THE HON’BLE SRI JUSTICE G.BHAVANI PRASAD C.C.C.A. No.70 OF 1992 AND CROSS OBJECTIONS No.70 OF 1992 Dated:16.02.2010 Between: A.P.Dairy Development Co-operative Federation Limited, Hyderabad, rep., By its Managing Director C.Hanumantha Rao .. Appellants/Plaintiff And M/s.Jain Industries, E-4, Industrial Estate, Cuddapah, rep., by its Proprietor, L.Hastimal Chowdary and another .. Respondents/Defendants COMMON JUDGMENT: The appeal by the plaintiff and the cross objections by the defendants in O.S.No.645 of 1985 on the file of the Additional Chief Judge, City Civil Court-cum-II Additional Special Judge for SPE and ACB Cases, Hyderabad are directed against the judgment dated 31.12.1991. The parties are referred to herein as they are arrayed in the suit. The factual background for the dispute is that the plaintiff filed the suit for recovery of Rs.1,13,170-35 ps. with interest at 18% per annum from the date of suit till the date of realization and costs from the first defendant, proprietary concern, and the second defendant, Proprietor of the same, jointly and severally, alleging that the plaintiff, a public undertaking/co-operative society, invited tenders for supply of 18 litres capacity square tins for filling ghee during 1982-83 and accepted the quotation submitted by the defendants followed by the agreement, dated 24.11.1982, fixing the price of the tins at Rs.13-45 ps. per tin to be supplied at the Ex.Milk Products Factory at Chittoor and Proddatur (exclusive of sales tax). The Managing Director of the plaintiff federation issued delivery schedules from time to time during the contract period of one year for supply of 55,000 tins at Chittoor and 35,000 tins at Proddatur respectively as detailed in the plaint. As the defendants could supply only 3,202 tins at Chittoor and 4,388 tins at Proddatur much later to the stipulated dates of delivery, the plaintiff was forced to purchase such number of tins in short supply from the open market and the purchases from M/s. Swastik Containers, Hyderabad, M/s. Goutham Tin Cans Containers, Hyderabad and M/s. Alpha Steel Industries, Hyderabad, so made resulted in loss of Rs.98,652-02 ps., to the plaintiff. While even the tins supplied by the defendants were sub-standard, they were accepted due to urgency and the defendants were being intimated from time to time about the requirement of the tins of the plaintiff and also the plaintiff being forced to purchase the tins from the open market due to the default of the defendants. The defendants sought to contend that the failure of the plaintiff to make payments within 30 days for the tins supplied by them relieved them from the obligation of making further supplies. However, as the defendants did not supply even those tins as per the schedule, they are not entitled to any payment as per the agreement, and therefore, the plaintiff filed the suit for recovery of loss of Rs.83,029-67 ps., with interest, notice charges and miscellaneous expenses etc. The statement of the details of the purchases made by the plaintiff from others due to the default of the defendants were enclosed to the plaint in the form of a statement. The defendants resisted the suit contending that after the agreement dated 24.11.1982, the defendants discharged their obligation as per the contract and it was the plaintiff that deliberately refused to honour the material supplied by the defendants from time to time. While the plaintiff did not fix any schedule for supply of the tins, the plaintiff is put to strict proof of its allegations. The defendants claimed ignorance of the alleged purchases made from others by the plaintiff and contended that the plaintiff never replied to any of the letters sent by the defendants and the plaintiff never made payment for the value of the tins supplied as per the agreement. How the figure of Rs.83,029-67 ps. was arrived at was not explained and as it was the plaintiff that committed breach of contract by not paying Rs.26,000/- still due from it to the defendants towards the value of the tins supplied, the defendants are not liable to pay the suit amount. The defendants made a counter claim for Rs.26,959-03 ps., with interest thereon for the tins supplied to the plaintiff for which payment was not made and the defendants, therefore, sought for the dismissal of the suit and grant of counter claim. The plaintiff responded to the counter claim contending that the plaintiff paid the value of the tins supplied to it and plaintiff was not due any amount towards value of any tins supplied by the defendants. The counter claim was barred by limitation and hence, the plaintiff sought for dismissal of the same. On such pleadings, the trial Court framed the following issues for trial: 1) Whether the plaintiff is entitled to the suit claim as prayed for? 2) Whether the defendants are not liable to pay interest at 18% per annum as prayed for? 3) Whether the suit is barred by limitation? 4) Whether the defendants are entitled to recover Rs.26,000/- from the plaintiff/defendants? 5) To what relief? The trial Court also framed the following additional issues: 1) Whether the defendants are entitled to make counter claim? 2) Whether the counter claim made by the defendants is true and correct? During trial, PW.1 and DW.1 were examined and Exs.A1 to A11 and B1 to B15 were marked. The trial Court rendered the impugned judgment discussing the oral and documentary evidence in detail and concluding that the defendants did not supply the quantities of tins as per the schedule given by the plaintiff and committed breach of contract. The trial Court also observed that when the defendants cannot keep up the schedule of supplies and failed to honour the orders placed by the plaintiff, they cannot complain that the amounts were not paid. Though the trial Court concluded that the defendants committed breach of contract, it found that the plaintiff failed to prove through positive evidence, the damage sustained by it, due to such breach of contract by the defendants. The difference in price, since the plaintiff was allegedly forced to pay, was considered by the trial Court to have not been proved in the absence of marking of original bills through the connected witnesses. In view of the absence of supporting evidence for the claim of the plaintiff, the trial Court found the claim of the plaintiff for the damages to be not proved. It consequently disallowed the suit claim for the alleged sum of damages or for interest. It also found that the counter claim of the defendants was barred by limitation and consequently, dismissed both the suit and counter claim, while directing both parties to bear their own costs. The plaintiff in its appeal mainly contended that in view of positive evidence of breach of contract by the defendants, the trial Court ought to have granted the damages as claimed by the plaintiff and the impugned judgment suffers from a grave misunderstanding of the scope of the suit. The plaintiff, therefore, seeks the decree of the suit as prayed for in reversal of the impugned judgment. The defendants in their cross objections contended that limitation would have started to run only from the date of admission by PW.1 regarding the counter claim and not earlier. The defendants pleaded that the suit was within time from the date of acknowledgment of the liability towards the amounts due and payable to the defendants by the plaintiff and, hence, the counter claim should have been allowed as prayed for. Sri M. Dilip Rao, learned Standing Counsel for the plaintiff strenuously contended that the positive findings, on merits, by the trial Court about the terms and conditions of the agreement between the parties, the default by the defendants in supply of the tins as agreed and the purchase of the required tins by the plaintiff in the open market should have led to the acceptance of the claim of the plaintiff about the loss sustained by such purchases in the open market from third parties due to breach of contract by the defendants. Any formal or technical lapse in not marking any bills could not have been a ground for rejecting the claim in view of positive evidence and the availability of all the relevant documents on record, the truth or reliability of which was not specifically denied even by the defendants. When the agreement provided for recovery of any loss sustained due to breach of contract from the defendants and when the breach of contract was proved compelling the plaintiff to make purchases from the open market, disallowance of the suit claim was, but, improper. Learned counsel also defended the conclusion of the trial Court about untenability of the counter claim. During the pendency of the appeal, the second defendant died and his legal representative was brought on record as the third respondent in the appeal as per the orders in C.C.C.A.M.P.No.79 of 2010, dated 15.02.2010. Consequently, he can also be taken as having been impleaded as the third cross objector in the cross objections, which, in the cause title of the cross - objections, shall be carried out by the Registry. Heard Sri M.Dilip Rao, learned Standing Counsel for the plaintiff and Sri Y.N.Vivekananda, learned counsel representing Sri T. Viswanadha Sastry, leanred counsel for the defendants. The points for consideration in this appeal are: 1) Whether the plaintiff proved its entitlement to damages from the defendants at any quantum? 2) Whether the defendants are entitled to counter claim towards the value of any tins supplied? 3) To what relief? POINT Nos.1 AND 2: The Assistant Manager, stores of the plaintiff, was PW.1 and on his own admission, he had no personal knowledge about the suit transaction and deposed only with reference to the records. While he reiterated the suit claim about the default of the defendants in supplying the required quantum of tins as per schedule, he baldly stated about the plaintiff being forced to purchase tins locally paying higher price and incurring loss. While PW.1 stated that as per Ex.A7 statement, he did not elaborate as to persons from whom the said purchases were made or the details of said purchases, he admitted during the course of cross examination that he cannot say how much amount was not paid to the defendants for the tins supplied by them and he did not reiterate the allegation about even the tins supplied being of substandard quality as alleged in the plaint. While he admitted the defendants addressing several letters seeking payment for the stock supplied, he also did not elaborate as to what was the prevailing market price of such tins at the relevant times and to what extent such market price was higher than the price agreed between the parties and any resultant loss occasioned to the plaintiff due to the purchases in the open market. He also did not refer to the plaintiff taking all necessary precautions to mitigate the damages or loss and as opposed to the evidence of PW.1 is the evidence of DW.1, the second defendant, in the suit, who claimed that the payments towards the value of the tins supplied by the plaintiff were irregular, in spite of several letters to the plaintiff and he tried to claim that it was due to the default by the plaintiff that further supplies could not be made. DW.1 claimed that he did not receive any letter from the plaintiff that they were making any purchases from some other agency due to the default by the defendants and he further claimed that he did not receive any intimation regarding any termination of the contract. He denied his liability for damages and reiterated the claim of the defendants for the counter claim. While the exhibits marked on behalf of the parties were in reiteration of their respective contentions, it was only Ex.A7 that would have thrown some light on the quantification of the damages to which the plaintiff is entitled. Ex.A7 statement appended to the plaint was authenticated by the Managing Director of the plaintiff and it was not stated in Ex.A7 as to from what books of account or other documents maintained in the regular course of business of the plaintiff, these details specified in Ex.A7 were extracted. Ex.A7, of course, gave the details of bills, number of tins purchased, the amounts payable and the cheques under which the amounts were paid. But, the annexures 1 to 4 of Ex.A7 were not within the personal knowledge of PW.1 on his own admission. The person, who maintained the original books of account or documents from which Ex.A7 was extracted, was not examined and was not stated to be unavailable for examination. The original bills under which the various supplies were allegedly made by third parties were not admitted into evidence by PW.1, nor was any attempt made by him to identify that any person either issued the bills or received the bills. It was under such circumstances that the trial Court, in spite of finding on the admitted facts that the defendants defaulted in supplying the tins as per the schedule, as per the orders placed by the plaintiff in terms of the agreement, had to conclude that the loss or damages sustained by the plaintiff were not proved. The conclusion of the trial Court that in the absence of proof of price of tins and in the absence of proof of such purchases at a higher price of different quantities from time to time the plaintiff’s claim cannot be considered, cannot be considered to be not based on the accepted principles of appreciation of evidence. The trial Court could not have considered any documents, which were not admitted into evidence, nor could have drawn any presumption from the evidence of PW.1 on the quantum of loss or damage to which the plaintiff is entitled due to breach of contract by the defendants. The failure of the plaintiff in the suit cannot be, therefore, reversed in the appeal. While coming to the counter claim, the cause of action for making the counter claim arose on the alleged date of supply of tins to the plaintiff by the defendants on 07.06.1983 and the trial Court noted that by the time of filing the written statement on 26.06.1986, the time for making any claim on such supply expired. The trial Court rightly referred to Order VIII Rule 6-A of the Code of Civil Procedure, which makes the counter claim be governed by all rules applicable to a plaint and when a suit could not have been instituted by the date of filing of the written statement and by the time of making of the counter claim due to the bar of limitation, the conclusion of the trial Court about untenability of the counter claim cannot be considered incorrect. The trial Court was in fact took into account the date of filing of the original written statement for the purpose, while the actual making of counter claim by the amendment ordered in I.A.No.308 of 1990 was on 23.08.1990. So, the conclusions of the trial Court about the counter claim also are not open to be reversed herein. These two points are answered accordingly. POINT No.3: The plaintiff failed not because of any untruth in its claim, but due to the failure of producing positive evidence about the quantum of damages. While the original proprietor, the first defendant concern, is no more as of now, in the circumstances, the parties can be directed to bear their own costs in the appeal and the cross objections like before the trial Court. In the result, the appeal and the cross objections are dismissed without costs. ___________________ G. BHAVANI PRASAD, J 16th February 2010 KH