R.S.A.No. 1201 of 2009 and 1 R.S.A.No. 2282 of 2009(O&M) In the High Court of Punjab and Haryana at Chandigarh Date of decision: 4.3.2011 R.S.A.No. 1201 of 2009(O&M) Food Corporation of India ......Appellant Versus M/s Gagan Rice Mills .......Respondent R.S.A.No. 2282 of 2009(O&M) M/s Gagan Rice Mills ......Appellant Versus Food Corporation of India .......Respondent CORAM: HON'BLE MRS. JUSTICE SABINA Present: Mr.H.P.Verma, Advocate, for Food Corporation of India. Mr.S.K.Singla, Advocate for M/s Gagan Rice Mills. **** R.S.A.No. 1201 of 2009 and 2 R.S.A.No. 2282 of 2009(O&M) SABINA, J. Vide this judgment both these appeals will be disposed of as these have arisen out of the same suit. Plaintiff Food Corporation of India (FCI for short) filed a suit for recovery against the rice mill-defendant. The case of the FCI, in brief, was that a policy had been framed by the Central Government and under the said policy FCI used to purchase paddy from the market and give it to the millers for shelling. Defendant-mill had agreed to shell the paddy as per its storage capacity. The paddy stored under the mill was to remain in joint custody of the FCI and the mill. As per the policy of the Central Government, 67 % of superfine rice was required to be delivered out of the paddy supplied to the defendant. The defendant had agreed to abide by the terms and conditions of the said agreement. The defendant had furnished the requisite security in terms of the agreement. The defendant was also responsible for the safe custody of paddy supplied to it for milling and delivery of rice as per the agreement. Losses, if any, incurred during the transit or storage were to be made good by the defendant @ 1 ½ time of economic costs of the variety of paddy/ rice. The defendant was required to deliver the rice within ten days of issuance of supply of paddy at regular intervals. As per schedule, 20% of rice was to be delivered in the months of October/ November 1994, 26% in December 1994, 26% in the month of January 1995 and 28% in the month of February 1995. The defendant had, however, failed to shell the paddy and as such it becomes liable to pay 1 ½ time of economic costs of paddy R.S.A.No. 1201 of 2009 and 3 R.S.A.No. 2282 of 2009(O&M) supplied to it. The total paddy stored in the premises of the defendant was 19520 bags weighing 12669.75 quintals of superfine paddy. Since the defendant failed to shell the paddy, the defendant dispatched 5120 bags weighing 3261 quintals of paddy before 31.5.1995. Cost of the remaining paddy was assessed at ` 876.21 per quintal @ 1 ½ time of the economic cost i.e. ` 82,44,041/- on 1.6.1995. Out of remaining paddy, 14401 bags were retrieved and their value was assessed at ` 395/- per quintal weighing 8847.23 quintals amounting to ` 34,96,656/-. The FCI was entitled to recover ` 47,49,385/- from the defendant. An expenditure of ` 46,406/- was incurred by the FCI on retrieving the paddy and hence, FCI was entitled to recover ` 48,35,791 plus 22,48,637/- towards interest. Defendant, in its written statement, averred that 19520 bags of paddy were stored in the premises of the defendant. The execution of agreement to shell the paddy between the parties was denied. It was averred that the paddy had been stored in the premises of the mill on rental basis. On the pleadings of the parties, following issues were framed by the trial Court:- “1. Whether the plaintiff is entitled to the recovery of ` 70,84,428/- as prayed along with interest ? If so, at what rate? OPP 2. Whether this Court has no jurisdiction to try and entertain the present suit ? OPD 3. Whether the suit is not maintainable in the present form ? OPD R.S.A.No. 1201 of 2009 and 4 R.S.A.No. 2282 of 2009(O&M) 4. Whether the defendants are entitled to the costs under Section 35A of the CPC? OPD 5. Whether the plaintiff is stopped by its act and conduct from filing the present suit? OPD 6. Whether the agreement as alleged by the plaintiff is forged and fabricated document ? OPD 7. Relief.” The suit filed by the plaintiff was dismissed by the trial Court vide judgment and decree dated 9.11.2005. In appeal, the suit filed by the plaintiff was decreed by the Additional District Judge, Faridkot vide judgment and decree dated 30.9.2008 for recovery of ` 20.45,777/- with proportionate costs. FCI was further entitled to recover interest @ 12% per annum w.e.f. 1.6.1995 till realisation. Hence, the present appeals by plaintiffs as well as defendant. Learned counsel for the FCI has submitted that the agreement entered between the parties, vide which the paddy was given to the mill for shelling, had been duly proved on record. As per the said agreement, in case of any loss/ storage, the mill was required to pay 1 ½ time of economic costs of paddy/ rice. Hence, the suit of the plaintiff for recovery was liable to be decreed as claimed. Learned counsel for the Mill, on the other hand, as submitted that the FCI had failed to prove its case. The alleged agreement had not been proved on record. In fact, the paddy had been kept in the Mill for storage purposes. Since the loss of weight of paddy was due to atmospheric condition, the Mill was not at fault. R.S.A.No. 1201 of 2009 and 5 R.S.A.No. 2282 of 2009(O&M) After hearing learned counsel for the parties, I am of the opinion that the present appeals are devoid of any merit and deserve dismissal. Learned first Appellate Court, after appreciating the evidence led by the parties on record, held that the alleged agreement qua handing over of the paddy for shelling was not duly proved on record. However, it was established on record that the paddy had been stored in the Mill by the FCI and some shortage had occurred. Basing calculations on the said shortage, the suit filed by the FCI for recovery was decreed. DW-1 Suraj Kumar, partner of the Mill admitted that 19520 bags of paddy had been stored in the Mill premises. He also admitted the factum of deposit of security with FCI by the Mill. The FCI had, however, failed to establish any agreement executed between the parties qua offer of shelling by the Mill to the FCI. The witnesses examined by the FCI deposed in their cross-examination that Hukam Chand had not signed agreement/ offer in their presence. PW-3 Harnek Singh, in his cross- examination, admitted that Hukam Chand had no concern with the firm but there was a power of attorney in favour of Hukam Chand. Out of the stored paddy with the Mill, the FCI established that 5120 bags weighing 3261 quintals were dispatched before 31.5.1995 and remaining 14401 bags were retrieved which contained 8847.23 quintals of paddy. Since the FCI had failed to establish the agreement which entitled it to claim shortage @ 1 ½ time of economic costs, the learned first Appellate Court rightly decreed the suit of the plaintiff- FCI, after calculating the shortage of paddy at ` R.S.A.No. 1201 of 2009 and 6 R.S.A.No. 2282 of 2009(O&M) 584.14. The expenditure incurred by the FCI while retrieving the paddy was also added in the shortage amount. No substantial question of law arises in these regular second appeals, which would warrant interference by this Court. Accordingly, the same are dismissed. (SABINA) JUDGE March 04, 2011 anita