Full Judgment Text
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CASE NO.:
Appeal (civil) 5261 of 2003
PETITIONER:
Food Corporation of India
RESPONDENT:
M/s Laxmi Cattle Feed Industries
DATE OF JUDGMENT: 22/02/2006
BENCH:
ARIJIT PASAYAT & TARUN CHATTERJEE
JUDGMENT:
J U D G M E N T
ARIJIT PASAYAT, J.
Appellant-Corporation calls in question legality of the judgment
rendered by a Division Bench of the Delhi High Court dismissing the
First Appeal questioning correctness of the order dated 13.11.1987 of
learned Additional District Judge, Delhi who had granted a decree of
Rs.81,442.53 with interest in favour of the respondent who was the
plaintiff before the Trial Court.
The background facts in a nutshell are as follows:-
The appellant invited tenders from persons intending to purchase
damaged foodgrains, by advertisement dated 9.6.1983. Tender submitted
by the respondent was accepted on 22.7.1983. It is to be noted that the
respondent was one of the successful bidders. Certain terms of the
agreement which shall be indicated in detail stipulated payment of the
price and the consequence of failure to do so i.e. levy of storage charges
for the stock not lifted and interest. The tendered quantity was 2246
M.T. of damaged foodgrains. Respondent deposited certain amounts. On
1.2.1984 the respondent requested that part of the agreement which was
not capable of being executed may be cancelled and balance amount may
be refunded. Prayer was also made for waiver of storage charges levied
by the concerned district Manager. A sum of Rs.1,46,049.50 was
refunded by the appellant. Subsequently on 16.7.1984, a further sum of
Rs.9959.68 was also refunded. The total amount of deposit by the
respondent was Rs.8,45,972.31. Out of the same, a sum of
Rs.1,44,864.85 was refunded by the district office of the appellant-
Corporation, Amritsar. On 16.2.1982 a telegram was issued by the
Senior Regional Manager of the appellant-Corporation, Punjab Region
requesting the respondent to immediately lift the balance stocks from
Jalandhar Depot latest by 5th March, 1985 failing which, it was
mentioned the stocks would be disposed of at the respondent’s risk as
per the terms indicated in the contract. A suit was filed by the
respondent which was numbered as Suit No.310 of 1985 for recovery of
Rs.99,900/- from the appellant alleging breach of contract. On
15.1.1986 written statement was filed substantially denying the
allegations. It is to be noted that the plaintiff-respondent did not tender
any evidence and evidence was led only by the appellant-Corporation.
The Trial Court decreed the suit holding that the appellant had
committed breach of the contract in refunding the balance of amount
and not supplying the goods to the entire extent for which the bid was
submitted by the plaintiff-respondent. Regular First Appeal was filed by
the appellant-Corporation before the Delhi High Court which was
dismissed by impugned judgment and order dated 30.1.2003 upholding
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the judgment and decree of the Trial Court.
In support of the appeal learned counsel for the respondent
submitted that the Trial Court and the High Court have not considered
the clauses relevant for the purpose of adjudication. The Trial Court
proceeded on the basis as if appellant was required to supply the goods
for the whole amount deposited. The Trial Court as well as the High
Court have also erroneously held that when the appellant had failed to
deliver the goods for the whole amount deposited, there was breach of
contract and storage charges and interest on account of late payment
cannot be claimed. The Trial Court also erroneously held that the goods
were justifiably not lifted by the plaintiffs in time and it had paid more
amount, and therefore no question of charging interest arises. The
respondent has not entered appearance in spite of service of notice.
It is to be noted that the following issues were framed by the Trial
Court:
"1. Whether the defendant is entitled to adjustment
of Rs.31,097.91 on account of storage charges
and Rs.5,374.20 on account of interest for the
late payment? OPD
2. To what amount, if any, in the plaintiff \026 firm
entitled on account of principal sum and
interest? OPP.
3. Relief."
A few conditions in the contract need to be noted. They read as
follows:
"A. (ii) It will be the responsibility of the buyer to obtain
necessary import/export permits from the concerned
authorities in case the stocks are to be moved to place
outside the one, where they are held. Such permit
shall have to be produced at the time of taking
delivery.
B. The Food Corporation of India do not guarantee
to make any definite quantity of damaged foodgrains
available to the buyers.
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E(ii) The earnest money deposited by the successful
tenders, along with the tender will be adjusted towards
security deposit for due performance of the contract
and would be liable to forfeiture. The security deposit
will be refunded on the due completion of the contract
but the Corporation will not be liable to pay interest
thereon.
(iii)(a) If the contractor fails or neglects to observe or
perform any of his obligations under the contract, it
shall be lawful for the Corporation to forfeit either in
whole or in part in its absolute discretion the security
deposit furnished by the contractor or any part thereof
towards the satisfaction of any sum due to be claimed
from the contractor for any damages, losses charges
expenses or costs that may be incurred or suffered by
the Corporation. The decision of the Corporation in
this regard shall be final and binding on the
contractor.
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(F)(ii) In the event of failure to complete the payment
and present the demand draft or deposit at call receipt
within the aforesaid period of seven days, the Food
Corporation of India shall have the option to forfeit the
security and resale stocks at the risk and cost of the
original buyer and also recover the loss sustained by
the Food Corporation of India as a result of such
failure or extend the period by 7 days for making the
payments provided interest of 18% per annum and
storage charges at the rate of three paise per bag or
part thereof are paid by the party. Any saving or profit
on resale as aforesaid shall be exclusively to the
account of the Food Corporation of India.
(G) The buyer will make his own arrangements for
transport and will not be entitled to claim any facility
or assistance for transport from the Food Corporation
of India. The things shall be placed at Food
Corporation of India’s cost by godown labour on
buyer’s trucks at the godown rates, or wagons of
godowns labour or buyer will be responsible for
subsequent handling including stacking of bags in the
trucks/wagons."
It is to be noted from the judgment of the Trial Court that no
evidence was led by the plaintiff. The High Court proceeded on the basis
as if the plaintiff had led evidence and the appellant-Corporation had not
led any evidence. On the contrary, the records clearly show that
evidence was led to establish loss suffered on account of delay in lifting
damaged stock. Without any material whatsoever the Trial Court as well
as the High Court held that the appellant had committed breach. On the
contrary the evidence clearly established that the appellant had proved
the loss sustained. The plaintiff was to establish its own case. It did not
choose to lead evidence. Therefore, the Trial Court in the absence of any
evidence tendered by the plaintiff should not have decreed the suit. The
High Court committed error by proceeding under the erroneous
assumption that the plaintiff had led evidence and not the appellant-
Corporation who was the defendant.
Above being the position, the judgment and decree of the trial
Court as affirmed by the High Court cannot be sustained, and are set
aside. The appeal is allowed. No costs.