreement. Mother of appellant Smt. Gomti Devi created equitable
mortgage in favour of the respondent bank in respect of her property bearing
no. 2459, Ward No. 5, Naiwara Street, Chawri Bazar, Delhi by depositing
title deeds of the said property for due performance of contract. Pursuant to
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letter dated 28 September, 1981 appellant also deposited a sum of
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` 50,000/- with the respondent as cash security. Vide letter dated 28
September, 1981 appellant had made following requests:-
(a) The security deposit of ` 1 lakh be reduced to ` 50,000/-
to be adjusted towards final instalment of purchase.
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(b) Equitable mortgage of the properties of Smt. Gomti Devi
(plaintiff‟s mother) be accepted as collateral security.
(c) The amount of first lifting be reduced from ` 1 lakh to
` 70,000/-.
(d) The period of lifting the goods be enhanced from two
months to three months.
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6. The aforesaid letter was written prior to the Agreement dated 3
October, 1981. It was denied that respondent created hurdles in lifting of the
papers by appellant. On the contrary, respondent extended time for lifting
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the paper. Vide letter dated 14 May, 1982 appellant confirmed that
respondent had extended the time for lifting the remaining stock.
Respondent alleged that appellant started raising unnecessary objections
about the quality of some categories of goods and demanded reduction in
rates and some rebate and discounts on frivolous grounds. Respondent
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wrote several letters to appellant, that is, letter dated 18 June, 1982, 19
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June, 1982, 16 July, 1982, 17 November, 1982, 28 December, 1982 and
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11 January, 1984 as also the notices dated 17 July, 1982, 31 July, 1982,
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23 September, 1982, 8 December, 1982, 8 June, 1984 and 3 July, 1984
through its counsel, in order to persuade appellant to abide by the terms of
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Agreement dated 3 October, 1981 and take delivery of remaining stocks
lying in the factory. It was further stated that Central Excise Department of
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its own had intercepted the truck. Since appellant failed to lift the balance
stock cash security deposit was forfeited.
7. In replication, appellant denied averments made in the written
statement and reiterated and reaffirmed what had been stated in the plaint.
8. On the pleadings of the parties following issues were framed by the
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trial court on 28 August, 1985 :-
1. Whether the suit for specific performance of the contract
requiring the defendant to deliver balance quantity of
paper claimed by the plaintiff to be weighing 39.807
metric tonnes (26.767 M.T. first quality and 13.093 M.T.
second quality) maintainable?

2. Whether the suit is properly valued?

3. Whether the plaintiff took delivery of 77.067 M.T. of
paper and made payment of ` 7,50,457.37 under
agreement dated 3.10.81 of which Annexure-I forms
part?

4. Did defendant commit breach of the aforesaid agreement
or any term thereof and if so to what effect?

RFA 133/2005 Page 7 of 14


5. Whether the demand of cash security of ` 50,000/- by the
defendant was illegal and if so is the plaintiff entitled to
return of the same with interest and again if so at what
rate and for what period?

6. Whether the plaintiff paid a sum of 20,000/- to truck
`
owner as charges as stated in para 8 of the plaint and if so
is the plaintiff entitled to the refund of the same with
interest from the defendant and again if so at what rate
and for what period?

7. Whether the plaintiff is entitled to claim adjustment of
34,240/- on account of differences of market price of
`
Patti (strips) as per para 9 of the application and if so to
what effect?

8. Whether the amount of ` 7,50,457.37 stated to have been
paid by the plaintiff to the defendant includes the excess
amount of ` 1,71,892.16 @ 24% and if the plaintiff is
entitled to adjustment of this amount from the defendant
with interest and again if so at what rate and for what
period?

9. Whether the defendant has committed breach of the
agreement dated 3.10.81 and if so to what amount is the
plaintiff entitled on that account or otherwise?

RFA 133/2005 Page 8 of 14


10. Whether the plaintiff was ready and willing to perform
his part of the contract and if so to what effect?
11. Relief.
9. Appellant examined himself as PW1. As against this, respondent
examined Shri Rati Ram Baghotia, Senior Auditor as DW1. Agreement
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dated 3 October, 1981 was proved as Ex. PX-1. Respondent had proved the
documents as Ex.P-1 to Ex.P-49. Appellant had proved number of
documents which have been exhibited as DW-1 to D-57.
10. After hearing the learned counsel for the parties and perusing the
record, trial court has held that appellant was entitled to 20,000/- with
`
interest @ 9% per annum from November, 1982 till the realisation. This
amount has been awarded towards the expenses paid by appellant to truck
owner, in view of impounding of truck by the Excise Department. As
regards other claims are concerned, trial court has held that appellant was
not entitled to the same. As regards Issue No. 1 is concerned, trial court has
held that respondent was permitted by the High Court to dispose of the
balance quantity of the papers, thus, specific performance could not be
granted, inasmuch as, appellant had himself prayed for payment of
` 2,07,543/- in lieu of the goods. As regards Issue No. 2 is concerned, trial
court has held that suit was properly valued and appropriate court fee was
RFA 133/2005 Page 9 of 14


paid thereon. This issue was decided in favour of the appellant. Issue No. 3
has been decided against the appellant. Trial court has held that in the
Agreement Ex.PX-1 a specific reference was made about Annexure I
wherein rates were duly specified. Appellant had taken delivery of 77.06
metric tonnes on payment of 7,50,457.37 which was in accordance with
`
Annexure I. Issue Nos. 4 and 10 have been decided together and against the
appellant. Trial court has held that it is the appellant who was not ready and
willing to perform his part of contract. As per Agreement Ex. PX-1 stock
was to be lifted on „as is where is‟ basis. Despite this appellant tried to raise
dispute with regard to price, quantity and quality of the goods. Trial court
held that it is the appellant who was reluctant to lift the paper and has to
blame himself for the same. Issue No. 5 has also been decided against the
appellant and in favour of the respondent. It is held that vide letter dated
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28 September, 1981 appellant had himself offered security, thus, ought not
have raised the plea that terms were changed after the Agreement. As
regards Issue No. 6, same has been decided in favour of the appellant and a
sum of ` 20,000/- has been awarded to the appellant in respect of the charges
paid by him to the truck owner. Issue Nos. 7 and 8 have been decided
against the appellant and in favour of the respondent. Trial court has
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concluded that rates as specified in the Agreement were applied, thus,
appellant was not right in saying that excess amount was charged. Issue No.
9 has also been decided in favour of the appellant.
11. I have heard the learned counsel and perused the trial court record
carefully and do not find any illegality or perversity in the impugned order.
I am of the view that findings rendered by the trial court are in conformity
with the evidence adduced by the parties, inasmuch as the view taken by the
trial court is a possible view and cannot be interfered with. The view taken
by the trial court in no way can be said to be perverse.
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12. Agreement dated 3 October, 1981 Ex.P-1 reads as under :-
AGREEMENT
“In consideration of Punjab National Bank, Tropical
Building, Connaught Circus, New Delhi hereinafter referred to
as bank which expression shall include its assigns successors in
interest) allong M/s Surender Kumar Arun Kumar (hereinafter
referred to as purchasers which expression shall include our
heirs, executors, administrators, assigns and legal
representatives) to purchase the entire stocks of coated paper
manufactured by M/s Regal Papers Ltd. lying at their factory
situated at Kavi Nagar, Ghaziabad UP in possession of the bank
on terms and conditions and in the manner hereinafter provided,
we the purchasers thereby agree as follows:-
RFA 133/2005 Page 11 of 14


1. The sale shall be affected by the bank on “as is where is”
basis and all transportation and octroi charges shall be
borne by the purchaser.
2. The sale price of the goods sold by the bank shall by the
ex-mill rate (as per annexure I) plus 24% thereof in
respect of all brands of the paper.
3. The purchaser shall lift the entire stocks value at ` 9.58
lacs approx. within a period of three months from the
date hereof.
4. The purchaser shall deposit in cash or by bank draft in
advance the purchase price calculated in terms of
conditions No.1 before taking delivery of the stocks in
parts. A single lifting of stock shall not be less than Rs.
One lac. The first lifting will be of ` 70,000/-.
5. The goods will be lifted in assorted lots.
6. The witness whereof the purchasers have herein set their
hands this day of October, 1981.
(SD)”
13. A perusal of the Agreement clearly shows that appellant had agreed to
lift the entire stock within a period of three years on „as is where is‟ basis.
Prior to the Agreement stock was lying in the factory of respondent and was
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inspected by the appellant. After negotiations Agreement dated 3 October,
1981 was entered into, hence appellant was bound by the terms thereof. Ex-
mill rates have been duly mentioned in the Annexure I which forms integral
part of Agreement. It was further specified in Clause 2 of the Agreement
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that bank shall be entitled to ex-mill rate as per Annexure I plus 24% thereof
in respect of all brands of the paper. Accordingly, appellant had no right to
challenge the quality, quantity as also rates. After lifting large quantity of
stock at the rates as agreed, it appears, in order to wriggle out from his
contractual obligations appellant avoided to lift paper on flimisy grounds of
quality and rates of paper, which he was estopped from raising in view of
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the terms of Agreement dated 3 October, 1981.
14. Cash security was offered by the appellant himself vide his letter
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dated 28 September, 1981 prior to the execution of Agreement, therefore,
appellant cannot claim that terms of Agreement were unilaterally changed
by the respondent subsequently by asking to furnish cash security. The
issue of cash security was made clear even prior to the Agreement, thus,
appellant cannot be heard to allege that terms of contract were changed
subsequently. As regards creating of hurdles by the respondent bank is
concerned, no evidence has been led in this regard, inasmuch as, bank
appears to have cooperated and granted sufficient time to lift the goods.
Three month‟s time was extended vide letters dated 18.3.1982(Ex.P4), letter
dated 25.3.1982 (Ex.P5), letter dated 18.6.1982 (Ex.P9) and letter dated
19.6.1982(Ex.P10) respondent requested the appellant to lift the goods but
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to no effect. Again vide notice dated 16.7.1982(Ex.P12) respondent called
upon the appellant to take delivery. Finally, vide notice dated
22.4.1982(Ex.P-16) appellant was informed that in case delivery was not
taken the goods would be sold. This clearly indicates that respondent gave
sufficient time to appellant to lift the stock in terms of the Agreement. As
against stipulated period of three months appellant was given one year time.
Appellant himself is guilty of breach of contract. As regards interception of
truck by the Excise Department is concerned, respondent had no role to play
in it. It was an independent act of Excise Department of intercepting the
truck. Thereafter, legal steps were taken and ultimately goods were released
pursuant to the orders of this Court that too due to cooperation and efforts of
respondent. This incident cannot be taken as that of creating hurdles by the
officials of respondent.
15. For the foregoing reasons, I do not find any perversity or illegality in
the impugned judgment and decree. Accordingly, appeal is dismissed.

A.K. PATHAK, J.
AUGUST 26, 2014/ ga
RFA 133/2005 Page 14 of 14