1 F.A.No.387 of 1992 IN THE HIGH COURT OF JUDICATURE AT BOMBAY, BENCH AT AURANGABAD FIRST APPEAL NO.387 OF 1992 Shetkari Sahakari Sangh Ltd., Satana, Taluka Bagalan, District Nasik through its Chairman Shri Vasantrao s/o Dagaji Patil, R/o Satana, Taluka Baglan, District Nasik .. APPELLANT (Original Defendant) VERSUS 1. Ratnakar Sheshikant Rawat, deceased through his L.Rs. 1-A Smt.Ushabai w/o Ratnakar Rawat, Age 57 years, Occu.Household, R/o Hanumanwadi, Chalisgaon, District Jalgaon (1-B) Mrs Chitra w/o Ashok Panchbahai, Age 37 years, Occu.Household, R/o 302, Gongothri Apartment, 3rd Floor, Jafrabad road, Rajula City, District Amroli (Gujrat Pin 365 560) 1-C Shri Hemant s/o Ratnakar Rawat, Age 32 years, Occu.Business, R/o Hanumanwadi, Chalisgaon, District Jalgaon 1-D Shri Sandeep s/o Ratnakar Rawat, Age 35 years, Occu.Service, Development, L.I.C.Branch Office 96-A, B.O. Jaibhole Shankar Market, Savada Taluka Raver, Dist.Jalgaon R/o Om Colony, Behind Kamal tiles, Savada, Taluka Raver, Dist.Jalgaon ..RESPONDENTS (Original Plaintiffs) Mr S.R.Deshpande, Advocate for appellant Mr Pravin G.Patil, Advocate holding for Mr R.N.Dhorde, Advocate for respondents 1-A, 1-C and 1-D. Appeal is dismissed as against Respondent No.1-B as per Registrar’s order dated 15.6.2010 2 F.A.No.387 of 1992 CORAM : MRS MRIDULA BHATKAR, J. DATE OF RESERVING THE JUDGMENT : 15.09.2011 DATE OF PRONOUNCING THE JUDGMENT : 21.10.2011 JUDGMENT 1. This appeal is filed against the judgment and decree passed by the learned Joint Civil Judge, Senior Division, Jalgaon in Special Civil Suit No.85 of 1984 dated 7.12.1991. 2. Respondent/original appellant had filed suit for recovery of money, i.e. Rs.3,69,915/- against the sale of fertilizers to the appellant. Appellant is a Co-operative Society working for the cause of the farmers at Satana. The respondent/original plaintiff was registered licence dealer in fertilizers. The respondent/original plaintiff died during the pendency of the appeal and his legal representatives have been brought on record. Appellant-society had placed the order for the Sufala fertilizer with specifications with the respondent on 9.7.1981. However, Sufala was not available. So, the non-availability of Sufala fertilizer was communicated by the respondent to the plaintiff and so, availability of “Nandi” brand fertilizer was communicated. So, the appellant-society ordered for Nandi brand fertilizer and it was supplied. Thereafter on 27.7.1991 second order was placed and as per the order, the fertilizers were supplied. The fertilizers were not to be sent directly to the office of the appellant – Co-operative Society at 3 F.A.No.387 of 1992 Satara but the fertilizers were directly to be sent to the respective farmers at different places, who had ordered the fertilizers through appellant-society. The respondent was to bear the expenses of the transportation of the fertilizers to be delivered to respective places of the farmers. The total price of the ten tonnes of the fertilizers of different types was worth Rs.5,56,090/- as agreed between the parties. Appellant paid Rs.1,19,200/- to the respondent-original plaintiff. The transportation charges to the tune of Rs.18,152/- were paid by the respondent-original plaintiff which was to be deducted from the price, which comes to Rs.5,37,938/-. Subsequently, the fertilizers sent and used by the farmers were found of inferior quality when the crop yielded was not of a good quality. Appellant, after getting such reports, returned the unsold fertilizers worth of Rs.48,823/- to the dealer – respondent. Thus, after deducting the amount of Rs. 1,19,200/- and Rs.48,823/- i.e. amount paid by the appellant-society, and the price of returned goods, the amount of Rs.3,69,915/- was due from the appellant. The order was placed for supply of dye-Ammonium Phosphate and Sufala granulated type having 20:20:0 (Nitrogen – 20, Phosphate 20 and Potash 0) ingredients in the fertilizers. However, granulated Nandi brand fertilizer which was supplied was not having the same ingredients, but the ratio was of 3.06% Nitrogen, 4.39% Phosphate in one order and in another order placed for 18:18:10, it was 3.91% Nitrogen, 4.71% Phosphate and 3.85% Potassium. The respondent had purchased this fertilizer from some other contractor, i.e. Rajesh Chemicals and Fertilizers of Bombay. The respondent- 4 F.A.No.387 of 1992 plaintiff had given one month’s credit for the payment from the date of the supply. However, the said amount was not paid. Respondent/original plaintiff sent notice on 3.8.1983 demanding the amount with interest at the rate of 18%. Again, the notice was issued on 6.9.1983. However, the amount was not paid and, therefore, he filed a suit for the said amount with interest of 12% per annum from 1.9.1981. Appellant appeared in the suit, filed written statement, suit was contested, both the parties adduced evidence and thereafter suit was decreed in favour of the original plaintiffs. Hence, this appeal. 3. Learned Counsel for the appellant submitted that the appellant has filed this appeal mainly on two grounds that the trial Court had no territorial jurisdiction to try and entertain the suit and the decree without jurisdiction is nullity and hence to be set aside. Learned Counsel submitted that the office of the appellant-society is at Satana. The contract of the sale and purchase of fertilizer has taken place at Satana in the office of the appellants. Appellant/defendant was not residing at Chalisgaon. No payment in respect of the contract was made at Chalisgaon but all payments were made at Satana. Learned Counsel further submitted that nowhere in the pleadings or even in the notice sent by the respondent, it is mentioned that the contract has taken place at Chalisgaon. Learned Counsel submitted that in the judgment the trial Court has accepted all the contentions raised by the defendant objecting the territorial jurisdiction at Chalisgaon. However, only in paragraph 25 of the judgment, territorial jurisdiction has been 5 F.A.No.387 of 1992 held in favour of the respondents. It is submitted that admittedly there was telephonic conversation between the office bearers of the appellant and the respondent in respect of changing the order of the fertilizer. The respondent had informed on telephone that Sufala was not available in the market and, therefore, office bearers of the appellant placed the order for Nandi brand fertilizer with same specifications as 20:20:0 on both the occasions. He submitted that the trial Court has erred in holding that the alteration of the contract was made by the appellants contacting respondent telephonically at Chalisgaon and for this reason the trial Court held that Court in Chalisgaon has the correct territorial jurisdiction. He pointed out that there is no specific averment of change of contract. He submitted that it was not alteration for change of contract but as per Section 62 of the Contract Act it cannot be a novation of contract, as there is no substantial change going to the root of contract but there is only change of brand of the fertilizer. On this point he relied on Andheri Bridge View Co-op. Hsg.Society Ltd., V. Krishnakant Anandrao Deo and others, reported in AIR 1991 BOMBAY 129. He further submitted that the ratio and quantity did not change and the terms of the contract did not change. So, this will not amount to a new contract or alteration of contract. He submitted that there are no pleadings of novation of contract in the plaint. Therefore, the appellant had no opportunity to deny the same. He argued that appellant has filed cross appeal. Finding of issue No.3 is in respect of supply of sub-standard fertilizer is not challenged and, therefore, it is to be considered as final. 6 F.A.No.387 of 1992 He submitted that as the quality of the fertilizer was sub-standard and not as per the specifications, appellant rely on Section 15 of the Sale of Goods Act. He submitted that appellant has examined the Agricultural Officer D.W.4 Dadaji Deore and P.W.6 Balkrishna Khadatkar, Chemical Analyst and they have stated that in the year 1983 the samples of the fertilizers were taken and were sent for chemical analysis. The report submitted by the Analyzer disclosed that the specifications of 20:20:0 or 18:18:0 were not at all maintained and it was a sub quality fertilizer. Learned Counsel explained that after the supply of the fertilizer immediately the complaint could not be lodged. Fertilizers were directly supplied to the farmers, who had placed the order of the fertilizer with the appellant, the farmers used that fertilizers in their field and when the crop was yielded, it was not up to the mark and found of sub quality. Thereafter the complaints were made. He pointed out that naturally, period of six to eight months was consumed. Learned Counsel submitted that under Section 15 of the Sale of Goods Act, it is necessary for the seller to maintain quality and if the said quality is not maintained, then under Section 59 of the Act, the remedy is available for breach of warranty therefore, the appellant was justified in not paying the price of the sub standard goods supplied by the respondent/defendants. He pointed out that civil Court has no jurisdiction to try this matter under Section 91 of the Co-operative Societies Act. Moreover, notice under Section 164 was required to be issued. 7 F.A.No.387 of 1992 4. In reply, learned Counsel for the respondents submitted that on 9.7.1981 when first order was placed, supply of Sufala was not available. So, appellants placed order of Nandi brand fertilizer. On 27.7.1981 the second order was placed. Learned Counsel submitted that the change from Sufala to Nandi brand has taken place on telephonic conversation and contract was altered. The Court, therefore, has rightly accepted the submissions and the averments on jurisdiction made by the respondents at the time of deciding the suit. He submitted that respondent has issued receipts from Chalisgaon and it was mutually agreed between the parties that payment was to be made to the respondent/plaintiffs at Chalisgaon and it was accepted by the appellant. Learned Counsel submitted that appellant did not offer any payment and, therefore, whenever respondent used to visit at Satana, the respondent collected the payment directly from the office of the appellant-society. He pointed out that the admission was given in the evidence of D.W.2 – Nathu Babari Nikam in paragraph 14 that if respondent would not have come to the office of the appellant, then appellant-society would have sent the payment to Chalisgaon. He relied on the receipts where the right of jurisdiction at Chalisgaon is reserved. He submitted that it is the general principle that the buyer to pay cost of the goods to seller at his shop. Learned Counsel submitted that respondent has supplied the goods as specified in the order. The goods were delivered on 20.7.1981, 21.7.1981, 22.7.1981 and thereafter the second order was placed on 27.7.1981. On the point of the specifications and the quality of the goods, he submitted 8 F.A.No.387 of 1992 that the evidence of D.W.4 Dadaji Deore discloses that the samples were taken on 12.12.1982. The samples were kept in the godown. More than fifteen months after the goods were received, samples were drawn. The report of the Chemical Analyzer discloses that the laboratory received the samples on 18.3.1983. Thus, after a gap of three months from the date of the collection, the samples were received by the laboratory. He submitted that fertilizer is a mixture of chemicals in a form of grannuals and there is every possibility of change of Chemistry of the components due to climate variations. It is also material that in what condition the fertilizer is stored in the godown. He argued that in the period of these three months in what manner and where the samples were kept is also not made clear by the appellant-society. Therefore, the report of the Chemical Analyzer that the goods were sub quality and not as per the specification, appears very doubtful and could not be relied. Learned Counsel drew my attention to Clause 30 of Fertiliser (Control) Order, 1985. He submitted that under this Clause, where the sample of the fertilizer has been drawn the same shall be dispatched to the laboratory for analysis within a period of seven days from the date of its withdrawal. D.W.4 Dadaji Deore given an admission in the cross-examination in paragraph 8 that for one year quality remains intact and thereafter it decreases. He further argued that the complaints were regarding the sub quality of the fertilizer are not produced before the Court by the society. He gave admission in paragraph 9 that the fertilizer worth Rs. 48,823/- supplied by the plaintiffs were not returned to the defendant 9 F.A.No.387 of 1992 as they were sold. Learned Counsel pointed out his admission in paragraph 11 that fertilizers except the sample bags which were not sold, were returned. He argued that thus the stand of the appellant that the fertilizers were sub quality and, therefore, they were returned to the respondents/original plaintiffs is not correct. 5. Learned Counsel submitted that no stay was granted and decree is already executed by the respondents. 6. Following points arise for determination : (i) Whether the appellant proved that trial Court has committed error in holding territorial jurisdiction at Chalisgaon ? Ans : No. (ii) Whether appellant is entitled to withhold the amount of price of the goods under Section 59 of the Sale of Goods Act ? Ans : No (iii) Whether the judgment and order of the Court dated 7.12.1991 is to be quashed and set aside ? Ans : No 7. As per Section 20 of the Civil Procedure Code the territorial jurisdiction is considered where the defendant resides or cause of action is taken place, where the contract is entered into by the 10 F.A.No.387 of 1992 parties, the place where it is agreed or any part of contract is performed territorial jurisdiction lies. It is not disputed that the appellant is having its office at Satana and the respondent is having his shop/office at Chalisgaon. Order of fertilizer was placed at Satana. Payment of the fertilizer supplied was made and accepted from time to time at Satana. While deciding the jurisdiction in respect of the contract, even part of the contract where performed also to be taken into account. In the present matter, there was a telephonic conversation between the parties, who were at Satana and Chalisgaon about the change of the brand of the fertilizer and it is considered as a the performance of the part of the contract. Submissions of learned Counsel for the appellant that a change made in the type of the fertilizer and there was no change in the actual order and the specifications of the material, therefore, it is not to be considered as novation of contract, are accepted. Learned Counsel has submitted that the facts are to be pleaded in the plaint and they cannot be substituted by law cited by the parties. There is a substance in the submissions of the learned Counsel for the respondents that the price was to be paid at Chalisgaon. My attention is drawn to the receipts 73 to 89. These receipts were issued against the payment made by the appellant to the respondent towards the price of the fertilizers between 22.7.1981 to 2.9.1982. It is significant to note that on the top of the receipts in the middle portion, the words, “Subject to Chalisgaon jurisdiction” are printed. Though the payments were accepted at Satana, by way of mutual understanding or to avoid inconvenience to 11 F.A.No.387 of 1992 both the parties, it is not to be interpreted as waiver of the jurisdiction at Chalisgaon. It cannot be treated implied waiver when there is specific written note reserving right of jurisdiction. Admission given by D.W.4 Deore that the payments would have been made at Chalisgaon if the respondent would not have come to take the payment at Satana also indicates that payment of the price at Chalisgaon was not denied and it was a part of the contract. Moreover, the shop of the seller, i.e. respondent is at Chalisgaon and the price is generally paid to the shop owner or a dealer at the place, where his office/shop situates. The trial Court has given different finding while appreciating the entire evidence on the point of jurisdiction and has given much weightage to the telephonic communication in respect of alteration of the contract. However, in the result, conclusion of the trial Judge that the Court had territorial jurisdiction to try the suit is correct. 8. Second point was raised by the appellant in respect of its right to withhold the part of the price of the goods as there was a breach of warrantee by the seller i.e. by the respondent. Section 59 of the Sale of Goods Act is a remedy for breach of warrantee. Buyer is entitled to reject the goods and also he may set up against the seller the breach of warrantee in diminution or extinction of the price or may sue the seller for damages for breach of warrantee. Section 59 of the Act is a remedy for the buyer. The submissions were made that the learned trial Court ought to have considered Section 15 of the Sale of Goods Act, 1930. Section 15 states that when there is a contract for sale of 12 F.A.No.387 of 1992 goods by description, there is an implied condition that the goods shall correspond the description. In the present case there were specifications of fertilizer. Earlier order placed for the fertilizer was under the brand of Sufala. As Sufala was not available in the market, appellant opted for other fertilizer of “Nandi” brand. Thus, Sufala fertilizer was the first choice of the appellant and Nandi was the second. There is no dispute that the order was placed by description with specifications of 20:20:0 and 18:18:10. However, report of the Chemical Analyzer at Exh.156 shows that samples, which were taken contained 3.06% Nytrogen, 4.39% Phosphate. Second order was placed for 18:18:10, but after receipt of the report of the Chemical Analyzer, i.e. at Exh.157 it is revealed that the sample contained 3.91% Nytrogen, 4.71% Phosphate and 3.85 Potash. Thus, the reports of the Chemical Analyzer if accepted as it is, undoubtedly the goods, which were delivered were not as per the specifications given at the time of demand. In the present case, the entire quantity of the fertilizers for which the demand was placed was supplied by the respondent. The supply was not made directly to the office of the appellant but the fertilizer was supplied to various farmers at different places directly by the respondent as per the instructions of the appellant. Thus, the delivery of the fertilizer worth Rs.5,56,090/- was accepted. However, appellant paid sum of Rs.1,19,200/- towards the price of the fertilizers. After one year on 2.7.1982, some fertilizers worth Rs.48,823/- were returned to the respondent/plaintiff. As pointed out by learned Counsel for the respondents, D.W.1 Yashwant 13 F.A.No.387 of 1992 Pandurang Bhambre deposed in the cross-examination in paragraph 8 that the appellant-society has recovered the price of the fertilizers from the farmers, which were sold to them. Thus, the society was a middleman between the farmers and the dealer. Society has collected the amount of the fertilizers from the farmers. The trial Court has considered this fact and, therefore, has rejected the defence taken by the appellant that they can withhold the price amount. D.W.2 Nathu Nikam who was working as a Manager of the appellant-society at the relevant time and was well-versed with the contract and the transaction, in his cross-examination in paragraph 9 has admitted that the fertilizers worth of Rs.48,823/- were returned to the respondent because they were not sold. Fertilizers were returned on 2.7.1982. Nearly after one year these fertilizers were returned. At the time of returning the fertilizers, there was no complaint or grievance made by the appellant and nothing to that effect is brought on record therefore, the admission of D.W.2 that the fertilizers supplied by the respondent were returned to the respondent, as they were not sold is important on the background of absence of complaint. Though the submissions of learned Counsel for the appellant are accepted that the expected results after using the fertilizers were seen only when the crop was yielded, for that a period of one year was sufficient, the appellant ought to have raised the grievance when the fertilizers worth of RS.48,823/- were returned after one year. 14 F.A.No.387 of 1992 9. Moreover, the fertilizers supplied were of a particular trade mark named “Nandi”. Therefore, under Section 16 (1) proviso of the Sale of Goods Act, no implied warrantee and condition about its quality can be claimed. It was necessary for the buyer to raise objection in time and and to disclose the condition or fault of the goods to get the benefit under Section 15, 16 or 56 of the Sale of Goods Act. Respondent has brought important admissions in respect of drawing samples and sending it to the Chemical Analyzer and has tried to point out that the reports of the Chemical Analyzer cannot be accepted as authentic, as the proper procedure is not followed. The learned trial Judge has held that the quality of the goods was sub standard. Learned Counsel for the appellant has submitted that the said finding is not challenged by filing cross objection by the respondents and, therefore, that finding is not to be disturbed. Assuming the finding given by the trial Judge is correct, yet because of the laches and the goods delivered were branded and were ordered from one Rajesh Chemicals, Bombay, the appellant cannot absolve their duty to pay the full price of the goods, which were delivered and used. It is also to be noted that the appellant has received the amount from the farmers, therefore, the appellants are liable to pay the dues. The order passed by the learned trial Judge does not want any interference. 10. In the result, the appeal, which is sans merit is dismissed. ( MRS MRIDULA BHATKAR, J.) (vvr/387.92fa)