Coffee Board vs M/S Ramesh Exports P.Ltd

3. Pre-liberalization, till 1996 all the coffee grown in India was pooled with the appellant-Board which is a statutory body under the Coffee Act, 1942. The appellant-Board (hereinafter referred to as “Board”) marketed the pooled coffee and distributed the net realization to the growers in proportion the quantity pooled by them. The Board marketed the pooled coffee by means of auctions and separate auctions were held for export and domestic market. Only registered exporters are allowed to participate in the said auctions and the successful bidders amongst them enter into contracts with the Board for the purchase of the coffee. The Board is a member of the International Coffee Organization (hereinafter referred to as “ICO”) which is the main intergovernmental organization controlling and regulating the global coffee export and import. Majority of the coffee growing and consuming countries are members of the ICO. The import and export of coffee is regulated by ICO by fixing quotas on the member countries in accordance with the quantum produced. As per the then International Coffee Agreement of 1983 the export quota system was supported by an obligatory system of controls. Each export by a Member was covered by a Certificate of Origin. Importing Members did not admit coffee from Members unless the Certificate was validated by coffee export stamps issued by the Organization. When quotas were in effect importing Members were required to limit their imports from non-members and exports to non-members were closely monitored.

5. In this backdrop, the facts leading to the present appeal are as under:

Thereafter, the respondent filed two suits against the appellant Board in the Court of City Civil Judge, Bangalore, one being O.S. No.3150 of 1985 praying for a decree of Rs.5,32,012.31 p. with interest at the rate of 19% per annum and costs of the suit and another suit being O.S. No. 4763 of 1986 praying for a decree of Rs.11,70,446.39 p. with interest at the rate of 19% per annum and costs of the suit. The appellant Board resisted the suits and denied the claims made by the respondent.

2. By judgment dated February 14, 2002, the Trial Court decreed O.S. No.3150 of 1985 with costs and interest at 6% per annum. Aggrieved by the judgment and decree dated February 14, 2002 passed by the Trial Court, the appellant Board filed R.F.A. No.901 of 2002 before the High Court of Karnataka. However, the other suit being O.S. No. 4763 of 1986 was dismissed by the Trial Court by judgment dated March 17, 2005 and aggrieved thereby, the respondent filed R.F.A. No.1033 of 2005 before the High Court of Karnataka. After considering the submissions of both the parties, the High Court partly allowed the regular first appeals. Aggrieved by the judgment and order dated December 19, 2011 passed by the High Court of Karnataka at Bangalore in Regular First Appeal No.1033 of 2005, the appellant Board has come up before this Court.

18. Though the plaint in the subsequent suit is more specific, we however, find that the respondent so as to recover the cost of the freight charges and other costs suffered by it, must prove that the appellant was under a duty to provide ICO stamps; and its failure to provide the stamps timely lead to the coffee being shipped without the stamps and ultimately lead to the losses being suffered by the respondent.

20. In the light of the above, we are of the opinion that suits should have been merged with the claims against coffee purchased between July 25, 1982 and September 8, 1982, (a period arising from the merging of the two periods claimed in the suits wherein eight days overlapped each other) clubbed together in the same suit from which two reliefs, first being the losses due to delayed shipment and second being the costs and losses arising due to the recall of the shipment, could have been claimed.

21. In the present factual matrix both the reliefs are being claimed separately in the two concerned suits. This scenario negates the principle of Order 2, Rule 2 in absence of any explanation as to why the respondent failed to claim the relief by way of a single suit when the cause of action was the same in the both. Therefore, we are of the opinion that the Trial Court in its judgment dated March 17, 2005 correctly held that in light of O.S. No. 3150 of 1985 the present suit is barred under Order 2 Rule 2 of the Code.

22. In view of the aforesaid discussion, we find that the High Court has misappreciated the facts in the light of Order 2 Rule 2 of the Code and thereby the reasoning of the High Court cannot be sustained in the eye of law. The said suit (O.S.No.4763 of 1986) is barred. Considering the facts, as discussed above, we set aside the judgment and order of the High Court and uphold the order of the Trial Court. Accordingly, the present appeal is allowed and the suit of the respondent is dismissed.

May 9, 2014.