Bangalore District Court
N.N.Global Mercantile Pvt. Ltd vs Karnataka Power Corporation Limited on 8 October, 2021
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH84]
:Present:
Ravindra Hegde,
M.A., LL.M.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 8th day of October 2021
COM.O.S.No.342/2019
Plaintiff N.N.Global Mercantile Pvt. Ltd.,
having its registered office at
Flat No.304, CWing,
Evershine Embassy,
Andheri (W),
Mumbai400053.
Represented by its Manager
Dilip Wasnik.
(By Sri.S.S, Advocate)
// versus //
Defendant Karnataka Power Corporation Limited,
"shaktiBhawan", 3rd Floor,
82, Race Course Road,
Bengaluru560001.
Represented by its
Superintendent Engineer (Fuel)
[
(By Sri.A.J.K, Advocate)
Date of Institution of the suit : 08/11/2019
Nature of the suit : Recovery of Money
Date of commencement of : 11/12/2020
recording of the evidence
Date on which the Judgment : 08/10/2021
was pronounced.
2
CT 1390_Com.O.S.3422019_Judgment .doc
: Year/s Month/s Day/s
Total duration
01 11 01
JUDGMENT
This suit is filed by the plaintiff praying to direct the defendant to pay Rs.57,13,353.99 to the plaintiff as on 13/2/2018 with interest @15% per annum and for costs.
2. Brief facts of the plaintiff's case is as under:
Plaintiff is a registered company and is represented by its Manager who is authorized by the board resolution. The defendant is the government company of the Karnataka State and is engaged in the services of generating electrical power in the State of Karnataka. The plaintiff was awarded contract for lifting and transporting of coal against RoadcumRail allotments from Western Coal Fields Limited (WCL) to Raichur Thermal Power Station(RTPS) by RoadcumRail Agreement dated 2/11/2017 and the work order was also issued. In order to generate thermal power in RTPS, it had to get the Coal lifted from WCL by roadcumrail and has entered into agreement with the plaintiff for such transportation for a period of two months. The terms of agreement between the parties, special terms and conditions and details of the work to be carried out by the plaintiff are all stated in the agreement. During the currency of the agreement, defendant foreclosed the agreement without any valid reason vide letter dated 20/12/2017 and caused severe financial loss to the 3 CT 1390_Com.O.S.3422019_Judgment .doc plaintiff. Inspite of the same, plaintiff fulfilled its obligation under the agreement dated 2/11/2017, for which the payment as agreed under the agreement fell due from the defendant. As per invoice dated 30/11/2017 and 31/12/2017, Rs.57,13,353.99 is due from the defendant. Though several letters and reminders were issued by plaintiff, payment is not made by the defendant. Therefore for recovery of this amount, plaintiff is constrained to file the suit. Plaintiff's representative made repeated request over phone and written communication to the defendant and plaintiff also got issued legal notice to the defendant on 23/1/2019, for which the defendant gave reply on 10/4/2019, but payment due to the plaintiff is not made and plaintiff sustained huge loss. Plaintiff has also complied mandatory requirement of preinstitution mediation and the defendant did not appear for PIM. Finally plaintiff filed this suit for recovery of the amount with interest.
3. The defendant appeared through counsel and filed detailed written statement and stated that the claim of the plaintiff is based on the agreement dated 2/11/2017 entered into between the parties and plaintiff has deliberately and maliciously neglected to state the true facts and circumstances of the case. Defendant denied the cause of action to the present suit. The defendant has stated that it is power generating company owned by Government of Karnataka and it had entered into fuel supply agreement with WCL for supply of coal to use in its Thermal Power Stations 4 CT 1390_Com.O.S.3422019_Judgment .doc and defendant invited offer from Coal Transportation Agency for lifting and transportation of coal from collieries to thermal power plants and on determining the lowest bidder it entered into contract for the said purpose and plaintiff is a coal transportation agency. It is stated that as defendant was in urgent need of coal at RTPS circulated enquiry dated 17/10/2017 inviting offers to coal transportation agencies to execute works of lifting and transportation of coal by road cum rail route from the loading points at WCL colliery at Penganga to RTPS. The coal transportation agency was to lift the crushed coal from the coal handling plant of the WCL colliery at Penganga amd supervise loading of crushed coal into lorries by WCL and transport the said coal to Railway Siding at Pandharpauni/Vimla, load it on to the railway wagons and ensure the safe transport of the coal to RTPS by rail. It is stated that plaintiff submitted its offer to the defendant along with M/s. Bhatia Coal Washeries Limited and they were the lowest bidders and same was accepted and the agreements were entered and work order was issued on 31/10/2017 to the plaintiff. It is stated that the plaintiff gave its letter of acceptance and defendant executed agreement dated 2/11/2017 for transportation of coal from WCL colliery to RTPS as per the terms stated in the agreement. It is stated that the plaintiff was to ensure that quality and quantity of coal that is lifted from WCL is transported and delivered to RTPS. The specified weight and Grade of the coal lifted at WCL would be delivered at RTPS 5 CT 1390_Com.O.S.3422019_Judgment .doc and any shortage in the delivery of coal was to be borne by the plaintiff and defendant was also entitled to deduct amounts in lieu of difference in the grade of coal that was delivered as compared to the coal that was lifted. It is also stated that defendant was to make a prepayment of railway freight based on the weight as stated therein and the defendant was considered the freight charges for quantity of coal delivered to RTPS. It is stated that any penalty levied by the railways for over loading or under loading (idle freight) wagons was to be borne by the plaintiff. It is stated that on 2/11/2017 WCL issued release order and directing the Area General Manager to release 1,50,000 MTs of coal of CruROM G10 (100 mm) grade from the Penganga colliery to RTPS through PRPI/PVIT railway siding by RCR mode through the plaintiff. The defendant was to be billed for the coal allotted by WCL vide invoices raised based on the quantity and quality of coal that was lifted from the colliery. It is stated that WCL on the basis of the weight and grade calculated at the loading end raises invoices on the defendant and the price of coal varies on grade of coal. The defendant has given details of the nature of contract and the procedure to be followed in getting effect to the agreement and lifting of the coal and transporting the same and also stated about the samples taken. It is stated that Central Institute of Mining and Fuel Research (CIMFR) is a third party agency to analyze the grade of the coal. It is stated that the defendant repeatedly requested for CIMFR to carry out sampling at the 6 CT 1390_Com.O.S.3422019_Judgment .doc loading end and WCL to provide enabling solutions for the same. It is stated that plaintiff transported 17,827.48 MTs of coal, even without CIMFR sampling and analyzing the same and the sample was taken by WCL and mentioned the grade of the coal in the invoice. It is stated that coal to be lifted from Penganga colliery and transported to PRPI/PVIT was to be undertaken by the plaintiff as well as Bhatia Coal and WCL raised invoices on the defendant for quality and quantity of coal measured at the loading end that was lifted by the plaintiff and mentioned the grade of coal as G10. It is stated that the coal delivered at RTPS at the unloading end was analyzed, taking a sample by CIMFR. Three of the rakes contained coal of the grade G17, G15 and G13 which is inferior to the grade of G10 that was lifted from the WCL colliery. Since as per the fuel supply agreement with the WCL sampling could not be done as enabling conditions were not provided by WCL and CIMFR did not take sample and analyze the coal. On 16/11/2017 WCL issued letter to the defendant to keep the dispatch of coal from Penganga in abeyance. It is stated that due to this defendant, foreclosed the agreement dated 2/11/2017 and issued letter on 20/12/2017 and terminated the agreement in accordance with clause 9 of the agreement. As the contract was foreclosed on account of WCL's in action in providing enabling conditions to CIMFR, the last consignment of coal was not a full consignment and hence there was empty wagons. The defendant undertook to bear the idle freight expenses for empty wagons only. It is 7 CT 1390_Com.O.S.3422019_Judgment .doc stated that Plaintiff raised two invoices one for Rs.49,05,562/ and another for Rs.8,07,792/. It is stated that in accordance with the agreement dated 2/11/2017, defendant was entitled to make deduction in the invoice of the plaintiff and deduction was made for coal cost of shortage, grade slippage, railway penalty, TDS and balance coal cost which comes to Rs.57,91,485/. The defendant has given the details of the reasons and the nature of deduction that are made in the invoice of the plaintiff. It is stated that as per the railway receipt filed by the plaintiff, when the weight of coal delivered is calculated with respect to first four rake that were transported by the plaintiff there were shortage in coal quantity of 19.21 MTs of coal and the coal cost is Rs.1959.32 per MT. Hence shortage in the coal cost is Rs.37,639/. It is stated that in the grade slippage the release orders of the WCL shown that grade of coal released is of 10G. CIMFR has taken sample of the coal transport at the unloading end i.e. at RTPS, wherein the grade is found for slippage No.G10 to G17, G15 and G13 in respect of 3 rakes. It is stated that as per the grades mentioned in the WCL invoices and CIMFR test results at RTPS it clearly show that the plaintiff has lifted superior grade coal i.e. of grade G10 and delivered inferior grade coal i.e. of G17, G15 and G13 and therefore defendant deducted amount of Rs.41,68,026/ for loss due to grade slippage. It is also stated that payment to the railways for transportation of coal from the railway siding to RTPS is made by the defendant, defendant is entitle to recover any idle 8 CT 1390_Com.O.S.3422019_Judgment .doc freight for under loading wagons that may be charged by the railways to the defendant. It is stated that plaintiff transported coal in 4 rakes containing only the coal transported by it before the transport was terminated. The Railway raised bills for transport of 18610.17 MTs coal by the plaintiff, but defendant received less than 18,610.17 MTs of coal and as there was unloading of coal in the wagons with respect to the first four rakes transported by the plaintiff, the railways levied an idle freight charge on the defendant to the tune of Rs.10,68,871/. Hence defendant is entitle to deduct Rs.10,68,871/ from the bills of the plaintiff towards penalty for idle freight. It is also stated that the defendant is entitled to deduct TDS from the bill of the plaintiff and Rs.1,14,267/ is accordingly deducted. It is also stated that same quantity of coal lifted by the plaintiff is to be delivered at RTPS. In the present case plaintiff lifted 18,033 MTs quantity of coal from the WCL colliery at Penganga and delivered only 17,827.48 MTs. Hence balance quantity of 205.52 MTs is with the plaintiff and plaintiff have to pay Rs.4,02,679.45. It is stated that representative of the plaintiff was present at the time of preparing reconciliation statement and has acknowledged the cost recoverable on the balance coal cost and the representative has sent reconciliation statement. It is stated that the invoice amount is Rs.57,13,353.99 and total amount to be deducted is Rs.57,91,485/ and after such deduction defendant has received Rs.78,131/ from the plaintiff towards balance deduction, over and above the invoice amount and 9 CT 1390_Com.O.S.3422019_Judgment .doc plaintiff paid the said amount without any protest. It is stated that on 25/4/2018 plaintiff confirmed that they have released the payment of Rs.78,131/ and requested to release the bank guarantee before its expiry. It is stated that the plaintiff has not mentioned any payment due from the defendant and it thereby waived its right to claim the same in the present suit. It is stated that plaintiff has acquiesced to the deductions made by the defendant and plaintiff himself has admitted and accepted the deductions and paid the balance amount by RTGS on 25/4/2018 and confirmation letter was given stating recoverable amount by KPCL is full and final. It is stated that for this reason the suit is not maintainable. It is also stated that on 9/5/2018 plaintiff issued letter listing out details of the deductions made by the defendant from the bills of the plaintiff and plaintiff has specifically stated that it has no objections to the deductions of Rs.554,585/ under the heads Coal Cost of shortage, TDS and balance coal cost. Plaintiff has also stated that out of amount of Rs.10,68,871/ in respect of Railway penalty, only Rs.1,55,541/ is not contractually justified. It is stated that under circumstances plaintiff cannot now claim the amount in the present suit as it has waived its right. It is stated that on 26/5/2018 plaintiff once again sent letter repeating its claims and the defendant issued reply and denied the claim of the plaintiff. It is stated that the sale of coal is complete and the transaction between WCL and the defendant ends when the coal is lifted by the plaintiff and when plaintiff lifted the 10 CT 1390_Com.O.S.3422019_Judgment .doc coal from the WCL colliery at Penganga, it became the bailee of the coal, holding it on behalf of the defendant and it was duty of the plaintiff to transport the coal exercising necessary caution so as to ensure the goods are delivered without any damage or deterioration to the defendant at RTPS. It is stated that by various letters and over telephone defendant had repeatedly informed the plaintiff that it is entitle to make deduction in accordance with the agreement dated 2/11/2017 and is not liable to pay any money as claimed. It is stated that the plaintiff had accepted the clarification provided by the defendant through different correspondences in respect of the deduction and plaintiff has waived its right. On all these grounds, it is stated that no cause of action has arisen on the dates mentioned in the plaint and the suit is liable to be dismissed.
4. On these pleadings following issues are framed by my learned predecessor:
1) Whether the plaintiff proves that they have entered into agreement dated 2/11/2017 with the defendant in order to generate thermal power as per the terms of agreement mentioned therein?
2) Whether the plaintiff proves that during the subsistence of agreement dated 2/11/2017 the defendant have foreclosed the agreement without having any valid reasons vide letter dated 20/12/2017?11
CT 1390_Com.O.S.3422019_Judgment .doc
3) Whether the plaintiff proves that the defendant corporation is due to pay a sum of Rs.57,13,353.99 paise to the plaintiff as on 13/2/2018?
4) Whether the plaintiff proves that they are entitle to recover a sum of Rs.57,13,353.99 along with interest @15% per annum from the date of suit till realization from the defendant?
5) Whether the plaintiff is entitle for the reliefs as claimed in the suit?
6) What order or decree?
5.In support of the plaintiff's case PW.1 is examined. Ex.P.1 to Ex.P.24 are marked. For defendant, DW.1 is examined. Ex.D.1 to Ex.D.38 are marked.
6. Heard arguments. Both the counsels have filed written arguments also. Perused the records.
7. My answer to the above issues are :
ISSUE No.1 : Do not arise for consideration. ISSUE No.2 : Do not arise for consideration.
ISSUE No.3 : Partly in the affirmative.
ISSUE No.4 : Partly in the affirmative.
ISSUE No.5 : Partly in the affirmative.
ISSUE No.6 : As per final order for the following
REASONS
8. ISSUES No.1 & 2 : Since these two issues are interlinked with each other, they are taken together for discussion, to avoid repetition.12
CT 1390_Com.O.S.3422019_Judgment .doc
9. The plaintiff has filed this suit for recovery of Rs.57,13,353.99 along with interest from the defendant which is the invoice amount due from the defendant according to the plaintiff. The plaintiff has stated that he has entered into agreement dated 2/11/2017 with the defendant for transportation of coal from WCL Colliery to RTPS through road cum rail and the defendant has foreclosed the agreement by its letter dated 20/12/2017. According to the plaintiff, the foreclosure is made by the defendant on the ground that the WCL has kept transportation of coal through RCR mode in abeyance. Plaintiff has filed this suit for recovery of amount covered by two invoices that are raised by the plaintiff for the coal transported. The defendant has admitted the agreement and also the foreclosure of the agreement by its letter dated 20/12/2017. The plaintiff's claim in the present suit is for the invoice amount covered by two invoices dated 30/11/2017 and 31/12/2017. Plaintiff also admits that the defendant has foreclosed the agreement. Though the plaintiff has stated that due to this foreclosure, plaintiff suffered loss etc, there is no claim on the basis of such loss alleged to have been suffered by the plaintiff due to foreclosure of the agreement. The foreclosure of the agreement is in terms of the agreement as mentioned in the letter dated 20/12/2017. Since there is no claim on the basis of the foreclosure of the agreement by the defendant by its letter dated 20/12/2017, Issue No.2 to regarding foreclosure of the agreement without any valid reasons do not arise for consideration in the present 13 CT 1390_Com.O.S.3422019_Judgment .doc suit. Similarly, agreement between the aprties dated 2/11/2017 is not disputed by either party. Agreement entered into between the parties on 2/11/2017, is for transporting of coal from WCL to RTPS and is not for generating thermal power as mentioned in the Issue No.1. As this agreement is not a disputed point between the parties and as both the parties are heavily relying on the terms of the agreement and the entire claim and the defence are based on the terms of the agreement there is no dispute about the agreement entered into between the parties on 2/11/2017 which is for transportation of coal from WCL colliery at Penganga to RTPS through road cum rail mode. Since points involved in both these issue No.1 and 2 are not the matters in dispute between the parties, these issues are answered as do not arise for consideration.
10. ISSUE No.3 : The main issue in the present suit is the Issue No.3 which is with regard to enntitlement of plaintiff to recover Rs.57,13,353.99 from the defendant. The case of the plaintiff is that for transportation of coal from WCL colliery at Penganga to RTPS of the defendant, agreement was entered on 2/11/2017 and the plaintiff which is a Coal transport agency had agreed to transport the coal through road cum rail. As per the agreement, plaintiff has transported Coal and this agreement is foreclosed by letter dated 20/12/2017. For the coal which is transported by the plaintiff to the defendant, plaintiff raised invoices dated 30/11/2017 and 31/12/2017 which is totally for the amount 14 CT 1390_Com.O.S.3422019_Judgment .doc of Rs.57,13,353.99. This amount according to the plaintiff is not paid inspite of request and reminders and letters and notices. The defendant in the written statement has admitted the agreement and also foreclosure of the same and receipt of invoices, but contende that defendant is has deducted certain amount for lapses on the part of the plainiff and on such deduction, Rs.78,131/ was still payable by the plaintiff and plaintiff has paid the same and thereby, claims are settled.
11. General Manager of the plaintiff who is authorized person has given evidence as PW.1 and stated plaint averments in his chief evidence. He has also stated that the plaintiff has no role in either tampering with the quality of coal nor is there any such allegation against plaintiff of tampering. He has also stated that the coal load at the loading point was to be sampled by CIMFR but the same was not done and it was the obligation of defendant and therefore allegation of the plaintiff about Grade slippage cannot be accepted. In the cross examination witness has stated that he is personally aware of lifting and transporting of coal and admitted that they have to liasoning with coal company and railways and they had appointed supervisor at the loading station. Witness admitted that as per the agreement, plaintiff is responsible for security and monitoring of the coal and stated that they have lifted the coal from coal mine through over designated tippers and trucks and delivered it to the siding of railways and appointed security at that place and stated that they have delivered the coal collected from the 15 CT 1390_Com.O.S.3422019_Judgment .doc mines in the same condition to RTPS. PW.1 has stated that, as per the agreement third party agency i.e. CIMFR was appointed by WCL and KPCL for sampling and analysis of coal. Witness admitted that generally CIMFR does sampling and analysis at the loading end and then submit report to KPCL and WCL. The witness has admitted that they have sent a letter on 9/5/2018 and suggested certain reasons for which deduction should not be made by the defendant and apart from these reasons, there are no other reasons stated by them. Witness has admitted that they have no objection for deduction of Rs.5,54,585/ towards coal cost shortage, TDS and balance coal cost. He has stated that they have disputed deduction of Rs.1,55,541/ out of excess idle freight. He has contended that as mentioned in letter dated 25/4/2018 plaintiff had paid Rs.78,131/ to the defendant, but denied that plaintiff has accepted all the deductions and denied that this payment is in final settlement of all the claims. PW.1 admitted that as per the agreement, based on RR weight or actual weight whichever is less KPCL shall regulate the railway freight and admitted that it is their responsibility to hand over invoices of WCL to KPCL. The witness has contended that they have taken the delivery of the coal as per the release order of the WCL as mentioned in clause 8 of the agreement. Witness denied that they have admitted in their letter that the grade of coal has slipped from G10 to G16. Witness has stated that there was no sampling done at the loading end. Witness has stated that whatever the grade of 16 CT 1390_Com.O.S.3422019_Judgment .doc coal that was taken from WCL has been delivered to RTPS. The witness stated that he do not know that CIMFR has sampled and analyzed the coal at the unloading end and admitted that the defendant has produced CIMFR report. Witness admitted that they have signed the conciliation statement and denied that they are aware of the CIMFR report at that time. Plaintiff has stated that there was no grade slippage of coal at the loading end and do not know whether there was grade slippage at the unloading end. Witness denied that they have not disputed grade slippage in their letter. PW.1 denied that there was Grade slippage in rake 87 in from G10 to G17 and in rake 1 from G10 to G15 and in rake 2 from G10 to G13. The witness denied as the deduction made by the defendant was correct, they have paid balance of Rs.78,131/.
12. Plaintiff has produced resolution of the Board authorizing PW.1 to give evidence as Ex.P.1 and authorization given earlier to the representative to file the suit as Ex.P.2. Letter dated 2/11/2017 by the plaintiff to the defendant accepting terms and conditions of the road cum rail allotment agreement and letter of the defendant are produced as Ex.P.3 and 4, Copy of the contract agreement dated 2/11/2017 for the work of transportation of coal against road cum rail allotments from western coalfields Limited loading points to RTPS by road cum rail is produced as Ex.P.5. The transaction between the parties is governed by this agreement. The letter of the defendant foreclosing the 17 CT 1390_Com.O.S.3422019_Judgment .doc agreement dated 20/12/2017 is produced as Ex.P.6. Ex.P.7 and Ex.P.8 are the invoices regarding which payment is sought by the plaintiff. Ex.P.9 and Ex.P.10 are the letters of the plaintiff seeking payment of the invoice amount. Ex.P.11 is the copy of legal notice. Ex.P.12 is the reply given by the defendant to the legal notice in which the deduction made are all stated by the defendant. The non starter report of the PIM is produced as Ex.P.13. Copy of RR report are marked as Ex.P.14 to Ex.P.19 by confronting to PW.1. Ex.P.20 to Ex.P.23 are the copies of report from wagon tipplers which are also confronted to PW.1 and marked. Ex.P.24 is the dispatch statement of coal.
13. The Assistant Executive Engineer (Electrical) of the defendant has given evidence as DW.1 and has stated in his chief affidavit about terms of the agreement and deduction made towards grade slippage along with penalty, TDS, balance coal cost and also coal cost of shortage. In the cross examination witness has stated that the scope of the work entrusted to the plaintiff was lifting coal from colliery owned by WCL in Panganga and unloading at RTPS. The mode of transportation of the coal was by road cum rail. The witness stated about the quality of coal available at Panganga is determined by coal controller and transporter has no role to play in determining the quality of coal to be lifted. The witness admitted that during the period of contract with the plaintiff, defendant never complained to the plaintiff of any pilferage or malpractice and he is not aware of recovery of 18 CT 1390_Com.O.S.3422019_Judgment .doc amount for malpractice from the plaintiff. Witness admitted that there was an agreement between WCL and the defendant called as 'coal supply agreement' and grade of coal, price of coal and sampling of the coal is agreed between WCL and the defendant. Witness admitted that CIMFR is the agency to conduct the sampling at the mines and there is a tripartite agreement between CIMFR, WCL and the defendant. Witness admitted that this agreement provides for place at which sampling is to be done and at what intervals it is to be done and method of sampling and it also provides for taking samples at colliery. Witness has stated that at the time of lifting of the coal by the plaintiff from the mine, CIMFR had not taken sample. He has admitted that CIMFR not doing the sampling at the mine, is one of the reason for foreclosing the contract with the plaintiff by the defendant and Ex.P.6 letter was sent by the plaintiff to the defendant foreclosing the contract. Witness admitted that the plaintiff has no role to play in foreclosing of the contract by the defendant. Witness has stated that CIMFR will take sample at loading and unloading end. The difference of the grade found in the sample taken at loading and unloading end would amount to slippage. The witness stated that one of the reason for slippage may be climate change or rain etc, the slippage due to climate change or rain would be only of one grade at the maximum. The witness has stated that the defendant has never made any allegation against the plaintiff for mixing anything in the coal that is being transported and thereby 19 CT 1390_Com.O.S.3422019_Judgment .doc reducing its grade. Witness has stated that the defendant has taken the grade of the coal at the loading point as stated by WCL. Witness has stated that the plaintiff have to transport the grade of coal that is mentioned in the release order and agreed specification includes many factors such as grade, weight measurement, quality. Witness has stated that in Ex.D.35 they have stated that as the coal is not supplied as per the agreed specification, they had deducted certain amount from the bills. Witness has stated that in the coal material delivered by the plaintiff, they have found some stones which is non coal material and they have reported it to WCL and they have not stated the same in the written statement, as it was very small and negligent. Witness has admitted that as per the agreement between WCL and KPCL, if the grade of the coal supplied by the WCL is lesser than agreed grade, KPCL is liable to pay only Rs.1 per ton to the WCL. Witness has stated that they have not produced the documents showing payment made to WCL by KPCL regarding the disputed coal supplied, but they have produced the invoices of WCL. The copy of agreement entered between WCL and KPCL is marked by confronting to witness as Ex.D.38. Witness has stated that the declaration made by WCL in the release order about the grade of coal is the declaration as per clause 4.5 of Ex.D.38. Witness has stated that since CIMFR has not done the sampling they have not prepared creditdebit note as per clause 11.2 of Ex.D.38. Witness has admitted that for slippage of grade they will be 20 CT 1390_Com.O.S.3422019_Judgment .doc sufficiently compensated under clause 11.2. The witness has stated that the rail receipt will be issued by the Railways to KPCL and it contains weight of coal loaded in each wagon. Witness submitted that idle freight is to be determined as per clause 2.2(vii) of Ex.P.5. Witness submits that clause 10.2 and 10.3 of Ex.D.38 protects the interest of KPCL on idle freight. However, DW.1 has stated that this clause will not apply to the present case as plaintiff is loading the coal and not WCL. The witness denied that claim of the plaintiff against the deduction on the ground of slippage and idle freight still persists. Witness submitted that at the time of Ex.D.32 they were still holding bank guarantee given by the plaintiff and denied that they have pressurized plaintiff to agree for Ex.D.32 for returning the bank guarantee. The witness denied that slippage calculation made by the defendant is totally wrong and denied that the defendant is not entitle to deduct the amount for slippage and idle freight from the amount payable to the plaintiff.
14. Defendant has produced the letter of authorization given to DW.1 as Ex.D.1. Release order dated 2/11/2017 given by WCL to the KPCL for release of 2.25 LT Coal of G10 grade is produced as Ex.D.2. Copy of the letters sent by defendant to CIMFR on 7/11/2017, 13/11/2017 asking them to take third party sampling activity are produced as Ex.D.3 and Ex.D.4. The letter dated 15/11/2017 by the defendant to the WCL informing about necessity of third party sampling and giving two options to the WCL is produced as Ex.D.5.
21CT 1390_Com.O.S.3422019_Judgment .doc Ex.D.6 is the letter of CWL to the defendant keeping dispatch of coal from Penganga through RCR mode in abeyance. On the basis of this Ex.D.6 the defendant has foreclosed the agreement with the plaintiff by letter dated 20/12/2017. The invoices are produced as Ex.D.7 to Ex.D.18. In all these invoices grade of coal is shown as G10. Ex.D.19 to Ex.P.23 are the unloading end analysis report given by CIMFR. Ex.D.24 and Ex.D.25 are the calculation made by the defendant for balance coal cost recovery. Ex.D.26 is the calculation made by the defendant for Railway freight recovery and Ex.D.27 is the calculation made by the defendant for the coal shortage cost recovery. Ex.D.28 is the price notification given by Coal India. Ex.D.29 and Ex.D.30 are Form No.16A of the Income Tax Act given by the defendant of TDS made on the invoice amount. Ex.D.31 is the certificate under Section 65B of the Indian Evidence Act. The defendant has produced reconciliation statement with regard to coal cost as Ex.D.32. Ex.D.33 is the letter of the plaintiff to the defendant dated 25/4/2018 by which the plaintiff has paid Rs.78,131/ through RTGS to the defendant and requested to release the bank guarantee. This letter according to the defendant is the consent of the plaintiff for the deduction made by the defendant. Ex.D.34 is the letter dated 9/5/2018 by the plaintiff to the defendant objecting for deductions and conceding deduction of Rs.5,54,585/. Ex.D.35 is the letter of the defendant to the plaintiff stating that there is no excess recovery and the recovery made is 22 CT 1390_Com.O.S.3422019_Judgment .doc proper. Ex.D.36 is the letter dated 26/5/2018 by the plaintiff to the defendant placing objection of deduction for slippage of grade and idle freight recovery. Ex.D.37 is the letter of the defendant reaffirming its stand. Ex.D.38 is the copy of fuel supply agreement entered into between the defendant and WCL.
15. On looking to the pleading, evidence, documents and arguments addressed by both the sides and also the written arguments submitted by learned counsel for both the parties, there is no dispute that for transporting of coal through road cum rail mode from WCL colliery in Penganga to RTPS of the defendant, agreement was entered on 2/11/2017 between the plaintiff and defendant and the copy of such agreement is produced as Ex.P.5. The transaction between the parties is governed by Ex.P.5. As per this agreement the plaintiff was to transport the coal released by the WCL to RTPS through road cum rail and the agreement was for a period of two months. The plaintiff has transported coal and has raised two invoices as per Ex.P.7 and Ex.P.8. Ex.P.7 is the invoice dated 30/11/2017 for Rs.49,05,561.72. Ex.P.8 is the invoice dated 31/12/2017 for Rs.8,07,792.27. Total invoice amount is Rs.57,13,353.99. It is an admitted fact that before the expiry of the period mentioned in the agreement, the agreement was foreclosed by the defendant by sending letter dated 20/12/2017 as per Ex.P.6. In this letter it is clearly stated that WCL has informed that as per the FSA (i.e. Ex.D.38) sampling at loading end is to be taken into 23 CT 1390_Com.O.S.3422019_Judgment .doc consideration and as CIMFR is not carrying out the same, dispatch from Penganga through RCR mode is kept in abeyance with immediate effect. This communication made by the WCL to the defendant is produced as Ex.D.6. Since, by Ex.D.6 dated 16/11/2017 WCL has kept transportation through RCR mode in abeyance,defendant by letter dated 20/12/2017 as per Ex.P.6, foreclosed the agreement with the plaintiff.
16. The plaintiff's suit is for recovery of the two invoice amount covered by Ex.P.7 and Ex.P.8 which comes to Rs.57,13,353.99. The plaintiff has stated that inspite of several requests and also legal notice, the defendant has not made the payment of this amount. The plaintiff has produced some correspondence made with the defendant. The contention of the defendant is that as per the terms of the agreement the defendant is entitled to make certain deduction from the amount payable to the plaintiff. According to the defendant, they have made such deduction of account of coal cost of shortage, grade slippage, railway penalty, TDS and balance coal cost. These deductions itself comes to Rs.57,91,485/ i.e more than invoice amount of Rs.57,13,353.99. According to the defendant by making these deductions out of the invoice amount still Rs.78,131/ was payable by the plaintiff itself and this amount is also paid by the plaintiff by RTGS on 25/4/2018 as seen in Ex.D.33. Payment of Rs.78,131/ by the plaintiff on 25/4/2018 is not 24 CT 1390_Com.O.S.3422019_Judgment .doc stated in the plaint. The plaint is totally silent about the payment of Rs.78,131/ to the defendant on 25/4/2018 and thereby seeking release of bank guarantee. According to the defendant, in view of settlement of cliam by Ex.D.33 by making payment of Rs.78,131/, defendant is estopped from making the claim made in the present suit. It is also contended that the plaintiff has waived his right to make further claim against the defendant as the rights and liabilities of the parties has come to an end after Ex.D.33. It is contended by the plaintiff in the course of arguments that plaintiff was pressurized to make this payment of Rs.78,131/ for getting back the bank guarantee which was given to the defendant, but plaintiff has never agreed or consented for the deduction made in the bill of the plaintiff. The learned counsel for the defendant in her written arguments has mainly contended about waiver, estoppel and also not pleading and establishing duress. Since plaintiff has not stated anything about this payment in the plaint and also in the evidence, it could be said that this payment of Rs.78,131/ was kept in dark by the plaintiff while filing a suit. Whether such stand taken by the plaintiff, bars the plaintiff from making present claim is necessary to be seen.
17. Though this Ex.D.33 is given on 25/4/2018, immediately thereafter on 9/5/2018 plaintiff sent a letter to the defendant as per Ex.D.34 raising objection for the deduction. Plaintiff fairly conceded for deduction of Rs.37,639/ for coal cost of shortage, Rs.1,14,267/ towards 25 CT 1390_Com.O.S.3422019_Judgment .doc TDS which is even evidenced by Form 16A produced by the defendant as Ex.D.29 and Ex.D.30. Plaintiff also conceded for the deduction of Rs.4,02,679/ for balance coal cost. In total plaintiff has conceded for the deduction of Rs.5,54,585/ out of the invoice amount due to the plaintiff. At the same time plaintiff mainly disputed deduction of Rs.41,68,026/ towards Grade slippage and also objected for deduction of Rs.1,55,541/ out of total deduction of Rs.10,68,871/ towards Idle freight. By referring to clauses of agreement, plaintiff has raised the dispute and for this dispute defendant gave reply on 21/5/2018 affirming its stand, stating that the recovery due to slippage of grade and idle freight recovery are proper and there is no question of returning of the amount and there is no excess recovery. For this plaintiff again gave reply as per Ex.D.36 on 26/5/2018 in which the plaintiff has reiterated its stand and objection for deduction towards slippage of grade, idle freight recovery by referring to the clause of the agreement/ Stand of the defendant is reaffirmed by its letter dated 4/6/2018 as per Ex.D.37. Thereafter plaintiff got issued legal notice to the defendant as per Ex.P.11 and defendant gave detailed reply as per Ex.P.12 reaffirming its stand and then this Suit is filed before this court. The defendant in the written statement has again reaffirmed its stand regarding deduction and also stated about the payment made by the plaintiff as per Ex.D.33. The evidence of the parties is also on the same line.
26CT 1390_Com.O.S.3422019_Judgment .doc
18. On looking to the documents referred above, no doubt, after making the claim for invoice amount, by Ex.D.33, plaintiff has paid Rs.78,131/ to the defendant. It is mentioned in Ex.D.33 that as per the discussions held with the defendant and on demand, they have released Rs.78,131/ and requested to release the bank guarantee before expiry of its existing validity on 28/4/2018 to avoid further financial burden on them. On plain reading of Ex.D.33, it do not say that in final settlement of the claim of the plaintiff, payment of Rs.78,131/ has been made. It also do not say that the plaintiff has admitted and consented to the deductions. Though the plaintiff could be found fault with, for not stating about payment of Rs.78,131/ in the plaint and also in the evidence, whether this payment of Rs.78,131/ acts as estoppel against plaintiff from raising objection for the deduction made and making claim for the invoice amount is necessary to be seen in the presence of several correspondence exchanged between the parties. As stated above, Ex.D.33 do not say about any final settlement of the claim between the parties. Bank guarantee given to the defendant which was for Rs.1,25,00,000/ as per Clause 12.01 of Ex.P.5 was with the defendant, for getting it released, plaintiff appears to have agreed to make payment as per the calculations made by the defendant, as per which Rs.78,131/ was to be paid. Ex.D.33 nowhere states that, after making this payment, plaintiff will not have any claim against the defendant in respect of this agreement. Hence, 27 CT 1390_Com.O.S.3422019_Judgment .doc Ex.D.33 cannot be considered as admission of the plaintiff to the deductions made by the defendant under various heads. Interestingly, plaintiff had given bank guarantee for Rs.1.25 crores at the time of entering into agreement. Plaintiff had transported the coal till the agreement is foreclosed by letter dated 20/12/2017. Plaintiff has raised 2 invoices for Rs.57,13,353.99. However the defendant has not made any payment to the plaintiff and on the other hand it has deducted more than the invoice amount as deductions and even recovered Rs.78,131/ from the plaintiff. On the face of it this act of the defendant appears very strange and not acceptable. As admitted by DW.1 and as could be seen from correspondence had between the parties, there is no allegation of any malpractice or fraud or misappropriation done by the plaintiff. Regarding quality of work done by the plaintiff also there appears to be no issues raised. Still after transporting of 1.5 MT coal from Penganga to RTPS, the plaintiff is not paid any amount, instead Rs.78,131/ is recovered from the plaintiff. This itself show that Ex.D.33 payment was not willingly made by admitting the deductions. Followed by this, immediately there is a letter of Ex.D.34 raising objection for the deduction and fairly conceding few deductions. For this letter, letter of the defendant at Ex.D.15 say that there is no excess recovery and question of return of amount do not arise. Therefore, validity of these deductions are to be now adjudicated.
28CT 1390_Com.O.S.3422019_Judgment .doc
19. On looking to the peculiar facts and circumstances of the case, in which the plaintiff whose services were taken for transporting the coal was not paid anything, instead, amount is recovered from him, it appears that payment of Rs.78,131/ by the plaintiff as per Ex.D.33 was not a willing or admitting payment. Such payment appears to have been made only by agreeing to the terms put by the defendant for getting released the bank guarantee of Rs.1,25,00,000/. After receiving the bank guarantee, the plaintiff appears to have raised the dispute by sending letter which is responded by the defendant. Thereafter, plaintiff has filed this suit. On considering all these aspects, there appears to be no bar for considering the claim of the plaintiff and the deductions made by the defendant on its merit.
20. The learned counsel for the defendant has relied on the decision of the Hon'ble High Court reported in MANU/KA/1325/2015 (Nagamma and others v. Dase Gowda and others) in which Hon'ble High Court has considered that evidence cannot be given against the documents and there is a presumption under Section 91 of the Indian Evidence Act regarding proper execution. On the basis of this decision, it is argued that when Ex.D.33 is admitted, it should be considered that it is validly executed and contrary contention that it was executed under pressure requires proof. This decision will not help the defendant, as, though plaintiff admitted this letter, it do not say that 29 CT 1390_Com.O.S.3422019_Judgment .doc payment is made in final settlement. There is nothing in Ex.D.33 to say that plaintiff has waived its right to make a claim or to oppose deductions. It is well established principle that a party cannot be an adjudicating authority to decide about legality of the deduction made by it, when the same is disputed.
21. The learned counsel has also relied on the decision reported in (2008) 12 SCC 401 (Babulal Badriprasad Varma v. Surat Municipal Corporation and others) in which in para 29 the Hon'ble Supreme Court has held that, "A person may waive a right either expressly or by necessary implication. He may in a given case dis entitle himself from obtaining an equitable relief particularly when he allows a thing to come to an irreversible situation". It is argued for the defendant that plaintiff has waived its right to dispute about the deductions. However, since Ex.D.33 cannot be considered as a final settlement and even Ex.D.33 do not say that after making such payment, plaintiff cannot make a claim, Ex.D.33 do not act as waiver of the right of the plaintiff.
22. Plaintiff has not stated anything about payment of Rs.78,131/ and deductions made by the defendant in the plaint. Hence, even there is no averment in the plaint or evidence about any duress, as cause for payment made by Plaintiff. In the course of argument, learned counsel for 30 CT 1390_Com.O.S.3422019_Judgment .doc plaintiff submitted that due to pressure and to get back the Bank guarantee of Rs.1,25,00,000/ plaintiff made payment and sent letter as per Ex.D.33. Regarding duress which is argued to be the cause for plaintiff making payment to the defendant, learned counsel for the defendant has argued that duress is not pleaded and not established and as such it cannot be accepted. In the decision reported in (2002) 9 SCC 667 (Birla Jute Manufacturing Company v. State of M.P and others), relied by defendant, Hon'ble Supreme Court has not accepted the contention that undertaking given by the appellant was under duress and it is not an undertaking in the eye of law by observing that the appellant had given solemn undertaking voluntarily. The learned counsel has also relied on the decision reported in (1976) 3 SCC 119 (Kale and others v. Deputy Director of Consolidation and others) in which in para 29, Hon'ble Supreme Court has held that, it is well settled that allegations of fraud or undue influence must first clearly be pleaded and then proved by clear and cogent evidence. In another decision reported in (1975) 3 SCC 802 (Ram Sarat Singh v. Harish Chandra Matho) in para 5 the Hon'ble Supreme Court on different facts has held that when no evidence was adduced and to state that about threat, duress or undue influence the inspection of the counterfoils of the ballots could not be allowed. In another decision of the Hon'ble Delhi High Court reported in ILR (2011) VI Delhi 395 (Chugh Kathuria 31 CT 1390_Com.O.S.3422019_Judgment .doc Engineers (P) Ltd., v. Delhi Development Authority) in para 25 the Hon'ble High Court by referring to order VI Rule 4 of CPC has held that, "this rule is engrafted to bind the party making the pleading to his case and also to enable to opposite to effectively meet the same. To permit a party to an arbitration proceeding to raise an oral plea of 'coercion' or 'duress' or 'undue influence' would cause irreparable injustice to the opposite party as the opposite party would be put to grave disadvantage in dealing with such a vague and indefinite plea which is devoid of particulars and specifics. When such contention of duress, coercion etc were not taken in the pleading the oral plea of duress cannot be accepted".
23. On going through all these decisions, it is clear that if the plaintiff is contending that final settlement was made as per Ex.D.33 and he had accepted such final settlement without reserving any right to claim invoice amount, due to duress, then decisions makes it clear that plaintiff cannot take up such plea of duress or coercion without pleading. The decisions also makes it clear that against contents of document, party cannot make an oral statement. They also makes it clear that, once plaintiff admitted execution of document, it is estopped from denying the same at a later date. However, in the present case even if Ex.D.33 is accepted as it is, it do not prevent the plaintiff 32 CT 1390_Com.O.S.3422019_Judgment .doc from agitating and disputing the deduction made by the defendant and from seeking recovery of the amount covered by the invoice in the present suit. Defendant contends that deductions are valid and plaintiff admitted those deductions and made payment. However, Ex.D.33 do not say that in final settlement of the claim, such payment is made by the plaintiff or that plaintiff has given up its right to agitate against deductions.
24. The learned counsel for the plaintiff on this point, has relied on a decision of the Hon'ble Supreme Court reported in (2011) 2 SCC 400 (R.L.Kalathia and company v. State of Gujarat). In this decision in para 13 the Hon'ble Supreme Court has held as under:
"From the above conclusions of this court, the following principles emerge:
(i) Merely because the contractor has issued "nodues certificate", if there is an acceptable claim, the court cannot reject the same on the ground of issuance of "nodues certificate".
(ii) In as much as it is common that unless a discharge certificate is given in advance by the contractor, payment of bills are generally delayed, hence such a clause in the contract would not be an absolute bar to a contractor raising claims which are genuine at a later date even after submission of such"noclaim certificate".
(iii) Even after execution of full and final discharge voucher/receipt by one of the parties, if the said party is able to establish that he is entitled to furnish amount for which he is having adequate materials, he is not barred from 33 CT 1390_Com.O.S.3422019_Judgment .doc claiming such amount merely because of acceptance of the final bill by mentioning "without prejudice" or by issuing "nodues certificate"."
25. This decision clears all the doubts. Decision makes it very clear that if there is an acceptable claim, court cannot reject a claim on the ground that nodues certificate is issued. It is also held that even after execution of full and final discharge voucher by one of the parties, if a party is able to establish that he is entitled to further amount, he is not barred from claiming such amount. In view of this decision, Ex.D.33 will not come in the way of deciding the entitlement of the plaintiff to the suit claim amount. Another decision of the Hon'ble Calcutta High Court reported in 1961 SCC Online Cal 120 (Dipchand Golencha v. M.Abhechand and company) is also relied by the plaintiff's counsel. But this deciscion is on different facts, wherein plaintiff had accepted money without prejudice to his claim. Hence, this decision do not help the plaintiff.
26. For the discussion made above, Ex.D.33 do not come in the way of deciding the claim of the plaintiff. Hence, preliminary objection raised by the defendant for entertaining the claim cannot be accepted.
27. Since plaintiff is permitted to agitate its claim, now the documents and evidence placed by the parties are to be considered. After Ex.D.33, plaintiff sent a letter as per 34 CT 1390_Com.O.S.3422019_Judgment .doc Ex.D.34 on 9/5/2018. The defendant has effected deduction of Rs.37,639/ for coal cost of shortage, Rs.41,68,026/ for Grade slippage, Rs.10,68,871/ for railway penalty(Idle fright), Rs.1,14,267/ for TDS and Rs.4,02,679/ for balance coal cost. In Ex.D.34, out of these five deductions, plaintiff has clearly stated no objection for deduction of Rs.5,54,585/ which are deduction No.I, IV & V i.e. for coal cost of shortage, TDS and balance coal cost. Though plaintiff has claimed entire invoice amount in this suit, in view of Ex.D.34, claim in respect of these 3 deductions cannot be made. Even PW.1, in his cross examination has stated that they have no objection for this deduction. PW.1 has stated that they have no objection for payment of Rs.5,54,585/ towards coal cost of shortage, TDS and balance coal cost. Therefore, in view of the documents produced in Ex.D.34, stating no objection for these deductions and also the admission of PW.1, validity of deduction towards coal cost of shortage, TDS and balance coal cost need not be considered and these deductions made by the defendant are justified and for this plaintiff has no objection.
28. Towards railway penalty or for Idle fright charge, Rs.10,68,871/ is shown as deduction by defendant. Out of this amount, Plaintiff has raised objection in its letter Ex.D.34 for deduction of Rs.1,55,541/ and contended that it is not contractually justified. No doubt Ex.P.5 agreement provides penalty for idle freight. Defendant contended that idle freight 35 CT 1390_Com.O.S.3422019_Judgment .doc penalty is calculated as per agreement clause 2.03(b)(iii) and stated that KPCL shall regulate the railway freight based on RR weight or actual weight whichever is less subject to recoveries. However clause 2.03 is with regard to pre payment of railway freight. Plaintiff contended that for idle freight clause 2.02 (vii) is to be taken into consideration. This 2.02 (vii) provides that, "The agency shall ensure that while loading coal at loading end, coal is loaded to the carrying limits of wagons prescribed by the railways and there should not be any under loading of the coal. In case of under loading of the coal, the idle freight incurred shall be to the account of the agency and shall be recovered by KPCL from the bills. Computation of idle freight will be done on rake basis. Difference in normal freight charged by railways and chargeable on the net weight received at RTPS will be considered as idle freight incurred on that particular rake". Therefore, as per this clause 2.02(vii), difference between normal freight charged by railways and chargeable on the net weight received at RTPS have to be considered as idle freight. What is the normal freight charged by Railways is to be taken. Then what is the net weight received at RTPS and what is the amount chargeable for such received net weight is to be taken. Difference between the two would be Idle freight charge. But the defendant has calculated idle freight by applying clause 2.03(b)(iii) as per which railway freight is to be regulated 36 CT 1390_Com.O.S.3422019_Judgment .doc based on RR weight or actual weight whichever is less. This clause, also states as subject to recoveries as per clause 2.02. Therefore idle freight charges is to be calculated as per clause 2.02(vii).
29. The calculation made by the defendant for idle freight is found in Ex.D.26. In respect of four rakes 43, 65, 74 and 87 chargeable rate on which KPCL paid freight to railway in MT is shown as 16,089.60 and actual freight paid is shown as Rs.2,19,14,275/. RR quantity in MT is shown as 15,326.12. Quantity received at RTPS is shown as 15422.09. For calculating idle freight, defendant has considered lesser among RR weight and weight received by 4 rakes and Minimum of quantity is considered as 15,306.91. By multiplying the same with price as 1350.41 and by adding 174800/ total actual freight arrived as Rs.2,08,45,404/. By deducting the same in actual freight paid of Rs.2,19,14,275/, Slippage amount is considered as Rs.10,68,871/. This calculation is primafacie wrong as per Clause 2.02(b)(vii) of Ex.P.5. As per this clause, what is the net weight received at RTPS is to be taken and not what is less among RR quantity and quantity received at RTPS. As per Ex.D.26 net quantity received at RTPS in respect of 4 Rakes in MT is 15422.09. By multiplying 15422.09 with price as 1350.41 and by adding 174800/ total actual freight comes to Rs.2,10,00,944.60. This amount of Rs.2,10,00,944.60, which is actual freight charge based on weight received, if deducted by total actual 37 CT 1390_Com.O.S.3422019_Judgment .doc freight calculated by defendant at Rs.2,08,45,404/, fference comes to Rs.1,55,540.60. Therefore defendant has deducted Rs.1,55,540.60/ in excess of what is legally permissible towardds Grade slippage. Hence out of total deduction of Rs, 10,68,871/ towards Grade slippage, deduction of Rs.1,55,540/ is not proper. Defendant applied clause 2.03, which may apply for railway freight charges. Though taking lesser among RR weight and actual weight as provided in clause 2.03, would be applicable for the purpose of coal shortage cost recovery as provided in Ex.D.27, but quantity received at RTPS is to be considered in considering idle freight. Idle freight means what is chargeable weight for which KPCL has paid freight to railway minus what is chargeble for the weight which is received. Therefore, towards idle freight charges Rs.1,55,540/ is calculated in excess. Hence deduction of Rs.1,55,540/ out of total deduction of Rs.10,68,871/ towards idle freight is not proper. Defendant is entitle to deduct only Rs.9,13,331/ out of Rs.10,68,871/ deducted by defendant. Hence, plaintiff is entitle for Rs.1,55,540/ which is illegally deducted.
30. The main dispute between the parties is regarding Grade slippage. As per the agreement entered into between the parties, plaintiff is required to transport declared Grade of coal from WCL colliery to RTPS. As per the agreement, agency is responsible for supply of coal of agreed specification for delivery by Road cum Rail to RTPS. As per agreement 38 CT 1390_Com.O.S.3422019_Judgment .doc between WCL and KPCL, sampling of Grade of Coal at the loading point is to be done by third party agency. Ex.P.5 Contract agreement, defines Third party agency (TPA) as party appointed by WCL and KPCL for sampling and analyzing of coal for colliery. This Third party agency is admittedly CIMFR. Sampling and analyzing is to be made of the Grade of Coal at the loading end by CIMFR as per the agreement entered into between WCL and KPCL which is produced as Ex.D.38. However in the present case, sampling at the loading end is not done by CIMFR. As admitted by DW.1, that is the main reason for keeping the transportation in RCR mode in abeyance by WCL and that is the main reason for foreclosure of the agreement between the plaintiff and defendant.
31. By Ex.D.3, defendant requested CIMFR to conduct sampling at the loading point of WCL colliery. Again on 13/11/2017 by Ex.D.4, defendant requested CIMFR to conduct sampling at the loading point i.e. WCL colliery. Inspite of these requests, CIMFR has not conducted sampling at the loading point on the ground that WCL has not provided enabling conditions. Subsequently on 15/11/2017 by Ex.D.5 defendant informed WCL that, CIMFR is not conducting sampling activity at WCL loading point of Penganga and therefore, requested WCL to accept the result of sampling and analysis of CIMFR at the unloading end i.e. RTPS or to transfer the remaining quantity of coal to other mines where 39 CT 1390_Com.O.S.3422019_Judgment .doc CIMFR is already carrying out sampling and analysing activity. WCL was not agreeable for the same and it wrote letter as per Ex.D.6 on 16/11/2017 and stated that as per FSA i.e Ex.D.38 sampling result at loading end is to be taken into consideration and as CIMFR is not carrying out the same through RCR mode, dispatch from Penganga is kept in abeyance. By quoting this letter, defendant sent letter to the plaintiff on 20/12/2017 as per Ex.P.6 and foreclosed the agreement.
32. All these correspondences show that, taking sampling at the loading point was a must and that was the base for calculating the Grade of coal. Though CIMFR was doing sampling and analysing at the unloading point which is even seen in the report at Ex.D.19 to Ex.D.23, no sampling was taken at the loading point. No doubt, in all the invoices at Ex.D.7 to Ex.D.18, of WCL the Grade of coal is shown as G10. But it was the declaration by WCL. If this declaration of the grade of coal as G10 by the WCL in its invoice is acceptable to the defendant, it could not have written letter as per Ex.D.3 and Ex.D.4 to CIMFR and also further consequence of letter at Ex.D.5 and keeping the transaction in abeyance as appear in Ex.D.6 and subsequent foreclosure of agreement of the plaintiff as per Ex.P.6 would not have taken place. There is a tripartite agreement between WCL, KPCL and CIMFR, which requires sampling to be taken at the loading point and unloading point. If the Grade at the loading 40 CT 1390_Com.O.S.3422019_Judgment .doc point has slipped to lower grade at the unloading point, there would be slippage of grade of coal, for which, transportation agency like plaintiff would be liable to make good the loss. In this case, in the invoice at Ex.D.7 to Ex.D.18 grade of coal that has been sent by the WCL to the defendant is shown as G10. But at the loading point no sampling was made by the third party agency CIMFR, inspite of repeated request made by the defendant, on the ground that enabling conditions have not been provided to CIMFR by WCL. It is suggested to PW.1 that coal controller declares Grade of coal available at a particular mine. However that would not be clear proof of the Grade of Coal that was released by WCL. If all the coal available in Penganga colliery of the WCL is declared as G10 and is acceptable to KPCL, then there was no necessity of CIMFR taking sampling at the loading point. This itself show that in the same colliery, Grade of coal may differ. DW.1 has stated that difference of the Grade found in the sampling taken at loading and unloading end would amount to slippage.
33. DW.1 has stated that defendant has taken the grade of coal at the loading point as stated by WCL. Witness admitted that in the agreement Ex.P.5 or Ex.D.38 it is not mentioned that grade of coal stated by WCL is to be taken at the loading point for calculating slippage. By considering the entire coal transported from Penganga colliery of WCL as G10 as mentioned in the invoice and by considering the grade of 41 CT 1390_Com.O.S.3422019_Judgment .doc coal as per the analysis made by CIMFR by taking sampling at the unloading point, defendant has calculated the grade slippage. Third party CIMFR which was required to do sampling at the loading point, has not taken the same. No fault could be found with the plaintiff, in CIMFR not doing sampling at loading point. When such sampling is not taken, defendant cannot consider the Grade of coal as G10 based on the invoice. Interestingly in its letter Ex.D.5 defendant itself requested WCL to accept the result of CIMFR at the unloading end for which WCL was not ready. This show that defendant was not ready to accept the grade of coal as appearing in the invoice which is the declaration of grade of coal by the WCL and not confirmed grade of coal.
34. The plaintiff is required to transport the coal which is released by the WCL from colliery in the same condition to the RTPS. Even as admitted by DW.1 there is no allegation of pilferage or malpractice by the plaintiff. In the entire correspondence made by the defendant with the plaintiff with regard to grade slippage or any other matter, there is no allegation made against the plaintiff stating that due to some positive act of the plaintiff there is a grade slippage. DW.1 in his cross examination has clearly stated in para 10 that the defendant has never made any allegation against the plaintiff for mixing anything in the coal and there by reducing its grade. It is also stated by the witness that one of the reason for slippage may be climate change for rain, but 42 CT 1390_Com.O.S.3422019_Judgment .doc such slippage due to the climate change or rain would be only of one grade at the maximum. In the present case according to the defendant there is a grade slippage from G10 to G15, G16 and G17. Therefore, by climate change or rain the grade slippage will not be so much as found in report of CIMFR. There are no allegation against the plaintiff of any malpractice or fraud, thereby plaintiff taking delivery of G10 coal and then delivering below standard coal to the defendant. In view of the contract entered into between the parties i.e. WCL and defendant as per Ex.D.38, sampling was to be made by the third party agency CIMFR at the loading point. Though the WCL has declared the Grade of the coal as G10 that is not final proof to state that G10 coal was released by the plaintiff. Even according to the defendant this G10 grade of coal mentioned in the invoice is not acceptable to the defendant and for this reason it has conducted sampling at the unloading point. When that is so, the defendant is not justified in blaming the plaintiff for delivering the coal of G15, G16 or G17 by receiving coal of G10.
35. There is absolutely no acceptable evidence which convince even the defendant to show that G10 coal was released by WCL. Though generally the coal produced at Penganga colliery of the WCL is of G10, there is no clear evidence to show that the entire coal i.e. found in this colliery is of G10 grade. It is further clear on looking to the report of CIMFR on the basis of sampling at unloading end found in 43 CT 1390_Com.O.S.3422019_Judgment .doc Ex.D.19 to Ex.D.23. Plaintiff had transported coal by different rakes No. 43, 65, 74, 87. 01 and 02. Among this, in respect of 3 rakes i.e. rake No.87 analyzed grade is G17, rake No.1 and 2 analyzed grade is G15 and G13. In respect of other rakes there is no such complaint of grade slippage. In respect of rake No.43 analyzed grade is G10 as seen in Ex.D.19. In respect of rake No.65 and 74, anlyzed grade is shown as G9 as seen in Ex.D.21 and 20. Therefore, these rakes in respect of rake No.74 and 65 analyzed grade is found as G9. If all the coal released at the colliery are G10 grade, how the grade has improved to G9 in respect of two rakes is not explained. Interestingly in Ex.D.38 agreement entered between WCL and KPCL there is a provision for credit note. It is mentioned in clause1.12.2 that WCL shall give regular credit note of account of grade slippage to the extent of difference in the base price of declared grade on analyzed grade of coal. In case analyzed grade being higher than the declared grade, bonus bill shall be raised by the seller. Therefore when the actual grade has improved than the invoice grade, defendant is entitle for bonus bill. Such bonus in respect of 2 rakes of G9 is not adjusted in the amount claimed from the plaintiff.
36. Therefore, WCL and KPCL were aware that there is possibility of grade slippage from the declared grade to analyzed grade and for that reason, they had kept sampling at two places one at the loading point and another at the 44 CT 1390_Com.O.S.3422019_Judgment .doc unloading. When there is no sampling taken at loading point, plaintiff who is only a transporter, who transports the coal from colliery to RTPS and whatever is released to him would be delivered by him, cannot be held liable to pay the claimed amount towards grade slippage. If sampling was done at the loading point by the third party agency as required and sampling was subsequently done at the unloading point, then slippage of grade could have been considered as for the latches of the transport agency i.e plaintiff and plaintiff could have been made liable. When the grade of coal which was delivered to plaintiff was not analyzed at the loading point, but it is analyzed at the unloading point, based on the difference between grade mentioned in the invoice and the analyzed at the unloading point, plaintiff cannot be asked to make payment for grade slippage.
37. Apart from this, defendant has not produced any document to show that the invoice amount as per Ex.D.7 to Ex.D.18 has been paid to WCL by the defendant. Whether the defendant has made payment by considering the entire coal i.e. taken delivery through the transport agency of the plaintiff by the defendant as G10 as mentioned in invoice is not clear. If the defendant has made the payment to the WCL by accepting the grade 10 mentioned in the invoice Ex.D.7 to Ex.D.18, it could have had some case to contest against the plaintiff. In the present case there are no material to show that the defendant has made the payment to WCL of the invoice amount by considering coal released as G10, though 45 CT 1390_Com.O.S.3422019_Judgment .doc there was no sampling made at the loading point. Even on this ground the deduction of abnormal amount of Rs.41,68,026.01/ towards grade slippage in respect of coal transported in 3 rakes is not justified. If there was some malpractice, fraud, misappropriation etc done by the plaintiff while transporting the coal and by some positive act, if the plaintiff had reduced the grade of coal that is delivered after taking delivery of high standard coal, defendant would have been justified in calculating this abnormal amount for grade slippage. When there is latches on the part of WCL and also the defendant in not getting the sampling and analyzing coal that has been released by the WCL, plaintiff is not justified in charging Rs.41,68,026.01 towards grade slippage on the plaintiff. On looking to the entire facts and the evidence it is clear that the deduction of Rs.41,68,026.01 by the defendant towards grade slippage is not justified. Therefore, defendant cannot deduct this amount out of the invoice amount of the plaintiff.
38. As discussed above, out of Rs.10,68,871/ deducted by the defendant towards idle freight charge Rs.1,55,540/ is not justified. Similarly the deduction of entire Rs.41,68,026.21/ towards grade slippage is not justified. Out of the invoice amount of Rs.57,13,353.99/ defendant has deducted Rs.57,91,485/. Out of these deductions of Rs.57,91,485/, deduction of Rs.41,68,026.21/ towards grade slippage and Rs.1,55,540/ towards idle freight charge 46 CT 1390_Com.O.S.3422019_Judgment .doc is found to be not justified. After deducting these unjustified deductions out of total deduction calculated by the defendant, valid amount that can be deducted by the defendant comes to Rs.14,67,918.79/. Therefore, defendant is justified in deducting Rs.14,67,918.79/.out of invoice amount of Rs.57,13,353.99. On such deduction the amount to which plaintiff is entitle would come to Rs.42,45,435.20/. The defendant has recovered sum of Rs.78,131/ from the plaintiff on 25/4/2018 which is based on defendant's calculation of deduction which is not accepted as held above. Therefore, this amount of Rs.78,131/ is also to be returned by the defendant to the plaintiff. Therefore, plaintiff would be entitle for recover Rs.42,45,435.20/ plus Rs.78,131/, which comes to Rs.43,23,566.20/ from the defendant. Accordingly issue No.3 is answered partly in the affirmative.
39. ISSUE No.4 : For the discussion made above plaintiff is entitle for Rs.43,23,566.20/ from the defendant. Plaintiff has prayed for interest on this amount @15% per annum. Though plaintiff has stated that due amount is, as on 13.2.2018, as plaintiff has not calculated interest upto date of Suit and has not paid court fee on such interest, plaintiff would be entitle for interest from the date of suit. There is no agreement between the parties for paying interest of 15% per annum. By considering interst prevailing, it I sproper to award interest @9% per annum on 47 CT 1390_Com.O.S.3422019_Judgment .doc Rs.43,23,566.20/ from the date of suit, till realisation. Accordingly, issue No.4 is answered partly in the affirmative.
40. ISSUE No.5 : For the discussion made on above issues, the plaintiff is entitle for recovery of Rs.43,23,566.20/ from the defendant with interest @9% per annum from the date of suit till realization of the entire amount. Accordingly, this issue is answered partly in the affirmative.
41. ISSUE No.6 : For the discussion made on above issues, following order is passed:
ORDER Suit of the plaintiff is partly decreed with costs.
The defendant is liable and is directed to pay Rs.43,23,566.20/ to the plaintiff along with interest @9% per annum from the date of suit till realization of the entire amount.
Draw decree accordingly.
[Dictated to the Judgment Writer; transcript thereof corrected, signed and then pronounced by me, in the Open Court on this the 8th day of October 2021] [Ravindra Hegde] LXXXIII Additional City Civil Judge.
BENGALURU.48
CT 1390_Com.O.S.3422019_Judgment .doc ANNEXURE
1. List of witnesses examined on behalf of Plaintiff:
PW.1 Kushal Gupta
2. List of witnesses examined on behalf of Defendant:
DW.1 Alamnawaz Shaikh
3 List of documents marked on behalf of Plaintiff:
Ex.P.1 : Resolution passed by plaintiff
dt.30/11/2020
Ex.P.2 : Resolution of the board of plaintiff
dt.5/3/2019.
Ex.P.3 : Letter dt.2/11/2017 addressed to
defendant
Ex.P.4 : Letter received from defendant on
31/10/2017 addressed to the plaintiff.
Ex.P.5 : Contract Agreement dt.2/11/2017.
Ex.P.6 : Letter addressed by KPTCL to the
plaintiff dt.20/12/2017.
Ex.P.7 : Tax Invoice dt.30/11/2017.
Ex.P.8 : Tax invoice dt. 31/12/2017.
Ex.P.9 : Copy of letter dt. 13/2/2018 addressed
to the defendant.
Ex.P.10 : Copy of letter dt. 5/3/2018 addressed to
the defendant.
Ex.P.11 : Copy of legal notice sent to the defendant
by plaintiff.
Ex.P.12 : Copy of reply notice received by the
defendant.
Ex.P.13 : Copy of non starter report issued by DLSA,
Bengaluru Urban dt. 15/10/2019.
Ex.P.14to
Ex.P.19 : Six RR Receipts produced by plaintiff.
Ex.P.20 to
Ex.P.23 : Copies of reports.
Ex.P.24 : Dispatch statement given by WCL.
49
CT 1390_Com.O.S.3422019_Judgment .doc
4. List of documents marked on behalf of defendant:
Ex.D.1 : Letter of Authorization.
Ex.D.2 : Release order dt. 2/11/2017.
Ex.D.3to5 : Office copy of letters dt.7/11/2017, 13/11/2017 and 15/11/2017.
Ex.D.6 : Letter dt. 16/11/2017.
Ex.D.7 to
Ex.D.18 : 12 Invoices.
Ex.D.19 to
Ex.D. 23 : CIMFR reports dt.29/11/2017,
11/12/2017, 11/12/2017, 30/12/2017
and 29/1/2018.
Ex.D.24 to
Ex.D.27 : Three table of calculations.
Ex.D.28 : Copy of price notification
Ex.D.29 &
Ex.D.30 : Form No.16A.
Ex.D.31 : Certificate under Section 65B.
Ex.D.32 : Original reconciliation statement.
Ex.D.33 : Letter of plaintiff dt.25/4/2018.
Ex.D.34 : Letter of plaintiff dt. 9/5/2018.
Ex.D.35 : Office copy of letter dt.21/5/2018.
Ex.D.36 : Letter of plaintiff dt.26/5/2018.
Ex.D.37 : Office copy of letter dt.4/6/2018.
Ex.D.38 : Copy of agreement dt.14/10/2019.
[Ravindra Hegde]
LXXXIII Additional City Civil Judge.
BENGALURU.
***