IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:11.06.2010 CORAM THE HONOURABLE MR. JUSTICE P.R.SHIVAKUMAR Appeal Suit No.104 of 2003 Chennai Metropolitan Water Suppy and Sewerage Board, No.1, Pumping Station Road, Chintadripet, Chennai – 600 002 ...Appellant/Defendant Vs. Bankatlal Indoria, Prop: Indoria Steel Corporation, No.9, Seshachala Garden Street Chennai – 600 019 ... Respondent/Plaintiff Prayer: Appeal filed under Section 96 of Civil Procedure Code against the judgment and decree in O.S.No.12820 of 1996 dated 10.8.2001 on the file of the IV Additional Judge, City Civil Court, Chennai. For Appellant : Mr.A.Arumugam For Respondent/Caveator : Mr.D.Madanchand Chopde JUDGMENT This appeal has been preferred by the defendant in Original Suit No.12820 of 1996 on the file of the IV Additional Judge, City Civil Court, Chennai against the judgment and decree dated 10.8.2001 passed in the above said case by the trial Court. 2.The respondent herein/plaintiff in the suit filed the suit containing averments which are, in brief, as follows: The respondent/plaintiff made an offer to purchase 750 metric tonnes of CI scraps from the appellant/defendant at the rate of Rs.4700/- per metric tonne and deposited a sum of Rs.8,80,000/- with the appellant/defendant for the said purpose. The said offer was accepted by the defendant by letter dated 31.3.1993 and the respondent/plaintiff was required to remit a sum of Rs.26,45,000/- being the balance sale price and a sum of Rs.1,41,000/- being the https://hcservices.ecourts.gov.in/hcservices/ sales tax at 4% on the sale price . Pursuant to the above said letter of acceptance and the conditions stipulated in the letter dated 19.4.1993 granting extension of time for deposit and demanding payment of interest at 18% for the delayed period, the respondent/plaintiff paid a sum of Rs.3,00,000/- by pay order on 27.4.1993 and a further sum of Rs.23,45,000/- by pay orders on 30.4.1993. The respondent/plaintiff also made a payment of Rs.1,14,000/- towards sales tax and a further sum of Rs.39,132/- towards interest for the belated payment. The appellant/defendant, by letter dated 03.5.1993, acknowledged the receipt of the above said amounts and asked the plaintiff to take delivery of 750 metric tonnes of CI scraps from NPC Stores, M.G.R Nagar, Chennai – 600 078 on or before 18.5.1993 and informed that in case of failure to take delivery, the respondent/plaintiff had to pay ground rent as per Clause 8 of the auction sale conditions. Thereafter, the appellant/defendant started effecting delivery of CI scraps and by 12.6.1996 the appellant /defendant could deliver 665.08 metric tonne of CI scraps alone and there was a deficiency in supply of CI scraps to the tune of 84.920 metric tonnes. The respondent/plaintiff, by letter dated 06.7.1993 addressed to the appellant/defendant, demanded supply of the balance quantity of CI scraps. The said letter was not responded and hence, the respondent/plaintiff had to send another letter on 08.9.1993 for which the appellant/defendant sent a reply on 13.9.1993 containing false averments. The averments made in the said letter of the appellant/defendant dated 13.9.1993 were refuted by the respondent/plaintiff in his letter dated 23.9.1993 and demanded supply of the balance quantity of CI scraps. Even thereafter, the appellant/defendant failed to supply the balance quantity of CI scraps and the appellant/defendant also failed to make refund of the amount corresponding the short supply of CI scraps. Therefore, the respondent/plaintiff has to approach the Court with the suit for the recovery of a sum of Rs.6,20,547/- being the total cost of 84.92 metric tonne of CI scraps, which the appellant/defendant failed to supply, Rs.15,965/- being the sales tax collected for the said amount making a total of Rs.4,15,089/- and a sum of Rs.2,05,458/- being the interest on the above said amount calculated at the rate of 18% p.a up to the date of filing of the suit with future interest and cost. 3.The suit was resisted by the appellant herein/defendant by filing a written statement containing the allegations which are in brief, as follows: The plaint allegations except those that are admitted in the written statement are false. In response to a tender call made by the appellant/defendant on 17.3.1973 for the disposal of 750 metric tonnes of CI scraps in “as is where is condition”, the plaintiff offered to purchase the same at the rate of Rs.4700/- per metric tonne. He also remitted a sum of Rs.8,80,000/- as Earnest Money Deposit accepting all tender norms in the tender book. The rate https://hcservices.ecourts.gov.in/hcservices/ offered by the respondent/plaintiff was accepted by the appellant/defendant by letter dated 31.3.1993 and the respondent/defendant was informed to pay the balance cost of Rs.26,45,000/- besides Rs.1,41,000/- towards sales tax at the rate of 4%. Thereafter, the plaintiff made remittence towards the sale value of 750 metric tonnes of CI scraps on different occasions and also paid the penalty charges for the belated payments, according to the tender conditions. He also got the Delivery Order on 03.5.1993 for removing the scraps from the Yard within the time limit specified in the Delivery Order, in accordance with the tender conditions. But contrary to the tender condition that the respondent/plaintiff had to remove the materials in “as is where is condition”, he separated the rusted particles by breaking and cleaning the CI scraps and took delivery of 665.005 metric tonne of CI scrap alone leaving the rusted particles weighing about 84.915 metric tonne which is roughly 11.2% of the total weight of the CI scraps. By breaking and cleaning the CI scraps and leaving the rusted particles, the respondent/plaintiff violated the tender conditions and has come forward with the suit with an ulterior motive to get unlawful gain. The appellant/defendant permitted the plaintiff to remove the materials in “as is where is condition” and it was the plaintiff who violated the tender norms by rejecting the balance materials weighing about 84.915 metric tonnes. Therefore, the appellant/defendant is not responsible for the same. The claim made by the respondent/plaintiff is devoid of merits. Hence the suit is liable to be dismissed with cost. 4.Based on the above said pleadings, the trial Court framed three issues which are as follows; ”1) Is it correct to state that the plaintiff failed to take delivery of 84.915 metric tonne scraps as contended by the defendant? 2)Whether the plaintiff is entitled to recover a sum of Rs.6,20,547/- together with interest at the rate of 18% p.a? 3)To what other relief the plaintiff is entitled?” 5.PW1 was examined as the sole witness and Exs.A1 to A7 were marked on the said of the plaintiff. DW1 was examined as the sole witness and no document was marked on the side of the defendant. 6.The learned trial Judge considered the pleadings made and evidence adduced on both sides, both oral and documentary, in the light of the points urged by the respective counsel appearing for the https://hcservices.ecourts.gov.in/hcservices/ parties in their arguments and, upon such consideration, came to the conclusion that the respondent herein/plaintiff was entitled to recover a sum of Rs.4,15,089/- towards the short supply of scraps together with an interest at the rate of 12%p.a on the said amount from the date of payment viz., 06.7.1993 till the date of decree and a further interest from the date of decree till realization at the rate of 6% p.a. The trial Court also awarded cost. Impugning the judgment and decree of the trial Court dated 10.8.2001, the appellant herein/defendant has come forward with the present appeal on various grounds set out in the memorandum of appeal. 7.The points that arise for consideration in this appeal are as follows: 1)Whether the respondent/plaintiff failed to take delivery of the full quantity of C.I. scraps as per the contract, even though the same had been made available by the appellant/defendant? 3)Whether the respondent/plaintiff separated the incrustations and taken delivery of the C.I scraps minus incrustations and such rejected portion accounted for the short supply? 5)Whether respondent/plaintiff is entitled to a decree for the recovery of a sum of Rs.4,15,089/- with interest and cost? 7)To what relief the parties are entitled? 8.The arguments advanced on behalf of the appellant and also on behalf of the respondent were heard. The entire materials available on record were also perused. Points 1 and 2: 9.The Chennai Metropolitan Water supply and Sewerage Board, who figured as defendant in the original suit (herein after referred to as the Board), a statutory body, is the appellant herein. The Board called for the tenders for the purchase of CI scraps that had been kept in the Yard, NPC Stores, M.G.R.Nagar, Chennai – 600 078. Pursuant to the same, like others the plaintiff also submitted an offer offering to purchase 750 metric tonnes of CI scraps from the appellant/defendant at the rate of Rs.4,700/- per metric tonne. The said price offered by the respondent/plaintiff happened to be the highest price and he had also deposited a sum of Rs.8,80,000/- as Earnest Money Deposit. The said offer made by the respondent/plaintiff was accepted by the Board by letter dated 31.3.1993 and the respondent/plaintiff was asked to pay a sum of Rs.26,45,000/- being the balance price and a sum of Rs.1,41,000/- towards Sales Tax at the rate of 4% on the total cost of CI scraps. https://hcservices.ecourts.gov.in/hcservices/ The respondent/plaintiff had prayed for extension of the time for making payment of the said amount and the Board granted extension of time by its letter dated 19.4.1993 imposing a condition that an interest on the cost should be paid at the rate of 18% p.a. Within the time thus extended, the respondent/plaintiff paid the entire amount mentioned above and a further sum of Rs.39,132/- towards interest for the belated payment. After the said payment was made, Delivery Order was issued by the Board on 03.5.1993 for removing the scraps from the Yard within the time specified in the Delivery Order. Accordingly, the respondent/plaintiff started taking delivery of CI scraps from the yard. Within the time limit specified in the Delivery Order, the respondent/plaintiff had taken delivery of 665.80 metric tonnes of CI scraps. Though there is a slight variation regarding the quantity of CI scraps lifted by the respondent/plaintiff (according to the respondent/plaintiff 665.080 metric tonnes, whereas according to the defendant it was 665.005 metric tonnes), the above said particulars are by and large admitted and not disputed by the parties. Therefore, it remains an admitted fact that the CI scraps taken delivery by the respondent/plaintiff and removed from the Board's yard fell short of 84.920 metric tonnes for which quantity also the amount was paid in advance by the respondent/plaintiff. Though according to the appellant/defendant it comes to 84.995 metric tonnes, the respondent/plaintiff has claimed the value of 84.920 metric tonnes alone and the corresponding Sales Tax and interest. 10.It is not in dispute that the respondent/plaintiff did not take delivery of 84.920 metric tonne of CI scraps out of 750 metric tonne of CI scrap for which amount was paid by the respondent/plaintiff. The reason for the shortage, according to the respondent/plaintiff, is that the appellant /defendant had made available only 665.080 metric tonnes of CI scraps for the respondent/plaintiff to take delivery and the balance quantity was not made available by the appellant/defendant. Per contra, it is the contention of the Board (appellant/defendant) that the CI scraps were kept in a heap and the quantity of the CI scraps was agreed to be 750 metric tonnes; that the respondent/plaintiff agreed to take delivery of the CI scraps in “as is where is condition”; that instead of taking the CI scraps in “as is where is condition”, the respondent/plaintiff chose to break the pipes and clear the rust at the time of taking delivery of scraps and that in that process the rusted particles which had been separated and omitted to be taken delivery of by the respondent/plaintiff accounted for the short supply of the CI scraps. It is the further contention of the Board (appellant/defendant) that the said act on the part of the respondent/plaintiff was against the tender conditions and that hence the respondent/plaintiff is not entitled to claim any amount towards the value of the alleged short supply of CI scraps and the corresponding portion of sales tax and interest. https://hcservices.ecourts.gov.in/hcservices/ 11.In this regard, PW1 has deposed in clear and categorical terms that the CI scraps made available for him to take delivery weighed 665.080 metric tonnes alone and that the Board had failed to make available the balance quantity of CI scraps in accordance with the contract. A specific suggestion put to him that 750 metric tonnes of CI scraps were there and that he took delivery of 666 metric tonnes alone and refused to take delivery of the balance was stoutly denied by him. He has made it clear in his testimony that only 665.080 metric tonne of C.I. scraps were available which he promptly took delivery; that apart from the said quantity there was no scraps available for taking delivery and that the same was the reason why there was a shortage in supply. The further suggestion that respondent/plaintiff broke the pipes, separated the rusted particles and rejected them and such rusted particles rejected by the respondent/plaintiff amounted to 11.2% of the total quantity was also stoutly denied by PW1. 12.In support of the contention of the respondent/plaintiff, documentary evidence in the form of Exs.A1 to A7 were also produced. Ex.A1 is the letter of the Board dated 31.3.1993 addressed to the respondent/defendant accepting the highest bid made by the respondent/plaintiff for the disposal of the 750 metric tonnes of CI scraps for a total cost of Rs.35,25,000/- and directing him to pay a sum of Rs.26,45,000/- after deducting a sum of Rs.8,80,000/- already paid as Earnest Money Deposit along with the tender documents and a further sum of Rs.1,41,000/- towards 4% sales tax. The said amount was directed to paid on or before 08.4.1993. It seems, on the request of the respondent/plaintiff, time for payment of the balance amount for the CI scraps was extended up to 05.5.1993, subject to a condition that an interest for the balance amount from the date of confirmation of bid at 18% p.a to be paid. The same is evidenced by the letter of the Board dated 09.4.1993 marked as Ex.A2. Ex.A3 letter (delivery order) dated 03.5.1993 addressed to the respondent/plaintiff by the Board evidences the payment of the entire amount for the removal of 750 metric tonnes CI scraps from N.P.C Stores, M.G.R.Nagar, Chennai – 78. In the said delivery order the respondent/plaintiff was directed to take delivery of 750 metric tonnes CI scraps from the N.P.C stores, M.G.R.Nagar, Chennai -78 on working days between 10a.m and 3p.m at the expenses of the plaintiff on or before 18.5.1993. 13.Under Ex.A4 letter dated 06.7.1993, the Senior Manager (Materials) was addressed to the effect that a balance of 86 metric tonnes of CI scarps was yet to be made available to the respondent/plaintiff. In the said letter, the respondent /plaintiff had also requested the Board to release M.S scraps in lieu of CI scraps, if required quantity of CI scraps was not available for delivery. It was also informed that the difference of rate for the https://hcservices.ecourts.gov.in/hcservices/ M.S scrap would be paid by the respondent/plaintiff. The said letter was not responded. Therefore, a letter dated 08.9.1993 was addressed to the Senior Manager (Materials) of the Board by the respondent/plaintiff requesting delivery of balance quantity of materials or for refund with interest. It was also informed that in case of failure to comply with the request, the respondent/plaintiff would be forced to approach the Court of law for appropriate remedy. Only after the said letter dated 08.9.1993 was sent, the Board came forward with a reply under Ex.A6 dated 13.9.1993 contending that the CI scraps was agreed to be taken delivery by the respondent/plaintiff in “as is where is condition”; that the plaintiff while taking delivery broke the pipes into pieces, removed the incrustations and taken delivery of the CI scraps minus the rusted particles; that it was in violation of the tender-cum-auction condition and that the rejected portion would account for the shortage of supply of C.I. Scraps. For the said notice, a proper reply was sent by the respondent/plaintiff contending that a specific quantity 750 metric tonnes of CI scraps was sold in auction and not in lot wise as claimed by the Board; that full payment with interest etc., had been collected from the respondent/plaintiff for 750 metric tonnes and not for an approximate quantity sold on “as is where is" condition; that the Officers of the Board weighed each and every lorry load of materials delivered to the plaintiff and gave gate passes for the actual quantities delivered and that the plaintiff was not given any permission for breaking the materials in the Board's yard before loading them into the lorries. Since the Board had not settled the claim even thereafter, the respondent/plaintiff chose to file the suit for the recovery of the sum claimed in the plaint. 14.In this regard, the oral testimony of DW1, the sole witness examined on the side of the Board (defendant), is not helpful to the Board to prove its case that the scrap was sought to be sold in “as is where is condition” and that the weight of the scraps collected in a heap was agreed by the parties to be 750 metric tonnes. Though, DW1, the Inventory Control Manager of the Board made an attempt in his evidence in chief examination to support the case of the Board that the plaintiff, in stead of taking delivery of the CI scraps as found in the heap, chose to break the pipes into pieces, separated the incrustations and taken delivery of the scraps after separating the incrustations and the incrustations which the plaintiff refused to take delivery was to the tune of 84.91 metric tonnes, the learned counsel for the plaintiff was able to successfully establish the reliability of his evidence by eliciting answers pointing out the fact that DW1 did not have any personal knowledge and that he was not speaking even with reference to the documents that are maintained in the normal course of business. Admittedly, the delivery of CI scraps was effected in 1993. DW1 has candidly admitted that he was not the Officer in-charge of the said work at that point of time. He also pleaded ignorance as to who was in-charge of the said section. It is https://hcservices.ecourts.gov.in/hcservices/ also his clear admission that he was not the person in-charge when delivery of CI scraps was made to the plaintiff. It is his clear admission that, out of 750 metric tonnes of CI scraps agreed to be delivered to the plaintiff, 84.92 metric tonnes of CI scraps was not supplied to him. However, he chose to append a rider that the officials of the Board were ready to deliver the same and it was the plaintiff who violated the tender conditions and refused to take delivery of the same. DW1 has also admitted that there is no record to show that the plaintiff refused to take delivery of the above said quantity of CI scraps even though the same was made available by the Board to the plaintiff for taking delivery. It is also the admission made by DW1 that the plaintiff had to pay ground rent in case of failure to take delivery of the scraps in accordance with the tender conditions, but no such ground rent was either claimed or collected from the plaintiff. It is his clear admission that for the alleged failure on the part of the plaintiff to take delivery of the balance CI scraps to the tune of 84.920 metric tonnes, no ground rent was claimed by the Board. In Ex.A4, the plaintiff had made it clear that the above said quantity of CI scraps was not made available to the plaintiff for taking delivery. DW1 has not only pleaded ignorance as to the correctness of the said claim made by the plaintiff in Ex.A4, but also pleaded ignorance regarding the exchange of letters between the Board and the plaintiff in this regard. Therefore, it is obvious that the testimony of DW1 shall not, in anyway, help the Board (defendant) to prove its defence case that despite the fact that the balance quantity of scrap had been made available to the plaintiff for taking delivery, the plaintiff omitted and refused to take delivery of the same. 15.On the other hand, the clear plea made by the plaintiff has been substantiated by the cogent and reliable testimony of PW1, which stands corroborated by the documentary evidence viz., Exs.A1 to A7 produced on the side of the plaintiff. The contention of the Board has been clearly refuted by the plaintiff in Ex.A7, the last of the communications addressed by the plaintiff to the Board. The finding of the Court below that the plaintiff's case that there was short supply of CI scraps to the tune of 84.92 metric tonnes has been substantiated is found to be made on sound reasoning and on proper appreciation of evidence. It is pertinent to note that the plaintiff, under Ex.A4, had requested the Board either to deliver the balance CI scraps or to deliver M.S scraps promising to pay the difference of rate for M.S scraps over C.I. Scraps. 16.Yet another aspect is worth mentioning to support the finding of the trial Court that there was short supply of CI scraps. It is the clear evidence of PW1 that the scraps as a heap, identified by the parties, was not the one sold to the plaintiff in one lot with the understanding that the entire scrap available in that lot had to be taken delivery of by the plaintiff without having any reference to https://hcservices.ecourts.gov.in/hcservices/ the actual weight of the scraps. It is also not the contract that the plaintiff and the Board mutually agreed that the deficiency, if any or excess of the scraps, if any, available in the heap shall be that of the plaintiff and no claim for the shortage or excess shall be made by either party against the other party. Therefore, the attempted contention of the Board that the scraps which had been collected in a heap as a lot was agreed to be of 750 metric tonnes and the entire heap (whether it would weigh below or more than 750 metric tonnes) was agreed to be sold to the plaintiff for the amount collected by the Board from the plaintiff has not been substantiated. If it could be true, then, the contract shall be more specific to the effect that the quantity mentioned was approximate and the deficiency or excess shall be borne by or shall go to the benefit of the plaintiff. If at all the scraps collected in a heap as a whole lot was sought to be sold, then there won't be any need to have each and every lorry load weighed before the vehicle left the Board's yard. Clear averments have been made and clear evidence has been adduced to the effect that the officers of the Board were present at the time of loading the scraps and each and every lorry load of scraps was weighed and only after such weight measurement, the vehicle was allowed to leave. The very fact that the Board admits that the total quantity delivered to the plaintiff amounted to 665.080 metric tonnes alone will make probable the case of the plaintiff that each and every load was weighed and only thereafter, the vehicle was allowed to leave. That is how the Board was able to acertain the quantity of scraps that had been removed from the yard of the Board. Further more, if it is true that the plaintiff broke the pipes into pieces, separated the incrustations and took delivery of the scraps minus the incrustations separated and rejected by the plaintiff much against the tender conditions, the officials of the Board would not have permitted the plaintiff to do so. At least the officials of the Board would have chosen to get an endorsement in writing