IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE FRIDAY, THE 13TH JUNE 2008 / 23RD JYAISHTA 1930 AS.No. 527 of 1994() -------------------- OS.33/1979 of I ADDL.SUB COURT,TRIVANDRUM .................... APPELLANT: ----------- P.P.KUKILLAYA, PROPRIETOR, M/S.POLY PIPES, COCHIN – 24. BY ADV. SRI P K JOSE, SRI JOHNSON ABRAHAM RESPONDENTS: ------------- KERALA STATE ELECTRICITY BOARD REPRESENTED BY ITS SECRETRY, TRIVANDRUM. BY ADV. SRI P SANTHALINGAM SRI.C.RAGHAVAN, SC, KSEB SRI.T.G.RAJENDRAN SC FOR K.S.E.B. FOR R SRI.C.K.KARUNAKARAN, SC FOR KSEB FOR R1 THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 13/06/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT NO REPRESENTATION TODAY ALSO FOR THE APPELLANT. DISMISSED FOR DEFAULT. 13.6.2008 SD/- PIUS C.KURIAKOSE, JUDGE. /TRUE COPY/ P.A. TO JUDGE. PIUS C. KURIAKOSE,J. - - - - - - - - - - - - - - - - - - - - - - - - - A.S.No.527 of 1994 - - - - - - - - - - - - - - - - - - - - - - - - - Dated: 19th August, 2008 JUDGMENT The defendant in a suit filed by the respondent-K.S.E.B. is the appellant and the appellant is aggrieved by the positive decree passed by the learned Subordinate Judge in favour of the respondent. 2. Briefly stated the case of the respondent-plaintiff was that in response to tenders invited by the plaintiff for supply of 50,000 meters of 20 mm PVC conduits, the appellant-defendant submitted the lowest tender and the same was accordingly accepted and purchase order was issued to the defendant. On the terms of the purchase order, the defendant should have supplied 20,000 meters at Aluva within 45 days of receipt of the order, 20,000 meters at Kundara store within 75 days of the receipt of the order and the remaining 10,000 meters at Kallai within 90 days of the receipt of the order. The purchase order was accepted by the defendant who executed necessary agreement in stamp paper in favour of the Chief Engineer of the K.S.E.B. The agreed rate was Rs.135.41 per 100 meters inclusive of taxes. Contrary to the agreed terms the defendant altogether supplied only 20,000 meters on three occasions. The third occasion was 23.3.1977 when he supplied 10,250 meters. Thereafter A.S.No.527/94 - 2 - the defendant defaulted supply causing huge loss to the plaintiff. Successive demands in writing for supplying balance conduits where of no avail and finally the defendant was informed that the contract will be cancelled and alternative arrangements for purchase of conduits will be made at the defendant's risk and cost. The purchase order was accordingly cancelled. Before the cancellation of the purchase order issued to the defendant the plaintiff had invited tenders for supply of 70,000 meters of 20 mm PVC conduits for other purposes of the plaintiff and the lowest rate as per tenders received in that case was at the rate of Rs.172/- per 100 meters received from M/s.Trencos Ltd. 30,000 meters of conduits supplied by M/s.Trencos Ltd. to the K.S.E.B. on 4.11.1977 was adjusted against balance 30 meters which were ought to have been supplied by the defendant pursuant to the purchase order given to him. The difference price comes to Rs.13,041/- and the suit was laid for recovering the above amount with interest and cost. 3. The appellant-defendant filed written statement and subsequently an additional written statement. The agreement for supply of conduits was admitted. But it was contended that the plaintiff never sustained any loss by reason of default in supply of materials by the defendant. It was denied that the contractual A.S.No.527/94 - 3 - obligations were violated by the defendant. It was contended that it is the plaintiff who failed to fulfill the obligations in the contract by not paying price for the goods supplied by the defendant. It was contended that the suit claim is unsustainable since the plaintiff has waived its rights under the contract by plaintiff's conduct. It was also contended that time was not essential regarding the contract of the plaintiff and that since the defendant was ready and willing to supply the agreed quantities of conduits, he is not liable to pay the difference in price as claimed in the plaint. As regards the plaintiff's claim for adjusting the conduits supplied by M/s.Trencos Ltd. against the conduits which were having supplied by the defendant, it is contended that it is for the plaintiff to prove that claim. 4. The learned Subordinate Judge would formulate the following issues for trial: 1. Whether the defendant performed his contractual obligation relating to the agreement and purchase order No.T.A.36/Ele.4/76-77 P.P. (69) dated 1.12.76? 2. Whether the defendant accepted the purchase order and whether the conditions in the purchase order are binding on the defendant? 3. Has the defendant supplied the agreed quantity? What is the quantity supplied? A.S.No.527/94 - 4 - 4. Is the defendant a defaulter in satisfying the agreed conditions? 5. Is there any loss due to the non supply of the balance quantity by the defendant caused to the Board? If so, what is the actual loss? Is the plaintiff entitled to realise the loss as damages from the defendant? 6. Has the defendant caused breach of contract? Is the defendant liable for the breach? 7. Is the plaintiff entitled for interest? 8. Reliefs and costs. Addl.9. Has the plaintiff relieved of its contractual obligations, and was the plaintiff free to make alternate arrangements without informing the defendant that the contract was cancelled? 10. Was time of the essence of the contract? 11. Was the defendant ready and willing to supply the required quantity of PVC pipes? In the first instance the suit was dismissed on the ground that actual damages, if any, sustained by the plaintiff could not be ascertained from the evidence which was available on record. Against that decree the plaintiff preferred A.S.No.433 of 1982 and this court allowing that appeal remanded the matter back to the court below for a de novo consideration after affording sufficient opportunities. The A.S.No.527/94 - 5 - evidence prior to the remand consisted of Ext.A1 and the oral testimony of P.W.1 alone. After remand the plaintiff produced Exts.A2 to A10. After remand also the defendant did not adduce any counter evidence. The learned Subordinate Judge on appreciating the evidence answered issue No.2 in favour of the plaintiff and held that the defendant had accepted the purchase order and that the conditions of the purchase order are binding on the defendant. To arrive at such a finding it was noticed by the court below that the averments in the plaint to that effect had not been specifically denied. Oral evidence of P.W.1 and documents Exts.A2 and A3 were also relied on by the learned Subordinate Judge in the above context. Issue No.3 was also answered in favour of the plaintiff finding that the allegations regarding short supply by the defendant had not been denied even, by the defendant. Issue Nos.1 and 4 and additional issue No.10 were considered together by the learned Subordinate Judge. The learned Judge noticed that supplies were received by the plaintiff even after the expiry of the time specified in Ext.A2 purchase order and held that time was not essence of the contract between the parties. Referring to Section 55 of the Contract Act it was held that nevertheless the plaintiff-promisee is entitled to compensation from the defendant-promisor for the loss occasioned and further held that A.S.No.527/94 - 6 - evidence was nil for substantiating the plea that the plaintiff has waived its right to claim damages. Additional issue Nos.9 and 11 were also considered together by the learned Subordinate Judge. It was noticed that the averments in the plaint that despite several demands by the plaintiff for supply of balance quantity of conduits, supplies were not made by the defendant had not been denied. It was further noticed that for vindicating the contention that the defendant became constrained to stop the supply due to the failure of the plaintiff to make payments for the supply already made, absolutely no evidence had been adduced by the defendant. Clauses 9 and 13 of Ext.A1 agreement were relied on by the learned Subordinate Judge to hold that the plaintiff was justified in making alternative arrangements for purchase of the quantity not supplied by the defendant. Issues were answered accordingly. Issue Nos.5 and 6 were also considered by the learned Subordinate Judge. Following the findings already entered on the earlier issues and noticing that there was absolutely no counter evidence on the side of the defendant to the evidence adduced by the plaintiff regarding the damages actually sustained, the learned Subordinate Judge answered these issues also in favour of the plaintiff. Issue No.7 dealing with the plaintiff's claim for interest on the compensation amount was also answered holding that the claim A.S.No.527/94 - 7 - at the rate of 6% is perfectly justified. 5. I have heard the submissions of Smt.Tessy Jose, counsel for the appellant and those of Mr.C.K.Karunakaran, learned Standing Counsel for the K.S.E.B. 6. Smt.Tessy Jose would argue that the very purpose of the order of remand passed by this court in A.S.No.433/1982 was to enable the respondent-plaintiff to adduce evidence to show that the defendant had been informed that the purchase order will be cancelled if supplies are not made within the stipulated time. Though after remand Exts.A2 to A10 were produced, the letter dated 26.9.1977 by which the plaintiff claims to have informed the defendant that the purchase order is liable to be cancelled was not produced. She argued that even the letter dated 5.12.1977 through which the purchase order was cancelled was not produced. Since the evidence produced after remand does not serve the purpose of the remand order, the learned Subordinate Judge was not justified in reversing the earlier judgment and in decreeing the suit. She also argued that preponderance of probabilities was in favour of the defence case and therefore the plaintiff should have been non-suited. 7. Mr.C.K.Karunakaran, Standing Counsel for the K.S.E.B. would resist the submissions of Smt.Tessy Jose. He would support the A.S.No.527/94 - 8 - judgment of the court below on the reasons stated therein. 8. I have considered the rival submissions and I have reappreciated the entire evidence adduced by the parties before the court below. I am not impressed by the submission of the learned counsel for the appellant that the non-production of the letter dated 26.9.1977 informing the defendant that the intention of the plaintiff to cancel the purchase order and the letter of cancellation dated 5.12.1977 amounts to fatal lacunae in the evidence of the plaintiff. Paragraphs 9, 11 and 12 of the plaint are the relevant paragraphs and the same is quoted below: “9. The defendant was requested again by letters dated 16.5.77, 1.7.77, 26.9.77 & 3.11.1977 to complete the supply as agreed to. The plaintiff-Board was urgently in need of the conductor. 11. Finally the Chief Engineer on behalf of the Plaintiff-Board on 3.11.1977 sent the final notice to the defendant informing the defendant that if the defendant fails to furnish the revised schedule for effecting the supplies within 7 days, the purchase order will be cancelled at the defendant's risk and cost. In the letter dated 26.9.1977 also it was made clear to the defendant that the order is liable to be cancelled at their risk and cost if they fail to complete the balance supply of 30,000 Mts. within 15 days. The defendant-firm did A.S.No.527/94 - 9 - not even reply to the final notice dated 3.11.1977. 12. So the Purchase Order was cancelled by letter dated 5.12.1977. The defendant-firm neither furnished a clear indication of the schedule of delivery of the balance quantity of Metres, nor even replied to the repeated reminders requesting to effect the supply of the balance. So the Board was constrained to cancel the order at the defendant's risk and cost. The conduct of the defendant-Firm is a clear violation of the contractual obligations thereby causing huge loss to the plaintiff for which the defendant alone is responsible and liable.” These averments are answered by the defendant in paragraphs 6, 8 and 9 and the same is quoted below: “6. The statement in para 9 of the plaint that the plaintiff Board was urgently in need of the conductor is not admitted. 8. In reply to the allegations made in para 11 of the plaint, it is submitted that the plaintiff Board has waived its right under the contract by its conduct and for that reason, the claim made in the plaint is not sustainable. 9. The statement in para 12 of the plaint to the effect that the plaintiff Board has incurred huge loss due to the non supply of the material is denied being not true.” A.S.No.527/94 - 10 - It is thus seen that the plaintiff's averment regarding issuance of a notice informing the defendant of the intention to cancel the purchase order and actual cancellation of the purchase order have not been denied by the defendant. It is one of the fundamental rules of pleadings that what is not specifically denied can be deemed to be admitted and admitted facts are not expected to be proved. 9. The result of the above discussion is that the challenge against the judgment and decree fails and the appeal will stand dismissed. However, having regard to the special circumstances which attend on this case, there will be a direction that if the principal amount due under the decree is paid by the appellant to the respondent on or before 30.11.2008, the respondent will receive such payment in full and final settlement of all its claims. No costs. srd PIUS C.KURIAKOSE, JUDGE