IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD WEDNESDAY, THE THIRTIETH DAY OF JUNE TWO THOUSAND AND TEN HON’BLE SRI JUSTICE G. BHAVANI PRASAD A.S.No.2644 of 1988 and Cross Objections A.S.No.2644 of 1988 Between: Orissa State Cooperative Marketing Federation Limited, Bhubaneshwar, represented by its Managing Director .. Appellant AND Vinod Solvextracts Private Limited, Vijayawada, Represented by its Managing Director Sri L.R. Manohar and another .. Respondents Cross Objections Between: M/s. Vinod Solvextracts Private Limited, represented by Managing Director Sri L.R. Manohar .. Cross Objector AND Orissa State Cooperative Marketing Federation Ltd., Bhubaneswar, represented by Managing Director and another .. Respondents COMMON JUDGMENT: The appeal and the cross objections are directed against the judgment and decree in O.S.No.341 of 1980 on the file of the Court of II Additional Senior Civil Judge, Vijayawada, dated 28-09- 1988. The parties are referred to herein as they are arrayed before the trial Court. The plaintiff filed the suit for recovery of Rs.95,164-05 ps with future interest at 17% per annum from the date of suit till realization and costs, alleging that it negotiated with the 2nd defendant held out by the 1st defendant as its agent for supply of Rice Bran Extractions and the 2nd defendant confirmed on behalf of the 1st defendant the order of the plaintiff for purchase of 200 Metric Tonnes of Rice Bran Extractions ordered by Telegram dated 21-04-1979 and another 200 MTs ordered by Confirmation Note No.33, dated 07-05-1979. The partner of the 2nd defendant came to the office of the plaintiff on 10-05-1979 and handed over a copy of the Confirmation Note along with a covering letter, the agreed terms of which were specified. The additional terms and conditions specified by the plaintiff in their letter dated 09-05-1979 were also confirmed by the 2nd defendant and the 1st defendant supplied only 200 MTs of Rice Bran Extractions out of 400 MTs to the plaintiff, who paid 90% of the cost thereof. The 2nd defendant informed by a letter dated 24-12-1979 that the 1st defendant assured them about early dispatch of the goods under Confirmation Note No.33 dated 07-05-1979 also, but the plaintiff did not get the supply in spite of further correspondence. The 1st defendant kept quiet in spite of receipt of the letters and the plaintiff incurred a total expenditure of Rs.14,551-50ps. towards demurrage and wharfage charges. The 1st defendant did not deny its liability for supply of remaining 200MTs or the payment of the charges and as the 1st defendant appeared to have repudiated the contract by its long silence, the plaintiff demanded payment of damages based on the difference between the existing market rate and the contract rate of goods to be supplied. The same was quantified at Rs.72,492/- and the final statements communicated to the defendants did not result in any payment. The 1st defendant on the other hand addressed the 2nd defendant claiming the contracted quantity to be only 200 MTs and the denial of liability is obviously evasive. The plaintiff elaborately described in the plaint the subsequent events between the parties ending with a notice dated 18-03-1980 prior to the suit and claimed the suit reliefs. The 1st defendant in its written statement denied any cause of action for the suit which it claimed to be not maintainable due to non-compliance of Rule 37(1) of the Orissa Cooperative Societies Rules, 1965. The 1st defendant also pleaded prior to the impleadment of the 2nd defendant that the suit is bad for non- impleadment of the 2nd defendant. The 1st defendant further contended that the 2nd defendant was never held out to be its agent and never negotiated on its behalf with the plaintiff. The 1st defendant claimed ignorance about the events or correspondence between the plaintiff and the 2nd defendant, but admitted that the 2nd defendant issued a Confirmation Note No.33 dated 07-05-1979 for 200 MTs of Rice Bran Extractions instructing the 1st defendant to send the stock to the plaintiff. The 1st defendant claimed ignorance about any additional terms and conditions than specified by the 1st defendant itself and it denied any liability or obligation in respect of Confirmation Note No.24. The 1st defendant also contended that any correspondence referred by the plaintiff in this regard is not binding on the 1st defendant and it is not liable for any demurrage or wharfage charges. The 1st defendant never assured the 2nd defendant about treating Confirmation Note No.24 dated 21-04-1979 as a subsisting contract and the 1st defendant made it clear in its letter dated 24-01-1980 and the earlier letter dated 27- 12-1979 about the dispatches made by it relating to Confirmation Note No.33, dated 07-05-1979. The 1st defendant is not liable to pay any damages to the plaintiff much less at the quantum claimed and the 1st defendant never committed any breach of contract. There was no Managing Director of the 1st defendant by name Sri P.B. Ray to whom any telephonic instructions could have been given and the goods were supplied to a tune of 200 MTs by the 1st defendant promptly as per the contract and it is not responsible for any delay in the plaintiff taking delivery of goods. The 1st defendant also contended that the cause of action for the suit, if any, having arisen in Orissa, the Court has no territorial jurisdiction. The 2nd defendant, who was subsequently impleaded remained ex parte. On such pleadings, the trial Court framed issues about the territorial jurisdiction for the suit, the suit being vitiated for want of necessary parties, the existence of any contract under Confirmation Note No.24, dated 21-04-1979, the commission of breach of contract by the 1st defendant, and the liability of the 1st defendant to reimburse the plaintiff for demurrage and wharfage charges. PWs.1 to 4 and DWs.1 and 2 were examined and Exs.A.1 to A.49, B.1 to B.48 and X.1 were marked during trial. Insofar as issue No.2 is concerned, after impleadment of the 2nd defendant in the suit, the issue becomes redundant. Concerning the other issues, the trial Court in the impugned judgment, firstly, noted that the 1st defendant did not press the objection about the territorial jurisdiction. It referred to the rival contentions and evidence in detail and reasoned that the 1st defendant admitted the contract under Confirmation No.33, while it denied the Confirmation Note No.24 dated 21-04-1979. The trial Court observed that the evidence did not indicate the 2nd defendant to be not the agent of the 1st defendant and acts of the 2nd defendant to be not binding the 1st defendant. The trial Court opined that Exs.A.14 and A.16 were the confirmations made by the 2nd defendant communicated to the 1st defendant in respect of both the Confirmation Notes No.24 and 33 respectively. The contract under Confirmation note No.33 was noted to be admitted and the plaintiff’s communications about the supplies to be made under both the Confirmation Notes were also noted. The trial Court read Ex.B.3 as indicating that the terms and conditions of Confirmation Note No.33 were confirmed without denying the contract under Confirmation Note No.24. The trial Court also relied on Ex.B.9 letter from the 2nd defendant to the 1st defendant in reply to the 1st defendant’s letter dated 13-06-1979 about various discussions about the two Confirmation Notes and also Ex.B.2 letter from the 2nd defendant. The trial Court felt that during such discussions, the confirmation Note No.24 also appeared to have been accepted with some additional terms and conditions thereby making the 1st defendant not entitled to deny any contract under Confirmation Note No.24. The trial Court also felt that Exs.A.14 to A.16 and A.5 show the acceptance of the contract by the 1st defendant, which was attempted to be disputed in Ex.B.8 for the first time. The plaintiff asserting about both the Confirmation Notes having to be complied with was also noted and hence, it was concluded that the suit contract was accepted by the 1st defendant, who is bound by the same. The trial Court then proceeded to estimate any loss caused to the plaintiff and referred to the evidence of PW.3 about the purchase of alternative stocks at higher price of Rs.850/- per M.T. in contrast with Rs.400/- per Metric Tonne under the suit contract. The trial Court, therefore, considered the claim of the plaintiff at the rate of Rs.750/- per Metric Tonne to be not excessive and further concluded that the plaintiff is not entitled to any interest on the damages claimed by it, based on the decision reported in Andard Mount (London) Limited v. Curewel (India) Limited (AIR 1985 Delihi 45). The trial Court also considered the payment of demurrage and wharfage charges at Rs.14,551-50ps under Exs.A.35 to A.39 to have been proved and opined that in the absence of any explanation by the 1st defendant for the delay, the 1st defendant is bound to pay the same also. Accordingly, the trial Court decreed the suit for Rs.95,164-05ps less Rs.6,786-40ps claimed towards interest with proportionate costs. The 1st defendant filed the appeal claiming that even the issues were wrongly framed and the agency was wrongly presumed even in the absence of any authorization by the 1st defendant, who had no privity of contract with the plaintiff. The denials of the 1st defendant could not have been overlooked and in the absence of a notice under Section 127 of the Orissa Cooperative Societies Act, 1962, the suit is not maintainable against the 1st defendant. The territorial jurisdiction of the Court is absent and no credible evidence was produced to quantify any damages or loss. Any confirmation between the defendants cannot enure to the benefit of the plaintiff, which can lay any claim only against the 2nd defendant and not the 1st defendant. There was no attempt by the plaintiff to mitigate the damages and hence, the appellant sought for reversing the judgment and decree of the trial Court. The plaintiff filed the cross-objections contending that the trial Court ought to have granted interest on damages at 17% p.a. as well as the interest at the same rate on demurrage and wharfage charges. The plaintiff also sought for grant of interest at 18% p.a. from the date of suit till realization. When the appeal and the cross-objections came up for hearing before the Hon’ble Sri Justice P.S. Narayana on 12-11- 2002 His Lordship ordered a reference to a Division Bench on three questions framed concerning compliance with Section 127 of the Orissa Cooperative Societies Act 1962 and Rule 37 (1) of the Orissa Cooperative Societies Rules 1965. The reference was later answered by a Division Bench on 4-02-2005 referring to the V.J. Dandekar v. Meera Cooperative Housing Society Limited, Hyderabad (2000 (1) ALD 499) and Rangalal v. U.R.P.C.P. & P. Society (AIR 1975 Orissa 137). The Division Bench opined that a notice under Section 127 of the Orissa Cooperative Societies Act, 1962 must be issued before institution of the suit, but the suit is maintainable with reference to Rule 37 (1) of the Orissa Cooperative Societies Rules, 1965, even if the society is impleaded as one of the defendants without being described as represented by its Secretary. The answer to the reference did not indicate the Division Bench adverting to the question No.1 referred to it about the tenability of an objection about want of notice under Section 127 of the Orissa Cooperative Societies Act 1962 for the first time at the appellate stage. The Division Bench relegated the appeal back for disposal on merits. Sri Manjari S. Ganu, learned counsel for the appellant and Sri N. Srinivas, learned counsel for the cross-objector, are heard at length and the following points arise for determination of the appeal and the cross-objections,-- 1) Whether an objection about the non-maintainability of the suit for non-compliance with Section 127 of the Orissa Cooperative Societies Act 1962 can be raised for the first time in the appeal? 2) Whether the 1st defendant is liable for damages and demurrage and wharfage charges claimed by the plaintiff? 3) Whether the plaintiff is entitled to the interest claimed? 4) To what relief? Point No.1: Learned counsel for the appellant relied on Chambala Karayi Sreenivasan, Kallayi Amsom, Vayalalam desom, Tellicherry and others v. Pullambadi Cheerootty of Kallayi Amsom Vayalalam Desom Tellicherry and another[1] for the proposition that a pure question of law can be considered even if raised for the first time in the appeal, when it does not involve an investigation into the facts. In opposition, Sri Srinivas, learned counsel for the cross- objector referred to Purna Chandra Sarkar v. Radharani Dassya and others[2] wherein a plea of want of notice under Section 80 of the Code of Civil Procedure was not permitted to be raised at a very late stage deeming the defendant to have waived the privilege of such notice by the earlier silence and delay. The Calcutta High Court referred to the principles laid down in the earlier precedents in this regard. In Vellayan Chettiar & others v. The Government of the Province of Madras and another[3], it was laid down that a notice under Section 80 of the Code of Civil Procedure can be lawfully waived and in State of Rajasthan v. Girdharilal Chunnilal Modi[4] also relied on by the learned counsel for the cross Objector, it was concluded that the plea as to the insufficiency and invalidity of the statutory notice under Section 80 of the Code of Civil Procedure cannot be raised for the first time in the appeal. To a similar effect is the decision reported in Lalchand Chowdhury v. Union of India[5] and also State of Orissa and another v. Bamadeb Panigrahi and another[6] where such an objection was attempted to be taken in a second appeal without raising the issue in the Courts below. The learned counsel also relied on Paleti Sivaramakrishnaiah v. Executive Engineer, N.C. Canals, Sathenapalli and another[7] wherein a learned Judge of this Court also refused to entertain a plea of want of notice when it was not raised in the Courts below and was raised for the first time during the arguments in the appeal. He also referred to State of Bihar and another v. Panchratna Devi and another[8] to a similar effect. The decision reported in Secretary, Primary Agricultural Development Bank Ltd, Badvel v. Agro Pumpsets and Implements Ltd., Cuddapah[9] arising under Section 126 of the Andhra Pradesh Cooperative Societies Act is straight on the point and the learned counsel for the cross objector rightly referred to the opinion of the learned Single Judge that the plea about want of notice cannot be permitted to be raised for the first time in the appeal. The learned Judge presumed that when it filed the written statement, the defendant must be inferred to be aware of the mandatory provision of Section 126 of the Andhra Pradesh Cooperative Societies Act, but still did not take such a plea. The learned Judge, therefore, drew the inevitable conclusion that the defendant waived the requirement and in this regard the learned Judge referred to Vellayan Chettiar & others v. The Government of the Province of Madras and another (3rd supra) and also another precedent from the Allahabad High Court. Section 126 of the Andhra Pradesh Cooperative Societies Act 1964 is in pari materia to Section 127 of the Orissa Cooperative Societies Act and the binding precedent cited above makes it clear that the objection about want of statutory notice under Section 127 could not have been taken for the first time in the appeal. There is absolutely no reason to deviate from the view of the learned Judge in the light of the preponderance of judicial opinion in this regard as disclosed by the other precedents cited above. Hence, it has to be concluded that the objection about the non-maintainability of the suit for want of notice under Section 127 of the Orissa Cooperative Societies Act cannot be taken for the first time in the appeal. Point No.2: The documents produced by both the parties have to form the basis for any reasonable conclusions with regard to the questions in controversy between the parties than the oral claims of the witnesses suitably moulded to suit the respective stands taken by the parties in the suit. Ex.B.3 from the 1st defendant to the 2nd defendant appears crucial in this regard and in Ex.B.3, the 1st defendant admitted receipt of the Confirmation Notes Nos.24 and 33 dated 21-04-1979 and 7-5-1979 respectively along with the corresponding letters. The 1st defendant stated “we confirm your terms and conditions as laid down in your Confirmation Note No.33 dated 7-5-1979 with the following amendments.” The sentence was followed with various amendments in the terms and conditions sought to be stipulated in respect of the transactions by the 1st defendant. But, no other part of Ex.B.3 offers any guidance as to whether the confirmation by the 1st defendant was in respect of both the confirmation notes or confined to only one confirmation note. The reference to both the confirmation notes having been received and the confirmation of the terms and conditions in one confirmation note only cannot be literally and grammatically interpreted as confining the confirmation to the terms and conditions in one confirmation note and indicating the confinement of the acceptance to one Confirmation Note only. When the 1st defendant stated that he received two Confirmation Notes and confirmed the terms and conditions of one Confirmation Note as amended by it, the same no way precludes understanding such confirmation as confirmation of both the confirmation notes subject to the terms and conditions of one confirmation note as amended by the 1st defendant. It is seen from the other communications from the 2nd defendant to the 1st defendant that the 2nd defendant was claiming to be discussing with the personnel of the 1st defendant about both the Confirmation Note Nos.24 and 33 and was not confined to Confirmation Note No.33 alone. While the 1st defendant itself admits that confirmation of the terms and conditions for supply as per Confirmation Note No.33 was at the behest of the 2nd defendant for supply to the plaintiff, if the plaintiff, who routed the order through the 2nd defendant, was persuaded to believe the 2nd defendant to be acting as the agent of the 1st defendant, the plaintiff cannot be considered to be at fault. It is true that since Ex.B.8 dated 13-06-1979, the 1st defendant was claiming that they did not confirm the Confirmation Note No.24 dated 21-04-1979 but what Ex.B.8 itself shows is that the 1st defendant was confronted with certain unavoidable problems, which may compel the 1st defendant to ask for extension of time, in spite of which they are trying their best to fulfil their contract. It may indicate that notwithstanding the communications from the 2nd defendant and the discussions by the 2nd defendant in respect of both the confirmation notes, the 1st defendant was not in a position to comply with the request for both the supplies for its own reasons. Ex.B.3 read with Ex.B.8 may suggest the 1st defendant to be attempting to claim non-confirmation of Confirmation Note No.24 taking advantage of the reference to confirmation of the terms and conditions of Confirmation Note No.33 only, which plea may not be, ex facie, supported by the plain language of Ex.B.3. Even subsequent to Ex.B.8, the 2nd defendant was always insisting in its correspondence about the clarification given to the 1st defendant throughout about the liability to supply a total quantity of 400 MTs to the plaintiff under two confirmation notes and the same not being denied during the discussions which the 2nd defendant allegedly had. The further communication in Ex.B.10 from the 1st defendant about the closure of the plant due to want of Rexene and the regret expressed for the inconvenience caused was responded by the 2nd defendant clearly informing the 1st defendant that it was taking a different stand than what was explained to it earlier referring to only one contract and not two contracts. In response to the same, the 1st defendant stated the situation to be due to a misunderstanding and again its reference to its difficulties in this regard may show the disinclination of the 1st defendant for supply of another 200 MTs to be due to the difficulties its plant was facing, but not the absence of any confirmation note, which was not denied. It is true that in Ex.B.15, the 2nd defendant stated that they opted to presume that there was only one contract for 200 MTs under Confirmation Note No.33, but how the 2nd defendant resiling from the original order can act to the disadvantage of the plaintiff at that distance of time is incomprehensible. Ex.B.23 similarly refers to a similar understanding between the defendants during discussions on 14-11-1979, but the 2nd defendant, who was justifiably believed by the plaintiff to be acting as the agent of the 1st defendant and made the plaintiff act on the supposition of a concluded contract in respect of all 400 MTs, could not have prejudiced the rights of the plaintiff against the defendants under any such understanding. Even the supplies under the admittedly accepted Confirmation Note No.33 were claimed by the plaintiff to have been subjected to demurrage and wharfage charges due to the delay in handing over the railway receipts to them resulting in payment of such charges as specified in the plaint and there appeared no reasonable explanation for the loss caused to the plaintiff in this regard and the correspondence on record did not indicate any scope for placing the blame in this respect at the door of the plaintiff. In Ex.B.48 reply to the suit notice, the 1st defendant admitted the contacts between the defendants on 21-04-1979 and 7-5-1979. The claim of the 1st defendant in the reply notice about the non-existence of two confirmation notes is belied by Ex.B.3 itself, which acknowledged the receipt of the said two Confirmation Notes. The further claim about the non-liability for payment of demurrage and wharfage charges also cannot be sustained against the plaintiff, as the reply itself showed that any representative of the 2nd defendant was unavailable at the time of loading the goods and the railway receipts were handed over only on 22-12-1979 and were taken delivery with a further delay. The attempt to throw the liability on the 2nd defendant may have to be a matter between the defendants, but not to the disadvantage of the plaintiff. The correspondence between the plaintiff and the 2nd defendant marked in exhibit ‘A’ series is suggestive of the justification for the belief of the plaintiff about the 2nd defendant acting as the agent of the 1st defendant and the evidence of the Managing Director of the plaintiff as PW.1 had no significant admissions to the contrary. While he reiterated about claiming Rs.100/- less per Metric Tonne than the rate at which they had to purchase due to the default, the evidence of PWs.2 to 4 was in broad corroboration of the claims made by PW.1. The mere admission that the witnesses were aware of the subsequent claims by the 1st defendant of confinement of the contract only to one confirmation note cannot be treated as any admission of absence of liability of the 1st defendant. DW.1, in spite of claiming that the 2nd defendant was never their agent, had to describe the 2nd defendant as the intermediary in the transaction. He and his correspondence would indicate the 1st defendant indulging in the transaction with the intervention of the 2nd defendant for supply of goods to the plaintiff and by such conduct the 1st defendant cannot deny the scope for the plaintiff being persuaded to believe the 2nd defendant to be acting as the agent of the 1st defendant. DW.1 admitted that the 2nd defendant informed about the requirements of the plaintiff in writing and also that they did not deny the Confirmation Note No.24 under Ex.B.3, which referred to both the confirmation notes. He also admitted that all the terms and conditions