Calcutta High Court
Vijai Shree Limited vs Union Of India & Ors on 10 January, 2017
Author: Shivakant Prasad
Bench: Shivakant Prasad
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
Present: The Hon'ble Justice Shivakant Prasad
CS No. 145 of 2006
Vijai Shree Limited
Versus
Union of India & Ors.
For the plaintiff : Mr. Dhruva Ghosh, Senior Advocate
Mr. Sanjoy Bose, Advocate
Ms. Pritha Bhowmick, Advocate
Mr. Abhishek Banerjee, Advocate
For the defendant no. 6 : Mr. Aniruddha Mitra, Advocate
Mr. S. Prasad, Advocate
For the Railways : Mr. P. S. Bose, Sr. Advocate
Mrs. Aparna Banerjee, Advocate
Heard on : 29.11.2016
C.A.V. on : 29.11.2016
Judgment on : 10.01.2017
This is a suit for a decree for Rs. 53,55,381/- and for an enquiry into the
damages suffered by the plaintiff.
Plaint case in brief is that the plaintiff carries on business of manufacture and
trading in various Jute products and has its Jute Mill situated at Shibpur, in the
District Howrah, West Bengal. At present the said Jute Mill is being operated in
consonance with a sanctioned Scheme approved by the Board of Industrial and
Financial Reconstruction.
On 3rd June, 2003 the Deputy Director of Supplies and Disposals, Kolkata
directed the plaintiff to sell 780 bales of B. Twill bags to The Punjab State Co-
operative Supply and Marketing Federation Ltd. through the Governor of Punjab
providing the details of supply, price, specifications, terms and conditions.
Pursuant to the said order, the plaintiff manufactured bags and despatched them
by Rail to Sangrur on 23rd June, 2003 and informed the Managing Director, Food
Grains, Punjab State Co-operative Supply and Marketing Federation Limited
defendant no. 6 herein that they have despatched 390 bales to Sangrur under
the relevant Railway receipts and the said goods were received and collected by
the said defendant no. 6.
Plaintiff received a copy of a letter dated 18/28-7-2003 written by the Director,
(QA), Kolkata, addressed to the Chief Manager (Food grains), Punjab State
Cooperative Supply and Marketing Federation Ltd. alleging that 390 bales
received by the consignee were badly affected by the rain and the Railway
Authorities did not accept any remarks on the delivery of the goods.
The Pay and Accounts Officer informed the plaintiff that a sum of Rs.
35,85,447/- has been withheld from the bill No. L/78 pending finalization of the
case of the recovery due from the plaintiff by a letter dated 12th September, 2003.
Plaintiff's specific contention is that full payment against the supply of 390 bales
were received and the defendants have withheld payment from Bill No. L/78
which was raised in respect of subsequent supply of bales and such action of the
defendants are bad, illegal, arbitrary, discriminatory, unwarranted and
unreasonable.
Defendant no. 6 has contested the suit by filing written statement contending
inter alia, that out of the 780 Gunny Bales supplied by the plaintiff, 395 Gunny
Bales were found to be in damaged condition affected by rain and the 395 Gunny
Bales were segregated from the total number of 780 Gunny Bales for inspection.
A joint inspection in presence of Mr. R. S. Pandey, the representative of M/s.
Vijai Shree Ltd. was held on 15th November, 2003 and the report reflected that
107 Gunny Bales were found fit for consumption and 288 Gunny Bales were
found to be damaged and not fit for consumption.
By filing a written statement, the defendant no. 9 submitted inter alia, that the
main claim of the plaintiff is against the defendant nos. 1, 2, 3 and 6 for
withholding the amount of Rs. 35,85,447/-. The Railways acted as carriers and
the consignment was delivered to the consignee at the destination by the
Railways after obtaining the delivery with clear Railway Receipts. It was
specifically stipulated that wagon no. SC/BCX-27042, NR/BCX-65660 and SE-
BCX-79129 against the invoice nos. 5, 6 & 7 dated 22.06.03 was unloaded at
Sangrur on 02.07.2003 and the party/consignee took delivery on 02.07.03
without any remarks as such, the plaintiff's claim that the goods were damaged
in transit is untenable.
On the above pleadings following issues have been framed:
1. Is the plaintiff entitled to a decree for a sum of Rs. 53,55,381/-?
2. Is the plaintiff entitled to a declaration that the alleged joint inspection
report dated 18th October, 2003 is void?
3. Are the defendants entitled to deduct any amount on account of damages
from bills relating to other transaction?
Issue nos. 1, 2 and 3 :
The above issues are taken up together for the sake of convenience in discussion
and for brevity.
The moot issue which falls for consideration in the present suit is as to whether
the defendants can withhold amount on account of supply of 288 Gunny Bales in
damaged condition due to rain water from bill No. L/78 relating to other
transaction. It is submitted by Mr. Dhruva Ghosh, learned counsel for the
plaintiff that in usual course of business, the plaintiff receives orders from the
office of Jute Commissioner for manufacturing B. Twill bags as per Government
orders. Normal procedure followed is that Union Government organisation all
over India place their respective orders and the Director of Supply and Disposals,
the defendant no. 5 herein, who in turn request the office of Jute Commissioner
the defendant no. 2 to place orders on various Jute manufacturers for supply of
B. Twill bags to the designated Government organization.
Admittedly, defendant no. 6 placed order to the defendant no. 5 for supply of
Gunny Bales and paid the price for such supply at the time of placing order. The
defendant no. 5 in turn placed the order to the plaintiff vide order dated the 2nd
June, 2003 of the Jute Commissioner (Exbt.-C) and order to sell dated 03.6.2003
of the Deputy Director of Supply and Disposal (Exbt.-D) on terms and conditions
embodied in the said orders for manufacture of 780 Bales of B Twill bags and
supply to defendant no. 6. After manufacture and on due quality assurance, as
per Quality Assurance Certificate dated 19.6.2003 (Exbt.-E), the bales were
despatched on 21st June, 2003 as per the certificate of Train Examiner as water
tight (Exhibit-FF) and goods were unloaded at Sangrur on 2nd July, 2003 against
the Invoice Nos. 5, 6 & 7 dated 22nd June, 2003 as per the report of the Chief
Goods Supervisor, Sangrur and the defendant no. 6 had received the Gunny
Bales in respect of the said consignment (Exhibits- GG, HH and II).
Mr. Aniruddha Mitra, learned counsel of the defendant no. 6 submitted that by its
letter dated 9th July, 2003 (Exhibit-K) addressed to the Director, Supplies and
Disposal, 6, Esplanade East, Kolkata-700 069 defendant no. 5 herein complained
about the receipt of 390 Gunny Bales of 50 kg. packing on 02.7.2003 supplied by
the plaintiff against RR No. 079405 to 079407 dated 22.6.2003 Ex. Howrah to
Sangrur, badly affected by rain with a request to stop the payment of 390 gunny
bales to the plaintiff and further requested to direct the Jute Mill to depute their
representative for joint inspection of the rain affected gunny bales.
Acting Director (QA), Kolkata by its letter dated 18/28th July, 2003 (Exbt.-J)
requested the defendant no. 6 to file a claim on the carrier as the gunny bales
were got wet during transit by rain as the period of supply in a monsoon period
since there was no quality complaint. I have discussed above that as per the RR
receipt no. 074405 to 074407 dated 22.6.2003 (Exbt.-F collectively) bales were
despatched in a water tight compartment, though, contents were not checked up
but RR receipt no. 074406 and RR receipt no. 074407 reflect that three bales and
four bales respectively were in torn condition as on the date of loading at Howrah
Station. Since those bales were loaded in water tight compartment as per the
report of the Train Examiner dated 21.6.2003, there was every scope of those 288
gunny bales having been badly affected due to rain water in the monsoon season
while their transit from the factory of the plaintiff to the railway yard at Howrah
Station.
Mr. Sujit Mitra, Sales Executive as authorised office of the plaintiff has deposed
before the Court and adduced in evidence documents marked as Exbts.-A, B, C,
D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, EE, GG, HH & II.
On behalf of the defendant no. 6 one Mr. Shivkumar Senior Manager, Law &
Taxation working with Punjab State Co.- Op. Supply & Marketing Federation
Limited defendant no. 6 has deposed and has proved the documents being Exbts.
1 to 15 as per its resolution no. 64 dated 13.7.1995 Exbt.-1 authorising him to
depose. As I have observed in the foregoing paragraph that by letter no. CMF/SA-
I/KH 03-04/10952 dated 09.7.2003 Exbt.-2 : K the Chief Manager, Food Grains
of defendant no. 6 wrote to the Director of Supplies and Disposals, Kolkata about
the receipt of rain affected gunny bales from Vijoy Shree Ltd., Kolkata, the
plaintiff herein complaining that 390 gunny bales were badly affected by rain and
further had requested to stop the payment of 390 gunny bales to the plaintiff.
This is how the complaint was lodged by the defendant no. 6 with the defendant
no. 5 requesting for joint inspection of the same. It would appear from the letter
No. C-III/2980/VSL(FW)/204 dated 20.8.2003 Exbts. 4=O that Assistant Director
of Supplies wrote to the Deputy Controller of Account, Ministry of Commerce
requesting the authority to withhold value of 390 bales from bills as the
consignee has received 390 bales damaged due to rain affected. It is well revealed
from the letter issued by defendant no. 5 to defendant no. 6 vide Exbt.-5 that the
period of supply of bales were in the monsoon period and requested to file the
claim on the Carrier. Pursuant to the said request the Deputy Director of
Supplies informed the Managing Director of the defendant no. 6 by its letter No.
C-III/2980/VSL(FW)/204 dated 17.9.2003 Exbt.-5 informing that as per the
complaint instruction has been issued for withholding the amount payable to the
plaintiff for supply of damaged 390 bales due to rain wet and that the plaintiff
had requested the Director of Supplies and Disposals with a request to release
the withheld amount for payment of bonus to Staff for ensuing Durga Puja
Exbt.-5. It would appear from the letter being no. Supdt./2003/77821 dated
23/24. 9.2003 of the District Manager, Markfed, Sangrur to the Superintendent
for taking of the matter with the DJSD for immediate inspection without opening
gunny bales and to ascertain the exact loss on account of supply of rain affected
bales by the plaintiff. The plaintiff requested the defendant no. 7 to release the
withheld amount informing that the representative of the plaintiff will go to the
place to settle the matter vide Exbts.- R = 7. Representative of the plaintiff Mr. R.
S. Pandey was deputed by the plaintiff to negotiate the matter concerning 390
bales of gunny bales which facts is reflected from the FAX letter on the letter
head of the plaintiff vide Exbt.-V1, V2, V3 & V4 bearing signatures of Mr. R.S.
Pandey the representative of the plaintiff.
It would appear from the letter dated 17.11.2003 addressed to Deputy Manager,
Markfed that the representative of the plaintiff made a request to arrange for
segregation of B. Twill gunny bales which were found untenable or rejected and
agreed to replace all rejected bales of bags and to pay of expenses of labour
charges, transport charges etc. This fact is proved from the said letter Exbt.-9
and the request made by said representative of the plaintiff Mr. R.S. Pandey vide
Exbt.-8 to allow him to hold joint inspection to disputed bales received by the
defendant no. 6.
Inspection took place on 15.11.2003 as per report Exbt.-11 which reflects that B.
Twill gunny bales of M/s. Vijoy Shree Ltd., Kolkata were segregated and opened
in presence of Mr. R.S. Pandey parties representative and it was found, 107 bales
were fit for consumption, 85 bales were found to be partially damaged not fit for
consumption, similarly 127 bales were opened and bags to bags were segregated
and found not fit for consumption as they were totally damaged. Bales segregated
and found totally damages were 76 in numbers and this fact finds corroboration
from the documents Exbt.-10 and Exbt.-11 being the joint inspection report. This
inspection report has been disputed by the plaintiff on the score that R. S.
Pandey was never employed by the plaintiff and he was not deputed as
representative by the plaintiff and that the letter heads used by the said R.S.
Pandey is not that of the M/s. Vijoy Shree Ltd., Kolkata.
In this regard Mr. Mitra has brought my notice to Exbt. Nos. I, L, M, N, P, R = 7,
T, U, V1, V2, V3, V4, W & Y which are the communications made by the plaintiff
Vijoy Shree Ltd. on its letter head. On comparison of the same it would reveal
that the disputed letter head bearing signature of R.S Pandey as the authorised
representative of the plaintiff is on the letter head of the plaintiff's company Vijoy
Shree Ltd., a unit Fort William Jute Mill. That apart, it would not be out of place
to mention that when the amount against the supply of 390 gunny bales out of
780 gunny bales as per the order dated 2nd June, 2003 by the Deputy Jute
Commissioner (Exbt.-C) was withheld, the plaintiff made communication to the
authorities for release of the amount as the plaintiff company was required to pay
puja bonus to the staff members during puja festival and preferred G.A. No.
3637 of 2006 for a summary judgment as against the defendant no. 5 for Rs.
9,83,700/- with interest from 4th September, 2003 until realization on the
amount at the rate of 18% per annum wherein the plaintiff submitted that after
placement of the order for supply of gunny bales of 780 nos., plaintiff had
manufactured bags in question and transported them by Railway to Sangrur and
informed the defendant no. 6 about the despatch of 390 bales by a letter dated
23rd June, 2003 and the said bales were received and collected by the defendant
no. 6 and after that plaintiff also sent the Railway receipt, Mill specifications,
quality assurance certificate to the consignee being the defendant no. 6. The bills
for the said consignment were duly sent by the plaintiff to the Controller of
Accounts, Ministry of Commerce, the defendant no. 8 herein as per the procedure
but the plaintiff in the 1st week of August, 2003 received the said letter dated
18/28-07-2003 of the Acting Director quality assurance to the Chief Manager
(Food Grains) of the defendant no. 6 and a copy of letter dated 9th July, 2003 of
the Chief Manager (Food Grains) to the Director of Supply and Disposals. It is
submitted by Mr. Ghosh that 390 bales were lifted by the consignee to avoid
damages and kept separately. The transportation was by railway from Howrah
Rly. Yard to Sangrur in Punjab in a water tight compartment and the bales were
loaded with the railway remark contents not checked up. There was quality
control as per the inspection held on 19th June, 2003 by the authority at the
factory premises of the plaintiff and three days after the bales were loaded in the
wagon and there was no scope of the bales having been damaged by rain water
as the same were transported in a water tight compartment. Accordingly, it is
urged that the plaintiff in no way responsible for the supply of damaged bales.
The plaintiff only learnt through the communication by the defendants about the
Jute bales found to be damaged due to rain. It is further submitted that said
bales must have been damaged due to rain water during transit as the period of
supply was during the monsoon as there is no complaint against quality of the
bales. A sum of Rs. 35,85,447/- was withheld from the subsequent bill of the
plaintiff which relates to separate contract.
Mr. Ghosh submitted that the decision to withhold the payments from the
subsequent bill of the plaintiff is illegal unreasonable, mala fide and in violative
of principle of natural justice and referred to a decision in case of General
Manager, North East Frontier Railway and others vs. Dinabandhu
Chakraborty (1971(3) Supreme Court Cases 883) in which the case, the
respondent retired as a Station Master from service from September 16, 1961
and he was entitled to receive provident fund which stood to his credit but while paying the same the appellant railway authority deducted a sum of Rs. 3,000/- under the authority of Rule 1341 of Railway Provident Fund Rule. The question for consideration before the Hon'ble Apex Court was whether the deduction so made was authorised by law. On consideration of the said Rule it was held that Government cannot be a judge in its own cause in absence of any statutory provision empowering it to act as such, as under the said P.F. Rule, no authority is constituted for deciding any dispute that might arise between the subscriber and the Government as regards any alleged incurring of liability nor as regards of quantum and further held that the only forum in which such disputes can be decided is the Civil Court. I have respectfully considered the decision which in my humble opinion is not apposite to the facts and circumstances of the case. Mr. Ghosh also referred to a case of State of Karnataka vs. Shree Rameshwara Rice Mills [(1987) 2 Supreme Court Cases 160] wherein it has been held thus--
" The powers of the State under an agreement entered into by it with a private person providing for assessment of damages for breach of conditions and recovery of the damages will stand confined only to those cases where the breach of conditions is admitted or it is not disputed. A right to adjudicate upon an issue relating to a breach of conditions of the contract does not flow from nor is inhered in the right conferred to assess the damages arising from a breach of conditions. Even assuming that the stipulation in the contract affords scope for being construed as empowering the officer of the State to decide upon the question of breach as well as assess the quantum of damages, adjudication by the officer regarding the breach of the contract cannot be sustained under law because a party to the agreement cannot be an arbiter in his own cause. Interests of justice and equity require that where a party to a contract disputes the committing of any breach of conditions the adjudication should be by an independent person or body and not by the party to the contract. The position will, however, be different where there is no dispute or there is consensus between the contracting parties regarding the breach of conditions............ and further held, though damages become payable on account of breach of conditions of the agreement they nevertheless constitute amounts payable under the contract i.e. Under one of the terms of the contract imposing liability to pay damages for breach of conditions- Hence Government entitled to recover damages as land revenue arrears."
Having regard to the observation made in the cited decision I am of the view that this also does not support the contention of Mr. Ghosh that the Government Department is not entitled to recover damages for breach of condition under the contract.
It is true that there was no notation on the delivery receipt by the railway at Sangrur but the fact cannot be lost sight of that the Rly. receipts issued at Howrah Rly. Station before loading of gunny bales clearly reflect that in total seven numbers of gunny bales were in torn condition. After delivery of gunny bales the authority of defendant no. 6 did report to the defendant no. 5 about the bales badly damaged due to rain wet within a reasonable period of time. A joint inspection followed as per the request of the defendant no. 6 in presence of Mr. R.S. Pandey the authorised representative of the plaintiff company. The joint inspection report though, has been disputed by the plaintiff at a later stage during pendency of the suit in the year 2015 showing a minute of resolution of the plaintiff company to take a defensive plea to avoid liability arising out of the warranty executed by the plaintiff company. Thus, the inspection report under challenge noted the damage of 288 gunny bales.
Conclusively it follows from the observations made in the order dated 28.2.2008 passed in connection with GA 3637 of 2006 that the plaintiff had obtained a judgment on admission relying on the joint inspection held on 18th October, 2003 wherein it was found that 65% of the Jute bales were in damaged condition. From the inspection report it was found that out of 395 Jute bales 107 Jute bales were found fit for consumption and balance 288 Jute bales were in damaged condition not fit for consumption/utilisation. Plaintiff had claimed summary judgement of Rs. 983700/- being the value of the 107 Jute bales and accordingly, a decree was awarded on admission against the defendant no. 5 to make payment for the said sum together with exemplary cost assessed at Rs. 40,000/-. Admittedly, the plaintiff has received the said amount in terms of the judgement on admission. Therefore, the plaintiff is estopped from challenging the joint inspection report having not carried in presence of its authorized representative and not entitled to declaration that joint inspection report dated 18th October, 2003 is bad in law and is null and void.
It is true that quality assurance certificate dated 19.6.2003 Exbt. E reveals that each bag was branded with the emblem of Markfed and the goods were dry as on the date of quality assurance certificate, the goods were transported in a water tight compartment under the certificate of railway authority being water tight and with remark contents not checked up, nonetheless, railway receipts as I have discussed in the foregoing paragraph bear the railway remark of total seven bales in torn condition. Here is a case of leakage at the originating station, therefore, the plaintiff cannot escape it liabilities by compensating the defendant no. 6 as per the given Warranty Exbt.-H which is reproduced hereunder for better appreciation of the terms between the consignor and the consignee.
"VIJAI SHREE LIMITED (FORT WILLIAM JUTE MILL DIVN.) 10, CLIVE ROW, CLACUTTA-700 001.
WARRANTY We hereby guarantee that 390 (Three hundred ninety only) Bales of Br. B. Twill Bags for 50 Kg. packing of the size 94 cm. X 57 Cm./ Hd. 665 gms mass per bag, 76 (+4, - 2) ends per dm. 28(+ 2, - 1) picks per dm, single blue stripe running along the length of the bag at the centre alongwith additional identification marking of two consecutive green warp thread at a distance of about 150 mm. away from any one side of the selvedge, dry sewn and conforming in all other respects to the current BIS specification (No. IS : 12650-1997) have been despatched under the Railway Receipt No. mentioned as under
against Supply Order No. C-III/2980/VSL (FW)/204 dated 03.06.2003 are in conformity with the ISI Standard specified. The list of the relative Bales Marks shown below.
We agree to replace, free of cost, to the Buyer, F.O.R. Railway Station/ Destination : Sangrur, 390 bales or any bale, which are found not to be upto the ISI Specification and which are certified as such by the competent Authority under the Indian Standards Certification Schemes. The freight of the bales rejected will to our account, both ways.
We further certify that all the bales are duly stamped with ISI Certification Marks and strictly conform to ISI Specification mentioned above.
Certified also that we, VIJAI SHREE LIMITED (Fort William Jute Mill Divn.) 10, Clive Row, Calcutta hold ISI Licence No. C/M/L/5039153 dt. 02.03.98 in the State of West Bengal and that the same in valid up to 14.01.2004.
Notification of the complaint must be given within twelve months from the date of receipt of the Railway Receipt Note.
Railway Receipt No. Date Bales
C 074405 22.06.2003 130 B/s.
C 074406 22.06.2003 130 B/s.
C 074407 22.06.2003 130 B/s.
Signature : For VIJAI SHREE LTD. Signature : For VIJAI SHREE LTD.
Accountant Accountant
Date: 23.06.2003 Date: 23.06.2003
MARKS
C-III/2980/VSL (FW)/204
Dated 03.06.2003
Br. B. Twill Bags 94 x 57 cms. Hd.
The Managing Director,
The Punjab State Co.- Op. Supply & Marketing
Federation Ltd.,
Markfed House '4', Sector-35B,
Chandigarh-160 022.
RAILWAY STATION/ DESTINATION : Sangrur.
1/B 500 Pcs. I.S.I.
Mills Symbol /Month/Year
Kgs. Gms.
$ 131-520"
In view of the warranty it is incumbent on the part of the plaintiff company to replace the damaged 288 gunny bales, as I find that the damage did not occur after taking delivery by the defendant no. 6 rather railway reports clearly gives notation of bales in torn condition before consignment of the goods for transportation by Rly. Defendant and the railway being the carrier cannot be held liable in absence of any proof of damage caused during transit. In the context of the discussion herein above, I answer the moot issue in favour of the defendants, nevertheless, the plaintiff shall be entitled to a decree for payment of the amount withheld by the defendant no. 5 on account of supply of 288 damaged gunny bales by rain water, on replacement of the same to the defendant no. 6 at the cost of the plaintiff in terms of the said Warranty within three months from the date hereof.
Accordingly, the above issues are decided.
Ergo, ordered, that the suit being C.S. No. 145 of 2006 is decreed on the aforesaid condition on contest against the defendant no. 6 and ex parte against the rest.
Department and all parties to act on the signed photocopy of this judgement.
(SHIVAKANT PRASAD, J.)