RSA No.3611 of 2003 (O&M) -1- RSA No.3109 of 2003 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH **** RSA No.3611 of 2003 (O&M) DATE OF DECISION: 26.03.2010 **** M/s Prem Chand Chiman Lal . . . . Appellant VS. Food Corporation of India through Divisional Manager, Delhi Road, Hisar . . . . Respondent **** RSA No.3109 of 2003 (O&M) DATE OF DECISION: 26.03.2010 **** M/s Ram Gopal & Sons . . . . Appellant VS. Food Corporation of India through Divisional Manager, Delhi Road, Hisar . . . . Respondent **** CORAM : HON’BLE MR.JUSTICE RAKESH KUMAR JAIN **** Present: Mr.Ashok Jindal, Advocate for the appellant. Mr.H.P. Verma, Advocate for the respondent. **** RAKESH KUMAR JAIN J. (ORAL) By this common order I shall be disposing of two appeals, namely, RSA No.3611 of 2003 titled as “M/s Prem Chand Chiman Lal Vs. Food Corporation of India through Divisional Manager, Delhi Road, Hisar” RSA No.3611 of 2003 (O&M) -2- RSA No.3109 of 2003 (O&M) and RSA No.3109 of 2003 titled as “M/s Ram Gopal & Sons Vs. Food Corporation of India through Divisional Manager, Delhi Road, Hisar”. Vide order dated 20.10.2005, passed in RSA No.3611 of 2003 it was ordered to be listed along with RSA No.3109 of 2003. Thus, both the appeals are being disposed of by this common judgment. However, the facts are being extracted from RSA No.3611 of 2003. A few skeletal facts to unfold the dispute between the parties are that the plaintiff is a commission agent from whom defendant had purchased paddy on 23.10.1996 and on 1.11.1996 @ Rs.415/- per quintal for a total amount of Rs.25,51,694.73 ps. out of which the defendant/respondent paid Rs.22,96,514.73 ps. and an amount of Rs.2,55,180/- remained outstanding. On a legal notice, served upon the appellant, another sum of Rs.1,77,151/- was paid by the defendant leaving the balance amount of Rs.78,028.30 ps. to be paid by the defendant. The said amount was not paid despite repeated requests, therefore, plaintiff/appellant filed present suit for recovery of Rs.97,582.42 ps. which included the principal amount as well as the interest. In the written statement, it was alleged that paddy was purchased by the defendant from the plaintiff in the season of kharif on 19.10.1996, 23.10.1996 and 1.11.1996 @ Rs.415/- per quintal. The entire stock of the paddy remained in possession of the plaintiff as it was not practically possible to weigh the purchased paddy on the spot because of rush of arrival in the grain market. However, when it was lifted and weighed in the premises of respondent, shortage is found to the extent of Rs.78,028.30 ps. and the payment thereof was withheld by the defendant. The plaintiff filed replication to the written statement reiterating the stand taken in the plaint while denying the averments RSA No.3611 of 2003 (O&M) -3- RSA No.3109 of 2003 (O&M) made in the written statement. On the completion of the pleadings, issues were framed on 8.5.1998, which reads as under : “1. Whether the defendant purchased a paddy in the sum of Rs.78,028,30 ps. to the plaintiff? OPP 2. Whether the plaintiff is entitled to recover the interest on the amount due, if so at what rate? OPP 3. Whether the suit is not maintainable in the present form? OPD. 4. Whether the courts at Fatehabad have no jurisdiction to try the suit? OPD 5. Whether the suit has not been properly verified if so to what effect? OPD 6. Whether the plaintiff has no come to the court with clean hands if so to what effect? OPD 7. Whether the plaintiff is estopped from filing the suit by his own act and conduct? OPD. 8. Whether the suit has not been properly valued for the purposes of the Court fee and jurisdiction? OPD 9. Whether the suit is bad for non-joinder for necessary parties? OPD 10. Relief. Both the parties led their oral as well as documentary evidence. The learned trial Court dismissed the suit of the plaintiff vide his judgment and decree dated 15.2.2002, which was modified by the First Appellate Court with the following observations: - RSA No.3611 of 2003 (O&M) -4- RSA No.3109 of 2003 (O&M) “Admittedly no notice of weighment was made by the defendant to the plaintiff or even the weighment was not conducted in the presence of the appellant / plaintiff but as stated earlier the actual weighment cannot be dis-believed. As such, it is clear that the defendant was justified in recovery the price of the shortage, which occurred in the paddy purchased when it remains in the custody of the plaintiff firm and the plaintiff firm by its own act and conduct undertook the custody including its proper weighment and thus they are liable for storage, if any. However, the defendants have failed to prove how they are competent to with held the double price of the shortage, as it is admitted case of the defendant that the actual price of shortage of 94.1 quintal comes out to be Rs.39,014/- but they had withheld the double of this. No contract to take double of the shortage has been produced by the defendants. Similarly there is nothing on the file to show that this shortage was because of malafide intentions of the plaintiff firm. On the other hand, the possibility of the shortage because of wrong weighment or pilferage cannot be ruled out. At the same time, it is admitted case of the defendants that when this shortage was found from so many similarly commission agents, they were called upon to make good deficiency and some of them have actually made good the shortage but the plaintiff firm fail to do so. This fact further shows that only actual shortage or its price can be recovered or with held by the defendant and there is nothing on the file to justify to with held double price of the shortage. As such, it is clear that the appellant has failed to RSA No.3611 of 2003 (O&M) -5- RSA No.3109 of 2003 (O&M) prove that they are not liable for the shortage but on the other hand, it is proved that they are only liable to the extent of actual shortage without any penalty or double of the same, as there is no such contract or penal clause in the contract between the parties. Resultantly, although the finding of learned trial Court on issue No.2 to the extent that the plaintiffs are not entitled to with held with the double of the price of the shortage. On the other hand, they can with held only the actual price of the shortage. Consequently, the finding of the learned trial Court on issue No.1 are affirmed, whereas, the finding of the learned trial Court on issue No.2 are affirmed partly to the extent stated above and it is held that appellant is only liable for the actual price defendants have illegally with held a sum of Rs.39,014/- defendants and this issue is accordingly disposed of in favour of the appellant / plaintiff to this extent.” Still aggrieved, plaintiff/appellant filed present appeal in which following substantial questions of law have been framed: - a) Whether the appellant can be held liable for any shortage in paddy when the weighment was not done as per rules? b) Whether a weighment in violation of rules 24 and 25 of the Punjab Agricultural Produce Markets General (Rules) 1962 is a valid weighment? c) Whether the action of the respondent corporation in withholding the payment due to the appellant for shortages is illegal, arbitrary and against the principles of law? As a matter of fact, learned counsel for the appellant has argued that only one question that the defendant has no jurisdiction or RSA No.3611 of 2003 (O&M) -6- RSA No.3109 of 2003 (O&M) competence to withhold the amount due to the plaintiff for the lapse on their own part as they did not weigh the paddy in question in the presence of the appellant which is contrary to the provisions of Rules 24 and 25 of the Punjab Agricultural Produce Markets General (Rules), 1962 (for short ‘the Rules’). As against this, learned counsel for the respondent has submitted that in fact the plaintiff has deposited part of paddy, which was short, therefore, he is estopped by his own act and conduct and cannot claim the balance amount. I have heard both the learned counsel for the parties and have perused the available record with their assistance. Before adverting to the facts of this case, it would be necessary to refer to Rules 24 and 25 of the Rules, which are reproduced as under: - “24 Sale of Agricultural Produce– Section 43 (2)(vi) – (i) All agricultural produce brought into the market for sale shall be sold by open auction in the principal or sub market yard: Provided that with the permission of the Secretary of the Board or any officer authorized by him in this behalf, the agricultural produce may also be brought or sold through bi-lateral transactions within the notified market area of a committee at a place of business of a licensee out side the principal or sub-market yard on the terms and conditions as may be specified by the Board. The buyer shall maintain a register in Form ‘R’ and furnish information in Form RSA No.3611 of 2003 (O&M) -7- RSA No.3109 of 2003 (O&M) ‘R-1) to the committee along with return in Form M. (2) Nothing in sub-rule (1) shall apply to a retail sale as may be specified in the bye- laws of the Committee. (3) A committee may, and on being directed by the 1[chairman] of the Board or an officer authorised by him] shall fix timing for the starting and closing of the auction in respect of any agricultural produce, other than fruits and vegetables. (4) The price of agricultural produce shall not be settled by secret signs or secret bid and no deduction shall be made from the agreed price of the consignment. (5) The auction shall not be conducted by any person other than the person engaged by the Committee: Provided that under special circumstances the [Chairman] of the Board or an officer authorised by him] may allow a Committee to make or permit any alternative arrangement: Provided further that nothing in this sub- rule shall apply to the auction of vegetables and fruits. (6) The highest bid offered by a buyer at an auction and at which the seller of the produce gives his consent to sell his produce, shall be the sale price of the produce. (7) The buyer shall be considered to have thoroughly inspected the produce for which he has made a bid and he shall have no right to retract it. RSA No.3611 of 2003 (O&M) -8- RSA No.3109 of 2003 (O&M) (8) As soon as the auction for a lot is over the auctioneer shall fill in the particulars in a book to be maintained in form H and shall secure the signatures of both of the buyer and the seller or their respective representatives, whoever may be present at the spot. (8-A)A Register in form H shall be maintained by the Committee in which the agricultural produce which remained unsold during the course of auction be entered and it shall be obligatory for every dealer or Kacha Arhtiya or Commission agent, as the case may be, to report about the unsold produce to the Committee as soon as his agricultural produce is sold.. (9) The buyer shall be responsible to get the agricultural produce weighed immediately after the auction or on the same day the produce is purchased by him [and the seller] or the buyer shall be liable for any damage to, or loss of, or deterioration in, the produce after the auction according to the local usage or custom[ or as per provisions of rule 13]. (10) A person engaged by a producer to sell agricultural produce on his behalf shall not act as a buyer either for himself or on behalf of another person in respect of such produce 6[without the prior consent of the producer:] Provided that a Co-operative Society shall be exempt from the operation of this rule. (11) The Kacha Arhtiya shall make payment of the seller immediately after the weighment is over. RSA No.3611 of 2003 (O&M) -9- RSA No.3109 of 2003 (O&M) (12) Every Kacha Arhtiya shall, on delivery of agricultural produce to a buyer, execute a memorandum in Form I and deliver the same to the buyer on the same day or the following day, mentioning sale proceeds plus market charges admissible under rules and bye-laws the counterfoil shall be retained by the Kacha Arhtiya; Provided that nothing in the sub rule shall apply where agricultural produce, being vegetable or fruit , not exceeding one quintal is weight in delivered. (13) In the absence of any written agreement to the contrary the sale price of agricultural produce purchased under these rules shall be paid by the buyer to the Kacha Arhtiya on delivery of Form I. (14) Delivery of agricultural produce after sale shall not be made or taken unless and until the Kacha Arhtiya or, if the seller does not employ a Kacha Arhtiya, the buyer has given to the seller a sale voucher in Form J, the counterfoil whereof shall be retained by the Kacha Arhtiya or the buyer, as case may be. 25. Weighment – Section 43(2)(x) (1) The Board shall fix standards of net weight of agricultural produce to be filled in a packing unit such as bag, a half bag or a palli within each notified market area. (2). No person shall fill or cause to be filled any agricultural produce expect in accordance with standards fixed under sub-rule(1) (3). All transactions in a market in terms of packing units shall be deemed to have been entered into in accordance with standards fixed under sub-rule(1). RSA No.3611 of 2003 (O&M) -10- RSA No.3109 of 2003 (O&M) (4) Immediately on the completion of weighment of a lot of agricultural produce within a notified market area, either party to the contract may cause a test weighment of ten percent of the units of packing in a lot or two packing units whichever is more. The test weighment shall be carried out at the site of weighment and if no test weighment is held at the site, the produce shall be deemed to have been correctly weighed. . (5) Test weighmen under sub-rule (4) shall be carried out in the presence of both the parties to the contract. In case any of the parties refuses or otherwise evades presence, the other party may report in writing to the Secretary of the Committee or any employee of the Board not lower in rank to that of [the Secretary of the Committee] who, after satisfying himself as the correctness of the report, shall cause the test weighment to be made in his presence or in the presence of any other official of the Committee authorised by him in this behalf, and the result of such test weighment shall be final, conclusive and binding on both the parties (6) Before any agricultural produce weighed in pursuance of a contract of sale or purchase within a notified market area is removed from the place of its weighment, the Chairman, the Secretary of the Committee or any employee of the Board not lower [in rank to that of 1[the Secretary of the Committee or Agricultural Inspector (marketing). or Assistant Marketing Officer of the Marketing section of the department of Agriculture & Forests (Agri. Wing)] shall, with a view to RSA No.3611 of 2003 (O&M) -11- RSA No.3109 of 2003 (O&M) satisfying himself that such weighment has been correctly made or is filled in accordance with standards fixed under sub-rule (1), be entitled at any time and without any previous notice, to check the weighment by means of weights and instruments kept by the Committee or any other agency in the presence of the purchaser and the seller and if either or both of them evade presence, test weighment may be carried out in the presence of any two persons present there. Provided that the proof of making payment of market fee in the State from which Paddy (Basmati) has been imported alongwith the purchase bill, documents relating to transportation and Form K-2 is furnished by the dealer to the concerned committee. (7) If the weighment checked under sub-rule (6) is found to be defective, the persons checking the weighment may order the lot to be reweighed. The reweighment shall be made at the cost of the buyer, if it is not filled in accordance with the standards fixed under sub-rule(1), and at the cost of the weighman concerned, if the weighment is otherwise defective. Such orders shall be final and the buyer or the weighman, as the case may be, shall immediately comply with the order. This sub-rule shall operate without prejudice to any other Punishment that they may be awarded under the Act, these rules or bye-laws made thereunder. RSA No.3611 of 2003 (O&M) -12- RSA No.3109 of 2003 (O&M) Out of the aforesaid rules, learned counsel for the appellant has laid stress on Rule 24(9) and Rule 25(5) of the Rules. According to him as per Rule 24(9) of the Rules, the buyer is responsible to get the agricultural produce weighed immediately after the auction or on the same day the produce is purchased by him and if the agricultural produce is not weighed immediately then the buyer is to be blamed and not the seller. In respect of Rule 25(5) of the Rules, it is submitted that even if the buyer has not lifted the agricultural produce and kept in the storage of the seller, it has to be weighed in the presence of both the parties to the contract and in case any of the parties refuses or otherwise evades its presence, the other party may report in writing to the Secretary of the Committee, who after satisfying himself as to the correctness of the report, shall cause the test weighment to be made in his presence or in the presence of an other official of the Committee authorised by him in this behalf, and the result of such test weighment shall be final, conclusive and binding on both the parties It is submitted that a finding of fact has been recorded by the First Appellate Court, which has not been challenged in the appeal by the defendant that “Admittedly no notice of weighment was made by the defendant to the plaintiff or even the weighment was not conducted in the presence of the appellant / plaintiff”. According to the learned counsel for the appellant if the paddy has not been weighed in accordance with Rule 25(5) of the Rules, even for the sake of arguments, it is presumed that the appellant was evading his presence, respondent was required to report the matter in writing to the Secretary of the Committee who would, after satisfying himself about the correctness of the report by the plaintiff, cause the test weighment in his presence or in the presence of any other official of the RSA No.3611 of 2003 (O&M) -13- RSA No.3109 of 2003 (O&M) Committee authorized by him. It is submitted that this is a case of internal check and balance so that weighment may not be done by the buyer alone in the absence of the seller. Buyer can always make a complaint that the weight of the produce is less. In order to avoid such a situation to happen, the legislature has framed Rule 25(5) of the Rules where in the absence of the seller for any reason, the matter has to be reported to the Secretary of the Committee in whose presence or in presence of the other member of the committee deputed by him, the food-grain is to be weighed so that it may not be said by the seller later on that he has been cheated at the hands of the buyer. In the present case, the plaintiff has been held liable to make the payment of Rs.39014/- on the ground that other commission agents have made the deficiency good, therefore, he is also liable to make the deficiency good. In my opinion this finding is totally perverse and unwarranted in the eyes of law in view of the provisions of Rule 25(5) of the Rules. Thus, the substantial question of law raised in these appeals that whether the weighment in violation of Rule 24 and 25 of the Rules is a valid weighment is answered in favour of the plaintiff/appellant and it is held that if the agricultural produce is not weighed in consonance with Rules 24 and 25 of the Rules, the buyer would have no grievance to be addressed to and to be adjudicated by the Court of law. In view of the above, both the appeals are allowed and consequently, the suit for recovery, as prayed for by the plaintiff, is decreed with costs. A photocopy of this order be placed on the file of another connected case. RSA No.3611 of 2003 (O&M) -14- RSA No.3109 of 2003 (O&M) (RAKESH KUMAR JAIN) 26.03.2010 JUDGE Vivek