HIGH COURT OF UTTARAKHAND AT NAINITAL SECOND APPEAL NO. 99 OF 2007 M/S Gupta Lime & Limestone Company …. Plaintiff-Appellant Vs. Rai Bahadur Narain Singh Sugar Mills Limited ….Defendant -Respondent 27.6.2008 Hon’ble Rajesh Tandon, J. Heard Shri S.K. Jain, counsel for the appellant and Smt. Indu Sharma, Advocate holding the brief of Shri Sharad Sharma, counsel for the respondent. FACTUAL MATRIX OF THE CASE 2. By the present second appeal filed under Section 100 of Code of Civil Procedure, the appellant has prayed for setting aside the judgment and decree dated 10.3.2004 passed by the Additional District Judge, Dehradun in civil appeal no. 35 of 1999. 3. Second appeal was admitted on the following substantial questions of law:- “1. Whether the finding recorded by the appellate court regarding jurisdiction is sustainable? 2. Whether the amount claimed by the plaintiff was due as a commercial transaction? 4. Briefly stated, a suit has been filed by M/s Gupta Lime Stones Company through its partner Shri Sunil Kumar Gupta 2 praying for a decree for recovery of Rs. 65,991.74 with pendentilite and future interest at the rate of 18 % per annum. According to the plaint averments, during the period from 22-1- 1984 to 13-11-1986, the plaintiff has supplied the limestones to the defendant as per agreement for a sum of Rs. 2,13,882.75 as per details given in annexure ‘A’. The plaintiff has received the payment of only Rs. 1,83,116.51 as per details given in annexure ‘B’. Therefore, a sum of Rs. 30,776.24 remained due against the defendant out of the bills of the year 1986 as principal amount. Paragraph 4 of the written statement to that effect is quoted below:- “4. That during the period from 22.1.84 to 13.11.86 the plaintiff further supplied to the defendant limestones worth Rs. 2,13,882.75 as per details given in Annexure ‘A’ against this from 17.2.84 to 4.2.88 the defendant made a payment of only Rs. 1,83,116.51 as per details mentioned in Annexure ‘B’ leaving a balance of Rs. 30,776.24 out of the bills of the year 1986 as principal amount.” 5. In paragraph 5 of the plaint, the plaintiff has stated as under:- “5. That the freight amount for transportation of the goods from Dehradun to Laksar was besides the said amount of Rs. 2,13,882.75 p., which the defendant paid extra. It may be stated that during the year 1983-84 rate of material charged in the Bills were ex. Dehradun and freight was separately payable. In the years 1985-86 and 1986-87 while preparing the Bills, the amount of rate F.O.R. Laksar was segregated and the bills were drawn excluding the amount of freight. The amount of Bills mentioned in Annexure ‘A’ of the plaint are after 3 deduction. The amount of freight which was included in the amount of freight which was included in the rates F.O.R. Laksar. Thus the defendant is not entitled to further deduct any amount on account of transport charges paid by it. It may further be stated that when plaintiff’s representative went to defendant’s office for reconciliation of accounts, Defendant’s officer made him to note the amount of freight in some of the bills so that the total amount of bills may be conformity with the rate of F.O.R. Laksar but the amount of bills mentioned in Annexure ‘A’ of the plaint and claimed in the suit are after deducting the transport charges from the amount chargeable as per rate F.O.R. Laksar.” 6. It has further been stated that on some occasions, limestone delivered to the defendant was rejected but the defendant did not deliver back the rejected material to the plaintiff. It has further been stated that the plaintiff has supplied limestones weighing 45.10 MT for a sum of Rs. 10,147.40 on 17.2.1986, 21.2.1986, 22.2.86 by truck No. URM 760, URM 2316 and URM 4977 by challan nos. 225, 179 and 234 respectively, but the defendant did not paid the same amount inspite of repeated request. It has been stated that the defendant is liable to pay the interest on the amout due as per the terms and market usage and customs i.e. 18% per annum amounting to Rs. 24,928/- till 30.7.1988. Therefore, a sum of Rs. 65,991.74 is due against the defendant. The plaintiff has sent a notice on 8.3.1988 to the defendant for payment of aforesaid amount which was replied by the defendant on 29.3.1988. The plaintiff has again sent a notice to the defendant 4 on 2.5.1988 demanding the amount due against the defendant.. In paragraph 11 of the plaint, it has been stated as under:- “11. That a notice dated 8.3.1988 was sent on behalf of the plaintiff to the defendant. The defendant in its letter dated 29.3.88 intimated that reply to the plaintiff’s aforesaid notice dated 8.3.88 would be sent in due course. Thereafter, on behalf of the plaintiff, a further notice dated 2.5.88 was sent and defendant was informed that the plaintiff could not wait for the defendant’s reply indefinitely and plaintiff again demanded payment of his amount. In reply defendant through counsel sent a notice dated 21.5.88 which is wrong, incorrect, baseless and is an after-thought. The defendant has failed to pay the amount due to the plaintiff, hence this suit.” 7. A written statement has been filed by the defendant denying the plaint averments. It has been submitted that the suit is barred by the provisions of Section 16 of the Partnership Act. The court has no jurisdiction to try the suit. It has been admitted that that the plaintiff has supplied the limestone as per Annexure ‘A’ but it has been submitted that the plaintiff has not made the supply of limestone on several occasions according to the quality of the limestone as agreed upon. The limestone was having dust. It has been denied that the limestone weight 45.10 MT was supplied to him. Since, the goods were to be supplied at F.O.R., therefore, it was not the duty of the defendant to send back the same at defendant’s office at the cost of the factory. It has been submitted that the goods which were rejected by the defendant are also still lying in his factory and the plaintiff is at liberty to take them back at any time. It has been denied that any amount is outstanding against the defendant. The defendant was having a right to 5 reject the goods below the quality. It has been submitted that after making the discounts the amount of Rs. 2,13,882.75 came to the extent of Rs. 1,81,881.61 against which a sum of Rs. 1,83,116.51 was made. The suit of the plaintiff is barred by the principles of estoppels and acquiescence. The suit of the plaintiff is liable to be dismissed. ISSUES FRAMED BY THE TRIAL COURT 8. On the pleadings of the parties, the trial court has framed the following issues:- 1. Whether the suit is barred by Section 16 of the Indian Partnership Act? 2. Whether Rs. 30,766.24 are due as balance principle amount for the year, 1986 as mentioned in para 4 of the plaint? 3. Whether the plaintiff is entitled to receive Rs. 10,147.50 as price of rejected goods mentioned in para 6 of the plaint? 4. Whether the plaintiff is entitled to interest of Rs. 24,928/- as alleged in para 9 of the plaint? 5. Whether the plaintiff is entitled to receive Rs. 150/- as costs of sending notices and registered A.D. letters? 6. Whether this court has no jurisdiction to try the suit as alleged in para 17 of the written statement? 7. Whether suit is barred by estoppel and acquiescence? 8. Relief? 6 EVIDENCE ADDUCED BY THE PARTIES 9. The plaintiff has filed three documents per list B-2, 24 documents per list 28 C2. The plaintiff has examined Sunil Kumar Gupta as P.W.1. 10. The defendant has produced 13 documents per list 65 C, one document per list 80C2, one document per list 118 C2, two documents per list 121 C2 . The defendant has examined Shashikant as D.W.1, Chandramani as D.W.2, Brijmohan as D.W.3, Jagdev Singh as D.W.4, Satish Kumar as D.W.5 and Naresh Kumar as D.W.6. FINDINGS OF THE TRIAL COURT 11. While deciding issue no. 1 as to whether the suit is barred by Section 16 of the Indian Partnership Act, the trial court has recorded the finding that the suit is not barred by Section 16 of the Indian Partnership Act. The trial court has recorded the finding as under:- “pwWafd izn’kZ 1 iathdj.k dh lR; izfrfyfi gS vr% ;g ugha dgk tk ldrk gS fd mldk ewy fizUVsM vFkok VkbZi 'kqnk ugha gS vkSj mDr vf/kfu;e dh vuqlwfpr 21 ds fu;e 6 ds vuq:Ik ugha gSA oknh }kjk nkf[ky dkxt izn’kZ 1 dks ekSf[kd lk{; ds }kjk fl) fd;k x;k gS vr% ;g ugha dgk tk ldrk gS fd izLrqr okn /kkjk 69 lk>snkjh vf/kfu;e ls ckf/kr gSA” 12. While deciding issue no. 2 as to whether Rs. 30,766.24 are due as balance principle amount for the year, 1986, the trial court has recorded the finding that on the back of challans only ‘rejected’ has been mentioned but the cause of rejection has not been shown and further no analysis report of chief chemist has been shown. The trial court has further recorded the finding that as per the contract if the goods dispatched is undersize then only 5 % goods will be acceptable but in the challans and 7 register 69/B there is no endorsement showing that 95 % goods have been rejected. The trial court has come to the conclusion that the defendant has not rejected any goods and all the goods which have been dispatched have been used by the defendant and, therefore, the plaintiff is entitled for a sum of Rs. 30,766.24 for the year 1986. 13. While deciding issue no. 3 as to whether the plaintiff is entitled to receive Rs. 10,147.50 as price of rejected goods, the trial court has recorded the finding that the defendant has used the limestones delivered by the plaintiff. The trial court has recorded the finding as under:- “oknh dh vksj ls uksfVl 141@x fnukafdr 2-5-89 ds }kjk tks nLrkost izfroknh ls ekWaxs x;s Fks og Hkh izfroknh dh vksj ls iw.kZ :Ik ls izLrqr ugha fd;s x;s gSa ftlls ;g Li"V gksrk gS fd izfroknh us dqN rF;ksa dks oknh ls ,oa U;k;ky; ls fNikus dk iz;kl fd;k x;k gS A rn~uqlkj okn foUnq la0 3 oknh ds Ik{k esa o izfroknh ds fo:) fu.khZr fd;k tkrk gS AÞ 14. While deciding issue no. 4 as to whether the plaintiff is entitled to interest of Rs. 24,928/-, the trial court has come to the conclusion that the plaintiff is entitled for the interest to the extent of 18 per cent per annum on the amount claimed which comes to Rs. 24,928/-. 15. While deciding issue no. 5 as to whether the plaintiff is entitled to receive Rs. 150/- as costs of sending notices and registered A.D. letters, the trial court has recorded the finding that the plaintiff is entitled for a sum of Rs. 150/- as costs of sending notices and registered A.D. letters. 8 16. While deciding issue no. 6 with regard to jurisdiction, the trial court has recorded the finding that the court has jurisdiction to try the suit. 17. While deciding issue no. 7 as to whether the suit is barred by the principles of estoppel and acquiescence, the trial court has recorded the finding that the suit of the plaintiff is not barred by the principles of estoppel and acquiescence. The trial court has recorded the findings as under:- “pWwafd oknh }kjk Ik= fnukad 4&2&88 izn’kZ 23 ds }kjk izfroknh dks ;g lwfpr dj fn;k Fkk fd fMek.M MªkQ~V la0 922769 fnukafd 1&2&88 okLrs eq0 30]766-24 iSls cdk;k gS A vr% oknh }kjk mijksDr /kujkf’k :Ik;s 13]058-70 iSls izkIr djus ds i'pkr~ ;g ugha dgk tk ldrk gS fd mDr Hkqxrku iw.kZ ,oa vfUre oknh us ekuk vkSj oknh dk okn ekSu Lohd`fr ,oa fcca/ku ds fl)kUr ls ckf/kr gS tc fd izfroknh ds fo}ku vf/koDrk }kjk rdZ izLrqr fd;k x;k gS fd oknh }kjk mDr /kujkf’k ds izkIr djus ds i'pkr~ oknh dk okn ekSu Lohd`fr o fooa/ku ds fl)kar ls ckf/kr gS A oknh dh vksj ls izfroknh dks Hksts x;s mDr Ik= ds tokc esa ;g ugha dgk tk ldrk gS fd izLrqr okn fooa/ku ,oa ekSu Lohd`fr ds fl)kar ls ckf/kr gSA” 18. On the basis of the aforesaid, the trial court has decreed the suit of the plaintiff. FINDINGS RECORDED BY THE APPELLATE COURT 19. Aggrieved by the judgment and decree passed by the trial court, the defendant went in appeal. The appellate court has recorded the finding that following points arise for determination:- 9 (1) Whether the suit of the plaintiff is barred by the provisions of Section 69 of the Indian Partnership Act? (2) Whether any amount of Rs. 30,766.24 is due as balance against the defendant? (3) Whether the goods for Rs. 10,147.50 was ever supplied by the plaintiff? (4) Whether this court has no territorial jurisdiction to try the suit? (5) Whether the plaintiff is entitled to the costs of notice amounting to Rs. 150/-? (6) Whether the suit is barred by the principles of estoppel and acquiescence? 20. While deciding with regard to jurisdiction, the appellate court has recorded the finding that admittedly, the goods were supplied by the plaintiff to the defendant from Sataun (H.P.) and the tenders were also invited and accepted at Laksar. The defendant resides at Laksar, therefore, the jurisdiction arises either in Himanchal Pradesh or at Laksar. The appellate court has further recorded the finding that the court at Dehradun has no jurisdiction to try the suit. The appellate court has recorded the finding as under:- “The learned lower court has also held that the defendant could not file any agreement that the plaintiff has the only right to file the suit at Saharannpur. I think that Saharanpur has been written wrongly, rather it should have been written Sataun (H.P.), but by not producing such document does not mean that the jurisdiction vested in the court situated at Dehradun. Thus, the Learned Lower Court has wrongly decided this issue in favour of the plaintiff. This point is decided in 10 favour of the defendant holding that the court at Dehradun has no jurisdiction to try this suit. Regarding the jurisdiction, it has also been alleged by the plaintiff in para 3 of his plaint that prior to it, for the supply of the goods by the plaintiff to the defendant in the year, O.S. No. 193 of 1982 was contested in between the parties and it was held that the court of Dehradun has the jurisdiction. In my opinion, this cannot be a resjudicata in this case because when a legal point has been decided wrongly in favour of any party, that does not Act as resjudicata against other party. The defendant has specifically alleged that this court of Dehradun, has no jurisdiction to try the suit.” 21. Section 20 of the Code of Civil Procedure provides the jurisdiction of the court to try the suit, which reads as under:- “20. Other suits to be instituted where defendants reside or cause of action arises – Subject to the limitations aforesaid, every suit shall be instituted in Court within the local limits of whose jurisdiction – (a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the defendants where there are more than one, at the time of the commencement of the suit actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the court is given, or the defendants who do not reside, or carry on business, or 11 personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part, arises.” 22. In view of the aforesaid, the court at Dehradun has no jurisdiction to try the suit because the goods were supplied by the plaintiff to the defendant from Sataun (H.P.) and the tenders were also invited and accepted at Laksar. The defendant resides at Laksar, therefore, the appellate court has rightly come to the conclusion that the the jurisdiction arises either in Himanchal Pradesh or at Laksar. 23. While deciding as to whether the goods for Rs. 10,147.50 was ever supplied by the plaintiff, the appellate court has recorded the finding that the plaintiff did not file any challan showing that limestone to the aforesaid extent was supplied to the defendant. The appellate court has relied upon the statement of D.W.1 and D.W.2 who have denied the fact of supplying the limestone amounting to Rs. 10,147.50. The register i.e. paper no. 69 B wherein the entry was made regarding the supply of limestone was also filed. The appellate court has come to the conclusion that the goods worth Rs. 10,147.50 was never supplied to the defendant and the defendant is not liable to pay such amount to the plaintiff. The finding of the appellate court is quoted below:- “Regarding supply of 45.10 M.T. limestones, the case of plaintiff is that the same was supplied but was rejected by the defendant and not returned to him. A notice dated 8.3.88 was also sent to return the same or to pay the price. The defendant in para 6 of his written statement has denied the supply of such limestones. The witnesses, D.W.1 andD.W.2 produced on behalf of the defendant have also 12 denied this fact, the defendant has also filed the register (paper No. 69B) wherein on entry regarding the supply of this limestone was made. The plaintiff also did not file any challan showing that his limestone was supplied to the defendant, but the learned Lower Court relying upon the amendment in para 6 of the written statement has held that the same was supplied and rejected. In my opinion, the findings of the learned court below in this regard are not correct. In para 6 of the written statement, the defendant has stated that no such limestone was supplied and the goods mentioned in para 6 of the plaint was out rightly rejected by the chemist of the defendant as the same were not upto the mark of the quality as agreed to be supplied by the plaintiff and the goods were not unloaded. In my opinion, in case it is admitted that the goods were supplied by the plaintiff and that reached at the door of the factory of the defendant and were rejected by the Chemist out rightly and not unloaded, so there was no question of making any entry regarding supply of these goods in this register 69 B. It was the duty of the plaintiff to prove this fact that such goods were supplied to the plaintiff. From the perusal of the record it is not proved that such goods were ever supplied by the plaintiff to the defendant. So, no question arises of consumption of such goods by the defendant. Thus, it is held that the goods worth Rs. 10,147.50 were never supplied to the defendant and defendant is not liable to pay such amount to the plaintiff.” 13 24. While deciding as to whether the suit of the plaintiff is barred by the provisions of Section 69 of the Indian Partnership Act, the appellate court has recorded the finding that the suit of the plaintiff is not barred by Section 69 of the Indian Partnership Act. The appellate court has recorded the finding as under:- “The submission made on behalf of the defendant/appellant cannot be accepted because Ex. 1 is the certified copy which was not necessary to be issued on printed or typed form. Thus, this point is decided in favour of the plaintiff and against the defendant holding that the suit is not barred by provisions of Section 69 of the Indian Partnership Act as held by Ld. Civil Judge.” 25. While deciding as to whether the suit is barred by the principles of estoppel and acquiescence, the appellate court has recorded the finding when a notice was issued by the plaintiff to the defendant regarding the payment of Bill No. 133 vide demand draft No. 0922768 dated 1.2.1988 for a sum of Rs. 13,086.70 was sent by the defendant to accept the same as full and final payment and though that amount was accepted by the plaintiff/respondent, but further a demand notice was sent, which shows that the amount was not received by the plaintiff in full payment. In view of the aforesaid, the appellate court has recorded the finding that the suit is not barred by the principle of estoppel and acquiescence. 26. While deciding as to whether the a sum of Rs. 30,766.24 is due against the defendant, the appellate court has placed upon the terms and conditions entered into between the plaintiff and the defendant to the following effect:- 14 II. If the Caco3 contents is less than 93 % and is upto 90 % the proportionate deduction will be done at the rate of 1% of the cost of limestone for each unit of caco 3 contents. III. If the Caco3 content is less than 90 % the suppliers will have to take back the same at their own cost. V. Broken limestone, if found under side will be accepted only upto 5 % and full deductions will be made in respect of quantity above 5% at ordered rat. XIII. That the plaintiff will accepts the analysis report of the laboratory of the defendant as final. XIV. Weight of limestone at the weight bride of the defendant will be taken as final.” 27. On the basis of the aforesaid, the appellate court has recorded the finding that according to the terms and conditions of the tender, deduction was made on account of the same and about deduction, endorsement was made on respective challans and the goods which were rejected are still lying in the campus of the factory. Further the appellate court has recorded the finding that according to the terms of the contract, the plaintiff was supplied the goods as F.O.R. at Laksar and, hence, it was the duty of the plaintiff to take the rejected goods at his own expenses and according to the terms and conditions of the tender, he was having a right to make such deductions. Further taking into consideration the condition no. V of the terms and condition, the appellate court has recorded the finding that the defendant was having a right to make the deduction to the extent of 5 % in case the stones supplied were found broken and under size. The appellate court has further recorded the findings to the following effect:- 15 “In my opinion, the findings of the learned trial court in this regard are not correct because analysis by the laboratory was required when according to conditions nos. 2 and 3 of the agreement Caco3 contents were less then 93 % and were upto 90 % stones were broken or under size could have been judged by the chemist by naked eyes. Likewise, if the limestones supplied contained dust that could also be judged by the naked eyes. Hence, in this regard the report of the chemist was not necessary. A notice was given by the plaintiff either to return the goods or to pay the price for that, the defendant replied that he may take the goods at his own costs. Since the goods were to be supplied F.O.R. at Lakshar hence it was the duty of the plaintiff to take the goods back at his own costs. In case, there was no condition to supply the goods at F.O.R. then certainly it was the duty of the defendant to sent