1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NUMBER 2305 OF 2006 IN SUIT NO. 2059 OF 2006 Satpal Jain ..Plaintiff. Vs. Glasstech Industries (India) Pvt. Ltd. & Ors. ..Defendants. Mr. D. H. Mehta i/b. Mr. B. H. Vyas for the Plaintiff. Mr. Rahul Narichania i/b. M/s. Mulla & Mulla for Defendant No.1. Mr. R.K. Dave for Defendant No.2. CORAM : S. J. VAZIFDAR, J. DATED : 20th AUGUST, 2008 P.C. : The suit is filed for an order and decree directing the Defendants to deliver the suit goods in the manner stated by Defendant no.2 in the Plaintiff's letter dated 17.3.2006. 2. Defendant no.2, Cunningham Lindsay International Private Limited, carries on business as an insurance surveyor and loss adjuster. Defendant no.3 is The United India Insurance Company Limited. 3. By a public notice dated 13.2.2006, Defendant no.1 2 invited sealed tenders from prospective buyers for disposal of wet and damaged material namely float glass and reflective glass. The notice stated that Defendant no.2 was appointed as the coordinator. The relevant clauses read as under : - “1.2 The seller shall have of the sole and absolute right and discretion to accept any offer or reject any or all offers without giving any clarification or assigning any reason. However, the Bidder shall have no option to accept a lesser quantity for delivery or withdraw their offer once submitted. 2.4 The tender shall be opened in presence of insured, surveyor and Nominated Officer of Insurance Company within 3 days of submission of tender. Successful bidder will be informed latest within 7 days of tender opening and the higher bidder shall be treated as the successful tenderer. However, sellers reserve the right to negotiate further with the highest bidder or reject all offers and re invite the tender or sell or dispose of in any manner as deemed fit. 2.5 The successful tenderer shall pay the entire amount of bid together with applicable taxes and duties thereon after adjusting the EMD within 7 calendar days of opening the bid, by Demand Draft obtained from the Nationalised or Scheduled Bank in favour of seller payable at Mumbai. In no case shall the successful tenderer seek any extension of time. For all unsuccessful bidders EMD amount will be returned after 15 days from the date of tender submission. 6.0 TERMINATION OF CONTRACT 3 6.1 The seller reserves the right at its sole discretion to terminate the contract at any time. 8.5 In case of any disputes, decision of surveyor will be binding to both the seller and the buyer.” 4. Four parties including the Plaintiff responded to the tender notice. The Plaintiff offered a sum of Rs.2,05,00,000 whereas the highest offer from the other three tenderers was only Rs.11,44,901/-. The Plaintiff however made the earnest money deposit by cheque instead of by a demand draft or a payslip as required by the above terms. 5. Defendant no.2 submitted a report to Defendant no.3 dated 7.3.2006 setting out the details of the tender process. Defendant no.2 opined that it would be prudent to pursue the Plaintiffs offer as it was far higher than any other offer received. Defendant no.2 stated that if the Plaintiff submitted the earnest money deposit of Rs. 20,50,000 by demand draft without any condition by the next day, his offer could be accepted, otherwise the first defendant's offer at 15% should be accepted as final. 6. Thereafter, on 9.3.2006 the Plaintiff submitted demand drafts in respect of the earnest money deposit. 4 7. Defendant no.2 under cover of its letter dated 10.3.2006 forwarded to Defendant no.1 the demand drafts submitted by the Plaintiff. It stated that it had already discussed with the Plaintiff and had agreed to confirm the schedule of the balance payment and the delivery in part lot by 14.3.2006. It also requested Defendant no.1 to co-operate with the Plaintiff on receipt of the requisite payment and to ensure that delivery of the quantity is approximately 75% of the payment made, till then excluding the earnest money deposit and that on receipt of final payment, the entire balance quantity could be delivered. 8. The Plaintiff by a letter dated 17.3.2006 stated that Defendant no.2 had been requested at the previous meeting to submit a detailed schedule for payment and lifting of the goods. A schedule for payment and lifting the goods was also specified. The Plaintiff also stated that a supervisor cum security guard would be stationed at sight till final delivery of the said goods and that the cost thereof would be paid by him. The Plaintiff stated that he proposed commencing the payment schedule from 27.3.2006 and to complete the payment in six installments by the end of the first week of May 2006. He further stated that he proposed lifting the entire material by the end of May 2006 and would in fact make an 5 effort to do so even earlier. The Plaintiff invited inputs from Defendant no.1 so as to finalize the schedule and stated that if Defendant no.1 was agreeable to the schedule suggested or as may be changed on a mutually agreeable basis, Defendant no. 1 should inform him/Defendant no 2. 9. By a letter dated 20.3.2006, Defendant no.1 informed the other Defendants that it had forwarded the request by Defendant no.2 to its principals in Belgium who in turn requested Defendant no.1 to retain the said goods stating that they did not want the same to be sold for certain reasons and in fact wanted to take back the material to Belgium for testing and experimental purposes. Defendant no.1 therefore requested Defendant no.2 to deduct the salvage value from the claim amount and to settle the same, the salvage being that offered by the Plaintiff. 10. It would be appropriate to preface a reference to the next two letters dated 23.3.2006 and 3.4.2006 addressed by Defendant no.2 with a reference to clause 8.5 of the tender conditions which provides that in case of any disputes, the decision of the surveyor/Defendant no.2 will be binding on both the Plaintiff and Defendant no 1. (A). Defendant no.2 by its letter dated 23.3.2006 replied to 6 the first Defendant's letter dated 20.3.2006. It is important to note that it stated : - “You are quite aware that the process of salvage disposal through tendering has already been undertaken and that the successful (tenderer) has been awarded the tender. You have also accepted the EMD amount from the bidder. We are of the opinion that it is highly unethical to take such kind of stand at this juncture. If your Principals had any reservation for disposal of this affected stock the same should have been discussed/disclosed much before and during the earlier stage. Please be advised that the matter of accepting any such proposal is at the discretion of your insurers and is permitted, it will warrant for the evidence of re-export of the entire affected lot with all shipping documents. Also, matter will have to be resolved amicably with the successful salvage buyer. An urgent meeting along with your responsible officials is required.”(emphasis supplied) (B). Defendant no.2 addressed a further letter dated 3.4.2006 to Defendant no.1 in which it reiterated some of the above facts and stated as follows :- “Time and again subject matter was discussed with your authorised representative Mr. Paul on the issue of salvage and practical difficulties of lifting-up the salvage in 15 days as mentioned in the tender. On review, we had confirmed that the salvage buyer shall 7 pay the money in 6 instalments and deliveries should be made after each instalment for the quantity equivalent to 75% of the value. The Earnest Money Deposit to be adjusted only against the last delivery.” (emphasis supplied) 11. The facts undoubtedly indicate a strong prima-facie case in favour of the Plaintiff that a valid and concluded agreement had been entered into, by which the Plaintiff had agreed to purchase the said goods. At the interlocutory stage, it would be sufficient to refer to clause 8.5 of the tender conditions and the two letters addressed by Defendant no.2 dated 23.3.2006 and 3.4.2006. Added to this is the affidavit filed by Defendant no.2 which sets out the procedure adopted and the purpose and significance thereof which supports this view. The parties having agreed by clause 8.5 that the decision of Defendant no.2 in respect of any disputes between them shall be binding, these letters and the said affidavit have their own force in establishing at least prima-facie a valid and concluded agreement between the parties. 12. That the payment was not to be made strictly in terms of the tender would make no difference in the facts and circumstances of the present case. Defendant no.1 is the owner of the goods. It is a private party. It was open to Defendant no.1 to agree to the terms and conditions being modified. There is nothing 8 in law that prevented it from doing so. Defendant no.2 was appointed as the coordinator as per the advertisement inviting tenders itself. Prima-facie, it appears that Defendant no.2 acted as the agent of Defendant no.1 and Defendant no.3 in the matter of the sale of the said goods. It confirmed that the goods had in fact been sold to the Plaintiff. There is nothing on record which even remotely suggests that it did not act bona-fide. In the circumstances, that there was a deviation from the terms of the tender regarding payment schedule makes no difference to the validity of the Plaintiff's submissions. 13. The Plaintiff has only sought the delivery of the said goods. This claim is based on the premise that the title in the goods had passed to the Plaintiff. Sections 19 and 20 of the Sale of Goods Act are relevant in this regard and read as under :- “19. Property passes when intended to pass. —(1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. (2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case. (3) Unless a different intention appears, the rules contained in Sections 20 to 24 are rules 9 for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.” 20. Specific goods in a deliverable state.— Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment of the price or the time of delivery of goods, or both, is postponed.” 14. In the present case the price for the said goods was agreed to. The goods were identified and were in a deliverable state. There is nothing on record which suggests that the property in the goods was not to stand transferred to the Plaintiff except upon receipt of the consideration. Nor is there anything on record that suggests that the property in the goods was to stand transferred to the Plaintiff only upon the delivery of the goods to him. 15. Defendant no.1 by its letter dated 24.4.2006 addressed to the other Defendants stated that in accordance with the terms of the tender it had decided to reject all the offers made by the bidders and accordingly returned the demand drafts. It stated that it wished to retain the entire salvage for itself. Mr. Narichania submitted that Defendant no.1 was entitled to do so in view of clause 6.1 which permitted it to terminate the contract at any time. 10 16. It is a moot point whether the clause permits a retrospective termination of a contract after the property in the goods had passed to the purchaser. It would be possible to contend that the clause permits the cancellation of a contract only in circumstances where the property in the goods has not passed to the purchaser. A construction to the contrary would lead to absurd results. If accepted, it would entitle Defendant no.1 to cancel the contract and resume possession of and property in the goods after any length of time. The clause does not stipulate a time period within which the right contained therein is to be exercised. This does not appear to have been the intention of the parties. 17. This is a large quantity of damaged and wet float and reflective glass imported from Belgium. There is nothing to indicate that the goods are ordinary articles of commerce easily available in the market. Mr. Narichania's reliance upon Section 58 of the Sale of Goods Act and the commentary from Mulla's on the subject is of no assistance to him. 18. Neither Defendant no.1 nor its principals will suffer any loss or damage by the grant of interim relief. It is pertinent to note that from the first Defendant's letter dated 20.3.2006, it is clear that 11 they in fact do not intend on selling the goods in the open market as it could damage the reputation of the principals. They only intend on taking the material back to Belgium for testing and experimental purposes. For this I propose to grant them liberty by this order. On the other hand, the Plaintiff is likely to suffer grave harm if the reliefs are rejected and he ultimately succeeds in the matter. Thus, the balance of convenience is in favour of the Plaintiff. 19. In the circumstances, the Notice of Motion is made absolute in terms of prayer (a). At the option of Defendant no.1, the goods shall be stored either at the premises of Defendant no.1 or at any other premises. The cost of and incidental to storing the goods shall be paid entirely by the plaintiff in the first instance but shall be subject to final orders in the suit. Defendant no.1 is at liberty to make an application for removing small quantities of the goods as samples for the purpose of testing and experimental purposes either for itself or its principals. The order shall remain stayed for a period of eight weeks from today. The ad-interim order however will continue to operate.