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66d95abf72c5-39 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 41. Sri B.S.A. Swamy, the learned Counsel has taken us through various technical details like loading, off-loading etc. and vehemently argued that the evaluation of the price bids is illegal. For example, he says that the quantities offered by the 4th respondent in civil works are mostly inadequate and hence the bid of the 4th respondent in civil works has to be 'loaded'. Similarly, in Structural Steel, Bus Bar System and Equipment, the contention of the appellant is that as a result of wrong evaluation done by the Board, the evaluated price of the bid offered by the 4th respondent became the lowest and the price of the appellant became the highest.
42. On the other hand, the learned Counsel for the Board and the 4th respondent contended that the bids were properly evaluated and all tenderers were treated equally arid the bid of the 4th respondent being the lowest, the 4th respondent was awarded the work after negotiations when certain conditions were imposed in accordance with the opinion of the Consultant. It is also their contention that small deviations are magnified by the appellant due to the business rivalry with the 4th respondent. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-40 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 43. From the perusal of the file produced, it is seen that the valuation process was completed on 7-7-1992 and the file was sent to the Financial Adviser for arithmetical check-up and the Financial Adviser returned it to the Board on 16-7-1992. The Store Purchase Committee consisting of entire Board and two Officers of the Government met on 18-8-1992 and after considering the Tender Analysis documents came to the conclusion that the evaluated bid of the 4th respondent is the lowest but wanted the 4th respondent to be called for negotiations with the negotiating Committee consisting of Member (Projects), Member (Accounts) and Member (Secretary). The offers were kept valid till 27-8-1992 and hence the tenderers were not asked to revalidate the tenders and finally after negotiations, tender of the 4th respondent was accepted with the addition of Rs. 19 lakhs towards the cost of extra Structural Steel required to make up for 215 tons and 47.52 tons of Reinforced Steel required to be used in accordance with the opinion of the consultant. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-41 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 44. The appellant is not consistent about the evaluatd price of his bid as well as bid of the 4th respondent as can be seen from the following statement:
Page-8 of Page-37of Page-8 of addl.
Sec. II (at Sec. IX material papers
the time of (during argu- (filed during
filing W.P.) ments of W.P.) hearing of W.A.)
Rs. Rs. Rs.
Appellant (M/s.
Bhanu Construc-
tion Co.) 3,03,44,000* 3,15,48,900** 3,10,43,259"*
4th Respondent 3,47,94,700**** 3,42,90/048 3,42,90,048
(*). Rs. 3,03,85,000. (**). Rs. 3,15,50,935
(***) Rs. 3,09,45,935. (****) Rs. 3,46,94,700....Due to Arithmetical
mistakes.
The appellant has taken its quoted price at Rs. 3,12,76,935/- while the correct figure is Rs. 3,12,96,835/-. If this difference of Rs. 19,900/- is taken into consideration, the evaluated prices of the Appellant will be nearly Rs. 19,900/- more than those indicated above in the table. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-42 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 45. The figures of loadings and off-loadings relating to the appellant are different in the three statements as can be seen from tine following table.
Page-8 of Page-37 of Page-8B of
Sec.II. Sec. IX addl. material
(in lakhs) (in lakhs) papers.
(1) (2) (3)
1. Civil Works nil -0.32 nil.
2. Structural Steel. + 12.10 + 10.29 + 8.97
3. Bus Bar System - 23.77 - 15.70 -15.70
4. Equipment + 2.50 + 2.38 + 2.38
5. D.C. Boards + 0.25 + 0.22 + 0.23
6. Financial Loading Not made + 5.87 + 5.87
7. Rebate for excess Not made Not made - 5.06
Provision.
- 8.92* + 2.74** - 3.31***
(*). Not-9.32 lakhs; (**) not + 2.72 lakhs. (***)not-2.34 lakhs. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-43 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 46. The appellant has also filed a statement (found at page-20 of Sec. IX) computing its evaluated bid at Rs. 2,97,06,343 with reference to "short falls of the offer of the 4th respondent", compared to its offer. As per this statement, the 4th respondent's evaluated bid is Rs. 3,18,91,970/-. But the appellant has not chosen to give the comparable evaluated bids of other tenderers to prove that its bid is the lowest.
47. These disputed bid valuation figures with all their technical features like loading, off-loading, cannot evidently be gone into the writ proceedings. What all this Court has to see is whether the decision is arrived at by the authorities applying the correct test and considering tenders dispassionately and without bias. The Court can interfere if the decision making process of the authorities is vitiated on any ground, but cannot interfere with the decision arrived at. This has been so held by the Supreme Court in Sterling Computers Ltd. v. M/s. M.N. Publications Ltd, 1993 (1) SCC 116 and F.C.I, v. M/s. Kamadhenu Cattle Feed Industries, .
48. In Sterling Computers Ltd. case, '" the Supreme Court held:
"While exercising the power of judicial review, in respect of contracts entered in to on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision making process". In this connection reference may be made to the case of Chief Constable of North Wales Police v. Evans where it was said that: (p. 144-a). | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-44 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | "The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the Court".
By way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans the Courts can certainly examine whether "decision making process" was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.
If the con tract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, the Court cannot act as an appellate authority by substituting its opinion i n respect of selection made for entering into such contract. But, once the procedure adopted by an authority for purpose of entering into a contract is held to be against the mandate of Article 14 of the Constitution, the Courts cannot ignore such action saying that the authorities concerned must have some latitude or liberty in contractural matters and any interference by Court amounts to encroachment on the exclusive right of the executive to take such decision". | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-45 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 49. In F.C.I. 's case, the Supreme Court observed as follows:
"7. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article-14 of the Constitution of. which non-arbitrariness is a significant facet. There is no unfettered discretion in public law. A public authority possesses powers only to use them for public good: This imposes the duty to act fairly and to adopt a procedure which is 'fairplay in action'. The observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his inter action with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely elimiate discretion in the exercise of power as it is unrealistic, but provides for control of its exercise by judicial review". | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-46 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 50. A feeble argument was advanced by the learned Counsel for the appellant that there are two different statements of valuation of price bids both dt. 7-9-92 - one typed and one in manuscript. We have seen the file. Tine allegation is absolutely without substance. As per the office practice, the manuscript is the draft and typed one is the fair and there is absolutely no difference between the two. The stand of the Board is that the object of loading and off-loading is not to award contract on the evaluated price, but to know whether the bidder is having any idea about scope of the work and whether any reasonable person in this line can quote those prices.
51. Another contention urged by Sri Swamy is that negotiating with only one tenderer is bad. He relies on the following observations in M/s. C.J. Fernacleiz's case (15 supra), at page-967.
"Assuming for purpose of argument that there has been a siight deviation from the terms of the NIT, it has not deprived the appellant of its right to be considered for the contract; on the other hand, its tender has received due and full consideration. If, save for the delay in filing one of the relevant documents, MCC is also found to be qualified to tender for the contract, no injustice can be said to have been done to the appellant by the consideration of its tender side by side with that of the MCC and in the KPC going in for a choice of the better on the merits. The appellant had no doubt also urged that the MCC had no experience in this line of work and that the appellant was much better qualified for the contract. The cooperative merits of the appellant vis-a-vis MCC are, however, a matter for the KPC (counselled by the TCE) to decide and not for the Courts. We were, therefore, rightly not called upon to go into this question". | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-47 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 52. We fail to see how these observations are of any assistance to the appellant. Here, the bids of all the tenderers including the appellant and the 4th respondent were considered and the bid of the 4th respondent was found to be the lowest and hence it was given the contract. In fact this is the decision relied on by the learned Counsel for the 4th respondent.
53. We agree with the learned Counsel for the Board who has also raised a plea that in any event, the appellant cannot get the contract as it is only Alluminium Industries Ltd., whose evaluated bid of Rs. 3,13,23,986 is the lowest, that could have got the contract. We accordingly hold that the complaint of the appellant that price bids were arbitrarily evaluated by the Board is not justified.
Contention No. II (i):-
54. The next contention of the learned Counsel for the appellant is that even if it is found that the rates quoted by the appellant are higher, the Board ought to have awarded the contract to it in view of its previous experience. To appreciate this contention, Clause 2.8.1 of Section 2 of Tender Specifications is relevant and it reads as follows:
Cl. 2.8.1. - Experience:
"While being equal of comparable on other aspects preffrence will be given to those who had supplied similar plant/equipment/materials to that specified du ring the last 5 years or supplying now under a running contract. A list of such supplies should be given in a schedule". | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-48 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 55. From tlis, it i s clear that preference wil1 be given to the persons who have experience provided the other things are equal. It is a matter of policy decision and especially when awarding contract to a party, who has quoted more for doing the work, there should be compelling and strong reasons to award to it in preference to the one who quoted less. Merely because it was earlier given work of Rayalaseema Thermal Power Project when its financial position was 25 the same, it does not follow that the appellant should be preferred for this work also even though it has quoted higher rates. It is also to be remembered that the appellant was not given the contract in question not because of its financial capability, but because the evaluated price of its bid was found to be more than that of the 4th respondent. Hence, the contention that the Board ought to have relaxed from the requirement of financial capability has no force. The learned Counsel has relied on voluminous documents filed by him in support his contention that the appellant has got many claims pending settlement against the Board to the extent of Rs. 2.75 crores, that it is now executing many contracts with the Board to its satisfaction and that mere accumulation of losses of about Rs. 5.96croresason31-3-1991 does not disabletheappellantfromtakingup and executing the work. But all these are not material since the appellant was denied the contract not because of its financial incapacity, but because its bid was not the lowest. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-49 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 56. The learned Counsel for the appellant relies on the principle of legitimate expectation laid down in U.O.I. and Ors. v. Hindustan Development Corporation and Ors., where the Supreme Court observed as follows:
"A case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfil. The protection is limited to that extent and a judicial review can be within those limits. But as discussed above a person who bases his claim on the doctrine of legitimate expectation, in the first instance, must satisfy that there is a foundation and thus has locus standi to make such a claim. In considering the same several factors which give rise to such legitimate expectation must be present. The decision taken by the authority must be found to be arbitrary, unreasonable and not taken in public interest. If it is a question of policy, even by way of change of old policy, the Courts cannot interfere with a decision. In a given case whether there are such facts and circumstances giving rise to a legitimate expectation, it would primarily be a question of fact. If these tests are satisfied and if the Court is satisfied that a case of legitimate expectation is made out then the next question would be whether failure to give an opportunity of hearing before the decision affecting such legitimate expectation is taken, has resulted in failure of justice and whether on that ground the decision should be quashed. If that be so then what should be the relied is again a matter which depends on several factors". | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-50 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 57. Explaining the theory in its application, the Supreme Court went on, "....By and large they (legitimate expectations) arise in cases of promotions which are in normal course expected, though not guaranteed by way of a statutory right, in cases of contracts, distribution of largess by the Government and in somewhat similar situations. For instance in cases of discretionary grant of licences, permits or the like, carries with it a reasonable expectation, though not a legal right to renewal or nonrevocation, but to summarily disappoint that expectation may be seen as unfair without the expectant person being heard. But there again the Court has to see whether it was done as a policy or in the public interest either by way of G.O. rule or by way of a legislation........"
58. The grounds on which the administrative action can be assailed and the relief that can be given to a party are laid down by the Supreme Court in the same case as under:
"....If that be so, a decision denying a legitimate expectation based on such grounds does not qualify for interference unless in a given case, the decision or action taken amounts to an abuse of power......."
xxx xxx xxx "......For instance if an authority who has full discretion to grant a licence and if he prefers an existing licence holder to a new applicant, the decision cannot be interefered with on the ground of legitimate expectation entertained by the new applicant applying the principles of natural justice. It can therefore be seen that legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited......" | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-51 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | xxx xxx xxx "If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatary, unfair or biased, gross abuse of power or violation of principles of natural justice, the same can be questioned on the well known grounds attracting Article-14 but a claim based on mere legitimate expectation without anything more can not ipso facto give a right to invoke these principles...."
xxx xxx xxx "As cautioned in Attorney General for New South Wales' case the Courts should restrain themselves and restrict such claims duly to the legal limitations. It is a well-meant caution. Otherwise a resourceful litigant having vested interests in contracts, licences etc. can successfully indulge in getting welfare activities mandated by directive principles thwarted to further his own interests. The caution, particularly in the changing scenario, becomes all the more important."
59. We are afraid that this decision is not of any help to the appellant. First of all there is no pleading to this effect either in the Writ Petition or in the Writ Appeal. Even otherwise, there is no change of policy here. If the appellant was denied the contract on the ground of its financial position, it could have some justification to contend that hitherto it was given contracts by the Board inspite of its financial position and that there are no reasons to depart from the practice in deciding this contract, without notice to the appellant. Whether in such circumstances the appellant is entitled to the benefit of theory of legitimate expectation is also doubtful and we need not express any opinion in this case since it is academic. Thus, we reject this contention.
60. Sri Swamy, the learned Counsel for the appellant also contended that the price quoted by the 4th respondent is predatory and that the three members of the consortium formed cartel and relied on the observations of the Supreme Court in Hindustan Development Corporation case (18 supra), in para 15. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-52 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | "The cartel therefore is an association of producer who by agreement among themselves attempt to control production, sale and prices of the product to obtain a monopoly in any particular industry or commodity. Analysing the object of formation of a cartel in other words, it amounts to an unfair trade practice which is not in the public interest. The intention to acquire monopoly power can be spelt out from formation of such a cartel by some of the producers. However, the determination whether such agreement unreasonably restrains the trade depends on the nature of the agreement and on the surrounding circumstances that give rise to an inference that the parties intended to restrain the trade and monopolise the same".
61. Later, the Supreme Court said in Matsushita Electric Industrial Co. Ltd., et al v. Zenith Radio Coloration et al 89 L.Ed. 2d 538, that predatory pricing conspiracies are by nature speculative and that the agreement to price below the competition level requires the conspirators to forego profits that free competition would offer them".
62. On the other hand, Sri Subrahmanya Reddy, the learned Counsel for tine respondents relied on the very same judgment at paras 17 and 19.
".....Therefore mere offering of a lower price by itself, though appears to be predatory, cannot be a factor for inferring formation of a cartel unless an agreement amounting to conspiracy is also proved".
"1.9. A mere offer of a lower price by itself does not mainfest the requisite intent to gain monopoly and in the absence of a specific agreement by way of a concerted action suggesting conspiracy, the formation of a cartel among the producers who offered such lower price cannot readily be inferred".
63. Here, neither the question of cartel nor the question of predatory price arises. Further, this plea has not been taken by the appellant either in the Writ Petition or in the Writ Appeal. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-53 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | Contention No. II (J):-
64. The last contention of the learned Counsel for the appellant is that the award of contract to the 4th respondent is vitiated by mala fides, since it was selected though the designs and drawings submitted by it are not in accordance with tender specifications and the Board not only agreed to pay higher price than what has been quoted by i t, but aIso conferred some extra benefits on it. The learned Counsel for the Board drew our attention to Clauses 6.3.0 and 6.4.0 of sub-section-D of Technical Specifications which are extracted hereunder:
Cl. 6.3.0: Contracts shall submit design calculations in support of the design and fabrication drawings submitted by him for the approval of ConsuItant /Purchaser.
Cl.6.4.0: Contractor shall check erection clearance and ensure that detailing of connection is carefully planned for easy erection.
65. Relying on these clauses, he contended that as the consultant has pointed out number of defects and deficiencies in the contract submitted by the 4th respondent, the Board took an undertaking from it that it will execute the work as per the specifications given by the consultant and as such there is no reason to reject the tender on that ground. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-54 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 66. Coming to the higher price being paid, it is true that the 4th respondent has quoted Rs. 2,18,43,650/-. In the negotiations the 4th respondent was given extra amount of Rs. 19 lakhs to cover the cost of additional tonnage to make up 215 M.Tons of structural steel and 47.52 tons of R.C.C. steel as per the requirement pointed out by the consultant. The learned Counsel for the appellant criticises the stipulation of payment of extra amount to the 4th respondent in case any extra structural steel is required to be used over and above the estimated 215 M.Tons. The learned Counsel for the Board says that the possibility of using extra steel over 215 M.Tons is a remote one in view of the fact that the appellant itself has estimated use of 229.1 tons and even otherwise that the amount may be meagre. He has also drawn out attention to the Clause in the Final Acceptance of the offer dated 28-4-1993 to the effect that extra reinforced steel if any required to be used has to be borne by the 4th respondent. He has also stated that in fact the amount at which the contract was awarded was far less than the evaluated price and the Board has gained by about Rs. 39 lakhs (Rs. 2,76,54,014 the evaluated price Bid less Rs. 2,37,43,650 the price at which awarded) and that the price quoted by the appellant (Rs. 3,12,96,835) is nearly Rs. 75 lakhs higher than the price at which the contract was awarded to the 4th respondent. We agree with the contention of the learned counsel for the Board. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-55 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 67. The learned counsel for the appellant has relied on clause 2.03 of subsection (B) of Standard Specification and Clauses 2.2.3. and 2.26.4 of Tender Specifications, which read as follows:
Cl.2.03.00: Should major deviations be desired by the Bidder, then a Base Offer shall be made in compliance with the specification and a separate Alternate offer may be made. Evaluation comparisons will, however, be made on the basis of Base offer only and the Alternate offer will be considered only when the Base offer of the Bidder is competitive otherwise and technically acceptable.
Alternate offer exhibits improved technology and economy over its Base Officer. Bids without Base Offer will be rejected as 'Irresponsive'.
Cl.2.2.3.: Clarifications, amplications and/or any other correspondence from the tenderer subsequent to the opening of the tender, will not be entertained. The tenderers are, therefore, advised to ensure that their tenders sent in COMPLETE SHAPE at the first instance itself. Post tender rebates, revisions or deviations in quoted prices and /or conditions or any such offers which will give a benefit to the tender over others wil1 not only be rejected but the ORIGINAL TENDER ITSELF WILL GET DISQUALIFIED ON THIS ACCOUNT AND THE TENDERER'S EARNEST MONEY DEPOSIT FORFEITED.
Cl.2.26.4: Under no circumstances shall tenderer alter his price during the validity period after tenders are opened, any tenderer who does so resulting in recalling of tenders by the Board or additional expenditure to the Board shall not only lose his Earnest Money Deposit but also run the risk of being black listed by the Board which reserves the right under the Law to recover damages resulting therefrom. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-56 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 68. The learned counsel for the appellant contended that in view of any major deviation proposed by the 4th respondent the base offer ought to have been rejected and the quoted price cannot be enhanced in any circumstances. These clauses do not indicate such a prohibition. These clauses also indicate that the tenderers while submitting their Base Offers can also submit alternate offer with major deviations if any. But evaluation of the bids will be madeonly on the basis of Base Offer. The Clauses also advises the tenderers that they should firm offers at the first instance itself and post tender modification or alteration of the price giving benefit to the tenderers over others will result in disqualification of the original tender itself. As can be seen, these apply to unilateral alteration of price due to any reason including as a result of major deviations. But here the amount of Rs. 19 lakhs is the amount agreed to by the Board through negotiations and not the amount demanded by the 4th respondent unilaterally. Further, by this enhancement of Rs. 19 lakhs, the 4th respondent does not derive any benefit over the other tenderers since even after the addition of Rs. 19 lakhs, the evaluated price bids of all the tenders are not disturbed and the bid of the 4th respondent continued to be the lowest of all the tenderers. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-57 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 69. The plea of mala fides raised by the appellant is without any merit. It is well settled that the burden of establishing mala fide is on the person who alleges the same. (See: E.P. Royappa v. State of Tamil Nadu, and M. Sankaranarayana, IAS v. State of Karnataka, . In E.P. Royappa's case, the Supreme Court, observed as follows: | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-58 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | "92. Secondly, we must not also overlook that the burden of establishing mala fides is very heavy on the person who alleges it. The allegations of. mala fides are often more easily made than proved, and the very seriousness of such allegations demands proof of a high order of credibility. Here the petitioner, who was himself once the Chief Secretary, has flung a series of charges of oblique conduct against the Chief Minister. That is in itself a rather extraordinary and unusual occurrence and if these charges are true, they are bound to shake the confidence of the people in the political custodians of power in the State and therefore, the anxiety of the Court should be all the greater to insist on a high degree of proof. In this context it may be noted that top administrators are often required to do acts which affect others adversely but which are necessary in the execution of their duties. These acts may lend themselves to misconstruction and suspcion as to the bona fides of their author when the full facts and surrounding circumstances are not known. The Court would, therefore, be slow to draw dubious inferences from incomplete facts placed before it by a party, particularly when the imputations are grave and they are made against the holder of an office which has a high responsibility in the administration. Such is the judicial perspective devaluating charges of unworthy conduct against ministers and other high authorities, not because of any special status which they are supposed to enjoy, nor because they are highly placed in social life or administrative set up - these considerations are wholly irrelevant in judicial approach - but because otherwise, functioning effectively would become difficult in a democracy. It is from this stand-point that we must assess the merits of the allegations of mala fides made by the petitioner against the second respondent". | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-59 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 70. In Sankaranarayana's case , the Supreme Court observed that it may be permissible in an appropriate case to draw reasonable inference of mala fides from the facts pleaded and established. But such inference must be based on factual matrix, which cannot remain in the realm of insinuation, surmise or conjecture.
71. The learned Counsel for the appellant heavily relied on the decision of a Full Bench of this Court in Kranth Sangram Parishath v. Sri N. Janardhan Reddy, 1992 (3) ALT 99 (F.B.). It was held in that case, "It is of paramount importance that decisions affecting the lives and liberties of citizens are rendered by people who are impartial, act fairly and bring to bear a dispassionate and objective consideration to the issues involved".
72. There is absolutely no dispute about this proposition and whether there is bias or not has to be decided on the facts and circumstances of each case. In the instant case, there is no material to show bias on the part of any member of the Board or Chairman or late Chairman in favour of the 4th respondent or against the appellant. | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-60 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 73. Apart from this, there is another hurdle in the way of the appellant. The appellant did not raise this plea of bias before the Board at various levels when the matter was considered and took a chance of getting a favourable order from the Board awarding the contract. Having failed, it is not now open to it to allege bias. The observations of the Supreme Court in G. Sarana v. Lucknoxv University, are apposite:
"We do not, however, consider it necessary in the present case to go into the question of the reasonableness of bias or real likelihood of bias as despite the fact that the appellant knew all the relevant facts, he did not before appearing for the interview or at the time of the interivew raise even his little finger against the constitution of the Selection Committee. He seems to have voluntarily appeared before the Committee and taken a chance of having a favourable recommendation from it. Having done so, it isnot now open to him to turn round and question the constitution of the Committee. This view gains strength from a decision of this Court in Manak Lal's case (supra) wherein more or less similar circumstances, it was held that the failure of the appellant to take the identical plea at the earlier stage of the proceedings created an effective bar of waiver against him. The following observations made therein are worth quoting:-
"It seems clear that the appellant wanted to take a chance to secure a favourable report from the tribunal which was constituted and when he found that he was confronted with an unfavourable report, he adopted the devise of raising the present technical point". | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-61 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 74. In reply to the contention raised by the respondents that in any event it is only Alluminium Industries Ltd., which is the lowest tenderer that could complain, and which has not come to the Court and it is not for the appellant to champion its cause, the learned Counsel for the appellant relied on the decision in Bangalore Medical Trust v. B.S. Muddappa, wherein the Supreme Court observed as follows:
"....It is too late in the day, therefore, to claim that petition filed by inhabitants of a locality whose park was converted into a nursing home had no cause to invoke equity jurisdiction of the High Court. In fact public spirited citizens having faith in rule of law are rendering great social and legal service by espousing couse of public nature. They cannot be ignored or overlooked on technical or conservative yardstick of the rule of locus standi or absence of personal loss or injury. Present day development of this branch of jurisprudence is towards free movement both in nature of litigation and approach of the Courts. Residents of locality seeking protection and maintenance of environment of their locality cannot be said to be busy bodies or interlopers . Even otherwise physical or personal or economic injury may give rise to civil or criminal action but violation of rule of law either by ignoring or affronting individual or action of the executive in disregard of the provisions of law raises substantial issue of accountability of those entrusted with responsibility of the administration. It furnishes enough cause of action either for individual or community in general to approach by way of writ petition and the authorities cannot be permitted to seek shelter under cover of technical) ties of locus standi nor they can be heard to plead for restraint in exercise of discretion as grave issues of public concern outweight such considerations". | https://indiankanoon.org/doc/16663/ |
66d95abf72c5-62 | Bhanu Construnctions Company ... vs A.P. State Electricity Board, ... on 1 March, 1994 | 75. The learned Counsel for the appellant contends that applying the above principle, this can be treated as a public interest litigation. On the other hand, in Janata Dal v. H.S. Choudary, , Justice Ramaval Pandian speaking for the Bench, a fter reviewing all the cases of public in terest litigation held that persons acting bona fide and having sufficient interest in instituting an action for redressal of public wrong or public injury, to advance the cause of community or disadvantaged groups and individuals can maintain public interest litigation. The Supreme Court also held that mere busy body or a meddlesome interloper or way farer or officious intervener has no locus standi to file public interest litigation for personal gain or private motivation or any other oblique consideration or for glare of publicity.
76. In the instant case, no interest of any disadvantaged group of individuals is vindicated. The appellant does not come within the parameters laid down by the Supreme Court in the Janata Dai's case (24 supra). As already seen, the Writ Petition and the Writ Appeal have been filed due to the business rivalry of the appellant with the 4th respondent and because he was not successful in getting the contract.
77. For the above, reasons, the Writ Appeal is dismissed with costs. Advocates fee Rs. 1,000/-.
78. After pronouncing the judgment Sri B.S.A. Swamy, the learned Counsel for the Appellant, has sought oral leave for appeal to Supreme Court. We do not think that this case involves any substantial question of law of general importance which needs to be decided by the Supreme Court. Accordingly leave is refused. | https://indiankanoon.org/doc/16663/ |
2e41037f91d3-0 | V. Basavayya vs N. Kottayya on 5 July, 1963 | JUDGMENT Anantanaravana Avyar, J.
1. Veguntha Basavayya, as sole plaintiff, filed O.S. No. 209 of 1952 in the Court of the Principal District Munsif, Eluru, for a dissolution of partnership business carried on between him (plaintiff) and the defendant and for accounts. The case of the plaintiff was that he and the defendant were partners of a partnership firm and did business from 1944 to 1947 in sundry articles and cloth. The defendant contested the suit raising various contentions which result ed in various issues. Of them, Additional Issue No. 1 framed on 31-7-1954 was: "Whether the suit is not maintainable by reason of the suit partnership being void"? The learned Principal District Munsif heard this as a preliminary issue and held that the suit partnership was illegal, void and unenforceable and that the suit was not main tainable. Accordingly he dismissed the suit with costs. The plaintiff filed A.S. No. 36 of 1955 before the learned Subordinate Judge, Eluru. The latter framed 3 single point for decision, namely, "Whether the suit is maintainable or not". He agreed with the trial Court and dismissed the appeal. Thereupon the plaintiff filed this second appeal.
2. When the second appeal originally came up for hearing before our learned brother, Seshachalapathi, J. he passed an order dated 3-8-1961 as follows : | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-1 | V. Basavayya vs N. Kottayya on 5 July, 1963 | "The two Courts below have relied upon the decislcn in Pisupati Rama Rao v. Tadepalli Papayya, 1954-2 MLJ (Andh) 103 : (AIR 1954 Andh 51). That decision had been rendered on the language of an express prohibition erected under Sections 13 and 16 of the Rice Rationing Order of 1943. It is not in dispute that the Madras Cloth (Dealers) Control Order of 1948 does not in express terms contain a prohibition analogous to Sections 13 and 16 of the Rice Rationing Order of 1943 referred to above. The question is bereft of any direct authority of this Court. A decision of the Calcutta High Court in Matizuddin Khan Choudhury v. Habibuddin Sheikn, (S) , has been brought to my notice which, while dealing with the terms of the Bengal Silk Control Order of 1945, held that forming a partnership for running the licensed business is neither illegal nor opposed to public policy. In view of the importance of question and the large number of similar cases that may arise, I direct that this Second Appeal may be posted before a Bench."
Accordingly, this appeal has come up before this Bench.
3. The points which arise are:
(1) Whether the suit partnership is void? And (2) Whether the suit is not maintainable on that ground?
4. The relevant facts of the case are as follows:
The partnership is alleged to have been formed in 1944 for carrying on business in sundry articles and cloth.On 26-10-1948, the plaintiff obtained a licence (Ex. A-1)
under the Madras Cloth (Dealers) Control Order, 1944. The | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-2 | V. Basavayya vs N. Kottayya on 5 July, 1963 | under the Madras Cloth (Dealers) Control Order, 1944. The
licence mentions the plaintiff as the licensee and gives
his father's name. It describes the business as follows: | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-3 | V. Basavayya vs N. Kottayya on 5 July, 1963 | "6. Nature of business for Retail business in
which licence has mill-made doth on
been issued. his own account."
It also elves the exact description and boundary of the premises where the business was to be carried on as 'in his own house at Dharmajigudem'. The plaintiff alleged
that the defendant was in management of the partnership business, from 1946 up to the end of 1950 which means that the defendant was the managing partner from prior to the obtaining of the licence.
5. Section 81 (2) of the Defence of India Rules runs as follows:
"The Central Government or the Provincial Government so far as appears to it to be necessary or expedient for securing the defence of British India or the efficient prosecution of the war or for maintaining supplies and services essential to the life of the community may by order provide | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-4 | V. Basavayya vs N. Kottayya on 5 July, 1963 | (a) for regulating or prohibiting the production, treatment, keeping, storage, movement, transport, distribution, disposal, acquisition, use or consumption of articles of any description whatsoever and in particular for prohibiting the withholding from sale either generally or to specified persons or classes of persons of articles or things kept for sale to be sold either generally or to specified persons or classes of persons or in specified circumstances.
(b) for controlling the prices or rates at which articles or things of any description whatsoever may be sold or hired and for relaxing any maximum or minimum limits otherwise imposed on such prices or rates." Rule 81 (4) runs as follows:
"If any person contravenes any order made under this rule, he shall be punishable with imprisonment for a term, which may extend to three years or with fine or with both."
The Government of Madras, in exercise of the powers conferred by Rule 81 (2) (b), made the Madras Cloth (Dealers) Control Order (hereinafter referred to for convenience as the M.C.D.C. Order) in 1944. Both sides have placed before us the above Order of 1944 and proceeded on the basis that the provisions of that Order were subrtantially in force during the relevant period concerned in this case and were substantially the provisions under which the licence (Ex. A-1) was issued. We also proceed accordingly. Clause 3(c) of the M.C.D.C. Order defines a 'dealer' as follows:
dealer means a person carrying on the Business, whether on his own account or as commission agent, or selling or storing for sale cloth, whether wholesale of re tail, and whether or not in conjunction, with any other business and includes a hawker." | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-5 | V. Basavayya vs N. Kottayya on 5 July, 1963 | Clause 4 reads: , "Save as hereinafter provided, no person shall carry on business as a dealer or hawker or store cloth for sale on or after 2nd May, 1944, except under and in accordance with the terms and conditions of a licence granted under this Order by the licensing authority.
Note: Where a dealer has more than one shop or place of business, whether in the same town or village or in different towns or villages, he shall obtain a separate licence in respect of each shop or place of business."
Clause 17 runs:
"if any person contravenes any of the provisions of this Order, then, without prejudice to any other punishment to which he may be" liable, any Court trying the offence may order that any stocks together with the packages and coverings thereof. In respect of which the Court is satisfied that the offence has been committed, shall be forfeited to His Majesty."
6. The two lower Courts relied on the decision of this Court in 1954-2 Mad LJ (Andh) 108 : (AIR 1954 Andh 51). The facts in that case were the plaintiff and defendants formed a partnership for running a rice ration shop business from 3-9-1944 and conducted that business on the basis of a ration shop licence issued in the name of the first defendant and the suit was filed by the plaintiff for a declaration that the firm had been dissolved on the 1st September 1945 and for settlement of accounts and other allied reliefs. The sole question which arose in the second appeal was whether the suit partnership was illegal. Subba Rao, C. J. (as he then was) obseived as follows: at p. 109 (of Mad LJ (Andh)); (at p. 52 or AIR): | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-6 | V. Basavayya vs N. Kottayya on 5 July, 1963 | "It is seen from the aforesaid provisions that the Ration Older was passed for maintaining supplies and services essential to the life of the community. It was intended to ensure an equitable distribution of rice to the members of the public at controlled rates, to achieve that object, it was necessary that the person, who buys and sells rice, should be under the control of the authorities concerned and subject to the regulations made to prevent abuse. The Order, therefore, enabled the authorities concerned to issue an authorisation to a retail dealer to buy and sell rice subject to the conditions laid down in the said Order. Under Section 13, the authorisation cannot be used by any person other than the person to whom it was issued. Under Section 16, such a person is prohibited from transferring a ration document to any other parson ..... It is, therefore, obvious that 'any contract involving the transfer of a ration document not only contravenes the express prohibition' contained in Section 13 of the Order 'but also relates to an act which is made an offence punishable' under the Defence of India Rules. Such a contract would be void under Section 23 of the Contract Act as the object of that contract involves something illegal or contrary to public policy."
The learned Judge relied on the decision in Nalan Padmanabhan v. Badrinath Sarda, 21 Mad LJ 425 and the decision of the Full Bench in Velu Padayachi v. Slvasoariam Pillai, and observed as follows: at p. 111 (of Mad LJ (Andh)) : (at p. 53 of AIR): | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-7 | V. Basavayya vs N. Kottayya on 5 July, 1963 | "In my view, the principles laid down in the aforesaid decisions equally apply to the facts of the instant case. The partnership business of buying rice and selling the, same in the retail shop was carried on with the aid of a licence in favour of the 1st defendant. When the licence was issued to the 1st defendant, it was intended that he should and none else (should) use that for doing Business. Instead, the plaintiff and other partners, who had no ration card along with the 1st. defendant bought and sold rice. 'It certainly was a user of the ration card by persons other than the one to idiom it was issued in contravention of Section 13 of the Rationing Order'. It also involved the transfer of a ration document prohibited by Section 16 of the Rationing Order."
The above decision is based on the following grounds:
(1) That the licence issued to the 1st defendant was intended that he and no one else should use that for doing business.
(2) When the partnership did the business, not only D. 1 (the licensee) but also the other partners including the plaintiff did the business though they had no ration card.
(3) So, it was the user or the ration card by persons other than those to whom it was issued and thus a contravention of Section 13 of the Madras Rationing Order.
(4) The forming of the partnership involved transfer of a ration document prohibited by Section 16 of the Madras Rationing Order.
(5) The forming of the partnership related to an act which was an offence punishable under the Defence of India Rules.
(7) In (FB), Horwill, J. observed as follows: at pp. 320-321 (of Mad LJ) : (at pp. 446-447 of AIR): | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-8 | V. Basavayya vs N. Kottayya on 5 July, 1963 | "..... when a licence, 'which is a personal privilege to vend', is acquired by one partner. It is certainly his licence and not the licence of the partnership. Since it was granted to him on the express understanding that it was to be used by him and by him alone, its use by the partnership would involve a transfer in precisely the same way as it would if the partnership were entered into 'after the licence was issued. 'On the question of public policy it is difficult to see any difference between the object of a partnership entered into before the licence was granted and one entered into after it was granted'. In either case, the partnership would be entered into for the purpose of bringing about a result prohibited by law i.e., the vending of arrack by a person who had no licence to do so."
(8) In 21 Mad LJ 425, the learned Judges observed thus: (at pp. 430-431):
"But 'if one person carrying on a trade and possessing stock' and capital, 'admits another into partnership' with himself, making the stock and capital, the joint property of both, 'it is impossible to contend that there is not a transfer in such a case ..... | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-9 | V. Basavayya vs N. Kottayya on 5 July, 1963 | We are not concerned in construing a statute like the Opium Act with the mere form of the transaction but with the substance of it."
9. It has been held in In Re Manu Iyer, also that the licence issued to a person under Clause 4(1) of the M.C.D.C. Order was personal to the licences and would not enure for the benefit of his heirs after his death.
10. Thus, it is clear that the licence (Ex. A-l) was a personal privilege granted to the plaintiff to deal in cloth and that if it was used by the partnership there was in substance and in effect, a transfer of the licence to the partners other than the plaintiff and dealing under the licence by the partnership would amount to those partners, in addition to the plaintiff, also dealing under that licence.
11. Both the lower Courts proceeded on the basis that the decision in 1954-2 Mad LJ (Andh) 103 : (AIR 1954 Andh 51), which related to the Madras Rationing Order 1943, also applied to the present case. In the judgment of the trial Court, it is observed that a licence issued under the provisions of Cloth Dealers' control Order comes within the definition of a 'ration document' under Section 2 (9) of the Rationing Order and that, therefore, Sections 13 and 16 of the Madras Rationing Order directly applied. The learned Subordinate Judge, in his appeal judgment, has referred to the Madras Cloth (Dealers) Control Order 1944 in two places wrongly as Cloth Rationing Order. 'Ration document' is defined in Section 2 (9) of the Madras Rationing Order, 1943 as follows: | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-10 | V. Basavayya vs N. Kottayya on 5 July, 1963 | " 'ration document' includes a ration book, a ration card or any part of any ration book or ration card or any ration coupon or any declaration, authority, permit or other 'document issued' or made by or 'under' the provisions of this Order."
The licence (Ex. A-1) clearly shows that it was issued under the M.C.D.C. Order, 1944 and was not issued under the Madras Rationing Order, 1943. It is not a 'ration document', as defined in Section 2(9) of the Madras Rationing Order, 1943, in spite of the fact that the definition mentions the word 'includes'.
12. The learned District Munsif also mentions in his judgment as follows :
"It is conceded that during the relevant period, the mill cloth was a rationed article and that no person can deal with mill cloth without first obtaining a licence."
Shri N. Bapiraju, the learned counsel for the appellant, contends before us that mill cloth for which the licence (Ex. A-1) was issued was not a rationed article but he is not able to substantiate his contention by placing any material before us. Shri N.C.V. Ramanujachari for the respondent, also does not produce any material. In view of the fact that there was a concession made before the trial Court obviously by the party against whose interest that concession was made, we do not find sufficient reason to held that the above observation by the trial court is wrong or without adequate basis. But, even then, the licence (Ex. A-1) is not a ration 'document' as defined in Section 2(9) of the Madras Rationing Order, 1943, | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-11 | V. Basavayya vs N. Kottayya on 5 July, 1963 | 13. Both sides have argued elaborately before us on the question as to whether the above decision in 1954-2 Mad LJ (Andh) 108 : (AIR 1954 Andh 51), is applicable to the present case purely on the basis of the M.C.D.C. Order.
14. Sections 13 and 16 of the Madras Rationing Order, 1943 run as follows :
"Section 13. A ration document shall not be used for obtaining any rationed article except by or on behalf of the person to whom such document was issued." "Section 16. No person shall transfer to any other parson a ration document issued to himself."
It is beyond doubt or dispute that there is no clause in the M.C.D.C. Order laying down express prohibition of transfer of a licence like Ex. A-l, corresponding to Section 16 of the Madras Rationing Order. As seen above, the partnership conducting the business amounted to transfer of rights under the licence by the plaintiff to the defendant who was a partner but was not a licensee tinder Ex. A-l. The question is whether the absence of any such express prohibition by a clause in the M.C.D.C. Order makes a material difference. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-12 | V. Basavayya vs N. Kottayya on 5 July, 1963 | 15. Shri Bapi Raju contends that there is no clause in the M.C.D.C. Order corresponding to Section 13 of the Madras Rationing Order and that, therefore, the operation by me partnership of the licence which was issued in the name of the plaintiff was not illegal. It is true that though there is no clause in the M.C.D.C. order which is exactly in terms of Section 13 of the Madras Rationing Order, there is Clause 4 which we have already extracted earlier in this judgment. Shri Bapi Raju argues that operation of licence by the partnership was not in conflict with Clause 4 and that it can be reconciled with Clause 4 as being in conformity with it. He contends that the defendant as partner and also the plaintiff as partner carried business only in accordance with the terms and conditions of the licence (Ex. A-1). It is true that the business if done by the plaintiff alone would have been in accordance with the terms and condition of the licence (Ex. A-1). But that fact does not mean that it was done in conformity with Clause 4 when the defendant as partner, in effect, did the business. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-13 | V. Basavayya vs N. Kottayya on 5 July, 1963 | Defendant did business as 'dealer'. Dealer as defined in Clause 3 (e) of the M.C.D.C. Order has to do Business under and in accordance with the terms of licence which means that he must do business under a licence granted to him as dealer. As already pointed out by us above and held by the various Madras decisions including the Full Bench in , the licence (Ex. A-1) is a personal privilege and gave lawful sanction to business by the Plaintiff alone as dealer and not the defendant as dealer. Shri Bapi Raju points out that the note in Clause 4 of the M.C.D.C. Order mentions that when a dealer has more than one shop, he should have a licence in respect of each shop. This does not mean that when a dealer had one shop and one licence, the business could be conducted in that shop under that licence by any dealer other than that licenced dealer even if the former be a partner of the licenced dealer. We find that this contention of Shri Bapi Raju is not tenable. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-14 | V. Basavayya vs N. Kottayya on 5 July, 1963 | 16. In Marudamuthu Pillai v. Rangasaml Moopan, ILR 24 Mad 401, A held a licence for sale of toddy while B held a licence for sale of arrack and A entered into an agreement of partnership with 8 in the business of vending arrack and toddy at a time when there was a rule in force under the Abkari Act prohibiting a person having a licence for the sale of toddy from being interested in the sale of arrack and prohibiting a person having a licence for the sale of arrack from being interested in the sale of toddy. A filed a suit against B for dissolution of partnership. The suit was held to be not maintainable and was dismissed. The learned Judges of the High Court held that the contract was void ab initio as being in contravention of the rule which was made not merely for the protection of the revenue but also in the interests of the public and that the contract vas also invalid on another ground as follows (at pp. 404-405) :-
"Apart from this, we should hold that the contract was invalid also on the ground that the licence in each case was to be obtained by only one of the partners .....To hold that a person who has not got a licence could still be partner with one who has a licence and as such partner carry on the business with or without the other would enable the unlicensed partner to evade the liabilities intended by the law to be cast on persons carrying on abkari business."
In the present case also, it is clear that the M.C.D.C. Order was passed not merely for the protection of reveres but also in the interests of the public. The ground mentioned in the above passage holds good independent of the rule under the Abkari Act and applies to the present case. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-15 | V. Basavayya vs N. Kottayya on 5 July, 1963 | 17. In ILR 35 Mad 582, which was under the Opium Act, the learned Judges of the Division Bench held that the contract of partnership was void and the suit vas not maintainable on two main grounds:
(1) that the transfer without sanction of the collector was prohibited; and (2) that there was contravention of provisions of Clause 20 of the licence which prohibited the transfer of the right.
In this case, the conditions of the licence do not include any express prohibition of transfer but the first term in the licence is that it was granted subject to the provisions of M.C.D.C. Order 1944 and the other conditions specified in it.
18. In Ramanayudu v. Seetharamayya, AIR 1935 Mad 440 : 41 Mad LW 521 (FB) the highest bidder at an abkari auction of toddy shop entered into a partnership with another to work the abkari business of the shop without getting previous permission of the Collector for such partnership and the partnership ran the business though the licence was only in the sole name of the highest bidder. It was held that the suit for recovery of the advances made by him to the partnership business was not maintainable. The learned Judges relied on the decision in ILR 24 Mad 401 and other decisions and held that the partnership was illegal and that the suit was not maintainable. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-16 | V. Basavayya vs N. Kottayya on 5 July, 1963 | 19. In a Full Bench held that a partner in a partnership entered into for the purpose of vending arrack under a licence granted to only one of the partners could not sue for the balance due on settlement of accounts as the contract was void ab initio whether it was entered into before the licence was granted or afterwards. The learned Judges approved of the decisions in ILR 24 Mad 401, ILR 35 Mad 582, AIR 1935 Mad 440 : 41 Mad LW 521 (FB) and observed as follows at p. 324 (of Mad LJ) : (at pp. 449-450 of AIR):
"If the licensee holds his licence for the partnership or by an act of volition shares his licence with his partner, then there is a transfer which offends Rule 27. If it be found that the licensee does not hold the licence for the partnership, because it is illegal for him to do so, or because for any other reason the non-licenced partner does not purport to sell, by himself or through his partner, under his partner's licence, then there is no transfer; but the non-licensed partner would then commit a breach of Section 15 of the Act. In either case, a punishable offence would be committed; and a partnership formed that would lead to a breach of these provisions would be illegal, either because an offence would necessarily be committed or because it would be against the general public policy underlying the enactment that only approved persons, specifically licensed, should be allowed to sell liquor."
Section 15 of the Abkari Act which is substantially similar to Clause 4 of the M.C.D.C. Order ran as follows:
"He liquor or intoxicating drug shall be sold without a licence from the Collector". | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-17 | V. Basavayya vs N. Kottayya on 5 July, 1963 | "He liquor or intoxicating drug shall be sold without a licence from the Collector".
(20) In (S) the learned Judges of the Division Bench of the Calcutta High Court discussed the above decision in AIR 1935 Mad 440 (FB) In para 50 and observed as follows: at p. 341 "The Madras High Court applied R. 27 framed undo1 the Madras Abkari Act and strictly enforced the same. The strict provisions of R, 27 may be so interpreted, but we do not think that the rules of public policy which were attempted to be applied or introduced were properly applied in that case AIR 1935 Mad 440 (FB)..... | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-18 | V. Basavayya vs N. Kottayya on 5 July, 1963 | Suffice it to say for the present that, in our view, the consideration of an object of agreement will not be deemed to be forbidden by law unless in the circumstances related above there is a specific provision forbidding transfer or sale of a right made under a license".
On an interpretation of the facts of that case including the relevant provision of the Silk Control Order, which did not prohibit the formation of any partnership for the starting of a filature or for carrying on silk business and only required that the owners of a filature should get themselves registered, the learned Judges held that the arrangement under the partnership was not prohibited under the Silk Control Order and that there was no contravention of Section 23 of the Contract Act on the ground that the object of the partnership was opposed to public policy. The Full Bench decision of the Madras High Court in that a partnership's conducting a business under a licence which stood in the name of one of the partners is opposed to public policy for the purpose of Section 23 of the Contract Act is binding on this Court. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-19 | V. Basavayya vs N. Kottayya on 5 July, 1963 | 21. In the Calcutta case, it was observed that the first defendant in that case whose name was registered as owner of the filature under the Silk Control Order had been in sole charge of the management of the filature. Such a fact would not make any difference in the present case and the position would be the same in this case if plaintiff, in whose name the licence stood, had been doing the management in view of the decisions of the Madras High Court which we have referred to above and which we respectfully follow. But, all the same, as a matter of fact, the case of the plaintiff is that the defendant was in management of the partnership business and conducted the business. In effect, the Calcutta High Court held on the basis of the specific provisions of the Silk Control Order that the formation of a partnership was not prohibited by law and was not opposed to public policy. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-20 | V. Basavayya vs N. Kottayya on 5 July, 1963 | 22. In Bhushayya v. Chinnappa Reddy, it was held by a Division Bench of this Court consisting of Syed Qamar Hasan, J. and Jaganmohan Reddy J. that a partnership by persons who are licensed under the Central Excises and Salt Act (1 of 1944) with those who had no licences was not prohibited (by law). This was based on the provisions of Section 6 of that Act and certain rules framed under that Act. In particular, Rule 178(4) merely required that intimation should be given to the authority concerned within a month from the date of an unlicensed person becoming a partner with a licensed person. A penalty of fine vas provided for failure to make such intimation. It was held by the learned Judges in at in view of the fact that there was special provision that, notwithstanding the omission to give intimation as mentioned above, an unlicensed person who became a partner with a licensed person would still be responsible for the terms and conditions of the licence, it did not appear that the intention of the rule was to declare such partnership as illegal or invalid. They also observed as follows: at p. 553 (or Andh WR) : (at p. 41 of AIR): | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-21 | V. Basavayya vs N. Kottayya on 5 July, 1963 | "Apart from the fact that under the rule there is a clear distinction, cases under the Abkari, Opium and Forest Acts have no application in determining the validity of partnerships made in contravention of the provisions of the Central Excises and Salt Act, as the prohibition is for the protection or convenient collection of revenue (but not in furtherance of a public policy as in the Abkari and Opium Acts). Where, therefore, a statute merely imposes a penalty without declaring it to be illegal or void, the imposition of penalty by itself does not in our view have the effect of making any contract made in contravention of a specific provision of the statute -- illegal or void. It must further be seen whether 'he statute was designed as a whole to further a public policy".
They relied on a passage in Anson's Law of Contract as follows:
"The effect in such a case depends on the proper construction of the particular statute. But where the words of the statute leave room for doubt as to its intention, it is material to ask whether the object of the Act in imposing the penalty is merely to protect the revenue or whether its object or one of its objects-is to protect the general public or some class of the general public by requiring that the contract shall be accompanied by certain formalities or conditions, as, for example, registration in the case of a money-lender. In the latter case. It is probable that the act for the doing of which the penalty is imposed is impliedly prohibited by the statute and therefore illegal."
This makes it clear that the act for the doing of which penalty was imposed can be impliedly prohibited and that, therefore, the prohibition need not necessarily be in express terms. In particular, in the present case, prohibition of formation of partnership or transfer of licence under the M.C.D.C. Order can be implied and inferred even though it is not mentioned in that Order in express terms. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-22 | V. Basavayya vs N. Kottayya on 5 July, 1963 | 23. The above decision was relied on by a later Division Bench of this Court in Venkatadri v. Govindaraju, 1960-2 Andh WR 151. The learned Judges held that it was indisputable that the Abkari Act and the Opium Act were designed in furtherance of a public policy and not merely for fiscal purposes and that, on the other hand, the Central Excises and Salt Act was designed with the avowed object of levy and collection of duties and that, therefore, the principle of the decision of the Full Bench in did not apply to the case of a holder of licence under the Central Excises and Salt Act (1 of 1944) entering into a partnership in regard to a business covered by the licence and contravening the provisions of the concerned rule by failing to report the fact of partnership within 30 days. They took into account the fact that, notwithstanding the omission to give intimation to the licensing authority within 30 days which was punishable with a penalty, the unlicensed partners were responsible under the rules for the terms and conditions of the license.
24. Section 23 of the Contract Act runs as follows:
"Section 23. The consideration or object of an agreement is lawful, unless | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-23 | V. Basavayya vs N. Kottayya on 5 July, 1963 | (i) it is forbidden by law or | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-24 | V. Basavayya vs N. Kottayya on 5 July, 1963 | (ii) is of such a nature that, if permitted, it would defeat the provisions of any law; or -
(iii) is fraudulent;
(iv) or involves or implies injury to the person or property of another;
(v) or the Court regards it as (a) immoral, or (b) opposed to public policy." | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-25 | V. Basavayya vs N. Kottayya on 5 July, 1963 | In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. For purposes of convenience of reference, we have givne numbers (i) to (v) and letters (a), (b) to the various portions in the above section. In this case, we are concerned only with items (ii) and (v) (b). The question as to whether a contract of partnership is valid or not depends on whether it comes under category (ii) or (v) (b). A licence, such as is concerned in the present case namely, a licence issued to a person under the M.C.D.C. Older, is a personal privilege given to the licensee (See (FB)). The privilege granted under it cannot extend to any persons with whom the licensee chooses to form a partnership Vide . M.C.D.C. Order was designed not merely for the protection of public revenue but in furtherance of a public policy. This is clear from the nature of the provisions in We order, formation of a partnership in effect amounts to transfer of rights under the licence by the licensee mentioned in that licence to his partners. Section 21 Mad LJ 425. If transfer of rights or formation of partnership in the above manner were expressly prohibited by law (M.C.D.C. Order), then the dealing in the business by the partnership would amount to an offence punishable under Rule 81(4) of the Defence of India Rules and also to the penalty of confiscation of stocks etc., under Clause 17 of the M.C.D.C. Order which is also a punitive provision. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-26 | V. Basavayya vs N. Kottayya on 5 July, 1963 | The mere fact that punishment is provided for formation of a partnership may not render the partnership illegal if there is no express provision of the Act concerned making it illegal provided that the object of the Act is merely for protection of the revenue. But if the abject of the Act is furtherance of a public policy, the formation of the partnership would become illegal under category (v) (b) as being opposed to public policy. me formation of the partnership can be illegal if it falls under category (ii) of Section 23, i.e., such partnership, if permitted, would defeat the provisions of the M.C.D.C. Order. If a partnership such as existed in the present case is allowed, it would enable a person who has not got a licence to evade the liabilities intended by the law to be cast on persons carrying on the business of dealing in cloth. So, it would come under category (n) of Section 23 it would also come under category (v) (o) of Section 23. The decision of the Full Bench in as well as the other decisions of the Madras High Court already referred to by us including ILR 24 Mad 401 are applicable to this case. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-27 | V. Basavayya vs N. Kottayya on 5 July, 1963 | 25. It is true that the M.C.D.C. Order does not contain an express prohibition of the formation of partnership or transfer of licence or an express provision that formation of partnership or transfer of licence is illegal. But prohibition of transfership and of transfer of licence and their being illegal need not necessarily be declared in express terms. They can be implied and they can be inferred from the provisions of the statute and the rules in (FB) It was held that (a) if the licensee held his licence for the partnership and shared his licence with the partner, then the transfer attended against Rule 27 and trial (o) if the licencee did not hold the licence for the partner ship, then the unlicensed partner committed a breach of Section 15 of the Act because of selling without a licence and that in either case, an offence would be committed and that, therefore formation of partnership was illegal because an offence would be committed or it would be against the general public policy underlying the enactment that only approved persons specifically licensed should be allowed to do business under the license.
In the present case also, it is clear that the public policy underlying the enactment especially as seen from Clause 4 of the M.C.D.C. Order is that only approved persons specifically licensed should be allowed to do the cloth business under the licence and the formation of partnership would be against that general public policy and would, if permitted, defeat the implied provisions of the M.C.D.C. Order especially Clause 4. So, me formation of partnership is illegal. The provisions of the M.C.D.C. Order show that by implication though not by express terms in the Order, the formation and working of partnership by a licensee with non-licensees was prohibited and amounted to a violation of the conditions of the licence (Ex. A-1). | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-28 | V. Basavayya vs N. Kottayya on 5 July, 1963 | 26. In an unreported judgment of the supreme Court in Govinda Rao v. Nathmal, (unreported judgment of the Supreme Court in C.A No. 30 of 1960, D/- 11-4-1952 the question of maintainability of a suit for accounts of a dissolved firm came up for decision under the following circumstances. Plaintiff filed a suit for accounts of a dissolved firm which, according to him, had existed as a partnership between himself and the defendants by formation in October 1946 under which the firm was to trade in food-grains. The defendants challenged the partnership on the ground that it contravened the Central Provinces and Berar Food Grains Control Order (1945) and was, therefore, illegal. That plea of the defendants was accepted by the two lower courts and came up on appeal by the plaintiff to the Supreme Court. The two defendants held a licence in the name of their joint family firm in Rajnandgaon State under the law in force in that State for dealing in foodgrains there. That State was an Indian State outside British India. The plaintiff held a licence under the Central Provinces and Berar Food Grains Control Order, 1945, for dealing in food-grains as a wholesale dealer in the Nagpur District. In October 1946 the plaintiff entered into a partnership with the two defendants for dealing in food-grains. This partnership conducted two transactions of purchase in Central Provinces. It was the admitted case of the plaintiff that the partnership was formed for the specific purpose of exporting food-grains to places outside the Central Provinces and was formed because the two defendants, who were not registered dealers in the Central Provinces, could not get permits for export from the Central Provinces.
27. The relevant provisions in the C.P. and Berar Food-Grains Control Order, 1945, were as follows:- | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-29 | V. Basavayya vs N. Kottayya on 5 July, 1963 | "Section 3(1). No person shall deal in food-grains as a wholesale dealer except under and in accordance with a licence issued by the Deputy Commissioner of the district." The phrase 'deal in food-grains' is defined as follow:
"To engage in the business of purchase, sale or storage for sale of food-grains whether on one's own account or on account of or in partnership or in association with any other person or as a commission agent or arhatiya, and whether or not in conjunction with are other business; and the words 'dealer' and 'dealing' shall be construed accordingly."
A 'wholesale dealer', under the Food Grains Control Order, was a dealer dealing in food-grains in quantities above a certain weight.
28. Their Lordships of the Supreme Court observed as follows:
"Without going into the pleas of the defendants, it is quite clear that the appellant (plaintiff) was making it easy for the respondents to trade in food-grains in Central Provinces and Berar without holding a licence, thus abetting an offence of the contravention of the Food Grains Control Order by the respondents. If not committing an offence himself. The definition of the phrase 'deal in food grains' which we have quoted above, clearly shows that every person who dealt in food-grains in a place where the Order applied, had to possess a licence. The word 'person' in Section 3(1) must include a group or association of persons like a firm of partners. A licence in the name of one of the partners was not enough. The partnership thus was an illegal one, because the object of the partnership was illegal. ..... | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-30 | V. Basavayya vs N. Kottayya on 5 July, 1963 | What we have to find out is whether the partnership was legal, because the suit was for accounts of that dissolved partnership. If the partnership was illegal or was for an unlawful purpose, then the Court will give no assistance to a plaintiff In such a case. It is obvious that the partnership was not licensed as a partnership. Therefore, the partnership could not deal in food-grains in Central Provinces and Berar. The licence in the name of the appellant was not one in favour of the partnership, and the whole of the transaction by the partnership was in contravention of the Food Grains Control Order. A Court would not enforce any claim arising from this illegal partnership ..... The suit was not for the enforcement of any money claim against the respondents, but was one for accounts of the dissolved firm, which we have already shown, was an illegal firm. The suit was, therefore, rightly\dismissed."
It will be observed that Section 3(1) of the C.P. and Berar Food-Grains Control Order is substantially similar in relevant particulars to Clause 4 of the M.C.D.C. Order. There is some difference Between the two provisions but it is not material for the purpose of this case. Both are in agreement on the material feature that no person shall deal in the concerned article as a dealer except under and in accordance with the terms and conditions of a licence duly granted. The definition of 'dealer' in Clause 3(c) of the M.C.D.C. Order is substantially in agreement in relevant particulars with the definition of the phrase 'deal in food-grains' and the indication in it as to how the word 'dealer' was to be construed on that basis in the C.P. and Berar Food Grains Control Order. Their lordships came to the conclusion that the partnership was illegal on the following grounds:- | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-31 | V. Basavayya vs N. Kottayya on 5 July, 1963 | (1) The word 'person' in Section 3 (i), corresponding to Clause 4 of the M.C.D.C. Order, included a firm of partners.
(2) The licence in the name of one of the partners did not amount to a licence in favour of the partnership so as to authorise a partnership to deal lawfully as 'dealer' under that licence.
(3) Therefore, the object of the partnership namely, dealing by the partnership in food-grains under the licence, which was in the name of one-partner (Plaintiff) alone was illegal as the partnership was not licensed as a partnership. So the dealing by the partnership in food-grains was in contravention or the C.P. and Berar Food-grains Control Order and was illegal.
(4) Suit for accounts of such a dissolved partnership was not maintainable. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-32 | V. Basavayya vs N. Kottayya on 5 July, 1963 | (4) Suit for accounts of such a dissolved partnership was not maintainable.
All the above grounds apply to the present case on the basis of the provisions of the M.C.D.C. Order which are substantially similar to the corresponding provisions of the C.P. and Berar Food-Grains Control Order on which those grounds are based by the Supreme Court. Consequently the decision of the Supreme Court applies directly to the present case and is sufficient to decide it, being ample authority of the highest court in the land, in particular, the decision of the Supreme Court does not rely upon any express prohibition of transfer such as contained in Section 13 and Section 16 of the Madras Rationing Order 1943. The decision shows that the illegality of the partnership does not depend on there being an express prohibition such as contemplated in Sections 13 and 16. That question, as to whether the absence of such express term affected the illegality of a partnership such as concerns in the present case was bereft of direct authority cf this Court when our learned brother, Seshachalapathl, J., made the reference on 3-8-1961, But, subsequently, direct authority of the highest Court has come into existence on this question when the Supreme Court passed judgment on 11-4-1962. | https://indiankanoon.org/doc/1962918/ |
2e41037f91d3-33 | V. Basavayya vs N. Kottayya on 5 July, 1963 | Their Lordships of the Supreme Court did not consider the question as to whether the C.P. and Berar Food-Grains Control Order and the prohibition of dealing without a licence under that order was merely to protect the, revenue or whether the object was the furtherance of public policy or the question as to whether the partnership would be illegal if the object of the C.P. and Berar Food-Grains Control Order had been only for the protection of the revenue and not in furtherance of public policy. But, we find that it does not affect the present case in view of the substantial similarity of the relevant provisions of the M.C.D.C. Order with the relevant provisions of the C.P. and Berar Food-Grains Control Order. The principle of the decision of the Supreme Court directly applies to the present case and the position mains unaffected by the decision of the Calcutta High Court in (S) . It is clear that the partnership was illegal and that the suit was not maintainable.
29. Though the decision of the Supreme Court is direct authority which is sufficient and ample to decide the present case, we have dealt with the various other decisions as they were cited and relied upon by the learned Advocates in the course of their arguments.
30. We, therefore, hold that the suit partnership is void and that the suit is not maintainable. Consequently, we uphold the judgment of the Court below and dismiss the second appeal with costs. | https://indiankanoon.org/doc/1962918/ |
e541c35e7670-0 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | JUDGMENT Umamaheswaram, J. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-1 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | 1. This is an appeal brought by the plaintiff as against the judgment and decree at the District Judge of West Godavari at Eluru dismissing his suit for recovery of damages for breach, of a contract dated 29th September 1950. According to the plaintiff, the defendant gave an order for a wagon load of black gingelly by a telegram dated 29-9-1959 and that the price was fixed at Rs. 84-3-0 per bag of 164 Lbs. F. O. R, Eluru.
The plaintiff, who accepted the order, on the same day applied to the M. and S. M. Railway for a wagon and a railway wagon was allotted on 15th October. The goods, viz., 251 bags of gingelly were loaded in the wagon on the same day. The railway receipt was obtained in the name of the plaintiff and endorsed to the Central Bank, Eluru. He also drew a hundi for the amount of the price on the defendant and delivered it to the Bank.
After the plaintiff sent a telegram intimating the dispatch of the goods, the defendant by an ante-dated postcard informed the plaintiff that the latter may not book the goods if not already despatched. Another ante-dated post card was sent by the defendant stating that the goods would not be accepted as the plaintiff had delayed in sending the consignment. The wagon reached Cochin on 26th October and the defendant refused to pay the hundi and toke delivery of the goods.
Further correspondence passed between the parties and the plaintiff through P. W. 1 arranged for the resale of the goods. The suit was instituted by the plaintiff for recovery of Rs. 4144-8-9 as damages on the basis of the prices fetched at the resale. He claimed the freight charges, demurrage, commission and brokerage paid at the time of resales. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-2 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | 2. The defendant resisted the suit on the ground that the plaintiff alone committed default inasmuch as he did not consign the goods immediately after the order was placed on him. He contended that the contract was validly terminated by him and that he was consequently not liable to pay any damages. He further pleaded that even assuming that he had committed the breach of the contract, he was not liable to pay damages on the basis of the prices realised at the resales held by P. W. 1.
3. Seven issues were framed by the District Judge. He found in paragraph 6 of the judgment that the case of the defendant that the goods should be immediately booked and delivered was not true, that the plaintiff took all the necessary steps to fulfil his part of the contract and that the contract was not validly terminated by the defendant.
In paragraph 7, he found that the plaintiff had no right "to resell the goods either under the contract or under law", that on the date of the breach viz., 16-10-1950, the market price was higher than the contract price and that the plaintiff was consequently not entitled to any damages. He overruled the plea of the defendant that the Court had no jurisdiction to entertain the suit. In the result, he dismissed the plaintiffs suit. The appeal has consequently been preferred by the plaintiff to this Court.
4. The questions that arise for decision are those covered by issues 4 and 5. Sri K. Ramachandra Rao, the learned advocate for the respondent, stated at the opening that he was not challenging the findings of the District Judge in regard to issues 1 to 3 viz., that the respondent had committed the breach of the contract. So, the only question that has to be decided is whether the plaintiff has established his claim to recover damages, railway freight, demurrage, commission and other expenses of resale. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-3 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | 5. Sri Sankara Sastri, the learned advocate for the appellant, strenuously contended that the contract dated 29-9-1950 related to a sale of specific foods, that the title to the goods passed to the defendant on the plaintiff accepting his order and that the plaintiff was entitled to exercise a right of resale on the defendant committing the breach of contract. In order to appreciate his argument it is necessary to set out a few relevant facts. On 29-9-1950, the defendant sent a telegram Ex. A-20 to the plaintiff in the following terms :
"Received. If immediately bookable despatch one wagon Kumppellu cheaply eighty four eight."
He confirmed the telegram by a letter and directed the plaintiff to wire the result after booking. The plaintiff thereupon sent a wire thus :
"Received. Purchased Wagon Karupapillu Eighty Four Eight Booking.........." | https://indiankanoon.org/doc/754134/ |
e541c35e7670-4 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | By his letter marked as Ex. A-22, he wrote in the following terms :
"We have purchased for you black gingelly at Rs. 84-8-0 per hag of 164 Lbs. to he booked to rail at Eluru and came to this village. We have intended for a wagon. As soon as it is allotted we will book the goods and send them.........." | https://indiankanoon.org/doc/754134/ |
e541c35e7670-5 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | Though according to the correspondence set out above, the plaintiff states that he had purchased the goods and despatched them in the wagon, but the Managing Partner of the plaintiff's firm, who was examined as P. W. 2, deposed that on 29-9-1950 the plaintiff's firm had 281 bags of gingelly and that they supplied 251 bags out of that quantity. He stated that on the date of loading, they had more than 281 bags of gingelly.
In the course of the cross-examination, he stated that the plaintiff did not purchase any goods on 29-9-1950 as they had sufficient stock with them and that the expression "purchased" used by them in the correspondence was only a business term. It is therefore clear from his evidence which I accept, that the subject-matter of the contract was not specified goods as defined in Section 2 (14) of the Indian Sale of Goods Act, hereinafter referred to as the Act.
According to the definition, "specific goods" means goods identified and agreed upon at the time a contract of sale is made. I have no doubt that the goods, which were despatched in the wagon, were not actually identified. The mere fact that they were capable of identification does not bring it within the terms of the definition. As the goods were not identified and agreed upon at the time when the contract was made viz.,. 29-9-1950, they are generic or unascertained goods within the meaning of the Act. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-6 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | In this view, I am unable to accept the contention of the learned Advocate for the appellant that the terms of Section 20 or Section 21 of the Act apply to the case. I am clearly of opinion that as the contract was for the sale of unascertained goods, section 23 is attracted. The question for consideration is whether there was an unconditional appropriation within the meaning of Sections 23 (2) and 25 (1) of the Act. Section 23 (2) runs as follows :
"Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the rights of disposal, he is deemed to have unconditionally appropriated the goods to the contract,"
Section 25 (1) is as follows :
''Where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such cases, notwithstanding the delivery of the goods to a buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled." | https://indiankanoon.org/doc/754134/ |
e541c35e7670-7 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | 6. The Point for consideration in the appeal is whether, when the plaintiff delivered the goods to the carrier, i.e., railway company, for the purpose of transmission to the buyer, he reserved the right of disposal and consequently there was no unconditional appropriation of goods to the contract. As stated supra, the plaintiff had obtained the railway receipt in respect of the goods in his own name. Ho endorsed the railway receipt in favour of the Central Bank, Eluru and delivered the hundi with a direction that the railway receipt should be delivered to the buyer only when the hundi was honoured and the price of the goods was paid.
According to Sri K. Ramachandra Rao, the learned advocate for the respondent, the fact that the railway receipt was taken in the name of the seller himself is Prima facie evidence that he intended to reserve the right of disposal of the goods and that the title would pass to the buyer only when he honoured the hundi and paid the price of the goods.
In support of his contention he strongly relied upon a decision of the Division Bench of this Court in State of Madras v. Venkataramaniah and Sons, (A). The learned Judges held that the fact that the goods had undergone the selective process, weighed and were delivered to the common carrier for transport did not show that there was an unconditional appropriation.
They further held that the question whether the appropriation was unconditional turned upon the construction of Section 25 of the Sale of Goods Act i.e., whether the seller reserved the jus disponendi. They observed that as the railway receipt, which is a document of title, was taken out in the name of the seller, he must be deemed to have manifested an intention to remain the owner and to retain control over the goods till the buyer made the payment through the bank. They added ; | https://indiankanoon.org/doc/754134/ |
e541c35e7670-8 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | "If on the other hand the seller books the goods to self the appropriation can be said to have been affected only when full payment is made to the seller."
I am inclined to hold that the facts if this case are directly governed by the Bench decision.
7. The learned advocate for the respondent further relied on a decision of the Bombay High Court reported in Ford Automobiles v. Delhi Motor Co., AIR 1923 Bom 125 (B). This decision was no doubt delivered prior to the passing of the Indian Sale of Goods Act. The learned Judge discussed the principles of English law and held that the railway receipts stand on the same footing as bills of lading and that the fact that the railway receipt was taken in the name of the seller was prima facie evidence that he intended to reserve the right of disposal.
He referred to the decision in Mirabita v. Imperial Ottoman Bank, (1878) 3 Ex. D 164 at p. 172 (C). The second rule extracted by the learned Judge from the judgment of Cotton L. J. in Mirabita v. Imperial Ottoman bank (C) (supra) is as follows :
"If, however, the vendor, when shipping the articles which he intends to deliver under the contract, takes the bill of lading to his own order and does so not as agent, or on behalf of the purchaser, but on his own behalf, it is held that he thereby reserves to himself a power of disposing of the property, and that consequently there is no final appropriation, and the property does not on shipment pass to the purchasers.'' | https://indiankanoon.org/doc/754134/ |
e541c35e7670-9 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | 8. The question as to when the seller is deemed to reserve the right of disposal is discussed by Mr. Benjamin in his treatise on the Law of Sale of Personal Property, 5th Edition, at p. 359. The learned author states as follows :
"The cases which illustrate the reservation of the right of disposal arise chiefly where parties at a distance from each other contract by correspondence, and where the seller wishes to secure himself against the insolvency or default of the buyer."
He points out that although the seller might write to the buyer and specify the packages and marks identifying the goods and although he may accompany this with an invoice, stating that the specific goods are shipped for buyer's account and in accordance with the buyer's order, mating his election final and determinate, the property in the goods will nevertheless remain in the seller till the bill of lading has been endorsed and delivered to the buyer.
9. In The Prinz Adalbert, 1917 AC 586 (D), Lord Sumner dealt with the general law where the seller pledged the bill of lading with a banker. The relevant observations are at pages 589 and 590 and are as follows ;
"Possession of the indorsed bill of lading enables the acceptor to get possession of the goods on th& ship's arrival. If the shipper, being then owner of the goods, authorises and directs the banker, to whom he is himself liable and whose interest it is to continue to hold the bill of lading till the draft is accepted, to surrender the bill of lading against acceptance of the draft, it is natural to infer that he intends to transfer the ownership when this is done, but intends also to remain the owner until this has been done. Particular arrangements made between shipper and consignee may modify or rebut these inferences ........" | https://indiankanoon.org/doc/754134/ |
e541c35e7670-10 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | This decision was followed by the Supreme Court in Commr. of Income-tax, Madras v. Mysore Chromite Ltd., (E). Das, J. {as he then was) held that the property in the goods passed in London where the bill of lading was handed over to the buyer's bank against the acceptance of the relative bill of exchange. It was pointed out that the payment by the Eastern Bank Limited, Madras, was nothing but an advance made by them to their own customer on the security of the goods covered by the bill of lading.
10. That the rule applicable to delivery of goods by carriers by sea is equally applicable to delivery of goods by carriers by land and to Canal Boat Companies is pointed out by Mulla, J. at page 129 in AIR 1923 Bombay 125 (B) by reference to the decisions in Dutton v, Solomonson, (1803) 3 B and P 582 : 127 E. R. 314 (F) and Fragano v. Long, (1825) 4 B and C 219 : 107 E. R. 1040 (G).
According to the learned Judge, there is no difference in principle between taking the bill of lading and the railway receipt in the name of the seller. The same view was taken by the Lahore High Court in Sundar Singh v. Gulab Singh, AIR 1927 Lah 269 (H).
11. The identical question came up for decision before the Patna High Court after the passing of the Indian Sale of Goods Act in Governor General of India in Council v. Joynarain, AIR 1948 Pat 36 (I). Referring to Section 25 (2) of the Act, Meredith, J. observed as follows at p. 37 : | https://indiankanoon.org/doc/754134/ |
e541c35e7670-11 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | "Though this provision is expressed as relating to the shipment of goods, the same principle will apply to their transmission by rail; see Firm Ugarchand Gajanand v. Firm Motiram Ghanshamdas, AIR 1938 Sind 18 (J); AIR 1923 Bombay 125 (B) and AIR 1927 Lah 269 (H). In the last mentioned case it was held that where goods are sent by railway, the railway receipt being addressed to self to be delivered to the purchaser only on receipt of the price of the goods, the property in the goods does not pass to the purchaser till the price is paid."
The same view was taken by the Allahabad High Court in Ram Karan Das v. Sardar Singh, 1950 All L. J. 145 (K) and by the Assam High Court in Ramniwas v. Commr. of Taxes, Assam, AIR 1952 Assam 178 (L). The decisions are all uniform that the rule which applies to the bills of lading is equally applicable to railway receipts.
The actual difference between delivery to a common carrier and delivery on board a vessel is however pointed out by Mr. Benjamin in his treatise on Sale, which is extracted at page 114 of the Indian Sale of Goods Act and Partnership Act by Pollock and Mulla, Second edition, in the following words :
"Where goods are delivered, by the seller in pursuance of an order to a common carrier for delivery to the buyer, the delivery to the carried passes the property, he being the agent of the buyer to receive it, and the delivery to him being equivalent to a delivery to the buyer." | https://indiankanoon.org/doc/754134/ |
e541c35e7670-12 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | "Where goods are delivered on board a vessel to be carried, and a bill of lading is taken the delivery by the seller is not a delivery to the buyer, but to the captain as bailee for delivery to the person indicated by the bill of lading, as the one for whom they are to be carried." | https://indiankanoon.org/doc/754134/ |
e541c35e7670-13 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | But, if the railway receipt or the hill of lading is
taken in the name of the seller, it is regarded in
English law as prima facie reservation of the right
of disposal of the goods by the seller. Sri Sankara
Sastri, the learned advocate for the appellant, has
not pointed out a single decision to show that there
I is any distinction in principle in regard to reservation of title in respect of a bill of lading and
a railway receipt. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-14 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | 12. Sri Sankara Sastri invited my attention to the decision reported in Siddique and Co. v. Rangiah Chettiar, 1947-2 Mad LJ 79 : (AIR 1948 Mad 122) (M). It has no bearing on the facts of this case inasmuch as the contract therein related to the sale of specific goods in a deliverable state and the goods were not entrusted to any common carrier or a railway company. The next decision cited by him, Madras State v. Ramalingam and Co. AIR 1956 Madras 695 (N), has also no bearing on the facts of this case.
It was held by the learned Judges on an interpretation of Section 25 (2) and (3) of the Act that the title to the goods passed in the Madras State inasmuch as the price was paid by the negotiating bankers on the receipt of the shipping documents, the bill of lading and the bill of exchange as the agent of the buyer.
13. Sri Sankara Sastri, however, raised an interesting and difficult question of law based on the specific language of Section 25 (2) of the Act. He contended that inasmuch as the Legislature specifically enacted Sub-sees. (2) and (3) only in regard la bills of lading and not railway receipts and provided that if the goods are deliverable to the order of the seller or his agent, the seller is prima facie deemed to have reserved the right of disposal, no such presumption or prima facie reservation of the right of disposal would arise in the case of a seller taking the railway receipt in his own name. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-15 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | There is considerable force in this contention. This argument has not been noticed in the several decisions decided after the passing of the Act except by the Assam High Court in AIR 1952 Assam 178 (L). The answer furnished at page 183 is not very convincing. As I am bound by the decision of the Division Bench of this Court in (A) and as the several decisions referred to supra take the same view I hold that the title in the goods did not pass to the buyer as contended by the appellant, I, therefore, agree with the District Judge that the appellant was not entitled to resell the goods I under the terms of Section 54 (2) of the Act.
14. Following the decision in Motilal v. Mool Chand, (O), I hold that the appellant is only entitled to claim the difference between the contract rate and the rate prevailing on the date of the breach by way of damages.
15. The finding arrived at by the learned District Judge that the goods sold by P. W. 1 between 8-11-1950 and 30-11-1950 were not the goods of the plaintiff is however, in my opinion, erroneous. The correspondence shows that when the defendant refused to take delivery of the goods, he instructed Chakola Lonappan Paul of Cochin to dear the goods from the wagon and dispose of them.
Intimation was given to the defendant under Ex. A-39 D/- 4-11-1950 that the plaintiff had given orders to Chakola Lonappan Paul of Cochin to sell the goods in open market. Exhibit A-55 is the letter sent by the plaintiff to Messrs. Chakola Lonappan Paul firm. P. W. 1 was examined on behalf of the plaintiff to show that the sales were accordingly held as evidenced by Exs. A-l to A-16. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-16 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | The mere fact that Exs. A-3, A-9, A-11 and A-12 did not disclose the name of the plaintiff, does not lead to the conclusion that the goods of others, were sold under those documents. P. W. 1 is quite specific that all the 251 hags cleared from the wagon were separately stocked and were sold under exhibits A-l to A-16. I accept his evidence and hold that what was sold under Exhibits A-l to A-16 were the goods of the plaintiff despatched under the suit contract.
There is no satisfactory evidence on behalf of the respondent to show that the sales were not duly conducted by P. W. 1 or that the price realised did not represent the market rates on the dates of those sales.
16. Sri Sankara Sastri next contended that ' even assuming that the appellant was not entitled to resell the goods under Section 54 (2) of the Act, the prices realised at those sales might be taken as representing the market, rates on those dates and damages awarded on that footing. In support of this argument. he relied upon the decision of the Madras High Court in Muthukrishna Reddiar and Sons v. Madhavji Devichand and Co. Ltd., (P).
It was held by the learned Judges that the price realised at the resale might be taken as the true value of the damaged goods if there was no unreasonable delay on the part of the purchaser in selling the goods. It was further held that the damages must be assessed on the basis of the market-value prevailing at the place of delivery. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-17 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | The question to be considered in the present case is whether there was no unreasonable delay on the part of the plaintiff in selling the goods and the market rate prevailing on the date of resale represents the market rate as on the date of the breach. As the goods were resold only on and after 8-11-1950 after the market had considerably fallen, I am inclined to agree with the District Judge that those rates should not be adopted as representing the market rate as on the date of the breach of the contract.
17. I however do not agree with him that the date of the breach was 16-10-1950 and that the market price was higher than the contract price. He proceeded on the erroneous view that the market rate prevailing at Eluru as on the date of the breach should be taken into account.
He ought not to have relied on the terms of the telegram Exhibit B-4 in which the plaintiff wrote that the market rate for black gingelly at Eluru as on 17-10-1950 was Rs. 85/8/0 or Rs. 86/-. He ought to have determined, as held in (P), the market rate of the goods as at the place of delivery on the date of the breach.
18. Before dealing with the question as to the date of the breach, it is necessary to dispose of a preliminary objection raised by Sri K. Ramachandra Rao, learned advocate for the respondent, based on the decision in Angulliah and Co. v. Sassoon and Co.. ILR 39 Cal 568 (Q). At p. 579, Sir Lawrence Jenkins held as the plaintiffs claim for damages rested on resale, the Court should not have awarded damages on a totally different basis. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-18 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | He expressed the opinion that if the defendant challenged the plaintiff's right to claim damages on the basis of resale, he should immediately apply for amendment of the plaint and claim damages on the difference between the contract price and the market price on the date of the breach. This decision was not followed by the Bombay High Court in Narsinggirji Manufacturing Co. v. Budansaheb, AIR 1924 Bom 390 (R). Macleod, C J. observed at p. 391 as follows :
"In the next place, the fact that the plaintiff claimed as the measure of damages the difference between the price, which he realised on the resale of goods and the contract price, would, in my opinion, be no reason for the Court to refuse to award damages according to the correct measure. With all due respect to the Judges who decided ILR 39 Cal 568 (Q), it seems to us that it, is going too far to hold that when a plaintiff has made a mistake in demanding damages on a wrong basis, the Court must refuse to set right the mistake by directing the damages to be calculated in the proper way unless the plaint i; amended,"
I am inclined to follow the liberal view of the Bombay High Court in preference to that of the Calcutta High Court. Out of abundant caution, Sri Sankara Sastri made an oral application to permit him to amend the plaint if I was inclined to accept the Calcutta view. But, as I am in agreement with the Bombay view that even without an amendment the Court is entitled to award the proper measure of damages if there is sufficient evidence on record, I think it is unnecessary to direct the amendment of the plaint. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-19 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | 19. The next question which has to be determined is one of fact as to when the breach of the contract took place. The learned District Judge found that the breach took place on 16-10-1950 when the defendant intimated to the plaintiff that he need not send the goods. Having carefully perused the evidence, I am not inclined to agree that the breach took place on that day and that the market rate of the goods as on that date should be taken into account.
The correspondence makes it clear that the defendant ordered one wagon kumpellu and that the plaintiff immediately applied for a wagon. After the wagon was allotted on 15th October, the goods were loaded and sent to Cochin. The goods were received at Cochin on 26th October. The intimation given by the defendant under Exs. A-28 and A-29 that he would not receive the goods was before the due date of performance.
It was open to the plaintiff either to accept the intimation given by the defendant or to keep open the contract till the date of performance. On 26th October, the plaintiff sent a wire to the defendant under Ex. B-5 requesting the defendant to pay the price of the goods and honour the hundi. On 28-10-1950, he wrote to the defendant to accept the delivery. A further telegram was sent on 29th October, that the wagon was not cancelled and that the defendant should take delivery without hesitation. The defendant sent a reply wire marked as Ex. A-37 on 31st October in the following terms : | https://indiankanoon.org/doc/754134/ |
e541c35e7670-20 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | "Your letter addressed Trichur reached Cochin camp yesterday as desired and authorised examined both files arrived decision follows up to demurrage about five hundred despatch delay loss three rupees per bag comes seven hundred and fifty altogether one thousand two hundred fifty from that you suffer five hundred ourselves seven hundred fifty hence instructed Bank receive less five hundred this decision only considering our future relationship please note this without prejudice to the legal rights of either side."
As the plaintiff was not agreeable to the new terms proposed in Ex. A-37 he requested Chakola Lonappa Paul of Cochin to clear the goods and sell them. Reading the correspondence as a whole, I am inclined to take the view that the breach of the contract had taken place only after the goods reached Cochin and the defendant refused to take delivery and sent Ex. A-37 i.e. on or after 31st October. The date of Exhibit A-28 or Exhibit A-29 under which the defendant intimated that he would not accept the goods should not be taken as the date' of breach inasmuch as the plaintiff-seller had not accepted the rescission of the contract by the defendant. The facts of this case are directly governed by the decision in Phillpotts v. Evans, (1839) 5 M and W 475 : 151 E. R. 200 (S), which is given as second illustration at page 243 in Pollock and Mulla's Indian Sale of Goods Act and Indian Partnership Act, second edition, The headuote in (1839) 151 E. R. 200 (S) correctly sets out the decision and is in the following terms : | https://indiankanoon.org/doc/754134/ |
e541c35e7670-21 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | Where A contracted for the purchase of wheat, to be delivered at Birmingham as soon as vessels could be obtained for the carriage thereof; 'and subsequently (the market having fallen) gave the seller notice that he would not accept it if it were delivered, the wheat being then on its transit to Birmingham.' Held, in an action against A for not accepting the wheat, that the proper measure of damages was the difference between the contract price and the market price on the day when the wheat was tendered to him for acceptance at Birmingham and refused; and not on the day when the notice was received by the seller."
At page 823, Mr. Benjamin in his treatise on the Law of Sale of Personal Property, 8th edition, refers to this case and states as follows :
"Lord Campbell said, in relation to (1839) 151 E.R. 200 (S) that it had been properly decided, but that the Exchequer of Pleas had not determined in that case that the seller would not have had the right of treating the bargain as broken, if he had chosen to do so, as soon as the buyer gave him notice that he would not accept the goods, without being compelled afterwards to make a tinder of them; and that the true point, decided in Ripley v. M'Clure, (1849) 4 Ex. 345 (T) was that a refusal' by the buyer to accept in advance of the arrival of the cargo he had agreed to purchase was not necessarily a breach of contract, but that, if unretracted down to the time when the delivery was to be made, it showed a continuing refusal, dispensing the seller from the necessity of making tender."
Following this decision, I hold that the time for ascertaining the damages for non-acceptance is the date when the goods were finally refused to be taken delivery of by the defendant. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-22 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | 20. Sri K. Ramachandra Rao, the learned advocate for the respondent, contended that as no specific date of delivery had been fixed under the terms of the contract, it was not open to the plaintiff to avail himself of the terms of Section 60 of the Act and wait till the date of delivery and that the date of reptidiation under Exhibit A-28 should he taken as the date of the breach of the contract. He referred in this connection to the decision in Millett v. Van Heek and Co. (1921) 2 KB 369 (U).
What was held by the Divisional Court (Bray and Sankey JJ.) in that case was that when a contract provided for delivery within a reasonable time after a future date, it was not a contract for delivery at a fixed time within the meaning of Section 51, Sub-section (3) of the Sale of Goods Act, 1893. The learned Judges of the Court of Appeal reserved their opinion on that question. Atkin L. J., however observed at p. 378 that it was difficult to see why it should he said that the contract for delivery at times which could be determined by a Jury was not a contract for delivery at fixed times. He added:
"It seems to me that a meaning could be given to the words, "if no time was fixed," by reading them as referring to a contract such as to deliver goods on demand or to deliver goods as required by the purchaser." | https://indiankanoon.org/doc/754134/ |
e541c35e7670-23 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | The expression used in Section 60 of the Act is not exactly the same as that contained in Section 51(3) of the Act. The expression employed is the "date of delivery". I am inclined to take the view on the facts of this case that the terms of Section 60 apply inasmuch as the defendant repudiated the contract before the date of delivery i.e., the wagon of goods reached Cochin. I am not inclined to agree with Sri Ramchandrarao's contention that as no specific or definite date of delivery was fixed the terms of Section 60 do not apply.
21. Even assuming that the terms of Section 60 do not apply and that the contract should he regarded has one to be performed within a reasonable time. I am inclined to apply the decision in (1921) 2 KB 369 (U) and hold that the damages are to be fired in reference to the time for performance of the contract subject to questions of mitigation. At p. 377, Atkin L. J. observed as follows:
"But it is said that, if no times have been expressed in the contract, and the contract would e construed by law as one for delivery by reasonable instalments over a reasonable time, even though those tunes might be ascertained as a question of fact by the jury, the plaintiff suing may not merely have an option, but is compelled, to fix his damages in reference to the market price at the time when the repudiation takes place. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-24 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | That, it seems to me, would introduce an anomaly entirely without any kind of principle to justify it. I am satisfied that the code never intended to make that distinction or to vary what was the rule of law at the time when it was passed, a rule which has been recorded in countless decisions since the doctrine of repudiation of contract has received its development in Frost v. Knight, (1872) 7 Ex. 111. (V), namely, that the damages are to be fixed in reference to the time for performance of the contract subject to questions of mitigation."
The Court of Appeal confirmed the view of the Divisional Court as to the measure of damages. When the defendant refused to accept delivery except on the terms mentioned in Exhibit A-37 dated 31st October, the plaintiff had requested Chakola Lonappa Paul to take delivery and sell the goods. It appears from the telegram sent by Chakola Lonappa Paul marked as Exhibit A-7 that the market rate of gingelly as on 2-11-1950 was Rs. 80/- per bag.
I am inclined to adopt that figure as the market rate on the date of the breach. The defendant has not adduced any evidence to show that the plaintiff could have mitigated those damages. Calculating the damages on that footing, the plaintiff would be entitled to recover 251x Rs. 4-8-0 per bag i.e., Rs. 1129-8-0.
22. The next question which has to he determined is whether the plaintiff is entitled to the railway freight incurred by him as special damage under Section 61 of the Act. Sri K. Ramachandra Rao contended that there was no pleading in regard to the railway freight. 1 am not inclined to accept his contention as the sum of Rs. 4144-8-9 claimed in the plaint includes this amount. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-25 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | The mere fact that the plaintiff had not claimed this sum under the specific head of "special damages" does not, in my opinion, preclude him from claiming that amount. There is no doubt that the contract was F. O. R. and the defendant was bound to pay these charges at the time of taking delivery. The damages are such which the parties knew when they made the contract to be likely to result from breach of it, and are special damages within the meaning of Section 61 of the Act.
In Ramalingam Chettiar v. Gokuldas Madavji and Co., AIR 1926 Mad 1021 (W), the cartage charges for taking the goods from Virudupatti to Tuticorin were allowed. Similarly, in Madhusudan Koer v. Badridas, AIR 1920 Cal 426 (X), the cost of freight and bags was allowed. Following these decisions, I am inclined to allow the plaintiff's claim in repard to the railway freight i.e., a sum of Rs. 758-4-0.
23. In regard to demurrage charges paid by the plaintiff, I am inclined to agree with the contention of Sri K. Ramachandra Rao that they cannot be allowed inasmuch as the plaintiff was bound to clear the goods when the defendant refused to take delivery. Similarly, in regard to the commission and brokerage paid by the plaintiff at the time of resale, I hold that the plaintiff cannot claim those charges as I have found that he was not entitled to exercise the right of re-sale under Section 54(2) of the Act. In the result, I hold that the defendant would be liable to pay Rs. 1129-8-0 and Rs. 758-4-0 with interest from the date of plaint upto the date of payment. | https://indiankanoon.org/doc/754134/ |
e541c35e7670-26 | Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957 | 24. The decree of the lower Court is set aside, and there will be a decree in favour of the plaintiff as indicated above. As the appeal is partly allowed, the parties will receive and pay proportionate costs throughout. | https://indiankanoon.org/doc/754134/ |
0189766b91c1-0 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | IN THE COURT OF SH. HARVINDER SINGH,
SPECIAL METROPOLITAN MAGISTRATE - 05,
DWARKA COURTS, NEW DELHI.
M/s Fullerton India Credit Co. Ltd.
through its Authorized Representative
Sh. Salman Hameed ....................Complainant
Versus
Lokesh Kumar ....................Accused
C.C.NO.18900/10 dated 18.05.2010
PS ANAND VIHAR
Under Section 138 of N. I. Act, 1881
a) Sl. No. of the case : 18900/10
b) Date of commission of offence : 01.05.2010 Approximately
c) Name of the complainant : M/s Fullerton India Credit Co. Ltd.
d) Name of the accused, and his : Lokesh Kumar
S/o Late Sh. Sewa Dass,
R/o 5297, Bharat Nagar, Basant Lane,
Paharganj, New Delhi - 110 055.
e) Offence complained of : Under Section 138 of N. I. Act, 1881
f) Plea of accused : Pleaded not guilty
g) Final order : Convicted
h) Date of such order : 22.10.2011
i) Brief
statement of the reasons for the decision : | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-1 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | i) Brief
statement of the reasons for the decision :
1. By way of this judgment, I shall dispose of complaint under Section 138 .....................Contd/ Negotiable Instruments Act, 1881 filed by the complainant i.e. M/s Fullerton India Credit Co. Ltd. through its authorized representative Sh. Salman Hameed against the accused Lokesh Kumar S/o Late Sh. Sewa Dass, R/o 5297, Bharat Nagar, Basant Lane, Paharganj, New Delhi
- 110 055. | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-2 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | 2. The brief facts of this case as per allegations of the complaint are that the complainant i.e. M/s Fullerton India Credit Co. Ltd. (Earlier known as First India Credit Co. Ltd.) is a NonBanking Financial Company duly incorporated under the provisions of Companies Act, 1956 and the complainant is engaged in the business of loans including personal loans, mortgage loans, vehicle loans etc. As per the para no.04 of the complaint, it is alleged by the complainant that the accused was sanctioned and granted a personal loan to the tune of Rs.1,15,000/ vide loan agreement no.6825000021890. It is further alleged by the complainant that the accused in partial discharge of his liability, issued three cheques bearing nos.166558, 166559 and 166560 each dated 06.03.2010 for a sum of Rs.57,500/, Rs. 28,750/ and Rs.11,322/ respectively and each drawn on ICICI Bank Limited in favour of the complainant. It is further alleged in the complaint that complainant presented the above said cheques to its banker which were returned dishonored vide cheques returning memos each dated 23.03.2010 with the remarks ''Funds Insufficient''. It is further alleged in the complaint that complainant served upon the accused a Legal Demand Notice dated .....................Contd/ 13.04.2010 dispatched on 13.04.2010 through its advocate thereby demanding the payment of above said cheques amount in question within 15 days of the receipt of the said notice. It is further alleged in the complaint that accused failed to comply with the notice and to make the payment against abovesaid cheques within 15 days of receipt of Legal Demand Notice. Accordingly, this complaint was filed by the complainant on 18.05.2010. | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-3 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | 3. After filing of complaint, authorized representative of the complainant namely Sh. Salman Hameed led his presummoning evidence by way of affidavit and after hearing Ld. Counsel for complainant, summoning order was passed against the accused vide order dated 29.05.2010 and after the appearance of accused, a separate notice under Section 251 of Cr. P.C was put to the accused on 06.08.2010 to which accused pleaded not guilty and claimed trial, thereafter the matter was fixed for CE and crossexamination. | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-4 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | 4. To prove the case of complainant, Sh. Salman Hameed, AR of the complainant got examined himself as complainant witness and tendered his post summoning evidence by way of affidavit Ex.CW1/A1 and relied on the documents already exhibited in presummoning evidence i.e. Ex.CW1/1 to Ex.CW1/8 and further reiterated the contents of the complaint on oath before this Court. The power of attorney of Sh. Salman Hameed is exhibited as Ex.CW1/2, original cheques as Ex.CW1/3 (Collectively), cheques returning ....................Contd/ memos as Ex.CW1/4 (Collectively), Legal Demand Notice as Ex.CW1/5, original postal receipt as Ex.CW1/6, original POD as Ex.CW1/7 and loan repayment schedule as Ex.CW1/8. Thereafter, the witness of the complainant was cross examined by Sh. S. S. Draal, Ld. Counsel for the accused in length. CW2 Sh. S. S. Pandey, Public Relation Inspector, Postal Department was examined as witness by the complainant to prove the delivery of notice to the accused person. CW2 exhibited Booking Slip as Ex.CW2/A and Delivery Slip as Ex.CW2/B. The said witness was also crossexamined by the Ld. Counsel for the accused. After that, complainant's evidence was closed on the statement of the Ld. Counsel for the complainant on 13.01.2011. | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-5 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | 5. After that the statement of the accused was recorded under Section 313 of Cr. P.C. r/w 281 of Cr. P.C. on 08.04.2011 in which all incriminating evidence alongwith exhibited documents were put to the accused Lokesh Kumar in which he admitted that he had availed loan from the complainant bank vide loan agreement no.6825000021890. It was further admitted by the accused person that all the cheques in question bear his signatures, but, stated that the signatures on the cuttings on the cheque bearning no.166560 dated 06.03.2010 are not his signatures. Accused person further stated that the cheques in question are security cheques and all the particulars except signatures have been filled by the complainant. In answer to another question, whether the cheques were dishonored vide .....................Contd/ returning memos Ex.CW1/4 (Collectively) with the reasons "Funds Insufficient", the accused admitted that the cheques were returned dishonored due to abovesaid reason vide abovesaid returning memos, but, further stated that the cheques were presented without intimation to him. The accused further submitted that neither he had received Legal Demand Notice nor AD card is signed by him. In answer to another question in his statement under Section 313 of Cr. P.C. r/w Section 281 of Cr. P.C., the accused stated that he wants to lead defence evidence. | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-6 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | 6. In defence, accused examined Sh. Ramji Lal, Parcel Supervisor, posted at Parcel Office, New Delhi Railway Station as DW1 on 28.07.2011. The DW1 exhibited leave record of the accused person as Ex.DW1/A and deposed before this Court on oath that accused was on duty on 15.04.2010 from 08:00 am to 04:00 pm. The DW1 was cross examined by Sh. A. K. Singh, Ld. Counsel for the complainant. The accused closed his defence evidence on 28.07.2011 and thereafter, the matter was fixed for final arguments.
7. I have heard Ld. Counsels for both the parties and I have also perused the record of the case file and evidence on record.
8. Following Points arise for determination by this court :
....................Contd/ (1) Whether complainant has proved on record the essential ingredients of offence under Section 138 of Negotiable Instruments Act, 1881 against the accused.
(2) Final order.
9. Point No. (1) - To decide this point lets analyze the main ingredients of Section 138 of Negotiable Instrument Act, 1881 and the evidence on record regarding these ingredients :
(a) Whether the cheque was drawn/issued by the accused person to the complainant on an account maintained by him with the bank for discharge, in whole or in part, of any debt or other liability? | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-7 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | AR of the complainant has deposed in para no.04 of his affidavit Ex.CW1/1A that the complainant granted and sanctioned personal loan to the accused to the tune of Rs. 1,15,000/ vide loan agreement number 6825000021890 dated 28.07.2009 and that the accused in partial discharge of his liability, issued three post dated cheques bearing nos. 166558, 166559 and 166560 each dated 06.03.2010 for a sum of Rs.57,500/, Rs.28,750/ and Rs.11,322/ respectively and all drawn on ICICI Bank Limited respectively in favour of the complainant. On this point, the main contentions of the accused person are : .....................Contd/
1. That the accused had settled the matter with the complainant on 30.04.2010 in the sum of Rs.1,14,197/ and had made a payment of Rs.30,000/ on 30.04.2010 itself and the complainant has filed this complaint even after settlement of the loan account.
2. That the cheques in question are security cheques which were given as blank signed cheques at the time of grant of loan and all the particulars except signatures have been filled by the complainant.
3. That the signatures on the cuttings on cheque no.166560 are not the signatures of the accused person and are forged and fabricated one. | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-8 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | I have carefully considered the contentions of the accused person and I have also gone through the evidence on record. It is pertinent to mention here that the accused person has not disputed his liability towards the complainant and has in fact admitted in his statement under Section 313 of Cr. P.C. r/w 281 Cr. P.C. that he has availed loan from the complainant as alleged by the complainant.
Now, this Court is dealing with the 1st defence of the accused that since the accused person had settled the matter with the complainant on 30.04.2010 and had made a payment of Rs.30,000/ on 30.04.2010 i.e. before expiry of 15 days from the receipt of notice as alleged by the complainant and before filing of this complaint, therefore, this complaint is not maintainable.
Admittedly, the accused person had made payment on 30.04.2010 vide .....................Contd/ Ex.CW1/D2 against offer for settlement of loan account, the same being exhibited as Ex.CW1/D3. On this issue, the law as per Section 59 and 60 of Indian Contract Act, 1881 which can be helpful is as under : Section 59 : Application of payment where debt to be discharged is indicated : "Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying that the payment is to be applied to the discharge of some particular debt, the payment, if accepted, must be applied accordingly." | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-9 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | Section 60 : Application of payment where debt to be discharged is not indicated : "Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits."
In view of the abovesaid law provided in Section 59 and 60 of Indian Contract Act, 1881 and of the fact that the payment was admittedly made against the offer for settlement of loan account and not against the cheques amount in question demanded through legal demand notice, therefore, the contention of the accused person that this complaint is not maintainable is hereby rejected.
Now, this Court is dealing with the 2nd defence of the accused person that the cheques in question were security cheques which were taken by the complainant at the time of grant of loan as blank signed cheques and all the particulars have been filled by the complainant.
.....................Contd/ The relevant law in this regard is : Section 46 of Negotiable Instruments Act, 1881 : "Delivery The making, acceptance or indorsement of a promissory note, bill of exchange or cheque is completed by delivery, actual or constructive."
Section 118 of Negotiable Instruments Act, 1881 "Section 118 : Presumptions as to negotiable instruments : Until the contrary is proved, the following presumptions shall be made :
(a) of consideration that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration; | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-10 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | (b) as to date that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity."
Section 139 of Negotiable Instrument Act, 1881 "It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability."
In view of presumptions provided by the Section 118 and Section 139 of Negotiable Instrument Act, 1881, presumption is that the cheques were issued/drawn for consideration and further the cheques were drawn or made on date which they bear. So, the onus was on the accused to rebutt these presumptions. In this case, the accused person has not brought any evidence to substantiate his defence, but, has relied upon the admission of the AR of the complainant that the mode of payment of EMIs in this case was through ECS, .....................Contd/ therefore, it supports the case of the accused that the cheques in question were security cheques given by the accused person as blank signed cheques at the time of grant of loan.
First of all, lets discuss the law on security cheques. On security cheques in the matter of Collage Culture & Ors. Vs. Apparel Export Promotion Counsil reported 2007 (99) DRJ 251 in Crl. M. C. No. 3011/2004, Hon'ble High Court of Delhi has held as under : | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-11 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | "It is urged that no actionable cause exists in favour of the complainant to make out the offence under Section 138 of Negotiable Instruments Act, 1881. It is urged that the sine qua non for the applicability of Section 138 of Negotiable Instrument Act, 1881 is the issuance of cheque for a debt which is due towards discharge of a liability. It is urged that a cheque given as a collateral security or as a security for payment of an amount which may become payable at a future date upon the happening or the nonhappening of an event i.e. towards a contingency can not be the foundation of an action under Section 138 of Negotiable Instruments Act, 1881."
"It would be relevant to note that the statute does not refer to the debt being payable, meaning thereby, a post dated cheque for a debt due, but payment postponed at a future date would attract Section 138 of the Negotiable Instruments Act, 1881. But, the cheque issued not for an existing due, but issued by way of a secuirty, would not attract Section 138 of the Negotiable Instruments Act, 1881, for it has not been issued for a debt which has come into in existence."
The abovesaid law has been reiterated by Hon'ble High Court of Delhi in the matter of "Ravi Kumar D......... Vs. State of Delhi & Anr." passed on 01.03.2011. | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-12 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | I have gone through the evidence of the accused and crossexamination of the AR of the complainant and the case of the accused is that the accused issued 03 blank signed .....................Contd/ cheques to the complainant at the time of grant of loan for the purpose of security. Since, in this case, the case of the accused person is not that the cheques were issued before his liability has actually become due and further since, no evidence has been brought by the accused person to substantiate his defence, so, the law laid down by the Hon'ble High Court of Delhi in the matters of Collage Culture & Ors. Vs. Apparel Export Promotion Counsil reported 2007 (99) DRJ 251 in Crl. M. C. No. 3011/2004 and "Ravi Kumar D......... Vs. State of Delhi & Anr." is not applicable to the present facts and circumstances of this case and we have to fall back on the presumption provided under Section 118 of N. I. Act, 1881 as to date. In view of the law and reasons discussed above, the accused has not being able to rebutt the presumption as to date provided under Section 118 Negotiable Instrument Act, 1881, therefore, the defence of the accused that the cheques in question were given by the accused at the time of grant of loan is hereby rejected. | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-13 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | The law on blank signed cheques as laid down by Hon'ble High Court of Delhi in the matter of "Ravi Chopra Vs. State & Anr." decided on 13.03.2008 in paragraphs number 15 to 21 is as under : Para 15 : "What appears to be clear from the above definitions that an essential feature of a cheque is that it has to be signed by the maker..............................But what about the other material particulars? Can the word "cheque" occurring in Section 138 NI Act include a blank cheque which is signed by the drawer but the material particulars of which are left unfilled at the time it was handed over to the payee? .............................."
.....................Contd/ Para 16 : "..............................Section 87 - Effect of material alteration : ..............................The provisions of this section are subject to those of Sections 20, 49, 86 and
125."
Para 17 : "While it is correct that in terms of the above provision, any material alteration to a cheque without the consent of the drawer unless it is made to carry out the common intention of the original parties thereto renders the cheque void, the expression "material alteration" has not been defined. Significantly, Section 87 has been made subject to Sections 20, 49, 86 and 125 NI Act.............................."
Para 18 : "Section 20 NI Act talks of "inchoate stamped instruments" and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written thereon an incomplete negotiable instrument" such person thereby gives prima facie authority to the holder thereof "to make or complete as the case may be upon it, a negotiable instrument for any amount specified therein and not exceeding the amount covered by the stamp." Section 49.............................." | https://indiankanoon.org/doc/64050465/ |
0189766b91c1-14 | The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011 | Para 19 : "The above provisions have to be read together with Section 118 NI Act which sets out various presumptions as to negotiable instruments. The presumption is of consideration, as to date, as to time of acceptance, as to transfer, as to endorsement, as to stamp. The only exception to this is provided in proviso to Section 118 which reads as under :
Provided .............................."
Para 20 : "A collective reading of the above provisions shows that even under the scheme of the NI Act it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee.............................." Para 21 : "The position in law has been explained in the judgment of the Division Bench of the Kerala High Court in Lillykutty v. Lawrance 2003 (2) DCR 610 in the following words:
..............................We are of the view, by putting the amount and the name there is ....................Contd/ no material alteration on the cheque under Section 87 of the Negotiable Instruments Act. In fact there is no alteration but only adding the amount and the date.............................."
So, in the light of the abovesaid law, even if, for the sake of arguments, we may presume that the cheques in question were given by the accused to the complainant as blank signed cheques, even then, it is no defence in the eyes of law. | https://indiankanoon.org/doc/64050465/ |