IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No 15592 of 2008 A M Engineering & Chemical Co, 9, Creek Row (Ground Floor) Kolkata – 700 014 under the sole proprietorship firm of Apurba Chandra Ghosh through their constituted Attorney Shri Debashis Chandra, son of Pradip Chandra, resident of Shambhoo Haldar Lane, Mali Sanchghau District – Howrah - Petitioner Versus 1 The Union of India through the Chairman, Railway Board, Rail Bhavan, Raisina Road, New Delhi – 10000 2 The Executive Director, Finance (REFC), Government of India, Ministry of Railways Board, Rail Bhavan, Raisina Road, New Delhi – 10000 3 The General Manager, East Central Railway, BISCOMAUN Tower, Patna – 800 001 4 The F A & C A O (Store), East Central Railway, 07th Floor, BISCOMAUN Tower 5 The Controller of Stores, East Central Railway, 05th and 06th Floor, BISCOMAUN Tower, Patna – 800 001 6 The Chief Material Manager (Depot), East Central Railway, Samastipur, Bihar – 848 101 7 The Deputy Chief Material Manager (Depot), East Central Railway, Samastipur, Bihar – 848 108 - Respondents *** For the petitioner : M/s Kaushlendra Kr Sinha, Rajendra Pd & Sunil Kr Singh, Advocate For the respondents : Mr Bindhyachal Singh, Advocate *** 3 30.03.2009 The petitioner is a Company that, inter alia, manufacturers disinfectives. Pursuant to tender issued by the Controller of Stores, East Central Railway, petitioner agreed to supply deodorant bio floor of IRS 7-11/74 specifications. Its tender was accepted and, accordingly, orders placed by the Railways to supply the same which was manufactured by the petitioner under the brand name CUTOZEM- 311. Petitioner was to supply 28,031 litres thereof in jars of 25/50 litres and was to deliver the same within 45 days of the letter of acceptance which was dated 29.03.2006. Petitioner, accordingly, entered into 2 agreement with the Railways for the said supply. One of the conditions of the contract was that there would be a pre-delivery inspection by RITES Limited. RITES Limited is Railways Inspection and Testing Services Limited, a Company wholly owned by Government of India and does various works for the Railways. Petitioner, accordingly, prepared the entire consignment and offered it to RITES for testing. RITES took random samples from the consignment as already readied on the 10th of June 2006. In their report, while drawing sample, they have clearly mentioned that the date of manufacturing of the consignment was 29th of May 2006 and was manufactured in May, 2006. The test report was prepared and submitted as according to the specifications. The consignments were then sent to the Railways as directed and each of the jars contained labels as per law required. The label is contained in Annexure-10. Apart from other information given, the label clearly stated that the date of manufacture was May 2006 and the date of expiry was April 2007 that is one year period. Now, it appears that Railways having received the consignment chose not to reject the same. They started using the same. It seems thereafter samples were taken by the Railways and sent to the National Test House, Ghaziabad. It is not in dispute that the samples were ultimately tested by the National Test House in July/August, 2007. It is not in dispute that RITES were also asked by the Railways to associate with the test. RITES refused to associate with the test and informed Railways accordingly clearly stating that the test was being carried out after the expiry of the goods so supplied and they would not associate 3 with the test. Even after test, the test report does not say that it does not conform to the Railways specification. The report ultimately states that the sample is not as per Railways standard. Bet that as it may, almost 50% of the stocks, as received by the Railways more than a year back, have already been consumed. Not only was the balance, which was lying with the Railways, was rejected but as full payment has been, by then, made to the petitioner, petitioner was directed to refund the amount received by it failing which from its bills by the Railways anywhere in India, the deductions would be made. Subsequently, interlocutory application has been filed by the petitioner showing as to how mere recovery of about Rs 5 lacs, his payment by the Railways worth over Rs 50 lacs had been stopped. Heard the parties and with their consent, as pleadings are complete, the writ petition is being disposed of at the stage of admission itself. There are a few things which are not in dispute. Petitioner was given order. In the order, one of the conditions was pre- delivery inspection. Pre-delivery inspection was done and there was no difference in the quality. Petitioner categorically states that on the containers, at the time of delivery itself, both the month of manufacturing and the month and the date of expiry were printed. This is not denied. To the contrary is accepted in the counter affidavit. As noted above, the expiry is shown to be April, 2007. Petitioner’s short submission is that the expiry being April 2007, the sample itself was taken late in April, 2007 but tested in 4 July 2007 which is long after the expiry of the life of the product, as supplied. This fact was recognised by RITES Limited also who refused to participate in the retesting specifically on this ground itself. This report of the National Test House is now made the basis for rejecting the entire consignment and that too more than a year after it was delivered. Petitioner’s further submission is that in terms of Clause 1502 and the note appended thereto, the rejection was not valid in law whereas on behalf of Railways, reliance was placed on Clauses 3202 and 3203 to justify the rejection even at that late stage. The first thing is what is the Indian Railways standard specification for such a good. Petitioner has annexed the same in his rejoinder as Annexure-22 which is not disputed by the Railways. Work and the important conditions thereof is Clause 2.9 of the said specification which states thus : 2.9 Stability on storage – The material shall remain stable for a period of at least one year from the date of manufacture when stored in temperature between 15-45 degree C in original container. The second important is that Clause 6.2 thereof with regard to marking and labelling. It is provided therein that marking and labelling provisions as prescribed under the Drugs Rules by Ministry of Health shall be followed. Now we come to the said two contentious clauses which are quoted hereunder : 1502. Consignees Right of Rejection – Notwistanding any approval which the Inspecting Officer may have given in respect of the stores or any materials or other particulars or the work or 5 workmanship involved in the performance of the contract (whether with or without any test carried out by the Contractor or the Inspecting Officer or under the direction of the Inspecting Officer) and not with standing delivery of the stores where so provided to the interim consignee, it shall be lawful for the consignee, on behalf of the Purchaser, to reject the stores or any part, portion or consignment thereof within a reasonable time after actual delivery thereof to him at the place or destination specified in the contract if such stores or part, portion or consignment thereof is not in all respects in conformity with the terms and conditions of the contract whether on account of any loss, deterioration or damage before despatch or delivery or during transit or otherwise howsoever. Note - In respect of materials pre-inspected at the firm’s premises the consignee will issue rejection advice within 90 days from the date of receipt. 3202. The Contractor also guarantees that the said goods/stores/articles would continue to conform to the description and quality as aforesaid, for a period of 30 months after their delivery or 24 months from the date of placement in service whichever shall be sooner, and this warranty shall survive notwithstanding the fact that the goods/stores/articles may have been inspected, accepted and payment therefor made by the Purchaser. To my mind, the plain reading of the two clauses clearly 6 show that once a material is required to be subjected to pre-inspection at the sales premises, the consignee (Railway) would issue rejection advice within 90 days from the date of receipt. Clause 3202 is a general provision and would not apply inasmuch as when the goods itself disclosed that its expiry of self-life was limited to April, 2007 that is one year as provided in the specifications as well then Clause 3202 of the general terms and conditions cannot be understood to extend the same to either 30 months or 24 months as the case may be. That is an inherent incompatibility in that term. That would not apply to special cases which provide otherwise. As seen above, the specification itself provided for the material to be stable for one year. If we now refer to Clause 1502, the picture is clear. Here, we are dealing with a case which required pre-delivery inspection at consignor’s place itself. In my view, note to Clause 1502 would clearly apply. It talks of this specified contingency. In my view, the rule of interpretation of such clauses is clear. If there is a general clause and another clause which deal with a specific situation then it is a clause which deals with a specific situation that is to apply and not the general clause. Here, in this case, I hold that Clause 1502 would cover the case and the Railways had no right to reject after 90 days much less after one year. My view also gains strength from the provisions of the Sale of Goods Act, 1930 and, in particular, Section 38 (2) thereof. Railways, as is admitted in the present case, used the substantial part of the material for over a year. After the designated expiry period, it got it 7 tested and on the test report, it rejected the entire consignment which is lying unused. That, in my view, is not permissible. Having considered the matter, accordingly, in my view, the writ petition must succeed. Railways, after such a long period, cannot reject the consignment nor rescind the sale nor demand refund of the money paid by it to the petitioner. All steps in these regards are not warranted by the agreement inter party. The writ petition is allowed. Annexures-1 and 2 are, accordingly, quashed. M.E.H./ ( Navaniti Prasad Singh)