Calcutta High Court
Steel Authority Of India Limited vs Steel Crackers And Ors. on 21 April, 1994
Equivalent citations: (1994)2CALLT222(HC)
JUDGMENT Shyamal Kumar Sen, J.
1. This appeal is directed against the judgment of the learned single Judge directing the respondent to desist from auctioning the goods which are subject matter of the sale order dated 6th September, 1989 and 28th July, 1989 being annexure 'B' to the writ petition without first effecting the delivery of the contracted quality and quantity of goods to the writ petitioners in terms of the sale orders dated 28th July, 1989 and plant instruction Memo dated 6th September, 1989 at a price stipulated in the last published price list of the respondent authority.
2. In the writ petition the respondents/writ petitioners challenged the with-holding of delivery of rejected Steel Rolls and C.I. Rolls as wrongful and illegal.
3. The facts involve in this appeal inter alia as appears from the writ petition are that the respondent No. I/Writ petitioner No. 1 is a partnership firm and the respondent No. 2/Writ petitioner No. 2 is a partner of the firm. They carry on business of Cast Iron Processing and Steel Processing at Ghusuri, Howrah.
4. On 28th July, 1989 Metal Scrap Trade Corporation Limited (the respondent MSTC) issued a Sale Order in favour of the respondents/writ petitioners under which the respondent MSTC sold to the respondents/writ petitioners 52 Metric Tonnes of used rejected Steel Rolls (above 20 Tonnes per piece) at Rs. 4,200/- per tonne. For payment of the price writ petitioners/respondents have already opened a Letter of Credit for Rs. 2,54,000/towards the price of the rejected steel rolls as will appear from the said sale order.
5. In the meantime on 15th July, 1989 a wagon load of C.I. Skulls (which are big chunks of Cast Iron Scrap) arrived at Shalimar Siding of Eastern Railway. This consignment was despatched from the Rourkela Steel Plant of the respondent SAIL (sometime also referred to as RSP) and had been sold by the respondent MSTC to another firm namely M/s. Associated Enterprises. M/s. Associated Enterprises, however did not take delivery of this particular wagon load of C.I. Skull.
6. The respondent MSTC being interested in having this particular wagon-load of C.I. Skull disposed of, invited various parties including the respondents/Writ petitioners to negotiate for purchasing the concerned C.I. Skulls. The respondent MSTC was particularly anxious regarding the disposal of this particular wagon load of C.I. Skull because of inter alia, the heavy liability that was accruing on account of demurrage.
7. Negotiations were held on 16th August, 1989. The Associations, namely Cast Iron Spun Pipe Manufacturers Association, Metal Scrap Processors Association and All India Mechanical Processors Association, as well as a firm called Subhadra Trading Company also participated in the negotiations along with "the respondents/writ petitioners. Except the respondent/Writ petitioners no other party was willing to' purchase this wagon load of C.I. Skull, because of the quality of the consignment in question and the liability already incurred on account of demurrage, pilferage etc.
8. The respondents/writ petitioners proposed that they would purchase this wagon load of C.I. Skull at the then listed price MSTC (Rs. 3,745/-) provided MSTC agreed to sell 240 Metric Tonnes of C.I. Rolls (above 10 Metric Tonnes per piece) and 300 Metric Tonnes of Rejected Steel Rolls (above 20 Metric Tonnes per piece) at the then prevailing listed price on certain terms and conditions.
9. It is the case of the writ petitioners that respondent MSTC after some further discussions/negotiations agreed to this proposal of the respondents/writ petitioners and the transactions were concudud by MSTC's letter dated 25th August, 1989.
10. It has been further alleged on behalf of the writ petitioners that in implementation of this transaction in so far as it envisaged purchase of 240 Metric Tonnes of Cast Iron Rolls and 330 Metric Tonnes of rejected Steel Rolls, MSTC issued two sale orders one in respect of Cast Iron Rolls and the other in respect of rejected steel rolls. The sale order in respect of C.I. rolls was dated 6th September, 1989 and was for 240 Metric Tonnes. As far as the rejected steel rolls are concerned, MSTC amended the earlier sale order dated 28th July, 1989 issued in favour of the respondents/writ petitioners by enhancing the quantity to be delivered by which the agreed quantity involved in the transacion, namely 300 Metric Tonnes, resulting in the obligation of the respondent MSTC to supply a total quantity of 352 Metric Tonnes of rejected steel rolls.
11. The respondents writ petitioners took delivery of the wagon load of damaged C.I. Skull which was lying at Shalimar by paying a sum of Rs. 2,11,098/- towards purchase price and also by paying a sum of Rs. 1,12,000/- towards demurrage in terms of the relevant documents. It has been alleged by the writ petitioners that the respondents writ petitioners suffered a loss of over Rs. 2 lacs as far as his part of the transaction is concerned, namely purchases of a wagon load of C.I. Skulls.
12. It has been alleged that the respondent MSTC, has failed to fully honour its commitment in relation to this transaction. It has supplied 176.170 Metric Tonnes of C.I. Rolls by 16th November, 1989 leaving a balance quantity of 63.83 Metric Tonnes. It has also supplied 105.756 of Rejected Steed Rolls upto 9th October, 1989 leaving a balance quantity of 246.250 Metric Tonnes.
13. It has further been alleged that on 15th November, 1989 the pendents MSTC/RSP were in a position to supply balance quantity from its existing stocks inasmuch as it had 295. 00 Metric Tonnes of the material in question stocked at RSP.
14. It is also the case of the writ petitioners that the respondents/ writ petitioner repeatedly requested the respondent MSTC to expedite delivery of the balance quantity of the concerned materials.
15. It has further been alleged in the writ petition that the respondent MSTC has never disputed that the respondents/writ petitioners are entitled to the delivery of the balance quantity and in fact, respondent MSTC expressly called upon SAIL/RSP to despatch the concerned materials.
16. It is also the case of the writ petitioner that instead of honouring its commitment and delivering the concerned material to the respondent/ writ petitioners, the respondent MSTC attempted to hold a Public auction of such materials on 8th August, 1990.
17. The writ petitioners challenged the action as hereinbefore mentioned in the writ petition as arbitrary and unreasonable and prayed for delivery of the materials in question.
18. The contention of the appellant is that on the basis of the prayer of the writ petition the writ petitioners should not have been granted any relief.
19. It has been submitted on behalf of the appellant that the prayer in the writ petition relates mainly to delivery of 63.830 M/T Cast Rolls and 246.25 M/T of Steel Rolls in accordance with the sale orders dated 28th July, 1989. Other prayers are consequential.
20. It has been argued on behalf of the appellant that the rights and obligations of the parties are absolutely governed by the terms and conditions of the sale orders issued in ordinary, trade and commerce. The Clauses 2 and 7 of the terms and conditions read as follows : -
Clause 2" Revisional Price Clause :-
The price payable on the goods shall be the price prevailing on the date of delivery as fixed and/or published by the appropriate authority irrespective of whether (1) the property in the goods has passed to the buyer before delivery and (2) any payment has already been made towards the price mentioned herein, such price being merely tentative and such payment being deemed to be paid on account but subject always to adjustment if any, according to such terms and conditions, may be prescribed by the Metal Scrap Trade Corporation Limited from time to time. The date of delivery in case of Roll Delivery is the date of Railway Receipt and in all other cases, the date of actual (Physical) delivery." Clause-7 "No commitment of supply within the Sale Order validity period can be given. Any quantity outstanding after the expiry date of the sale order will stand automatically cancelled. "Price mentioned in the Sale Orders are indicative and not firm. Price as at the time of delivery will prevail and be payable by the purchaser. Time for delivery under one Sale Order is 8 months and under the other, more than one year. The writ petition contains no averment that the SAIL is obliged to deliver at the prices indicated in sale orders. It is not the case of the petitioner that SAIL cannot revise the price from time to time or that the petitioner is not liable to pay price as may be fixed at the time of delivery.
Even if the Court directs delivery in accordance with the sale order as prayed, the petitioners will still be liable to pay the price as on the date of delivery as may be fixed or published by SAIL. Therefore, the Court cannot direct delivery at a specified price.
21. The further case, of the appellant is as follows :-
(a) Some tune in November, 1980, the respondent No. 2 found that the scraps and rejects of rolls which are bought out items, are not obtaining proper value when offered for sale to particular consumers at a price tentatively fixed. It was therefore, decided by the respondent No. 2 by way of policy to remove rolls from the jurisdiction of order department and to sell them by open auction. As a result, the cast iron rolls upto 10 metric tonnes piece and steel rolls above 20 metric tonnes piece amongst other rejects of brought out items were taken out from Order Department of the respondent No. 2 and were given to another Department for disposal and the same will be evident from the letter dated 15th November, 1989 of the Manager Order Department.
(b) The mechanism for fixing price of scrap of bought out items (here Cast Iron and Bolls and Steel Rolls) was evolved. It was decided to ascertain market price by putting the materials up for auction through the auctioner/MSTC, the respondent No. 1. The auctions were held by MSTC on 28th and 29th June, 1990 and maximum price obtained was approximately Rs. 5,222/- for the item for which sale order mentions the price of Rs. 4270/- per M.T. In this auction the Writ petitioners themselves quoted the price and took about 71 metric tonnes of the said materials at a total price of Rs. 3,71,000/- at the rate of Rs. 5,222/- per M.T.
(c) The other materials (Steel Rolls above 20 metric tonnes per piece) were to be put up for auction on 8th August, 1990.
(d) Same interested parties have given offers in writing to buy this item giving different rates ranging from Rs. 8,000/- to Rs. 9,500/per metric tonne, whereas the sale order mentions the price of Rs. 4,200/-. Thus the price now obtained from, open market comes to Rs. 9,500/- per metric tonne for Steel Rolls and Rs. 5,222/- per metric tonne for Cast Iron Rolls, which is the present price of the said materials.
(e) On August 7, 1990, the petitioners obtained an interim Order restraining Auction Sale. Auction could not be held. The petitioners prevented SAIL from following the mechanism for ascertaining market price, obviously upon realising that price of not less than Rs. 9,500/- per M.T. would be secured at the Auction for the other item in respect whereof the Sale Order mentions tentative price of Rs. 4,200/- per M.T. Learned Advocate for the appellant also submitted as follows :-
(a) The supply and non-supply of the materials, which are ordinary commercial articles (scraps), are governed by the terms and conditions of the sale order, particularly clauses 2 and 7 thereof. This contract is not enforceable under the Specific Relief Act. The petitioners at best be entitled to damage if there is any breach of the terms and conditions on the part of the respondents. The petitioners seek to enforce its right by way of specific performance of contract which is not available under the law of the land and therefore the Writ Petition is not maintainable.
(b) The petitioners have no legal right to specifically enforce the contract for sale of ordinary articles of commerce. Existence of legal right is the basis for Writ of Mandamus. The petitioners have no legal right and therefore cannot maintain this writ petition.
(c) Fixation of price is a policy decision of the respondent No. 2 which is quite reasonable and necessary for securing the market price and for the interest of the Company in carrying out its day to day commercial activities and the same is not open to judicial review.
(d) Ordinarily, Public property should be sold by pubic auction which fetches the highest price and also ensures fairness.
(e) The contract entered into by the parties is non-statutory. Relationship between the parties is purely contractual. Decisions in the realm of commercial contract could not be the subject matter of Article 226 of the Constitution of India. The writ petition is not maintainable.
(f) Article 14 of the Constitution of India cannot be construed as a charger for judicial review of State action after the contract has been entered into and to call upon the State to account for its actions in its manifold activities by stating reasons for such action.
(g) In any event the petitioners are not entitled to seek any relief. The real motive of the petitioners is to get the goods today at low prices of last year. Breach of any legal right, which can be compensated by money, cannot be challenged in a writ petition under Article 226 of the Constitution. There is no breach on the part of the appellant in any event.
(h) Price list is an invitation to treat and is not binding offer to sell out at the prices mentioned in the price list. Price list does not create any legal obligation on the seller to sell at the prices mentioned in the Price List.
(i) High Court in its writ jurisdiction should not override statutory law and should not direct specific delivery of the goods contrary to the provisions of Specific Relief Act. This is the contract relating to movable. The scraps are ordinary articles of commerce and also obtainable in the market. In fact, after filing of this writ petition, the writ petitioners have purchased 71 M.T. of these materials. A vague allegation has been made in the writ petition that these are not ordinary articles of commerce and as such allegations have been denied in the affidavit in opposition.
(j) Section 10 of Specific Relief Act read with Section 14 clearly provides that contract of sale in the instant 'case cannot be specifically enforced. Section 14 provides that a contract for the non-performance of which compensation in money is an adequate relief, cannot be specifically enforced. Section 10 provides that the Court shall presume that breach of a contract to transfer moveable property can be adequately relieved by compensation in money except when the moveable property in question is not ordinary article of commerce etc. The writ Court cannot be asked to pass an order contrary to statutory law.
22. Learned Judge, while disposing of the writ petition dated 15th February, 1991 directed inter alia as follows :-
"In that view of the matter the writ petition succeeds. There shall be a writ in the nature of mandamus directing the respondent to desist from auctioning the goods which are subject matter of the sale order being annexure 'D' to the petition without first effecting the delivery of the contracted quality and quantity of goods to the petitioners in terms of the sale orders dated 20th July, 1989 and plant instruction memo dated 6th September, 1989 at a price as appears from the last published price-list of the respondent authority. There shall have no order as to costs."
23. The appellant being aggrieved by the said order of the Learned Judge moved the instant appeal.
24. It has been submitted on behalf of the appellant that the Learned Judge wrongly assumed and proceeded on the footing as if there was a tacit understanding that the quantity of CP Skull at the listed price of Rs. 3,745/- shall be purchased by the petitioner from M.S. T.C. and the later in turn agreed to sell 240 M.T. of C.I.S, Roll above 10 M.T. per piece and 300 M.T. of rejected Steel Rolls above 20 M.T. per piece at the prevailing prices on certain terms and contentions."
25. It has been submitted on behalf of the appellant that the records, however, show the agreement to be otherwise. In this connection reference may be made to the note-sheet which is at page 38 of the Paper Book which provides as follows :-
"After prolonged negotiations the following was agreed to as a final and last offer :
(1) All demurrage shall be to their account.
(2) R/R weight will be acceptable.
(3) Normal Sale terms of MSTC including price escallation clause is acceptable.
(4) 240 tonnes of C.I. Rolls (below 10T) and 300 tonnes of Steel Rolls (above 20T) is acceptable. Delivery may be from the ready stocks or from the future arisings.
The party desired the despatches to be made on priority basis."
26. It has also been submitted on behalf of the appellant that the appellant as Government organisation never induced the respondents/writ petitioners to accept the damaged C.I. Skull. There was discussion between the parties and after discussions they agreed to price escalation clause and they were offered materials admittedly by issuing sale orders.
27. It has submitted on behalf of the respondents writ petitioners that it is well settled in contractual obligation the writ Court can interfere if the action of the Govrenment agency appears to be arbitrary and unfair.
28. From the submissions of the parties and facts on record the main question appears for decisions, is if the action of the Governmental authority is unfair or arbitrary as noted by the Learned Single Judge. It cannot be disputed that there was a price variation clause.
29. The other contention of the appellant that the contract is not enforceable under the Specific Relief Act, and the petitioners at best be entitled to damages if there is any breach of the terms and conditions since the articles contracted for are ordinary commercial articles and in that view of the matter the writ petition is not maintainable and has not also been gone into by the learned Single Judge.
30. It is quite true that the writ Court can interfere in contractual matters if Governmental agency acts arbitrarily or in unreasonable manner as held by the learned Judge. However, it is well settled that writ Court will not scrutinise in details the facts of disputed nature and will not enter into question of interpretation of contracts involving close scrutiny.
31. From the facts on record in the instant case it appears that it requires close scrutiny for the Court to make an interpretation on different aspect of the Contract and/or negotiation and also requires evidence to be taken into account. In our view, the matter requires detailed and elaborate scrutiny. The Writ Court, in our view, should not interfere on the face of the record. The contention of the appellant cannot be so easily brushed aside. In that view of the matter we are of the view that the Learned Single Judge was not justified in passing the said order in the writ petition and should have relegated the issue for determination relating to interpretation of the contracts in question involving several disputed questions of facts to alternative forum of suit.
32. Accordingly we allow this appeal and set aside the order of the Learned Single Judge of 15th February, 1991 and we are of the view that it will be open for the respondent-writ petitioners to establish its claim in appropriate Court by instituting suit or any other procedure as the writ petitioner may be advised.
The appeal, accordingly, is disposed of with a direction as above.
There will be no order as to costs. Stay prayed for is refused.
All parties are to act on a signed copy of the operative part of the Judgment/Order on usual undertaking.
Ajit Kumar Sengupta, J.
33. I agree.