1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.184 OF 2003 IN SUIT NO.1180 OF 1980 Tirumurti Mills Ltd. ...Appellant Vs. The Cotton Corporation of India Ltd. ...Respondents. --- Mr.R.D.soni i/b. M/s.Khaitan & Jaykar, for Appellant. Mr.Rishabh Shah with U.M.Mahajan i/b. M/s.Divakar & Co., for Respondent. --- CORAM: D.K.DESHMUKH & A.A.SAYED, JJ. DATED: 2nd February, 2009. 2 P.C.:- 1. By this appeal, the appellant challenges the judgment and decree passed by the learned Single of this Court in suit no.1180 of 1980 dated 11.8.2000. By the decree, the learned Single Judge has directed the present appellant who was defendant in the suit to pay to the plaintiff a sum of Rs.32,98,970.32 with interest at the rate of 18% p.a. from the date of institution of the suit till the date of realisation. The relevant facts are that the suit was filed by the Cotton Corporation of India which is a Government of India undertaking for recovery of damages against the defendant who is appellant. The defendant is running a textile mill and is a company incorporated under the Companies Act. The respondent-plaintiff issued circulars dated 18.2.1997 inviting offers for purchase of foreign cotton proposed to be imported by the plaintiff to several textile mills including defendant. By letter dated 3.3.1977 the defendant requested plaintiff to register its requirements for different varieties of cotton at the rate quoted 3 therein. Thereafter, a standard format of contract duly signed by the plaintiff in duplicate was sent to defendant. The original was to be retained by the defendant after signing the same and the duplicate was to be returned to the plaintiff. The defendant did not return the duplicate copy of that contract. According to the plaintiff, the plaintiff has acted upon the contract and that contract is binding on them. According to the plaintiff, by the contract, the plaintiff had agreed to supply cotton to the defendant and the defendant had agreed to purchase the same. In all 995 bales of different varieties of cotton were allotted to defendant by the Textile Commissioner and by this Contract it was agreed that the contract entered into with foreign suppliers by plaintiff would be an integral part of this contract. It was also agreed that the price would be paid by the defendant against those tender by the plaintiff of the bill of lading, insurance policy and invoice and other documents. It was also agreed that if defendant fails to pay the price, plaintiff would be entitled to clear and take delivery of the goods at the cost and risk of defendant. It was further agreed 4 that if defendant did not take delivery, plaintiff would be entitled to sell the goods to any other party by private sale or auction and any loss suffered by the plaintiff will be borne by the defendant. It was claimed by the plaintiff that the plaintiff informed the defendant by letter dated 7.6.1977 that 215 bales of Nicaragua cotton were shipped by the foreign shipper from Nicaragua to Cochin against the plaintiff main import licence. Similarly by different letters, the defendant was informed regarding different varieties of cotton having been shipped by the foreign shippers. By telegram dated 23.6.1977 the defendant asked the plaintiff to inform as to the total number of bales allotted against the contract No.G/396. The plaintiff by telegram dated 4.7.1977 informed the defendant details of shipment of global cotton made under different shipments under the contract. The defendant informed the plaintiff that the bank guarantee was not available and they would try to take delivery of 400 bales of cotton provided additional accommodation was given by its bankers or 90 days credit was given by plaintiff, otherwise, 5 the plaintiff was requested to make alternate arrangement for clearance. By another telegram dated 18.7.1977, the defendant requested the plaintiff to arrange for delivery of 215 bales of Nicaragua at mills on 90 days credit, as their financial position was not comfortable. However, thereafter, by letter dated 21.7.1977 the defendant stated that there was no contract and when there was no contract arrived at, why plaintiff effected shipment on its account. It was further stated that they will not be liable for consequences of shipping of bales. According to the plaintiff, thus the defendant repudiated the contract on 21.7.1977 and thus committed breach of the contract. According to the plaintiff, the goods that were received for the defendant were stored by plaintiff and thereafter, they were sold at a lower price and the plaintiff, therefore, claimed damages being difference in the price of cotton plus the expenditure incurred by the plaintiff for storing, for clearing the goods and for selling them and the price at which the cotton was sold. The claim was resisted by the defendant. Firstly, the defendant claims that this Court does not have jurisdiction to 6 try the suit. Secondly, it was claimed that there was no concluded contract between the plaintiff and defendant. Thirdly, it was claimed that even assuming that there was a concluded contract between the parties, it was repudiated by the defendant in the month of April,1977 and lastly it was claimed that while claiming amount of damages, the plaintiff has not taken steps to mitigate the damages. On the basis of the rival pleadings the learned Single Judge has framed the following issues:- “1. Whether this Court has no jurisdiction to entertain and try this suit as contended by the defendants ? 2. Whether the plaintiffs prove that there was a contract for sale of cotton to the defendants ? 3. Whether the plaintiffs prove that the defendants committed breach of contract by not accepting delivery of the cotton tendered as per the 7 contract, and as a result of which, they suffered loss of Rs.32,98,970.32 ps. ? 4. Are the plaintiffs entitled to claim interest ? If yes, at what rate?” The learned Single Judge has decided the issues by the judgment delivered by him on 11.8.2000. The learned Single Judge has held that this Court has jurisdiction to entertain the suit as part of cause of action has arisen in Bombay. The learned Single Judge has also held that the defendant has committed breach of the contract and therefore, they are liable to pay damages to the plaintiff. Accordingly, the learned Single Judge has passed the decree in favour of the plaintiff and against the defendant directing the defendant to pay a sum of Rs.32,98,970.32 ps. with interest to the plaintiff. The defendant is in appeal against the judgment and decree passed by the learned Single Judge. 2. We have heard the learned Counsel appearing 8 for both the sides. The learned Counsel appearing for appellant firstly submits that the contract was communicated from Bombay office of the plaintiff to Cochin office of the defendant. He submits that even if it is assumed that the contract was accepted by the defendant at Cochin, then also according to him, the contract will get concluded in Cochin, and therefore, Court at Cochin has jurisdiction and not this Court. In support of his submission, he relies on two judgments viz. one is of the learned Single Judge of Delhi High Court in the case of “M/s.Progressive Constructions Ltd. Vs. Bharat Hydro Power Corporation Ltd., AIR 1996 Delhi 92” and another judgment is of the learned Single Judge of Madras High Court in the Case of “Muhammad Esuff Rowther Vs. M.Hateem & Co., AIR 1934 Madras 581”. The learned Counsel submitted that there was no concluded contract between the parties. He submits that the contract dated 18.3.1977 which was signed by the Deputy Director was forwarded to the defendant at Cochin and at Cochin the defendant was to sign it but the defendant never signed it, and therefore, there was no concluded contract between the parties. The 9 learned Counsel submitted that the communication dated 3.4.1997 was not actually addressed to Cotton Corporation of India, but was addressed to the Bank, though copy of that letter was given to Cotton Corporation of India. It is submitted that though in that letter it is stated that the contract has been entered into, it was only a representation made to the bank for providing bank guarantee. The learned Counsel submits that there is no concluded contract between the parties. The learned Counsel submits that even assuming that the allotment was made and the defendant had accepted the offer, according to the learned Counsel by letter dated 5.4.1977 addressed to Cotton Corporation of India, the contract was cancelled by the defendant and therefore, the cancellation of the contract was much before the arrival of shipment and therefore, according to the learned Counsel, the defendant cannot be held liable for payment of damages. The submission of the learned Counsel is that perusal of particulars of claim shows that the defendant had sold the bales of cotton after about a period of three years and the considerable amount appears to have been claimed by 10 the plaintiff on storage of the goods. The learned Counsel submits that there is nothing in the deposition of the plaintiff to show as to why the goods could not be sold earlier to avoid payment of storage charges. 3. We have heard the learned Counsel appearing for respondent. He supported the judgment and decree passed by the learned Single Judge. 4. Now in the light of these rival submissions, if the record of the case is perused, it becomes clear, so far as the jurisdiction of the Court is concerned, the contract was sent by the Cotton Corporation of India as a result of allotment made by the Textile Commissioner in favour of the defendant. That allotment was made by the Textile Commissioner in Bombay by order dated 18.3.1977 a copy of which is at Exhibit D-4 on record. Then the contract was signed by the Cotton Corporation of India- plaintiff at Bombay on 18.3.1977 for supply of imported cotton to the defendant as per defendant's own request. It may be pointed out here that in February,1977 the 11 defendant itself has placed its order for supply of cotton on the Cotton Corporation of India in Bombay by letter dated 3.3.1977. It is pursuant to that request made by the defendant that allotment was made by the Textile Commissioner on 18.3.1977 and on that allotment being made by the Textile commissioner, the Cotton Corporation of India has signed the contract and sent it to the defendant for its signature. The contract in original was to be retained by the defendant and a copy thereof duly signed was to be sent to the plaintiff. It is an admitted position that the defendant never returned the original sent by the plaintiff to the defendant. If it was the intention of the defendant not to accept the agreement then the defendant should have simply returned the original of the contract to the plaintiff. The conduct of the defendant of retaining the original, in our opinion, clearly indicates that it accepted the contract. Perusal of letter dated 3.4.1977 which is addressed to the Bank by the defendant, a copy of which is admittedly sent to the plaintiff, clearly shows that by that letter dated 3.4.1977 the plaintiff came to know that the contract 12 has been accepted by the defendant. What is further to be seen here is that, according to the plaintiff, the contract was terminated or rescinded by the defendant by letter dated 21.7.1977 which was received by the plaintiff in Bombay. If one goes as per the case of the defendant, then also according to the defendant, the defendant terminated the contract by letter dated 5.4.1977 addressed to Cotton Corporation of India which was received by them at Bombay. It is, thus, clear that not only the contract was entered into at Bombay but even termination was communicated to the plaintiff at Bombay. Therefore, looking at the matter from any point of view, it cannot be denied that a part of cause of action has arisen in Bombay. Therefore, according to clause 12 of Letters Patent, as part of cause of action has arose in Bombay, this Court has jurisdiction to entertain the suit. So far as the judgments, relied on by the learned Counsel appearing for defendant- appellant, of Delhi High Court and Madras High Court are concerned, those judgments are based on the provisions of Section 20 of Civil Procedure Code. As per the provisions of Section 120 of Civil Procedure 13 Code, provisions of Section 16, 17 and 20 of C.P.C. do not apply to the original civil jurisdiction of High Court. Therefore, in our opinion, what is stated in those judgments is not relevant. In our opinion, the finding recorded by the learned Single Judge that part of cause of action arose in Bombay and therefore, as per the provisions of Clause 12 of Letters Patent this Court has jurisdiction to entertain the suit cannot be faulted. 5. So far as the next submission of the learned Counsel appearing for defendant that there is no concluded contract between the parties is concerned, in our opinion, apart from the fact that the conduct of the defendant of retaining the original of the contract clearly indicates its intention to accept the contract, the communication dated 3.4.1977 a copy of which is at Exhibit D-6 on record clearly shows that the defendant accepted the contract, and there was a concluded contract between the parties. Relevant part of that letter reads thus :- “We have already entered into contract for import of 995 bales of Global 14 cotton under subsidised rate for May, June and July shipment, at a cost of Rs.25 lakhs and we have already sent to you copy of the contract for reference.” It is thus clear that the defendant in no uncertain terms stated that they have entered into contract with the plaintiff and though they retained the original of the contract and did not send a signed duplicate copy of the contract to the plaintiff as required, they definitely sent a copy of the contract to the Managing Director, Indian Bank. If the defendant was making representation to the bank and it had sent copy of the contract with that communication, it is obvious that it had sent a copy of the contract which was signed by the plaintiff. In our opinion, therefore, the learned Single Judge was perfectly justified in recording the finding that there was a concluded contract between the parties. The next submission of the learned Counsel is that even assuming that there was a concluded contract between the parties it was terminated by letter dated 5.4.1977. Now perusal of letter dated 5.4.1977 which is at Exhibit-23 on the record shows that that letter 15 does not speak of cancellation of the contract. What it speaks is to cancel the allocation of imported cotton. The allotment was not made by the Cotton Corporation of India, the allotment was made by Textile Commissioner and though on the face of it the letter shows that a copy of the letter was forwarded to Textile Commissioner, in the deposition the only witness examined on behalf of the defendant did not state that a copy of that letter was sent to Textile Commissioner. On the contrary, he states that the letter was hand-delivered to the plaintiff. Therefore, in our opinion, by the document at Exhibit D-23 it cannot be said that the contract was terminated by the defendant. The learned Single Judge has, in fact, after going through the evidence on record has recorded a finding that the defendant has not been able to prove that this letter was actually delivered to the plaintiff. What is pertinent to be noted is that after the shipments were received, the defendant was informed about the arrival of the shipment. The defendant has sent a telegram dt.26.7.1977. In that telegram he stated about his inability to secure bank guarantee. He does not speak 16 about his act of terminating the contract. Had the defendant terminated the contract in April,1977 itself, it would not have referred to its inability to get the bank guarantee in the telegram dt.26.7.1977. In our opinion, therefore, the case of the defendant that the contract was terminated by letter dated 5.4.1977 is incapable of being accepted. Now that takes us to the last submission made on behalf of the defendant that the plaintiff has not taken steps to mitigate the loss. The learned Judge in his order has considered this aspect in detail in paragraph-16, and he has held that the witness examined on behalf of the plaintiff has proved all the documents on the basis of which the damages were claimed and there has been virtually no cross- examination of those witnesses on that aspect of the matter on behalf of the defendant, and therefore, the learned Judge has held that there is nothing on record to show that the amount of damages claimed by the plaintiff is not justified. The learned Counsel appearing for defendant, though he took us through the evidence on record, was not able to show that there was substantial cross examination of the 17 witnesses examined by the plaintiff on this aspect of the matter. 6. Taking overall view of the matter, therefore, we find no substance in any of the contentions urged on behalf of the defendant- appellant. Appeal, therefore, fails and is dismissed. No order as to costs. (D.K.DESHMUKH, J.) (A.A.SAYED,J.) ---