IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID TUESDAY, THE 9TH FEBRUARY, 2010 / 20TH MAGHA, 1931 AS.No. 64 of 1999(A) -------------------- OS.231/1993 of SUB COURT,KOTTARAKKARA .................... APPELLANT/PLAINTIFF: ------------------ M/S. REHABILITATION PLANTATIONS LTD. (A GOVERNMENT COMPANY) REPRESENTED BY ITS MANAGING DIRECTOR, PUNALUR - 691 305. BY ADV. SRI.M.C.JOHN RESPONDENTS/DEFENDANTS 1 AND 2: --------------------- 1. MRS. LIYA MATHEW, MALAYA RUBBERS, XIII/25, M.C. ROAD, NATTAKOM, KOTTAYAM-13. 2. MATHEW T. THOMAS, MANDATE HOLDER OF MRS.LIYA MATHEW, -DO- -DO- ADV. SRI.SAIGI JACOB PALATTY. THIS APPEAL SUIT HAVING BEEN FINALLY HEARD ON 09/2/2010, THIS COURT ON THE SAME DAY DELIVERED THE FOLLOWING: HARUN-UL-RASHID,J. --------------------------- A.S.NO.64 OF 1999 --------------------------- DATED THIS THE 9TH DAY OF FEBRUARY, 2010 JUDGMENT Plaintiff in O.S.No.No.231/93 on the file of the Sub Court, Kottarakara is the appellant. The suit filed for compensation for breach of contract was dismissed with costs by the court below. Hence, this appeal. The parties hereinafter referred to as the plaintiff and defendants as arrayed in the suit. 2. The plaintiff is Rehabilitation Plantations Ltd., a Company owned by the State of Kerala (hereinafter referred as “the Company”). On 24/12/1990 the plaintiff and defendants executed an agreement marked as Ext.A1 in the suit. The defendants agreed to purchase approximately 50 metric tons of skim rubber stored by the Company at its factory in Kulathuppuzha estate. The price fixed is at the rate of Rs.9.10 per kilogram. The last date for lifting the goods is 9/1/1991 and -2- A.S.No.64/1999 a grace period of 7 days was also provided. There is a further stipulation in the agreement that the plaintiff-Company shall have the right to extend the period for lifting the stock and also to reserve the right to ask for payment of ground rent at the rate of Rs.5/- per metric ton per day, after the date fixed for taking delivery. Another clause in Ext.A1 agreement stipulates that in case the defendants make default in taking delivery of the goods, the plaintiff would recover the loss at the risk and cost of the purchasers together with the ground rent, advertising charges etc. The agreement further provides that the Company is entitled to forfeit the earnest money deposit, if the defendants committed breach of the terms and conditions of Ext.A1 agreement. By Ext.A2 letter dated 5/1/1991 the defendants informed the Company that they would pay the value of 20 metric tons of skim rubber before 9/1/1991 and requested for extension of 15 days' time from 10/1/1991 for taking delivery. The reason stated in Ext.A2 letter is that there is shortage of diesel and therefore -3- A.S.No.64/1999 transportation of the goods to north India is getting delayed. In Ext.A2 letter it is requested to extend the period for lifting the remaining 30 metric tons for a further period of 15 days from the expiry date so as to enable the defendants to make arrangements for payment and lifting of the goods. On 9/1/1991 the defendants paid the price of 20 metric tons of skim rubber. On 9/1/1991 another letter marked as Ext.A3 was sent to the Company. Along with Ext.A3 they have sent the value of 20 metric tons of skim rubber. It is stated therein that they are sending the value of 20 metric tons of skim rubber after adjusting an amount of Rs.20,000/- still in credit with the Company. There is a request to the Company to adjust Rs.20,000/- towards the price of 20 metric tons and further requested to issue the release order for 20 metric tons of skim rubber. In Ext.A3 letter the defendants have also asked 15 days' extension for making payment and lifting the balance quantity as requested in their letter dated 5/1/1991 marked as Ext.A2. On 17/1/1991 the -4- A.S.No.64/1999 defendants lifted 10 metric tons of skim rubber and requested the Company to extend the period for lifting the balance 10 metric tons out of 20 tons till 21/1/1991. Ext.A4 is the letter issued by the defendants in that behalf. In the meanwhile the Company gave extension of time for lifting the entire stock on or before 21/1/1991 on condition that the defendants should pay ground rent. It is seen that the defendants lifted 10 metric tons of skim rubber on 25/1/1991 and did not take delivery of the balance quantity of 30 metric tons skim rubber within the extended time fixed by the Company. In different letters sent to the Company, marked as Exts.A5 to A8 during February, 1991, other reasons are stated for not taking delivery of the goods. Shortage of diesel for transportation, strike of labourers in the factory and the misconduct of field officers of the Company etc. were stated on different occasions for non-lifting of the goods. The balance goods was not lifted by the defendants as stated earlier for one reason or other, even after the period extended as requested by -5- A.S.No.64/1999 the defendants. 3. Ext.A5 is a telegram dated 21/1/1991 addressed to the Managing Director of the Company, which is the last date fixed for lifting th entire stock. The telegram was sent with the endorsement “lifting 'skim rubber' within the period not possible--Diesel shortage. Letter follows.” The letter dated 21/1/91 stated in the telegram is marked as Ext.A6. Again on 15/2/1991 the defendants sent another letter stating that they have arranged the balance payment for lifting 30 metric tons skim rubber during the lst week of February 1991, but unfortunately the labour strike prevented them from doing so and requested the Company to waive the ground rent for the remaining 30 metric tons of skim rubber during the period of strike, as it is not their fault for the delay. The said letter dated 15/2/1991 is marked as Ext.A7. By letter dated 19/2/1991 the Company has informed the defendants that unless they remit the value of 30 metric tons of skim rubber and lift the entire quantity within ten days, the -6- A.S.No.64/1999 goods will be re-sold at their risk and cost and the loss will be recovered from them by initiating legal action. The said letter is marked as Ext.A8. Ext.A9 is the reply letter sent by the defendants to the Company. By the said letter the defendants sought for further time for depositing the cost of 30 metric tons skim rubber. Ext.A10 is another communication dated 6/3/1991 addressed to the Managing Director of the Company stating that the re-tender for the material on their risk and loss is not admissible and cannot be justified as they are ready to remit the value of the remaining quantity of the material in the light of the fact that neither in the tender conditions nor in the agreement, it is recited that the purchaser should be allowed to take the new stock only. It is further stated that if the Company proceeds to re- tender the balance goods at the defendants' risk and loss, it is not acceptable to them. By the said letter they demanded release of the security deposit. Ext.A11 is the letter dated 17/4/1991 sent by the defendants to the Company again demanding the security -7- A.S.No.64/1999 deposit of Rs.13,000/-. Ext.A12 is the communication dated 27/4/1991 issued by the Company to the defendants informing that the quantity tendered by them have been earmarked and stocked in the factory for delivery and out of such stock they have lifted only 20 metric tons and therefore, the defendants were directed to collect the balance quantity of 30 metric tons within a period of ten days from the date of receipt of the letter, failing which the Company will be constrained to re-sell the goods at the defendants' risk and cost and to recover the loss from them by initiating legal action. Ext.A13 is another communication issued by the defendants on 6/5/1991 again requesting the Company to refund the security deposit. 4. By notice dated 6/5/1991 the Company invited tenders for re-sale and ultimately 30 metric tons of skim rubber was re-sold to one Industrial Rubber Company at the rate of Rs.7/- per kilogram. The purchaser Company took delivery of the 30 tons of skim rubber. It is the plaintiff's case that -8- A.S.No.64/1999 because of the breach committed by the defendants, the Company sustained loss of Rs.63,000/-, which is the difference of price between the contractual price with the defendants and the re-sale price. The Company also claimed an amount of Rs.4,473.33 as advertising charges for the re-sale and another amount of Rs.12,150/- by way of ground rent at the rate of Rs.5/- per day per ton for 147 days. Therefore, the Company prayed for a decree against the defendants for a total amount of Rs.89,532/- with 12% interest. The defendants contended inter alia that they took delivery of 20 metric tons as stipulated in the agreement that the Field Officer of the Company was insisting the defendants to take delivery of fresh stock and did not care to stock the fresh skim rubber separately from the old stock, that for fresh stock water contents of skim rubber will be only 40% to 45% and the dry rubber content of fresh stock of skim rubber will be only 55% whereas in the case of old stock, the dry rubber content will vary between 80% to 85%. It is also contended that the matter was -9- A.S.No.64/1999 brought to the notice of the Company, that they did not take any action to redress the grievances of the defendants and so the defendants did not take delivery of the remaining 30 metric tons. As such there was no breach of contract on their part and therefore the plaintiff is not entitled to claim loss on account of the re-sale and forfeiture of the earnest money deposit. 5. The evidence in this case consists of oral testimony of PWs.1 and 2, DWs.1 and 2, Exts.A1 to A26 and B1 and B2. 6. The trial court framed the issue as to whether the plaintiff or the defendants committed breach of contract and whether the plaintiff is entitled to recover the plaint claim from the defendants. I have already discussed the sequence of events and the communication between the parties immediately after the execution of Ext.A1 agreement. The parties are bound by the terms of Ext.A1 agreement. I have already referred to the important terms of Ext.A1 agreement. As per Ext.A1, the last date for lifting 50 metric tons of goods was 9/1/1991. -10- A.S.No.64/1999 Admittedly, the skim rubber was not taken delivery before the said date. By Ext.A2 letter dated 5/1/1991 the defendants informed the Company that they will remit the value of 20 metric tons of skim rubber on or before 9/1/1991 and requested the Company to extend the period for lifting the remaining 30 metric tons for a further period 15 days from the expiry date. So the stand of the defendants in Ext.A2 is that they will remit the value of 20 metric tons of skim rubber within the time stipulated in the agreement. There is no assurance that they will lift the goods within the said date. They wanted further time for depositing the value of 30 metric tons of skim rubber. Ext.A3 letter dated 9/1/1991 was also sent on the last date fixed for lifting the entire stock on payment, in which it is stated that they have remitted the value of 20 metric tons of skim rubber less Rs.20,000/-. In Ext.A3 it is also stated they have already requested for 15 days' time for lifting the balance 30 metric tons of skim rubber. In the letter dated 17/1/1991 the defendants -11- A.S.No.64/1999 informed the Company that they were able to lift only 10 metric tons of skim rubber before 9/1/1991, that their labourers could not carry on the cutting of skim rubber after last Saturday as the factory had “Pongal” holidays on 14 and 15th of January. So they requested for extension of time till 21/1/1991 to cut and lift the remaining 10 metric tons of skim rubber. It is clear from the above said communications that the defendants did not remit the price fixed in Ext.A1 agreement on or before 9/1/1991. Instead of not remitting the amount and lifting the stock as agreed, they started sending letters requesting the Company for extending the period for lifting the remaining 30 metric tons. Exts.A2 and A3 are letters addressed to the Company on 5/1/1991 and 9/1/1991 respectively. It is seen from the communications issued by the defendants addressed to the Company that they have been stating one reason or other for not lifting the balance material. In fact only 10 metric tone skim rubber was lifted before the last date fixed. It is seen that subsequently another 10 metric tons of skim -12- A.S.No.64/1999 rubber was lifted. In Ext.A7 letter dated 15/2/1991 the defendants stated that they are hopeful for depositing the value of 30 metric tons during the lst week of February. 7. Though requested for further time, the Company did not extend the time finding that the defendants did not carry out the terms of agreement. Neither the defendants deposited the entire amount on or before 9/1/1991 nor they lifted even 20 metric tons of skim rubber for which the value was remitted. Though by Exts.A2 to A4 and other communications the defendant sought for 15 days' time, the Company did not grant any extension. At the same time, the Company issued Ext.A8 letter dated 19/1/1991 asking the defendants to remit the value of 30 metric tons and remove the entire quantity of skim rubber within 10 days, failing which the goods will be re-sold at their risk and costs and the loss will be recovered by initiating legal action. Ext.A9 is the reply sent by the defendants to the Company. By Ext.A9 again the defendant sought for 15 days' -13- A.S.No.64/1999 further time for lifting the goods after remitting the value. It is not stated in Ext.A9 that they proposed to deposit the value of 30 metric tons on any date. What is sated is that they want 15 days' time more for lifting the stock after remitting the value. Even after the time fixed in Ext.A8 letter, the defendants did not remit the value. The Company after a period of 2 months again issued similar notice like that of Ext.A8 granting the defendants 10 days' time to remit the value of 30 metric tons and to lift the materials. The defendants did not comply with the request of the Company; but insisted to refund the security deposit remaining with the Company. The case of the defendants is that they have stated in Ext.A13 letter addressed to the Company that it is because of their fault for not giving proper instructions to the Field Officer for supplying the rubber which they tendered . I do not think that the reason stated for not lifting the stock by the defendants is bona fide and can be sustained in law. After executing Ext.A1 agreeing to remit the amount on or before 9/1/1991, the -14- A.S.No.64/1999 defendants started sending letters stating one reason or other for not remitting the amount or for lifting the materials. In the earlier communications their only case is that they may be given 15 days' time for remitting the amount and lifting the materials. They have not cared to remit the amount within 15 days, though the Company did not grant them time till that date. They have not remitted the amount during January, February, March and April, stating that there is shortage of diesel, labour strike, Pongal etc. Subsequently, during March and April they turned round and stated that there is obstruction in lifting the goods. All these reasons are stated, which according to me, are not a bona fide act on the part of the defendants. Some lame excuses are projected for not remitting the value of 30 metric tons of skim rubber. It is seen from the subsequent tender that the value of the skim rubber has gone down from Rs.9.10 to Rs.7/-. The fall in price may have been the reason for not lifting the material. In fact they have no complaint at the time when they remitted the -15- A.S.No.64/1999 price of 20 metric tons. The trial court did not go into the exact reason as to why the contract was not performed. The attendant circumstances leading to the non-lifting of stock were not seriously considered by the trial court. The communications itself show that the defendants were finding out one reason or other for their failure to remit the price of 30 metric tons of skim rubber. The trial court observed that the defendants have raised a complaint against PW2 Field Officer of the Company, and his insistence on the defendants for taking the skim rubber of the inferior quality not contracted for. Without appreciating the attendant circumstances in the context in which the defendants raised such allegations, the trial court simply believed the evidence of DWs. 1 and 2, who are the agent of the defendants. There is no basis for the court below to enter a finding that the preponderance of probability is for the case of the defendants that the Company was not prepared to give the defendants the very same skim rubber for which the defendants had submitted tenders -16- A.S.No.64/1999 and thus the Company have committed breach of contract. I have already mentioned the reasons stated in Ext.A2, A3, A4 and A5 letters. 8. It is evident from the facts and attendant circumstances that the defendants have committed breach of contract and failed to lift 30 metric tons of skim rubber as agreed. They have not chosen to pay the price and lift the materials, though the Company had offered them to do so by Ext.A8 and A12 communications. That also would go to show that the defendants are not at all interested in lifting the materials. 9. In the circumstances, the Company is entitled to recover the loss caused to them by re-sale of 30 metric tons of skim rubber at the reduced rate, forfeiture of earnest money deposit as per Ext.A1 agreement and also to realise the ground rent. 10. The learned counsel for the respondents submitted that the claim of the plaintiff for realisation of -17- A.S.No.64/1999 Rs.22,050/- towards ground rent is unreasonable and unsustainable and therefore the said finding is liable to be st aside. I think that the contention that the claim for ground rent is not sustainable also cannot stand. Even then as a relief measure, the plaintiff is allowed to realise only 50% of the ground rent demanded. The learned counsel also submitted that the claim of interest at the rate of 12% per annum is excessive and requested this Court to allow the plaintiff to realise only reasonable rate of interest. Taking into consideration the contentions of the respondents and taking a lenient view, I find that the plaintiff is permitted to realise the plaint claim less 50% of the ground rent with interest at the rate of 9% per annum. In the result, the appeal is allowed in part. The judgment and decree passed by the trial court are set aside. A decree is passed allowing the plaintiff-Company to recover from the defendants and their assets a sum of Rs.78,498/- (Rupees seventy eight thousand four hunderd and ninety eight) together -18- A.S.No.64/1999 with interest at the rate of 9% per annum from the date of suit till realisation. The plaintiff is also entitled to proportionate costs through out. HARUN-UL-RASHID, Judge. kcv. -19- A.S.No.64/1999 HARUN-UL-RASHID,J. -------------------------- A.S.NO.64 OF 1999 -------------------------- JUDGMENT 20th October, 2009