Andhra Pradesh High Court - Amravati
M/S. K. Kerkarshaka Shankarana ... vs M/S. Agro Agencies, on 8 December, 2023
THE HON'BLE SRI JUSTICE V.GOPALA KRISHNA RAO
APPEAL SUIT No.122 OF 2006
JUDGMENT:-
This Appeal, under Section 96 of the Code of Civil Procedure [for short 'the C.P.C.'], is filed by the Appellant/defendant challenging the Decree and Judgment, dated 30.12.2005, in O.S. No.47 of 1998 passed by the learned Principal Senior Civil Judge, Tenali [for short 'the trial Court']. The Respondent herein is the plaintiff in the said Suit.
2. The Plaintiff filed the above said suit for relief of declaration that the plaintiff is entitled to the amount deposited by the defendant federation, rendition of accounts and ascertainment of amount payable, for costs and subsequent interest with bank rate.
3. Both the parties in the Appeal will be referred to as they are arrayed before the trial Court.
4. The brief averments of the plaint, in O.S. No.47 of 1998, are as under:
i) The plaintiff is a proprietary concern doing business in selling coconut oil etc., at Tenali. The plaintiff, earlier, had agreement with 2 VGKRJ AS 122 of 2006 the defendant federation for promotion and sale of coconut oil in Andhra Pradesh and latest agreement is dated 15.04.1996. As per terms of agreement the defendant has to supply coconut oil in various packages of different capacities, for which the plaintiff has to furnish bank guarantee for Rs.10,00,000/-. Commission will be given to the plaintiff also. That the plaintiff should pay in cash for the consignment within 15 days else the plaintiff is liable to pay interest.
On the request of plaintiff, Indian Bank, Tenali Branch extended bank guarantee for Rs.10,00,000/- i.e., on 28.05.1997 for Rs.7,50,000/- and for Rs.2,50,000/-, in total Rs.10,00,000/- bank guarantee will be expired by 17.1.1998. The defendant by its letter dated 15.12.1997 addressed to the bank, Invoked the bank guarantee to a tune of Rs.8,36,816/- and requested the bank to pay the same by 22.12.1997. The defendant wrote another letter dated 27.01.1998 to the bank referring to the letter dated 15.12.1997 requesting the bank to pay the invoked amount by 10.02.1998. The plaintiff went to Trivendram and met the officials of the defendant company, discussed the matter with them by staying there itself from 19.02.1998 to 23.02.1998. As a result the defendant company on 23.02.1998 telephoned to the Indian bank, Tenali Branch and 3 VGKRJ AS 122 of 2006 said that the plaintiff had paid the amount by way of delivering post dated cheques and the bank need not sent the money Invoked, as nothing is due from plaintiff as on 23.02.1998 in view of the post dated cheques for Rs.8,00,000/-. The defendant also informed the bank people through phone that the invocation of bank guarantee on 23.12.1997 and follow up letter dated 27.01.1998 are to be ignored by the bank. Under the circumstances, plaintiff gave a letter date 23.02.1998 to the defendant and the details of post dated cheques given by the plaintiff to the defendant federation on 23.02.1998 are as follows:-
1. Cheque No.447651, dt.10.03.1998 for Rs.1,00,000/-
2. Cheque No.447652, dt.21.03.1998 for Rs.1,00,000/-
3. Cheque No.447653, dt.31.03.1998 for Rs.1,00,000/-
4. Cheque No.447654, dt.13.04.1998 for Rs.1,00,000/-
5. Cheque No.447655, dt.23.04.1998 for Rs.1,00,000/-
6. Cheque No.447656, dt.30.04.1998 for Rs.1,00,000/-
7. Cheque No.447657, dt.07.05.1998 for Rs.1,00,000/-
8. Cheque No.447658, dt.15.05.1998 for Rs.1,00,000/-
4 VGKRJ AS 122 of 2006 Both the plaintiff and defendant came to an understanding for the following terms:
1. That the defendant refrains from presenting the cheques dated 07.05.1998 and 15.05.1998 till the compromise is fully worked out. By writing suitable letters, defendant withdraws immediately the invocation of the bank guarantee made by its letter dated 15.12.1997 and another letter dated 27.01.1998.
2. The question of interest, sales tax and other contentions of the plaintiff will be placed before the Board of the defendant federation and the amount will be paid to the plaintiff by way of reimbursement.
ii) The defendant committed breach of contract by its letter dated 23.03.1998 addressed to the Indian Bank Branch, Tenali, Invoked the bank guarantee to a tune of Rs.8,36,816/- as referred to in its letter dated 15.12.1997 and 27.01.1998 to the bank and requested the bank to pay the amount by 31.03.1998 to the defendant. The defendant company with an ulterior motive gave go-bye to the compromise, wanted to be a double gainer at the cost of plaintiff by Invoking the bank guarantee for Rs.8,36,816/- though it is already 5 VGKRJ AS 122 of 2006 had post dated cheques on hand which they can present for encashment and to take action against the plaintiff if cash is not available or paid.
iii) The plaintiff returned the damaged stock to the defendant. Credit note also given by the defendant to the plaintiff for the value of the said stock, but it changed the Interest on the said amount. The defendant agreed to refund the charged interest on Rs.1,05,336/- upto December, 1995 together with interest till payment is made. The defendant told the plaintiff that the matter will be placed before the Board for its ascent, and the refund will be made. The defendant agreed to reimburse the sales tax vide defendant's letter MGK 29(3)192/4913 and additional sales tax as per A.P.Act. The agreement dated 15.04.1996 between the plaintiff and defendant was expired by 15.04.1997. There is no subsisting agreement. The defendant committed breach of agreement by not sending stocks to the plaintiff after 12.4.1996, inspite of repeated requests and orders placed by the plaintiff, the defendant failed to supply stocks. Because of which the plaintiff suffered loss of 6 VGKRJ AS 122 of 2006 business and profit and also suffered loss by unnecessarily paying the bank commission for the bank guarantee.
iv) The plaintiff need not pay any Interest to the defendant subsequent to the expiry of agreement. The defendant has to pay Interest over the cost of damaged goods returned to it by the plaintiff on par with the interest claimed by the defendant and the balance of Interest to be paid to the plaintiff. As per the understanding arrived at, the sales tax and extra tax paid by the plaintiff should be refunded by the defendant. As the defendant failed to supply stocks, the plaintiff suffered loss of business and profits. Therefore the defendant has to compensate the loss. As the defendant failed to supply stock, the bank guarantee provided by the plaintiff stood idle. Plaintiff is forced to pay the bank commission during the entire period.
v) The plaintiff wrote a letter dated 04.03.1998 and sent the same to the defendant through registered post bringing forth the settlement of claim for over due amount and Invoking of bank guarantee. The plaintiff is entitled for refund of Rs.2,00,000/- notionally from defendant towards the above claims. The plaintiff 7 VGKRJ AS 122 of 2006 also sought for the relief of settlement of accounts, to determine how much amount the plaintiff has to pay to the defendant and to restrain the defendant from invoking the bank guarantee as the defendant had already received payment for the said amount by way of post dated cheques and to restrain the defendant from presenting the post dated cheques until amount is actually due to it, is detrimented and the defendant has to pay back the surplus amount already received by it by way of cheques or return the cheques.
vi) This court granted interim injunction in I.A.No.513/1998. But the defendant violated the interim injunction orders passed by this court and invoked the bank guarantee and taken away a sum of Rs.8,36,816/- from Indian Bank, Tenali. In I.A.No.780/1998 in I.A.No.513/1998 in this suit the court passed orders directing the defendant to redeposit the amount received by him from Indian Bank, Tenali by way of D.D. on 15.05.1998, within one month from the date of this order, failing which the respondent/defendant has to suffer civil Imprisonment for a period of one month. The defendant preferred appeal to the District Court and High Court. Before the appellate court and High Court also the defendant lost its case and 8 VGKRJ AS 122 of 2006 finally deposited a sum of Rs.8,36,816/- on 20.08.2004 to the credit of the suit instead of re-depositing in Indian Bank, Tenali branch. The Indian Bank, Tenali Branch filed a suit against the plaintiff and recovered huge amounts which includes Rs.8,36,816/- and interest from the plaintiff. As such the amount of Rs.8,36,816/- deposited to the credit of the suit by the defendant together with interest at bank rate from 15.05.1998 till the date of realization, became the property of the plaintiff. Hence the plaintiff also seeking declaration that the plaintiff is entitled for the amount of Rs.8,36,816/- along with interest from 15.05.1998 till realization.
5. The defendant filed a written statement by denying the averments mentioned in the plaint and further contended as under: -
i) The defendant while admitting the agreement between the plaintiff and defendant for promotion and sale of coconut oil in Andhra Pradesh in 1993, pleaded that the transaction between the plaintiff and the defendant was governed by the latest agreement dated 15.04.1996 executed at Thiruvananthapuram, Kerala. The defendant further contend that in clause 22 of the agreement clearly specifies that all disputes and differences that may arise out of or in 9 VGKRJ AS 122 of 2006 the course of this agreement shall be decided under the provisions of the Kerala Co-operative Societies Act, 1969 and Section 100 of the Act clearly bars jurisdiction of the Courts and revenue Courts, hence the suit is not maintainable and this Court has no jurisdiction to entertain the suit and the injunction application is also not maintainable. The only remedy open to the plaintiff is to go by clause 22 of the agreement between plaintiff and defendant and the plaintiff ought to have file an arbitration suit before the Registrar of Co-operative Societies, Tiruvananthapuram and redress his remedies, if any he has.
ii) A grace period of 6 months is provided from the date of expiry of the bank guarantee for its invocation. Therefore, bank guarantee is valid upto 17.07.1998. Inspite of repeated demands, the plaintiff committed default in making payment due to the defendant, therefore, the defendant is constrained to invoke the bank guarantee.
iii) The defendant had not accepted any letter dated 23.02.1998 or the cheques bearing Nos.447651 to 447658 as alleged. The defendant is a State Government undertaking and therefore there is no provision to accept post dated cheques. The defendant is not 10 VGKRJ AS 122 of 2006 liable to reimburse the sales tax as per the A.P.Act as alleged by the plaintiff.
iv) The plaintiff himself admitted his liability for Rs.8,36,000/- due to the defendant and the plaintiff also liable to pay interest at 22.5% p.a. The defendant is in receipt of the letter but ignored it as it was against facts and figures and against the terms of the agreement. The defendant being a government undertaking cannot accept post dated cheques for future presentation.
6. Based on the above pleadings, the trial Court framed the following issues:
(i) Whether the defendant has not accepted any letter dated 23.02.1998 or the cheques bearing Nos.447651 to 447658, as alleged?
(ii) Whether the defendant is not liable to reimburse the sales tax as per the A.P.Tax?
(iii) Whether the plaintiff is liable to pay interest at the rate of 22.5% from date of delivery till the date of payment?
(iv) Whether the defendant is not liable for damages for damaged stock?
(v) Whether this Court has no jurisdiction to entertain the suit?
(vi) Is the plaintiff entitled to any relief as prayed?
11 VGKRJ AS 122 of 2006
(vii) To what relief?
7. During the course of trial in the trial Court, on behalf of the Plaintiff, PW1 and PW2 were examined and Ex.A1 to Ex.A23 were marked. On behalf of the Defendant DW1 was examined and Ex.B1 to Ex.B4 were marked.
8. After completion of the trial and hearing the arguments of both sides, the trial Court partly decreed the Suit with costs vide its judgment, dated 30.12.2005, against which the present appeal is preferred by the appellant/defendant in the Suit questioning the Decree and Judgment passed by the trial Court.
9. Heard Sri M.Bala Subrahmanyam, learned counsel for appellant/defendant through virtual hearing and heard Sri Y.V.Anil Kumar, learned counsel, representing Sri Y.V.Ravi Prasad, learned counsel for respondent/plaintiff.
10. Sri M.Bala Subrahmanyam, learned counsel for appellant would submit that the Civil Court at Tenali has no jurisdiction to decide the suit and the suit has to be filed at Tiruvananthapuram 12 VGKRJ AS 122 of 2006 and he would further contend that the decree and judgment passed by the trial Court is contrary to law and the appeal may be allowed.
11. Per contra, the learned counsel for the respondent would contend that on appreciation of entire evidence on record, the trial Court partly decreed the suit and there is no need to interfere with the finding given by the Trial Court.
12. Having regard to the pleadings in the Suit and the findings recorded by the trial Court and in the light of rival contentions and submissions made on either side before this court, the following points would arise for determination:
I. Whether the Principal Senior Civil Judge's Court, Tenali is having jurisdiction to try the suit? II. Whether the decree and judgment passed by the trial court needs any interference?
13. Point No.1:
Whether the Principal Senior Civil Judge's Court, Tenali is having jurisdiction to try the suit? The learned counsel for appellant would submit that in view of clause 22 of Ex.A1 agreement, the Civil Court at Tenali has no 13 VGKRJ AS 122 of 2006 jurisdiction to try the suit and it has to be decided under Kerala Cooperative Societies Act, 1969. The learned counsel for appellant represented that in view of the Ex.A1 agreement clause 22, the Civil Court at Tenali has no jurisdiction. The clause 22 in Ex.A1 goes to show that all the disputes and differences that may arise out of or in the course of agreement shall be decided under Kerala Cooperative Societies Act.
14. Per contra, the learned counsel for respondent would contend that since the appellant played fraud on the plaintiff by executing an agreement under Ex.A1 through an incompetent person, therefore, there is no need to rely on Ex.A1 agreement. The Deputy Manager, (finance) of the defendant federation is examined as DW1. As per his evidence, the Managing Director of the defendant is only the competent person to sign in the agreement. Per contra, Ex.A1 was entered by the Marketing Manager. Admittedly, there is no endorsement on Ex.A1 or any subsequent letter or any proceeding from the defendant federation authorizing the Marketing manager to sign on Ex.A1 on behalf of Managing Director. Therefore, Ex.A1 itself is nullity.
14 VGKRJ AS 122 of 2006
15. The Apex Court in a case of Shriram City Union Finance Corporation Limited. Vs. Rama Mishra1 held as follows:
A party is bound either by the provisions of the Constitution, statutory provisions or any rule or under terms of any contract which is not against the public policy. It is open for a party for his convenience to fix the jurisdiction of any competent Court to have their dispute adjudicated by that Court alone. In a case of Dwarka Prasad Agarwal (Died) By L.Rs. vs. Ramesh Chandra Agarwala2, the Apex Court held as follows:
Section 9 of the Code of Civil Procedure confers jurisdiction upon the civil courts to determine all dispute of civil nature unless the same is barred under a statute either expressly or by necessary implication. Bar of jurisdiction of a civil court is not to be readily inferred. A provision seeking to bar jurisdiction of civil court requires strict interpretation. The court, it is well-settled, would normally lean in favour of construction, which would uphold retention of jurisdiction of the civil court. The burden of proof in this behalf shall be on the party who asserts that the civil court's jurisdiction is ousted.
Here in the case on hand, the plaintiff is a proprietary concern running business at Tenali in Guntur District, Andhra Pradesh. Therefore, the Senior Civil Judge's Court, Tenali is having 1 2002 AIR(SC) 2402 2 2003 AIR(SC) 2696 15 VGKRJ AS 122 of 2006 jurisdiction to decide the suit. The Trial Court by assigning cogent reasons held in its judgment that the said Court can try the suit. I do not find any illegality in the said finding given by the trial Court.
16. Point No.2:
Whether the decree and judgment passed by the trial court needs any interference?
It is not in dispute by the appellant that the plaintiff is proprietary concern doing business as in selling coconut oil at Tenali and the plaintiff is also carrying business at Tenali. As per the case of the plaintiff, the defendant has to supply Coconut oil in various packages of different capacities, for which the plaintiff has to furnish a bank guarantee for Rs.10,00,000/-. It is not in dispute that the plaintiff submitted bank guarantee for Rs.10,00,000/-, out of the said amount an amount of Rs.8,36,816/- is invoked by defendant. In order to secure proper payment of the cost of the goods supplied to the plaintiff by the defendant, the plaintiff offered a bank guarantee of Rs.8,36,816/-. As per the own admissions of DW1, the defendant received 8 post dated cheques worth of Rs.8,00,000/-. It was admitted by the learned counsel for appellant/defendant that the
16 VGKRJ AS 122 of 2006 said cheques are encashed by the defendant. It is not in dispute by both sides that bank guarantee furnished by the plaintiff for Rs.8,36,816/- was also invoked by the defendant. The contention of the plaintiff is that the defendant federation collected the amount due from the plaintiff. As seen from the material on record a specific request is made by the plaintiff not to invoke the bank guarantee made by the plaintiff to the defendant that the plaintiff is depositing 8 postdated cheques instead of invoking the bank guarantee of Rs.8,36,816/-. Per contrary to the same, the defendant encashed the said cheques and the defendant also raised bank guarantee of Rs.8,36,816/- and the defendant collected the money doubles the amount due from the plaintiff. In order to prove the case of the plaintiff, the plaintiff examined one R.Venkateswara Rao as PW1 and the official of the bank is examined as PW2. The evidence of PW1 and PW2 supports the case of the plaintiff. The material on record reveals that having accepted the post dated cheques and encashing the postdated cheques, the defendant federation invoked the bank guarantee and collected the money double the amount due from the plaintiff. It is also fact that the bank guarantee was invoked by the defendant federation inspite of injunction order granted by the 17 VGKRJ AS 122 of 2006 trial Court. The same is not disputed by the other side. The material on record reveals that contempt of Court proceedings were also initiated against the defendant and the said orders were upheld by this Court and the defendant deposited the bank guarantee amount of Rs.8,36,816/- before the trial Court. On appreciation of the entire evidence on record, the trial Court rightly decreed the suit in-part by granting relief of declaration that the plaintiff is entitled to receive the amount of Rs.8,36,816/- which was deposited by the defendant before the Court. It is an admitted fact by both the parties that inspite of specific instructions by the plaintiff, the defendant encashed the post dated cheques for Rs.8,00,000/- and also invoked the bank guarantee for Rs.8,36,816/-, due to that the plaintiff suffered a lot and the bank filed a suit against the plaintiff and collected money from the plaintiff with interest. In fact, the defendant collected the money double the amount due from the plaintiff, even though the defendant encashed the cheaques for Rs.8,00,000/- again the defendant also invoked the bank guarantee for Rs.8,36,816/- which is a contrary to law and which is not permissible. Therefore, the decree and judgment passed by the trial 18 VGKRJ AS 122 of 2006 Court is perfectly sustainable under law and it requires no interference.
17. In the result, the Appeal Suit is dismissed confirming the decree and Judgment dated 30.12.2005, in O.S.No.47 of 1998 passed by the learned Principal Senior Civil Judge, Tenali. No order as to costs.
As a sequel, miscellaneous petitions, if any, pending in the Appeal shall stand closed.
_________________________ V.GOPALA KRISHNA RAO, J Date: 08.12.2023 sj 19 VGKRJ AS 122 of 2006 48 THE HON'BLE SRI JUSTICE V.GOPALA KRISHNA RAO APPEAL SUIT No. 122 OF 2006 Date: 08.12.2023 sj