1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO. 157 OF 2007 IN SUIT NO. 1341 OF 1980 The Cotton Corporation of India Ltd ] having its registered office at ] Air India Building, 12th Floor, ] Appellant/ Nariman Point, Bombay-400 021 ] Ori. Plaintiff. Vs. The Bombay Dyeing & Manufacturing ] Company Ltd having its registered ] office at Neville House, Graham Road, ] Respondent/ Ballard Estate, Bombay-400 038. ] Ori. Defendant Mr. Gaurav Joshi with Mr. U.M. Mahajan i/by. Divekar & Co. Adv. for the appellant. Mr. P.N. Mody i/by. Mulla & Mulla and Cragie Blunt and Caroe, Adv. for the respondent. CORAM :- D.K. DESHMUKH, & SMT. R.P. SONDURBALDOTA, JJ. DATED :- 21st JUNE, 2010. 2 PC : 1. This Appeal arises out of the judgment and order dated 3rd July, 2006 passed by the learned Single Judge dismissing the suit for damages filed by the appellant holding that there was no concluded contract between the parties for import of cotton. 2. The brief facts to be stated for decision of the appeal are that the appellant company, wholly owned by the Government of India was the canalising agent for import of cotton. It imported cotton in bulk on the basis of a bulk import license for the various consumer mills holding subsidiary licenses for the purpose. The consumer mills used to place orders for purchase of cotton with the appellant. The cotton was then imported and allocated to the consumer mills on the basis of allocation sanctioned by the Textile Commissioner. For that purpose, a contract in a standard format used to be executed between the parties. 3. On 5th April 1977, the appellant issued a general circular informing the mills of availability of three types of imported cotton the shipment whereof was to be received sometime in June-July, 1977. The respondent-company by its letter dated 10th May, 1977 registered its demand for 2500 bales of California Arizone cotton at the rate 3 of Rs.5,0,50/- per candy, C.I.F.,Mumbai. The appellant, then, forwarded agreement dated 12th May, 1977 in the standard format to the respondent a duplicate of which was to be returned by the respondent duly signed within 7 days from the receipt of the agreement. Clause-33 of it provided that if the copy was not returned within the stipulated time, it would be deemed that the respondent had accepted the agreement. As the agreement was received by the respondent much later after the date of the agreement, the respondent by its letter dated 20th May, 1977 informed the appellant that the period of 7 days stipulated in Clause-33 would begin as of that date. Thereafter, on 21st May, 1977 a letter was received by the respondent, from the office of the Textile Commissioner that it had been allocated 2500 bales of cotton of the California Arizone variety. Para-9 of the letter required the respondent to inform the appellant, as well as, the Textile Commissioner s office about acceptance or otherwise of ’ “ ” the quota within a period of 15 days of the issue of the letter. Therefore on 26th May 1997, the respondent informed the appellant that it would communicate acceptance or otherwise of the “ ” allocated bales of cotton by 4th June 1977. Admittedly there was no such communication from the respondent to the appellant. Then 4 on 2nd July 1977, the appellant informed respondent that instead of 2500 bales of cotton, 2052 bales had been imported and allocated to them. On 12th July 1997, a communication was sent by the appellant to the respondent in response to the letter dated 2nd July 1977 intimating that they should treat the subject as closed. Again on 9th August 1977, the respondent communicated to the appellant that there was no question of taking delivery of the 2500 bales of cotton, the contract having lapsed since they had not given bank guarantee as required. Thereafter correspondence ensued between the parties with the appellant calling upon respondent to take delivery of the bales of cotton and the respondent refusing to do so. Finally the appellant filed the suit herein seeking damages against the respondents amounting to Rs.94,77,722.60ps. 4. On the basis of the pleadings between the parties, the learned Single Judge framed as many as 11 issues, the first issue being whether the appellant proved that there was concluded contract between the parties. On appreciation of evidence produced by the parties, the issue was answered in the negative. In view of this finding, the learned Single Judge did not consider other issues opining that there was no need for it and dismissed the suit. 5 5. It has been contention of the appellant that although there is no written contract executed between the parties, the correspondence that ensued between the parties and their conduct establishes that there was a concluded contract between the two for import of cotton which the respondent sought to repudiate. Mr. Joshi, the learned counsel for the appellant submits that the there was sufficient material before the learned Single Judge to hold as such. According to him, the learned Single Judge ought to have held that the concluded contract had taken place either on 28th May 1977 or latest by 4th June 1977 as the respondent failed to return copy of the agreement duly signed by it within 7 days of the receipt as provided in Clause 33 of the contract. He submits that at the highest, the period of 7 days under the clause would get extended to 4th June 1977, in view of Clause 9 of quota letter. It has also been contended by the appellant that the learned Single Judge ought to have pronounced the judgment on all the issues as mandated by order 14 Code of Civil Procedure. 6. Undoubtedly the mandate of Order 14 Code of Civil Procedure is that the Court gives its findings on all the issues arising in the matter. Therefore, the learned Single Judge ought to have decided all the issues arising in the matter and given findings thereon. 6 However, taking into consideration the fact that issue No.1 decided by the learned Single Judge is the core issue and the other issues are entirely dependent upon the decision on that issue, we are first inclined to consider in this appeal whether the challenge to the finding on the issue by the appellant can be substantiated. 7. The first document towards the alleged contract between the parties is the Circular dated 5th April 1977, by which the appellant informed all the mills that limited quantities of three varieties of cotton are available for allocation at the rates mentioned against each variety. The mills were requested to register their demands on or before 20th April 1977. The Circular also required mills desiring to import cotton to send applications for subsidiary import license along with the bank guarantee calculated at the rate of 600 per bale, within 10 days after confirmation of the booking. The respondent by its letter dated 10 ’ th May 1977, registered its demand for 2500 bales of California Arizona Cotton at Rs.5,050/- per Candy C.I.F., Bombay. However, it forwarded neither an application for subsidiary import license nor bank guarantee to the appellant. The next document which is heavily relied upon by the appellant is Contract No.G/621 for sale of cotton in the standard format. This contract though dated 12th May 1977 was admittedly received 7 on either 19th or 20th May 1977. One of the recitals to this agreement stated that the respondent had deposited with the appellant in cash/furnished it bank guarantee for 25% of the approximately C.I.F. value of the quantity of cotton to be imported (2500 bales). Clause 3 of the agreement provided that the contract entered into by the appellant with the foreign supplier (import contract) shall form integral part of the agreement and the agreement was always be treated as subject to the terms and conditions of the import contract. Clause 20 of the agreement enabled the appellant to forfeit the deposit of 25% paid by the mill either in cash or by bank guarantee in case of non fulfilment of the terms and conditions of the agreement by the buyer mill. Clause 33 of the agreement required the buyer to return duplicate copy of the agreement duly signed within 7 days from the receipt of the agreement and provided that in case of default, the mill would be deemed to have accepted the contract. Lastly, Clause 34 provided that the agreement was subject to the condition that mill produces the necessary bank guarantee within 10 days from the date of the agreement, failing which the agreement shall be liable to be cancelled. There is no dispute that the respondent mill did not forward the duplicate copy of the agreement duly signed within 8 the time stipulated. It also did not give any bank guarantee to the appellant either as required under the agreement or as per the circular. Further it did not communicate it s acceptance of the ’ allocation of quota. 8. Mr. Mody, the learned counsel for the respondent points out that Clause 34 of the agreement is completely inconsistent with the recital regarding the bank guarantee. The recital states that the respondent has already given the bank guarantee, whereas clause 34 grants time of 10 days to furnish the bank guarantee. Mr. Joshi, however, submits that Clause 34 of the agreement is required to be ignored because the appellant by its conduct should be deemed to have waived the requirement of bank guarantee. The clause gave an option to the appellant to repudiate the contract for breach of the condition and no benefit can be drawn by the respondent for its own nonfulfilment of the same. We find it difficult to draw the inference as suggested. Clause 34 could have been ignored only in the case of the recital as regards the bank guarantee being correct. Admittedly the recital is not correct because the respondent has not at any point of time furnished any bank guarantee to the appellant. The agreement dated 12th May 1977 is in a standard format. In all probabilities, it provides for both the situations i.e. a bank guarantee 9 being furnished in advance and the bank guarantee to be furnished subsequently. However, while forwarding the agreement to the respondent, it was necessary for the appellant to delete that part of the standard format not applicable to the respondent. Not having done so renders, the agreement defective. In that circumstance, as has been so held by the learned Single Judge, it was open for the mill to draw its own inference as regards the contract on its failure to furnish bank guarantee within the time stipulated. Considering the nature of the contract, it would be difficult to deem that the appellant had by its conduct waived the requirement of bank guarantee. In the facts of the case, it was necessary for the appellant to do it specifically. Had the respondent taken some step or complied with any of the terms of the contract, it would have been possible for the appellant to argue that because it did not insist for the bank guarantee, the condition should be deemed to have been waived. The entire conduct of the respondent actually militates against the argument of concluded contract. In the circumstances, in our opinion, the appellant cannot be allowed to take advantage of clause 33, to contend that because the respondent failed to forward the duplicate copy duly signed within 7 days from the receipt of the contract, it should have deemed to 10 be accepted the same. 9. Another difficulty in the way of the appellant is paragraph 9 of the quota letter dated 21st May 1977. That paragraph required the respondent to inform the appellant as well as Textile Commissioner s office about acceptance or otherwise of the ’ “ ” quota of 2500 bales allocated within a period of 15 days of issue of the letter. Unlike the agreement, there is no deeming provision in the quota letter. Further it is also not possible to ignore the quota letter, as the appellant is also bound by the same. The appellant could have imported, for the mill, only such quota of cotton bales as allocated by the Textile Commissioner. In that circumstance, the allotment of quota by the Textile Commissioner and acceptance of it by the respondent becomes an integral part of the contract for import. It may be noted at this place that the appellant did not import cotton for the respondent of the quota sanctioned by the Textile Commissioner The quota imported was short of the sanction. It was of 2052 bales. 10. In view of the above, we find no infirmity with the finding of the learned Single Judge that there was no concluded contract between the parties for import of cotton. The learned Single Judge has also rightly taken note of fact that though the import contract between 11 the appellant and the foreign supplier was to form an integral part of the agreement, the appellant had not bothered to forward copy of the import contract to the respondent at any point of time. 11. On the above background, the evidence led by the appellant in the matter makes an interesting reading. The appellant was acting as a canalising agent for the respondent for import of cotton. According to the witness examined by the appellant, the agency came into effect on 10th May 1977, when the respondent registered its demand for 2500 bales of cotton. Thereafter as an agent of the respondent, the witness claimed to have communicated the order to the Textile Commissioner and then forwarded the contract to the respondent. This would mean that the appellant had assumed the agency even before forwarding the formal agreement to the respondent for its acceptance and signature. Admittedly the appellant had placed the order with the foreign supplier for import of cotton much prior to 10th May 1977, at which time the appellant was not acting as an agent of the respondent. In that circumstance, the appellant could not be allowed to dump the goods on the respondent by resorting to clause 33 of the agreement in standard format. In these circumstances, we are not inclined to interfere with the impugned judgment and order. Since the core issue between the parties, has 12 been answered in the negative, we think that there is no need to get the decisions on the other issues. Hence, the appeal is dismissed. ( Smt. R.P. SondurBaldota, J.) ( D.K. Deshmukh, J.)