IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23.12.2011 CORAM THE HON'BLE MRS. JUSTICE R.BANUMATHI and THE HON'BLE MS. JUSTICE R.MALA O.S.A.No.236 of 2010 Thiru Arooran Sugars Limited rep. by its Chairman and Managing Director 112, Uthamar Gandhi Salai, Eldorado, 5th Floor, Chennai – 600 034. ... Appellant/ Defendant Vs. Tamil Nadu Co-operative Sugar Federation Limited, rep. by its Special Officer, 474, Anna Salai, Periyar EVR Buildings, V Floor, Nandanam, Chennai – 600 035. ... Respondent/ Plaintiff Original Side Appeal is filed under Order XXXVI Rule 1 of the Original Side Rules read with Clause 15 of the Letters Patent against the order dated 15.06.2009 made in C.S.No.426 of 1998 on the file of this Court. For Appellant : Mr.Satish Parasaran For Respondent : Mr.N.Karthikeyan JUDGMENT R.BANUMATHI,J. Being aggrieved by the judgment and decree in C.S.No.426 of 1998 [15.06.2009] whereby the learned Judge decreed the suit for a sum of Rs.31,25,750.68 with further interest and cost being the differential cost/loss incurred by the Respondent-Plaintiff on account of failure of the Appellant-Defendant to lift the molasses allotted to them. 2. Case of Respondent-Plaintiff is that Appellant-Defendant is a https://hcservices.ecourts.gov.in/hcservices/ regular purchaser of molasses from the member Mills of Plaintiff Federation and had participated in a number of tenders conducted by the Plaintiff. In Ex.P2-letter [16.12.1994], Appellant-Defendant had confirmed the request for allotment of 30,000 MTs of molasses. In pursuant to the said letter of request, under Ex.P3-letter No.R.C.45337/C2/94 dated 21.1.1995, the Commissioner of Sugar issued an order for lifting 1500 MTs of molasses from M/s.MRK Co-op Sugar Mills and 2000 MTs from M/s.NPKRR Co-op Sugar Mills at the rate of Rs.1300/- per MT. In pursuance to Exs.P2 and P3, Plaintiff Federation issued Ex.P4-sale order [27.1.1995] that molasses is to be lifted from the member Mills of the Plaintiff Federation on or before 15.02.1995. Case of Respondent-Plaintiff is that Appellant- Defendant had failed to lift the molasses before the stipulated time and has resulted the allotment automatically lapsed and under Clause 7 of the sale order [Ex.P4], Earnest Money Deposit [EMD] will be forfeited. 3. Further case of Plaintiff Federation is that Defendant then participated in the tender conducted by the Plaintiff Federation on 23.02.1995 and thereafter, under Ex.P6-letter [24.02.1995], Defendant requested for allotment of 5000 MTs for the quarter ending 31.03.1995 and 5000 MTs for the quarter ending 30.06.1995 at the rate of Rs.1000/- per MT. In his Proceedings Lr.RC.No.45337/C2/94 dated 19.05.1995, the Commissioner of Sugar allotted 5000 MTs of molasses. On receipt of the said allotment by the Commissioner of Sugar, Plaintiff Federation has sent Ex.P8-letter [12.06.1995] intimating the Defendant that due to failure of the Defendant to lift the molasses as per the sale order dated 27.01.1995, the EMD of Rs.87,500/- lying with the Plaintiff stands forfeited and that the balance EMD available was Rs.1,62,500/- and after deducting the same from the differential cost of Rs.10,50,000/-, the amount payable by the Defendant was Rs.8,87,500/-. Defendant had sent Ex.P9-letter [23.06.1995] denying the contents. Alleging that in view of the failure of the Defendant to lift the molasses, the Defendant is liable to pay the loss, Plaintiff Federation has filed the suit for recovery of a sum of Rs.13,66,750/- with further interest at the rate of 18% per annum. 4. Resisting the suit, Appellant-Defendant has filed the written statement contending that in the letter dated 16.12.1994 [Ex.P2], Appellant-Defendant requested for allotment of 30,000 MTs of molasses making it clear that the ceiling under existing ML4/ML6 licences are to be granted and also making it clear that the permission to export the alcohol outside the State would be necessary. It is further averred that no orders were passed on the said application granting increased in capacity and the condition precedent stipulated in the Defendant's letter dated 16.12.1994 was not satisfied. As per the plaint averments, the failure of the Appellant-Defendant to lift the https://hcservices.ecourts.gov.in/hcservices/ molasses on or before 15.02.1995 resulted in a breach and in such case, the suit for recovery of damages for the alleged breach instituted on 11.6.1998 will be barred by limitation. According to Appellant-Defendant, no concluded contract ever came into existence pursuant to the conditional offer made by the Defendant on 16.12.1994 and even the sale order dated 27.1.1995 [Ex.P4] contains express stipulation requiring the Defendant to accept the said order by signing and returning the copy in token of acceptance which the Defendant has declined to do so and consequently, there was no concluded contract. Stating that there was no cause of action against the Defendant and that the claim is barred by limitation, Appellant-Defendant prayed for dismissal of the suit. 5. On the above pleadings, trial Court framed nine Issues. PW1- R.Dhanappan, the then Senior Manager of Respondent-Plaintiff Federation has filed his proof affidavit. Exs.P1 to P9 were marked. After a few days of commencement of trial, learned counsel for Appellant-Defendant took time for settlement and thereafter, the learned counsel for Appellant reported "no instructions". For revocation of vakalat, the matter was listed for few hearings and thereafter, the suit was listed before the Master. Learned counsel for Appellant-Defendant appeared before the Master and again took adjournments on number of occasions for cross-examination of PW1 and did not choose to cross-examine PW1. Since the counsel for Appellant did not appear, on the available evidence and materials, the suit was decreed on 15.06.2009 for a sum of Rs.31,25,750.68 with further interest at the rate of 18% per annum on the sum of Rs.8,87,500/- from the date of decree till realisation. 6. Mr.Satish Parasaran, learned counsel for Appellant has contended that the judgment does not reflect the filing of written statement by the Appellant-Defendant and the judgment proceeds as if the Appellant-Defendant remained exparte. It was further submitted that the contract was completed only after the acceptance and as per Ex.P4-sale order [27.01.1995], Appellant-Defendant has to acknowledge the receipt and without communicating the acceptance, the request of the Appellant remained as an offer. It was further submitted that mere silence will not amount to acceptance. Learned counsel interalia argued that as per Ex.P4, the due date for lifting the molasses was on 15.02.1995 and the suit was filed on 11.06.1998 and therefore, the suit is barred by law. 7. Taking us through various exhibits, Mr.N.Karthikeyan, learned counsel for Respondent-Plaintiff has contended that having asked for allotment of molasses, it is not open to the Appellant-Defendant to resile from the terms and conditions. It was further submitted that as per Clause 8 of the terms and conditions, in case of failure to lift the molasses on or before the due date, the Appellant-Defendant https://hcservices.ecourts.gov.in/hcservices/ is liable for any loss incurred and the differential cost will be recovered from the defaulted purchaser who failed to lift the molasses sold and having regard to the terms and conditions of the allotment and upon analysis of the evidence, the learned Judge decreed the suit and the judgment warrants no interference. Learned counsel further argued that in the Execution Petition filed by the Respondent-Plaintiff, Appellant-Defendant has paid an amount of Rs.29,55,840/- and therefore, nothing survives for consideration in this appeal. 8. Upon consideration of the evidence and materials on record and the impugned judgment and also the rival contentions, the following points arise for consideration in this appeal:- (1)When the counsel for Appellant-Defendant reported 'no instructions', whether fresh notice should have been issued to the Appellant? (2)Whether Appellant's agreeing to purchase 30,000 MTs of molasses was not an unconditional one? (3)Whether the Appellant was right in contending that in the absence of any acceptance on the part of the Appellant to the sale order or any conditions thereto, whether the contract cannot be treated as a concluded contract and enforced as against the Appellant? (4)Whether the Plaintiff Federation is competent to maintain the suit? (5)Whether the suit is barred by limitation? (6)To what relief, the parties are entitled to? 9. Point No.1 - In the light of the Appellant's counsel reporting "no instructions", whether fresh notice was necessary:- As pointed out earlier, Appellant-Defendant has filed the written statement in 1998, but did not choose to cross-examine PW1 nor adduced any oral or documentary evidence. Learned counsel for Appellant has contended that the learned Judge ought to have taken note of the fact that pursuant to service of suit summons, the Appellant had filed an elaborate written statement in October 1998 and the learned Judge ought to have examined the merits and de-merits of Plaintiff's case and Defendant's defence before deciding the suit and the learned Judge erred in having decided the suit exparte. It was further submitted that when the Appellant-Defendant has filed a detailed written statement and when the counsel for Defendant reported "no instructions", the learned trial Judge ought to have ordered fresh notice to the Defendant and the Appellant-Defendant was not put on notice that the suit is being heard in its absence and therefore, prays to set aside the impugned judgment. 10. In support of his contention that notice ought to have been sent to the Appellant-Defendant, learned counsel placed reliance upon https://hcservices.ecourts.gov.in/hcservices/ (1998) 2 SCC 206 [Malkiat Singh and another v. Joginder Singh and others]. In the said case, considering the fact that Appellant thereon was neither careless nor negligent in defending the suit, the Supreme Court held that the Defendant cannot be said to be at fault and set aside the exparte decree and remitted the matter back to the trial Court for disposal in accordance with law. 11. The ratio of the above decision is not applicable to the present case for the simple reason that Appellant-Defendant even though a private Sugar Mill was not diligent in defending the suit. As pointed out earlier, the suit was posted before the Court on 25.07.2006 for trial and Appellant took time for settlement and thereafter, Issues were framed and the matter was posted for trial and again it was adjourned. Again when the suit came up on 22.10.2007, the counsel for Appellant reported "no instructions" and thereafter, the matter was adjourned by four weeks for revocation of vakalat by the Defendant counsel. Thereafter, the matter was posted before the Court again for trial and then posted before the Master for evidence. Proof affidavit of PW1 was filed on 15.10.2008 and for cross-examination of PW1, the matter was adjourned to 04.11.2008, 14.11.2008 and 28.11.2008 respectively and then the matter was directed to be posted before the Court on 12.12.2008. Then the matter was listed before the Court on 09.06.2009, 11.06.2009 and 15.06.2009. Since the counsel for Defendant did not appear, the suit was decreed exparte on 15.06.2009. Thereafter Execution Petition was filed and in the Execution Petition, learned counsel for Appellant- Defendant appeared and took number of adjournments and only after the attachment was ordered, the Appellant-Defendant has paid an amount of Rs.29,55,840/-. A careful consideration of various dates and events in the trial Court, in our considered view the Appellant was not diligent in defending the suit. Having appeared and took number of adjournments both before the Court as well as before the Master, it is not open to the Appellant-Defendant to contend that Appellant- Defendant was not put on notice about the suit being heard. 12. Normally, when the counsel for the appearing party reports "no instructions", the purpose of issuing notice is to put on notice that the counsel had withdrawn the vakalat and that the party has to make necessary arrangements in prosecuting/defending the suit. In the case on hand since the Appellant's counsel appeared and took adjournments on number of times, the facts and circumstances of the case did not warrant issuance of such notice. There is no justification in the contention that the learned Judge ought to have ordered fresh notice to the Appellant-Defendant and Point No.1 is answered accordingly. 13. Points No.2 and 3 – Appellant made only offer and there was no concluded contract:- https://hcservices.ecourts.gov.in/hcservices/ As per Exs.P2-letter [16.12.1994] Defendant confirmed their request for allotment of 30,000 MTs of molasses from (1) Arignar Anna Sugar Mills, Kurungulam; (2) MRK Co-operative Sugar Mills, Sethiathope; (3) NPKRR Co-operative Sugar Mills, Mayiladuthurai. On the basis of Ex.P2-letter, under Ex.P3 [21.01.1995], the Commissioner of Sugar allotted 3500 MTs of molasses to the Appellant-Defendant from M/s.MRK Co-operative Sugar Mills and M/s.NPKRR Co-operative Sugar Mills. In pursuance to Exs.P2 and P3, under Ex.P4-sale order [27.1.1995], Plaintiff Federation confirmed the sale of molasses as indicated below:- S.No . Name of the Mills Quantit y (in MT's) Rate/MT (Ex- Factory) excluding duties & Taxes (in Rs.) Due Date for lifting EMD Received M.R.KRISHNAMOORTHY CSM N.P.K.R.R. CSM 1500.000 2000.000 1300.00 1300.00 15.2.95 ALREADY REMITTED As per Ex.P4-sale order, the molasses were to be lifted on or before 15.02.1995. As per Clause 7 of the terms and conditions of the sale order, if the Appellant failed to lift the molasses within the stipulated time, the EMD of Rs.87,500/- stood forfeited. As per Clause 8 of the terms and conditions of the sale order, if loss is incurred due to resale, the differential cost will be recovered from the defaulter in respect of non-lifting of 3500 MTs of molasses. As per the sale order No.34, loss of Rs.8,87,500/- arrived as under:- Contract rate for 3500 MTs @ Rs.1,300/- per M.T. ... Rs.45,50,000.00 Sale value of the 3500 MTs @ Rs.1000/- per M.T. Offered by the Defendant in the Tender conducted on 23.02.95 ... Rs.35,00,000.00 ------------------ Loss Rs.10,50,000.00 Amount available with the Plaintiff from Rs.2,50,000/- after forfeiture of E.M.D. of Rs.87,500/-. ... Rs. 1,62,500.00 ------------------ Net loss ... Rs. 8,87,500.00 ------------------ https://hcservices.ecourts.gov.in/hcservices/ along with interest at the rate of 18% per annum on Rs.8,87,500/- from 12.06.1995 calculated at Rs.4,79,250/- and the suit was filed for Rs.13,66,750/-. 14. To contend that the request for allotment of 30,000 MTs of molasses was not unconditional one, the learned counsel for Appellant-Defendant has drawn our attention to Ex.P2-letter. In Ex.P2-letter, Appellant has made the request for allotment of 30,000 MTs of molasses which reads as under:- "... we confirm our request for allotment of 30,000 MTs of molasses from the following Co-op/Public Sector Sugar mills in the order of preference given below: 1.Arignar Anna Sugar Mills, Kurungulam 2.MRK Co-op Sugar Mills, Sethiathope 3.NPKRR Co-op Sugar Mills, Mayiladuthurai We are agreeable to lift the molasses at the rate of Rs.1,300.00 per M.T. Ex-factory and we will be in a position to lift at the rate of 3000 to 3500 MTs. per month. Since the aforesaid quantum of Molasses will be in additional to our captive availability of nearly 50,000 MTs of Molasses, which is also the prevailing ceiling on our ML4/ML6 licences, the offtake committed above will be subject to necessary amendment to the ML4/ML6 Licences as discussed at the meeting held by the Hon'ble Minister for industries on December 13, 1994. We also presume that necessary permission will be granted for export of alcohol outside the State as discussed at the aforesaid meeting. ...." 15. Learned counsel for Appellant has contended that in Ex.P2- letter [16.12.1994] Appellant's agreeing to lift 30,000 MTs molasses at the rate of Rs.1300/- per MT was not an unconditional one, but subject to pre-condition that amendments are to be obtained to the Appellant's ML4/ML6 licences increasing the Appellant's prevailing ceiling and grant of necessary permission to the Appellant to export alcohol outside the State of Tamil Nadu. It was further submitted that since no amendments were made to the Appellant's licences, Appellant did not and could not purchase the quantity of molasses and non-purchase of molasses by the Appellant cannot be deemed a breach on the part of the Appellant since there was no unconditional agreement to lift 30,000 MTs of molasses. 16. The above contention does not merit acceptance. Referring to Appellant's letter dated 16.12.1994 [Ex.P2], under Ex.P3, the Commissioner of Sugar allotted 3500 MTs of molasses to the Appellant from (i) M/s.MRK Co-op Sugar Mills; (ii) M/s.NPKRR Co-op Sugar Mills. Copy of Ex.P3-letter was marked to the Appellant-Defendant. After the receipt of Ex.P3-letter, Appellant did not respond stating that https://hcservices.ecourts.gov.in/hcservices/ they could lift the molasses only if necessary amendment to ML4/ML6 licences is made. After allotment of the molasses, Appellant did not choose to inform the Commissioner of Sugar that without increasing the Appellant's ML4/ML6 licences, Appellant will not be in a position to lift the molasses. Per contra, Appellant remained silent and waited for confirmation of sale of molasses by the Plaintiff Federation from the respective Co-operative Sugar Mills. Under Ex.P4 [27.1.1995], Plaintiff Federation confirmed the sale of molasses. As per Ex.P4, the due date for lifting of molasses was on 15.02.1995. Appellant should lift the stock from the Mill within the due date specified on remitting the value of molasses with Excise Duty, Sales Tax etc. failing which the EMD will be forfeited as per the terms and conditions enclosed. 17. It was made clear that the sale was subject to the terms and conditions therein. We may usefully refer to Clauses 7 to 11 of the terms and conditions annexed with Ex.P4 which reads as under:- "7. The purchaser should remit the amount and lift the molasses within the lifting time mentioned in the Sale Order. If the successful tenderer fails to lift the molasses within the stipulated time, the EMD remitted by him will be forfeited without notice and the quantity allotted will automatically lapse. 8. In case of failure to lift the molasses on or before the due date specified in the Sale Order, the member- factories shall have the right to dispose the same according to their choice and any loss incurred and the differential cost will be recovered from the defaulted purchaser who failed to lift the molasses sold. 9. In case of failure to remit the amount claimed towards loss on the part of the purchaser within one week from the date of receipt of the claim, the Federation will initiate action to recover the amount of loss sustained by each member mill. 10. Unless otherwise permitted, the time means the date and time mentioned in each sale order, and the date or day will close by 5 P.M. 11. Non-removal of molasses purchased from the mills premises will be the conclusive evidence for failure to perform the contract. (underlining added) When the sale of molasses was subject to the above terms and conditions, the Appellant-Defendant cannot contend that his request for allotment of molasses was not unconditional. 18. Learned counsel for Appellant-Defendant has contended that Appellant-Defendant applied to the appropriate authorities for amendment of ML4/ML6 licences seeking enhancement of capacity to enable the Appellant-Defendant to lift 30,000 MTs in addition to its https://hcservices.ecourts.gov.in/hcservices/ own captive production, but however, no orders were passed on the said application granting increase in capacity. Learned counsel would further submit that the condition precedent stipulated in Ex.P4-sale order was not specified. Learned counsel would submit that the confirmation of sale under Ex.P4 was only an offer and that Ex.P4 expressly stipulates that the Appellant-Defendant should acknowledge the receipt of the order and return the duplicate copy signed in token of acceptance of the order. In support of his contention, the learned counsel for Appellant laid emphasis upon Paragraph (4) of which reads as under:- "4. Please acknowledge receipt of this order and return the duplicate copy duly signed in token of acceptance of the order subject to terms & conditions specified herein." There is no merit in the contention that confirmation of sale of molasses was only an offer which need to be accepted. The stipulation in Ex.P4 asking the Appellant to acknowledge the receipt of the order and return the duplicate copy signed in token of acceptance is only formal. 19. In pursuance to the Appellant's request for allotment, under Ex.P3, the Commissioner of Sugar allotted 3500 MTs of molasses. By reading of Ex.P2-letter, it is seen that the Appellant "confirmed their request" for allotment of 30,000 MTs of molasses. In Ex.P2- letter, even though the Appellant-Defendant has stated that their ML4/ML6 licences are to be amended, it cannot be said that the allotment of molasses was conditional. Ex.P4 [27.1.1995] confirms the sale of molasses subject to the terms and conditions enclosed and not a mere offer. Having so confirmed the request for allotment of molasses, it is not open to the Appellant-Defendant to contend that its request for allotment was conditional and that Appellant- Defendant cannot be bound by the terms and conditions enclosed with Ex.P4. 20. Under Ex.P2 while making a request for allotment of 30,000 MTs of molasses, ofcourse, the Appellant-Defendant asked for necessary amendment to ML4/ML6 licences and further stated that they will presume that necessary permission will be granted for export of alcohol outside the State of Tamil Nadu. Even though request was made with conditions, under Ex.P3 [21.01.1995], 3500 MTs of molasses was allotted. But the Commissioner of Sugar has not stated anything about the amendment to ML4/ML6 licences or permission to sell alcohol outside the State of Tamil Nadu. At no stage the Appellant-Defendant protested to the allotment, but acted on the same. The conclusion would be that Appellant-Defendant has accepted the allotment of 3500 MTs of molasses. Only after Clauses 7 and 8 of terms and conditions of sale of molasses were sought to be enforced, the Appellant- Defendant has raised the issue. https://hcservices.ecourts.gov.in/hcservices/ 21. In Paragraph (4) of Ex.P4 asking the Appellant to give token of acceptance was only a formal. Appellant is not right in contending that the sale of molasses under Ex.P4 was only an offer by the Sugar Mills. As discussed earlier, Appellant's request was accepted and 3500 MTs of molasses was allotted. Ex.P4 was only confirmation of sale of molasses which was already allotted to the Appellant-Defendant. 22. Conduct of the Appellant is to be noted. As discussed earlier, only in pursuance to Ex.P2-request of the Appellant and as per the order of Commissioner of Sugar [Ex.P3], under Ex.P4-Sale Order No.34 sale of 1500 MTs from M/s.MRK Co-op Sugar Mills and 2000 MTs from M/s.NPKRR Co-op Sugar Mills was confirmed. When that being so, in Ex.P9-letter [23.06.1995] Appellant has stated that “they were not aware as to on what basis the Sale Order No.34 dated 27.1.1995 was issued”. Having confirmed request for allotment of molasses, Appellant-Defendant is not justified in feigning ignorance about Sale Order No.34. 23. Learned counsel for Appellant has drawn our attention to Ex.P5-tender form in and by which Appellant-Defendant has remitted EMD of Rs.3,12,500/- pursuant to the tender dated 03.03.1994 floated by Plaintiff Federation. In the said application, Appellant made a request for 12,500 MTs of molasses and Appellant was allotted 3000 MTs of molasses by Sale Order No.117 dated 10.05.1994. Learned counsel for Appellant has contended that as per the said Sale Order No.117, Appellant was allotted 3000 MTs of molasses, but actually Appellant deposited a sum of Rs.3,12,500/- being the EMD for 12,500 MTs and after finalisation of the tender and allotment of 3000 MTs of molasses, a sum of Rs.2,50,000/- had to be refunded to the Appellant. Learned counsel for Appellant has further submitted that Plaintiff Federation has unilaterally appropriated the EMD of Rs.87,500/- [EMD required to be paid under sale in dispute] and the same appears to have been appropriated from the said Rs.2,50,000/- and any unilateral adjustment of the Appellant-Defendant's money without reference to the Appellant-Defendant and without its concurrence is wholly illegal. As discussed earlier, allotment of 3500 MTs of molasses was subject to the terms and conditions enclosed with Ex.P4. As per Clauses 7 and 8 of the terms and conditions, if the successful tenderer fails to lift the molasses within the stipulated time, the EMD will be forfeited without notice and also the tenderer has to make good the loss incurred due to resale and the differential cost will be recovered from the defaulter. Only after the Respondent- Plaintiff's issuance of Ex.P8, Appellant-Defendant appears to have raised the issue of unilateral adjustment. When the Appellant- Defendant has not chosen to adduce oral evidence regarding justifiability or other wise of “unilateral adjustment”, Respondent- https://hcservices.ecourts.gov.in/hcservices/ Plaintiff Federation cannot be expected to