1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.567/2007 IN SUIT NO.1312 OF 1980 The Cotton Corporation of India Limited, having their registered office at Air India Building , 12th Floor, Nariman Point , Mumbai -400 021 Appellants/ Ori.Plaintiffs. Vs. Madura Coats Limited, having their registered office at New Jail Road , Madurai -625001 (South India) and also carrying on business at 15 ,Raj Mahal ,84 , Veer Nariman Road, Mumbai -400 020 Respondents/ Ori.Defendants Mr.Rajesh Shah with Mr.U.M.Mahajan i/b M/s Divekar & Co. for the appellants Dr.Virendra Tulzapurkar , Sr.Advocate with Mr.A.A.Joshi i/b Mr.Nivit Srivastava advocate for the respondents CORAM: S.B.Mhase , & Prasanna B.Varale , J.J. Judgment Reserved On-29/7/2008 Judgment Pronounced on-14/11/2008 2 ORAL JUDGMENT (Per Prasanna B.Varale ) 1] This appeal is filed by the appellants being aggrieved by the judgment and order passed by this Court (dated 30-4-2007) in suit no.1312/1980 whereby the suit was dismissed with costs.For the sake of convenience appellant is referred to as plaintiff and respondent is referred to as defendant . The contentions of the plaintiff in the suit can be summarised as follows. 2] The plaintiff is a company duly registered under the Companies Act and a Government of India Undertaking. The main business of the plaintiff company is to act as channelising agents for the import and supply of foreign cotton to Indian Textile Mills . The defendants are also company registered under the Companies Act having a textile mill at Madurai . A Circular dated 21st February, 1977 was issued by the plaintiff thereby calling upon all Indian Textile Mills to place their offers for foreign cotton of different variety which were intended to be imported by the plaintiff. The said circular which is at Exh.1 of the plaint discloses that there are limited quantity of varieties of cotton i.e.Central America,Central South America, Brazil, Nicaragua Guatemala, Paragna ,Mexico . The rates were also shown against variety of the said cotton .The rates do not include letter of credit, bank charges and CCI's charges. It was informed to the proposed purchasers to register their demands with the application and other paper formalities. In response to the said circular the defendant 3 company had offered for purchase of 10,000 bales each of Brazilian and Mexican cotton by communication viz.telegram dated 14.3.1977 . The offer was placed for 10,000 bales. The Textile Commissioner allotted to the defendant only , 805 bales of Mexican cotton and 9000 bales of Brazilian cotton and the same was accepted by the defendant. It was submitted by the plaintiffs that prior to issuance of the circular dated 21.2.1977 the plaintiffs have entered in to two contracts with the foreign suppliers viz.Sanbra of Brazil for purchase and import of large quantity of cotton of Grade colour and staple equal to type ''Spisk'' with an option to a supplier to deliver part or all equivalent out of Paraguayan growths . Pursuant to the order and according to the contracts the plaintiff sent the defendant a contract dated 18th March,1977 in duplicate bearing no.G/389 and the defendant on communication/letter dated 25.6.1.1977 returned one copy of the contract duly signed by them. By the said contract ,the plaintiff agreed to import and sell to the defendant and the defendant agreed to purchase 205 bales of Mexican cotton at the rate of Rs.5050/- per candy in May-June Shipment and 9000 bales of Brazillian cotton at the rate of Rs.4975/- per candy ,June-July Shipment . The defendants have furnished the requisite Bank Guarantee. Three consignments of 648,1000 and 6966 bales of type Spisk were shipped by the foreign supplier and the defendants were informed by the plaintiff through letters dated 15.7.1977 and 2.8.1977 and it was requested to the defendants to arrange for the delivery of the cotton on its arrival and to make payment thereof .The defendants by letter dated 12.8.1977, informed the plaintiff that as far as 805 4 bales of Mexican Cotton as per contract , they would take delivery of 700 actual bales ,but as far as 8614 bales of Brazillian cotton were concerned the quality was Paragua cotton and not Brazillian and as such they are not bound to take the delivery .It is interesting to note that the entire controversy revolves around this particular type of the cotton. It is the contention of the plaintiff that on or about 11.8.1977 there was a meeting between one Mr.V.Munikrishnan and officer of the plaintiff and one Mr.R.C.Doraiswami ,representatives of the defendant and the submission of the plaintiff that in view of the contract entered in to between the parties which includes shippers contract as an integral part , the defendants were bound to take delivery of Peraguayan cotton which was of the type spisk and it was the option of the shipper to shift cotton viz.Brazillian ,Nicaragua , or Paraguayan as these all are equal type viz.spisk . 2] The defendant ,in contrast to the contentions of the plaintiff, submitted that through letter of advance dated 10.9.1977 it was brought to the notice of the plaintiff that the cotton imported was not of the type for which the defendant has placed his offer ,but was of different type viz.Paraguayan cotton and as such the defendant refused to take delivery of the said cotton. The plaintiff submitted that as the defendant refused to take delivery of the cotton which had already arrived in quantity of 8614 bales at port of Madras, the plaintiff was left with no option but to clear the goods and store it in plaintiff's godown . The plaintiff submitted that through letter dt.20.3.1978 the defendants were called upon to take delivery of the said cotton within two weeks from the receipt of communication, failing which the 5 defendant would be held responsible for the loss suffered by the plaintiff . However, the defendant by letter dated 2.5.1978 informed the plaintiff that the plaintiff has committed breach of contract by importing cotton other than the cotton contracted and as such is not bound to take the delivery . The plaintiff submitted that as contract dated 18-3-1977 was valid and binding contract between the parties , the refusal of the defendant can be treated as breach of contract and as the defendant has not taken the delivery, the plaintiff was left with no option but to sell cotton to some other purchasers . The plaintiff by calculating expenses under various heads such as invoice value, clearance charge, demarcation charge, alongwith interest has ultimately prayed for decree of sum of Rs.2,61,26,182.37 with interest at the rate of 20% per annum from the date of the suit till the judgment and thereafter at the rate of 6% per annum till the payment with the costs of the suit . A separate schedule of the claim is annexed to the plaint as Exh. A. 3] The defendant has resisted the claim of the plaintiff on various grounds by filing the written statement but there are two important grounds viz. (1) The plaintiff had offered the defendant the quality of cotton viz. Peraguayan cotton as against his order for the quality Brazillian cotton . The Peraguayan cotton was never ordered by the defendant nor he has given any option for Peraguayan cotton . The defendant was not bound to take delivery of the cotton which was not of his choice and which was tried to be forced to purchase by the plaintiff and as such the defendant was not 6 ready to purchase Peraguayan cotton . The other ground raised by the defendant is that it was never agreed between the plaintiff and the defendant than an agreement of the plaintiff with foreign supplier was an integral part of the contract between the plaintiff and the defendant. The defendant has specifically submitted that he was never made aware by the plaintiff that there are terms of the said contract whereby the plaintiff entered in to contract with foreign suppliers. It was also submitted by the defendant that inspite of repeated requests of the defendant to supply the said contract in clause 3 the plaintiff has neither supplied the copy of the said contract nor made the defendant aware of such contract. The defendant also submitted that in the correspondence between the defendant and plaintiff and also in the meetings of the representatives of the respective parties the defendant has submitted that as the cotton viz.Peraguayan cotton ,was not of his choice nor he has placed order for Peraguayan cotton the defendant was not liable to take the delivery and ultimately the defendant was not responsible for any loss incurred by the plaintiff. 4] On these rival contentions and the evidence placed by the parties in form of documents, as well as oral evidence this Court was pleased to dismiss the suit. We have heard the advocates appearing for the parties at length . The learned senior counsel Mr.Tulzapurkar appearing for the appellant has tried to impress upon us by making submission that the defendant was liable for the loss for the reasons that the defendant was bound by the 7 terms of agreement and as such, though the cotton was of qualitry viz.Peraguayn cotton which was supplied by the foreign supplier and was of the equal quality of Brazillian cotto ,the defendant ought to have taken delivery of the said Peraguayan cotton. It was submitted by the learned counsel that the import contract and terms thereof were binding on the defendants as they formed an integral part of the suit contract no.G-389 in view of clause 3 . The learned counsel also submitted that it was not permissible for the learned Judge to go beyond the contract and to arrive at the findings which were contrary. 5] The real controversy or issue of the contest is about delivery of a goods ,for which the defendant says that he has not placed an order for that particular good which has been supplied to him and it was forced upon him to take delivery of that good for which he has not given option and in that event it was the case of the defendant that he was not bound to take delivery of that good and as such the contract was not binding on him and hence he is not liable for any damages claimed by the plaintiff ,more so the damages of unwanted goods. 6] It is not in dispute that in response to the offer of the plaintiff for purchase of cotton the defendant has placed an order for a particular quality of cotton viz.Brazillian cotton and Mexican cotton . The shipment was received of the quality of various cotton including Peraguayan cotton . Though it was tried to be submitted by the plaintiff that the goods imported viz. Peraguayan cotton were not 8 different in quality and type from Brazillian cotton and more particularly in view of clause 26 of the contract ,the defendant was not entitled to cancel the contract on the ground that the cotton imported was Peraguayan cotton instead of Brazillian . Whereas the defendant agreed that they placed order in response to the circular dated 21.2.1977 for an import of cotton of the quality viz.Mexican cotton and Brazillian Cotton as they were interested in purchase of this particular type of cotton . It was also the contention of the defendant that they were not aware of the contract which was entered between the plaintiff and foreign supplier prior to the circular issued dt.21.2.1977 and it was also submitted that while writing contract no.G/389 dated 18.3.1977 duly signed by the defendant at that time itself, the defendant had specifically asked to provide copy of import contract referred to in clause 3 of the contract between the plaintiff and the defendant. It was further submitted that inspite of the request made by the defendant the plaintiff has neglected to supply the copy and as such the defendant was not made aware of the contract between the plaintiff and the foreign supplier inspite of his request to supply the copy of the said contract. The defendant also submitted that the resell contract which the plaintiff allegedly entered in to with other companies indicates that the said contract was not in respect of Peraguayan cotton but it was for '' Peraguayan raw cotton equal to type Rover ''and as such it is clear that the cotton imported by the plaintiff was not of the quality cotton contracted by the defendant nor it was the type ''spisk'' . It was also submitted by the defendant that the plaintiff has taken sufficient time of his choice and will take steps to 9 resell the said cotton after the period of two years from the alleged breach of contract and as such, the plaintiff was at fault in not making the efforts as expected as possible to mitigate the damages or to minimise the loss and for such neglectful act of the plaintiff, the defendants cannot be held liable and the plaintiff has to blame himself for that act. 7] We find sufficient force in these submissions. The record also shows that there is sufficient material to indicate the substance in the claim of the defendant . On perusal of the record , the contract between the plaintiff and defendant,which is at Exh.26,reads as follows. ''In the event of the Foreign Suppliers 1 supplying cotton of quality and type other than the quality and type of the cotton by this agreement agreed to be imported and sold, the mills will have the option either to accept such cotton under this agreement in substitution of the cotton contracted for or to cancel this agreement . In the event of acceptance of such cotton, all other terms and conditions of this agreement will remain in force. In the latter case the agreement will be cancelled without any consequences to any of the parties hereto.'' It is observed by this Court and we also concur with the same view that admittedly there is no specific evidence to show that copy of import contract mentioned in clause 3 of the contract was supplied to the defendant. The plaintiff's witness has stated that such copy was given to the defendant's representative Bhamra . However, Bhamra 10 has denied this. If really such copy would have been given, then, normally, plaintiffs would have obtained signature of Bhamra for having received the copy of the import contract. But that has not happened and as such,the learned Single Judge was not inclined to hold that the plaintiff has proved his case regarding handing over the copy of the import contract to the defendant. 8] We have gone through the evidence of one Munikrishnan , witness of the plaintiff, his affidavit and his oral evidence is before the Court. It is clear from his evidence that there is no reason to take a different view from the view taken by the learned Single Judge and to arrive at a conclusion that the plaintiff has not handed over the copy of the import contract as mentioned in clause 3. It will not be out of place to state here that inspite of the attempts made by the defendant to seek the said copy of import contract the plaintiffs have just neglected to supply the copy.The plaintiff was also not able to produce any evidence to substantiate their case that the defendant was having copy of the import contract mentioned in clause 3 and as such,has utterly failed to prove this fact and ultimately the case of the plaintiff falls flat on this ground. 9] It will also be interesting to note at this stage that the witness for the plaintiff in his oral evidence has admitted in cross examination that: 11 “however, it is fact that the Brazillian Cotton was available for allocation when the said circular was issued '' . On issuance of the circular for the said quality of cotton viz . Brazillian the defendant has given response for purchase. It is not the case of the defendant that he has opted for Peruguayan cotton instead of Brazillian cotton while responding to the offer of the plaintiff, but it is a specific stand of the defendant that he has placed his order for Brazillian cotton and not for Peraguayan cotton and as such he cannot be forced to purchase the goods which are not of his choice. At this stage it is important to refer the contentions of the defendant placing reliance on provisions of section 15 of Sale of Goods Act.Section -15 reads thus : '' 15. Sale by description – Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description , it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description '' . ''It is well settled that where the goods are described by the contract, and the buyer contracts in reliance of that description it is a sale by description . It applies to all cases where the purchaser has not seen the goods, but is relying on the description alone . The principle of this section is an universal one. The condition as to description must be strictly fulfilled. In such contract of sale of goods if the seller fails to deliver goods that correspond with description then it has to be held that he has failed to perform contract and in such event the buyer is entitled to refuse to accept the goods. Ordinarily , where there is a dispute between a buyer and a seller with reference to quality or type of goods, it would be the duty of the seller to prove that the goods were of the type contracted for . In the instant case, 12 plaintiffs have made an attempt to show that though they had sent cotton, it was similar to Brazillian Cotton and as such there was substantial compliance. '' 10] We see no reason to record that the plaintiff has failed to prove that Brazillian and Peruguayan cotton are one and the same and ultimately the plaintiff had failed to deliver the goods which were contracted for . Placing reliance on provisions of section 37 of the Sale of Goods Act by which a buyer is entitled to refuse such goods and, therefore, no fault can be found in the submissions of the defendant that he has a right to refuse the delivery of a wrong quality goods. Though a pale attempt is made by the plaintiff to suggest that Peruguayan cotton was of superior quality and therefore the provisions of the Sale of Goods Act more particularly section 15 of the Sale of Goods Act cannot be applied, we find no substance in this contention for the reason that the plaintiff was unable to prove that Peruguayan cotton was of better quality than Brazillian cotton and apart from that, in view of the contentions of the defendant that in view of the offer of the plaintiff wherein it was shown that large quantity of Brazillian cotton was available the defendant has responded to place the order for purchase of Brazillian cotton and he was not at all interested in Peruguayan cotton . 11] The other contentions which were raised were dealt in detail by giving sufficient reasons by the learned Single Judge . We, therefore, find no reason whatsoever to interfere with those reasonings of the learned Single Judge. Taking into consideration an 13 overall view of the matter ,the facts, evidence consisting of oral and documentary, we have arrived at conclusion that there is no merit in the contentions of the plaintiff /appellant .The defendant has substantially proved his case and in view of the stipulation in the contract between the plaintiff and the defendant, more particularly in view of clause 26 the defendant had option to cancel the agreement without any consequence in case of non supply of the quality for which the defendant has placed the order for and the failure on the part of the plaintiff to show that the defendant was made aware of the contract or the agreement entered in to between the Corporation and Foreign suppliers, we have no hesitation to say that the appeal is devoid of any merits and consequently deserves to be dismissed. Appeal is ,accordingly dismissed. (Prasanna B.Varale,J.) (S.B.Mhase, J.)