Calcutta High Court
Nawal Kishore Agarwalla vs Haryana State Electricity Board on 20 January, 2005
Equivalent citations: (2005)2CALLT477(HC)
JUDGMENT Narayan Chandra Sil, J.
1. This is a suit for declaration for Rs. 70,629.17 P. or in the alternative an enquiry into the loss and damages suffered by the plaintiff and decree for such sum as may be found due to the plaintiff.
2. The plaint case in brief is that by exchange of correspondence between the parties the plaintiff agreed to sell and the defendant agreed to purchase 95 Kms. Of Galvanised Steel Stranded Wire having 7/3.15 mm. Steel Strands of Grade 3 as per ISS-2141/1968 of minimum tensile strength 110 K.G.f./mm @ Rs. 2,510/- per Km. upon several conditions as incorporated in the plaint. The contract was concluded which will be evident by several letters referred in paragraph 2 of the plaint. By a telegram of November 3, 1972 as confirmed subsequently by Memo No. 14856/T-331/III dated November 6, 1972 addressed to the plaintiff at its office at Calcutta within the jurisdiction of this Court the defendant purportedly terminated the said contract uniteraly, arbitrarily and without any just or bona fide cause, although the plaintiff was at all material time ready and willing to perform its part of the obligations under the said contract. It is also stated that acting on that contract the plaintiff, in fact, manufactured galvanized stranded wire of the contracted quality and specification. But despite repeated demands the defendant failed and neglected to inspect or cause the inspection of the said goods prior to delivery in terms of the contract. It is claimed in the petition that the real motive behind such cancellation was sharp decline in the price of the said goods falling below the contracted price. Having failed to persuade the defendant to take delivery of those manufactured goods the plaintiff was ultimately constrained to sell the same in the open market at the best available price @ Rs. 4,000/- per Matric Tone and for an aggregate value of Rs. 1,75,200/-. The plaintiff thus sustained a loss to the extent of Rs. 63,250/-. It is claimed that the defendant had due notice and knowledge of the said sale and loss incurred by the plaintiff. Thereafter the plaintiff prepared its bill for the said loss of Rs. 63,250/- and submitted the same to the defendant under covering letter No. 2720/73 dated April 17, 1973 which was accepted by the defendant. In the circumstances, the present suit arose.
3. The suit is contested by the defendant by filing a written statement in which all the material allegations are denied and it is inter alia stated that by a telegram dated August 25, 1971 the defendant informed the plaintiff that offer in letter to supply the goods at the price had been accepted by them. But at the same time the defendant also imposed some conditions as below :
"(i) Description of Material. Quantity in Km. Rate per Km. Galvanised Steel Stranded Wire having 7/3.15mm Steel Strands of grade 3 as per I.S.S. 2141/1968 minimum tensile strength HOKGF/mm. 95. Rs. 2510/- Net Price.
(ii) A contract agreement of the defendant's standard form will have to be executed between the plaintiff and the defendant;
(iii) The delivery should commence within 2 months of the date of the issue of the purchase order and to be completed within 2 to 3 months time. The order is placed on the strict understanding that the entire work including manufacture and delivery, supply of material shall be completed within the period:
(iv) This order constitutes the entire agreement. No variation or modification of this order, waiving of terms and provisions hereof shall be deemed valid unless mutually agreed upon in writing by both the purchaser and the supplier;
(v) A sum of Rs. 1200/- calculated at 1/2 percent of the contract value of the purchase order as temporary security on Rs. 20,000/- as permanent security shall have to be deposited by the defendant with the Accounts Officer of the plaintiff for faithful execution of the order;
(vi) The plaintiff would acknowledge the receipt of the purchase order and signify his acceptance to the terms and conditions within seven days. The plaintiff would start supplies only after he had furnished such unconditional acceptance."
4. After receipt of that order which the defendant termed as purchase order the plaintiff by an order dated October 4, 1971 made certain suggestions about alteration of certain terms and also asked for clarification for certain terms in the said purchase order. Thus certain correspondence passed between the parties. Finally the defendant informed the plaintiff the clauses in the said purchase order which were agreeable to amend and to what extent. It is further stated that even seven days of the receipt of the said letter dated April 6, 1971 the plaintiff did not acknowledge the letter nor did it accept the terms of the purchase order as amended. But by letter dated May 12, 1972 in reply to that letter dated April 6, 1972 the plaintiff for the first time acknowledged receipt of the said letter and at the same time suggested certain alterations of the terms with amendments. Thereafter the plaintiff continued negotiations and requested the defendant to confirm the amendment of certain clauses. In this way the period for delivery had expired and by letter dated September 8, 1972 the plaintiff requested the defendant for extension of time of the delivery of goods and to confirm the suggested amendments. Thereafter the defendant by its letter dated September 13, 1972 informed the plaintiff that it would not be possible for it to extend the delivery period and the exemption of security deposit. But still then the plaintiff continued correspondence and negotiations with the defendant. It is further stated that in such process by a telegram dated November 3, 1972 the defendant informed the plaintiff that as the plaintiff had not uptil then sent the unconditional acceptance nor had it deposited the security money, no further extension in delivery would be allowed and as such the matter regarding purchase of the materials might be treated as closed at the plaintiff's risk and responsibility.
5. It is further stated that the purchase order dated September 17, 1971 was subject to the unconditional acceptance of the terms and conditions thereof by the plaintiff and the plaintiff never gave such unconditional acceptance and as such there is no concluded contract. It is also denied that the defendant denied its knowledge nor did it admit that the plaintiff manufactured galvanized stranded wire of the contracted quality and specification and if any such goods were manufactured, it is denied, the same was in pursuance to the contract between the parties. On the pleadings of the parties the following issues were framed by Mr. Sachi Kanta Hazari, J. (as His Lordship was then on August 7, 1986) :
ISSUES
1. Was there a concluded contract between the plaintiff and the defendant whereby the defendant agreed to purchase and the plaintiff agreed to sell 95 kgs of Galvanised Steel Stranded Wire having 7/3.15 mm. steel strands of Grade 3 as per ISS-2141/1968 of minimum tensile strength 110 K.G.F./mm at the rate of Rs. 2,510/- per km. as per terms and conditions mentioned in paragraph 1 of the plaint ?
2. Was the said contract terminated by the defendant by a telegram of 3rd November 1972 as confirmed by the Memo of the Superintending Engineer of the defendant by his letter dated 6th November 1972 addressed to the plaintiff ?
3. Did the plaintiff manufacture galvanized steel stranded wire of the contracted quality and specification ?
4. Did the defendant fail and neglect to take delivery of the said manufactured galvanized steel stranded wire ?
5. Did the plaintiff sell the said manufactured articles in the open market on account of the defendant on March 28, 1973 at the best available price, that is, Rs. 4,000/- per M. ton i.e. for a total sum of Rs. 1,75,200/- ?
6. Did the plaintiff sustain loss of a sum of Rs. 63,250/- as stated in paragraph 6 of the plaint ?
7. Is the plaintiff entitled to interest at the rate of 12% per annum as claimed by the plaintiff ?
8. Is the plaintiff entitled to a decree for Rs. 70,629.17P. ?
9. To other relief or reliefs the plaintiff is entitled.Issue No. 1
In fact, this issue in the main point to be determined for the purpose of disposal of the present suit. We may hark back to the facts that it is denied by the defendant that there was any concluded contract between the parties rather it is canvassed on behalf of the defendant that there was no unconditional acceptance for delivery of goods by the plaintiff and as such there was no concluded contract between the parties. On the other hand, the different stand had been taken by the plaintiff. It is insisted upon the Court that the several correspondence made between the parties are unmistakenable stand to establish that the contract was concluded by all senses. Now let us examine from the records in order to determine which stand is correct.
6. Both the parties have submitted their written notes on arguments. Thus it is argued on behalf of the defendant that the plaintiff suppressed in the plaint that in spite of extension of time, no concluded contract was entered into by and between the parties. It is thus pointed out that from time to time the period fixed for submission of tender was extended and finally extended till 31st May, 1971. It is also stated that without receiving the tender papers the plaintiff by a letter dated 25th May, 19761 made an offer to the defendant to supply 95 kg. of galvanized steel wire of 7/3.15 mm. on the terms mentioned in the said letter. According to the defendant the letter dated 17th September, 1971 mentioned in paragraph 2 of the plaint is the purchase order and thereafter by several letters the plaintiff asked about alteration of certain terms and also asked for clarification of certain terms in the said purchase order. And in this way ultimately there was no final acceptance between the parties relating to various alteration of the terms as suggested by the plaintiff. The defendant is conspicuous in its stand that the plaintiff never sent unconditional acceptance of the term imposed by the defendant inspite of extension of time which prompted the defendant to send the telegram dated 3rd November, 1972 informing the plaintiff that as the plaintiff had not till then sent unconditional acceptance, nor had deposited the security, no further extension in delivery could be allowed culminating the cancellation of the purchase order at the plaintiff's risk and responsibility. In this connection the defendant has pointed out the evidence of the witnesses which I shall discuss at the appropriate point of time. In the written notes on argument the plaintiff stated that the telegram dated November 3, 1972 sent by the defendant is misconceived and the question of terminating the contract at that stage did not arise at all. It is admitted by the defendant that the entire case revolves on the construction/interpretation of several correspondence between the parties in order to determine whether the contract was concluded between the parties. Plaintiff wants to substantiate this point of conclusion on contract by the fact that they had manufactured the wire in terms of the contract. In paragraph 15 of their written notes on arguments it is stated that just because the parties were still then negotiating regarding collateral terms it does not mean that the contract itself is vitiated.
7. There is no question before us as to whether the contract was vitiated rather we are concerned to determine the point whether the contract in question between the parties was concluded contract. From the submissions of the learned advocate for both the parties it is admitted that negotiation was made between the parties as regards the contract and several correspondence in this connection were made. It is admitted in paragraph 15 of the written notes on arguments submitted by the plaintiff that the negotiations regarding collateral terms was going on between the parties.
8. In this connection, the learned advocate for the plaintiff has referred to the ratio decided in the case of Progressive Constructions Ltd. v. Bharat Hydro Power Corporation Ltd. . It is observed in that judgment by Hon'ble Mr. Justice R.C. Lahoti (as His Lordship was then) that when offerer and offeree are not at one place and are exchanging the offer and acceptance through post then the contract would be deemed to have been entered into at the place where the offer were received and the acceptance was posted. The place of delivery of acceptance is irrelevant and does not provide any cause of action. Merely by placing reliance on the delivery of letter of acceptance of offer, suit by reference to Section 20(c), CPC cannot be filed at the place where the letter of acceptance was delivered is not a part of the cause of action. It was also observed that if delivery of letters of acceptance or rejection of tenders is to be treated as raising a part of the cause of action so as to confer Jurisdiction on the Court to entertain a suit relating thereto then in respect of one tender the respondent may come to be sued at different places throughout the country.
9. His Lordship passed the order in that case in connection with disposing a petition under Section 20 of the Arbitration Act, 1940 and in doing so, it is clear from the above discussion, the question of jurisdiction of the Court was only determined by His Lordship. There was no dispute before the Lordship as regards the contract was concluded or not. Admittedly, in that case His Lordship passed the order on jurisdiction on a concluded contract and as such in my considered view the ratio decided in the case has no application before us.
10. We shall now examine the evidence of the witnesses of the parties. Plaintiff appears to have examined only one witness Shyamsundar Agarwalla whereas defendant has also examined one witness namely Premchand Rajput. Plaintiff has pointed out in paragraph 18 of their written notes on arguments to question Nos. 21, 24, 373 to 378 put to the PW 1 whereas the defendant has pointed out to question No. 301 put to the PW 1. It appears from the answer given by the PW 1 to question No. 301 that the plaintiff asked for variation in respect of item Nos. 9, 11, 12 and 27. Question 309 put to the PW 1 has also been referred to by the defendant and it appears that the PW 1 affirmed and agreed to the question put by the learned advocate for the defendant that until and unless the variations sought for by the plaintiff was accepted by the defendant, there was no scope for any concluded contract being coming into existence. My attention was also drawn to question Nos. 311 and 314 put to the PW 1 by the learned advocate for the defendant. It appears from question No. 311 that the attention of the PW 1 was drawn to exhibit "F" which is a letter dated 14.12.1971 and it is stated by the witness that it is not mentioned in the said letter that the defendant did not agree to accept the variations. On our scrutiny it appears from the bunch of the exhibits that the Exhibit "F" is a copy to the letter dated 12.5.1972 and I do not find any letter dated 14.12.1971 either from the list of exhibits or from the bunch of exhibited documents. However, it appears from the exhibit "F" which is a copy of the letter addressed to the plaintiff by the defendant that in giving reply to Clause 10 of the letter of the plaintiff dated 6.4.1972 it is stated that the remarks made in Clause 10 were not acceptable to them and it is also stated that unless proper instructions for release of payment are not given it is not possible to arrange despatches and, therefore, the defendant requested the plaintiff to confirm that the delivery date will be reckoned from the date of receipt of letter by the defendant advising the Accounts Officer to arrange 95% payment. It appears from the said copy of the letter particularly from the marginal notice there presumably made by the defendant that the purport of that letter was for extension of time. By question No. 314 the witness was asked that the defendant did not give any answer so far the other variations sought for by the plaintiff and the PW 1 stated that the defendant did not accept the other variations but at the same time they did not deny also.
11. By question No. 316 put to the PW 1 the learned advocate for the defendant has drawn attention to letter dated 6th April, 1972 written by the defendant to the plaintiff and the witness was asked to confirm that the defendant had accepted some conditions but at the same time refused to accept the other variations sought for by the plaintiff which was confirmed by the PW 1.
12. My attention was drawn to question Nos. 352 and 353 put to the PW 1. It appears that those two questions have continuation from question No. 351 and if we read all the three question Nos. 351, 352 and 353 it appears that the attention of the PW 1 was drawn to the letter dated 4th October, 1971 and the witness confirmed that the plaintiff requested the defendant to change the terms of the purchase order and very candidly stated that the plaintiff had asked for some clarifications.
13. It is stated in the written notes on arguments that in answering the question No. 418 the witness admitted that the plaintiff accepted some of the terms of the defendant but not at: all and to question No. 420 the witness admitted that according to the terms the defendant could buy materials from others if the terms of the defendant was not accepted by the plaintiffs within seven days from the date of offer. On scrutiny it appears from the answers given to question Nos. 418, 420 and 422 that the witness admitted that the plaintiff accepted some of the terms but not all and in Clause 28 (Ext.E) of the purchase order dated 17th September, 1971 the plaintiff was required to make unconditional accept the purchase order within seven days from the date of that purchase order. The attention of Clause 17(b) of the purchase order was drawn to the witness in question No. 491 and it was stated in the said clause that the variations and modifications of the terms shall be acted upon and unless mutually agreed upon it in writing by the purchaser and supplier which was admitted by the witness in an unqualified terms. In question No. 503 when the PW 1 asked as to whether the plaintiff had given any unconditional acceptance of the terms of purchase order, the witness remained silent. Thus, in view of what has been stated in the foregoing lines I have no hesitation to hold that the present contract in question had not been concluded till before the telegram cancelling the contract was sent to the plaintiff by the defendant. Thus, issue No. 1 is decided against the plaintiff.
Issue Nos. 3, 4, and 5These three issues are taken up together and they are interrelated to each other.
14. In the written notes on arguments my attention was drawn to the question No. 634 to 646. By this question the PW 1 was asked as regards the manufacturing of the goods in question. The answers given by the defendant to those questions are not at all satisfactory to substantiate the claim of the plaintiff that the goods were manufactured by them in terms of the contract for the purpose of supplying the same to the defendant. The witness is not at all specific to say which company had manufactured those goods nor did he know the address of such company. It is very queer to note that the witness could not say as regards the production of any document to the Court showing that the goods were actually manufactured for the purpose of the contract and carried to the godown of the plaintiff company. This is sufficient to hold that the plaintiff has miserably failed to substantiate its claim that the goods were manufactured for the purpose of the contract to supply the same to the defendant. It appears from the answers to the question Nos. 654 to 660 that as regards the sale of those purported produced goods there was no advertisement in the newspaper nor there was any hand-bill or hand-notice published for the purpose of sale and just an oral request was made to Ramji Bhai, Hari Bhai and Kishan Lal in this regard. The defendant in their written notes on arguments has also drawn my attention to question Nos. 681 to 684 and thereafter to 686 to 705. All these questions and the answers given thereto are in respect of the manufacture and sale of the goods in question. It is admitted by the witness for the plaintiff in answers to question Nos. 708 to 716 that no papers had been produced so as to show the market price of those goods. In the subsequent questions the witness admitted that he had no personal knowledge as to whether the plaintiff received the advance amount of Rs. 18,000/- from any intending purchaser. The witness in answer to question No. 776 had expressed his ignorance as to whether the delivery of the goods was made to the alleged purchaser.
15. From all above it is clear that the plaintiff has miserably failed to establish the production of those goods and the sale of the same at any price to the purported purchasers.
16. Accordingly, all these three issues namely issue Nos. 3, 4, and 5 are disposed of against the plaintiff.
Issue No. 217. It appears from the record that all the documents exhibited on behalf of the defendant had been lost in course of hearing of the suit and thereafter the documents were reconstructed by the order of the Court. The PW 1 has proved the carbon copy of the telegram dated 3rd November, 1972 which was exhibited as Exhibit-10. It appears from the carbon copy of that telegram the defendant had closed the transaction at the risk and responsibility of the plaintiff for the reasons that the plaintiff did not send its unconditional acceptance of the purchase order of the defendant till that date in terms of Clause 28 of the contract and no security money was deposited by the plaintiff and thereby the plaintiff had allowed the delivery period to expire keeping the defendant-board in suspense. It was also made clear in that telegram that no extension of the period of delivery could be allowed. It is claimed by the defendant that subsequently the contents of the said telegram was confirmed by a memo of superintending engineer of the defendant by his letter dated 6th November, 1972 addressed to the plaintiff. The copy of the said letter was exhibited as Exhibit-6 by the defendant. There appears no specific denial of the receipt of such telegram and the letter followed thereafter both addressed to the plaintiff by the defendant. Furthermore, the telegram was made through Post and Telegraph Authority and as such there is again a presumption that the same was duly received by the plaintiff. We have already decided that there was no concluded contract between the parties and in such circumstances the termination of the contract by sending telegram was duly made by the defendant. Thus, this issue is also decided against the plaintiff and in favour of the defendant.
Issue Nos. 6 to 918. In view of our observations and decisions in respect of the other issues these four issues are also decided accordingly against the plaintiff and in favour of the defendant.
The suit thus fails miserably. It is, therefore, ordered that the suit is dismissed with costs to be paid to the defendant by the plaintiff.
All parties are to act on a xerox signed copy of the operative portion of this judgment on the usual undertaking.