Calcutta High Court
Parameswarilall Puroshottamlall And ... vs Food Corporation Of India And Ors. on 25 June, 1992
Equivalent citations: (1993)1CALLT254(HC)
JUDGMENT Shyamal Kumar Sen, J.
1. The facts, inter alia, leading to this writ petition are that on or before 8th of July, 1987 the respondent No. 1 issued an invitation to tender for the sale of pressure parboiled rice (Sela) superfine and other common varieties lying at the Food Corporation of India godown at various places.
2. Pursuant to the aforesaid notice inviting tender the petitioners tendered for a portion of goods put up for sale and a contract was concluded between the petitioner No. 1 and the respondent No. 1 for sale of 480 M.T. of P.P.B. Rice Superfine (84-85) per quintal for a total price of Rs. lO,9O,O8O.OOp. The said tender was accepted by the respondents by telegram No. D/l(1)/PPB/RICE/DISP/TEV/87 dated 17th July, 1987. A copy of the telegram has been annexed to the writ petition and marked with the letter 'A'.
3. Pursuant to the aforesaid the petitioner duly deposited the total sale price being a sum of Rs. 10,90,080.00. The respondent No. 1 issued a release order dated 13th of August, 1987 valid upto 11th of September, 1987 for releasing of 440 M.T. of the materials on the terms and conditions which will appear from the said release order which has been annexed to the writ petition and marked 'B'. The respondents did not issue release order for the entire material though the entire price for 430 M.T. had in fact been deposited by the petitioners with the respondents.
4. It has been alleged that at the material point of time there was a labour strike in the concerned godown at Pingli Road (Karnal) in the State of Haryana and the petitioners were prevented from lifting the entire goods pursuant to the release order. Between 19th August, 1987, and 7th November,. 1987 the petitioner lifted a total of 431.8. M.T. and was unable to lift 8.2 M.T. out of the quantity covered by the said release order.
5. It is the contention of the petitioners that the respondent No. 2 wrongfully claimed that the petitioner would have to deposit an additional sum of Rs. 65,000/- representing 5% of the value of the goods before release order for the balance 40 M.T. could be released. In order to expedite matters and to prevent further controversy though without prejudice to its contentions, the petitioner on or about 3rd of September 1987, duly tendered a sum of Rs. 65,000/- representing 5% of the purchase price though the petitioner's, contention was that no further payments were required to be made in the aforesaid circumstances. The aforesaid fact will be evidenced inter alia by a certificate issued by the State Bank of Bikaner and Jaipur dated 27th April, 1989 a copy of which is annexed to the writ petition' and marked 'C. The respondents declined to accept the aforesaid amount as there were strikes at the godown at the relevant point of time.
6. By letter dated 30th of November, 1987 the petitioner requested the respondent to extend the time for lifting the said materials. A copy of the: said letter has been annexed to the writ petition and marked 'D'.
7. By letter dated 8th of April, 1988 the petitioner wrote to the respondent No. 2 pointing out the difficulties which have arisen in lifting the balance 40 M.T. and requesting the said respondent to extend the time particularly in view of the fact that the petitioner had been prevented from lifting the materials by reason of the labour strikes which had resulted in the closure of the, concerned godown. A copy of the said letter dated 8th April, 1988 has. been annexed to the writ petition and marked 'E'.
8. It has been alleged that despite repeated requests and reminders the respondents have failed and neglected to issue a release order for the balance 40 M.T. of materials in breach and violation of the contract between the parties. The respondents also refused to return the money already paid by the petitioner for the said quantity of rice.
9. The respondent No. 1 issued a letter dated 2nd of December, 1989' which was received by the petitioner at its place of business within the aforesaid jurisdiction alleging that the petitioner had failed to fulfill the contractual obligation namely to deposit the full costs of the stocks within the stipulated period and accordingly the security deposit was to be forfeited. A copy of the said letter dated 2nd of December, 1989 is annexed to the writ petition and marked 'F'.
10. By letter dated 20th of February, 1990 which was received by the petitioner at the petitioner's place of business within the aforesaid jurisdiction, the respondent No. 1 through the Assistant Manager (Commercial) purported to forfeit a sum of Rs. 54,504.00 being the security deposit. A copy of the said letter dated 20th February, 1990 has been annexed to the writ petition and marked 'G'.
11. The petitioner duly protested against the aforesaid action on the part of the respondent No. 1. In this context the petitioner referred to a telex message dated 2nd of January, 1990. A copy of the said telex message has been annexed to the writ petition and marked 'H'.
12. On 19th of June, 1990 the respondent No. 1 issued a letter to the petitioner which was received by the petitioner at the petitioner's aforesaid place of business within the jurisdiction threatening to sell the balance amount of 48.2 M.T. of Superfine Rice which the petitioner had been prevented from lifting at the risk and cost of the petitioner. A copy of the said notice has been annexed to the writ petition and marked T.
13. By letter dated 30th of June, 1990 the petitioner wrote to the respondent No. 2 setting out the correct facts and circumstances of the case and requesting the respondent No. 2 to enure release order for 40 M.T. of rice delivery of 8.2 M.T. of undelivered rice of refund of Rs. l,04,090.00p. which is due and payable. A copy of the said letter dated 30th of June, 1990 has been annexed to the writ petition and marked 'J'.
14. On or about 2nd July, 1990 the petitioner at the petitioner's place of business came across a notice published in the Statesman on or about 28th June, 1990 by the respondent No. 1 inviting offers for purchase of the said 48.2 M.T. at the risk and costs of the petitioner No. 4. The tenders were due to be opened on 6th of July 1990. A xerox copy of the said publication has been annexed to the writ petition and marked J-l.
15. The petitioner immediately objected to the aforesaid by a telegram dated 3rd of July, 1990. A copy of the said letter has been annexed to the writ petition marked 'K'.
16. The petitioner also wrote to the Chairman of the respondent No. 1 on 5th of July, 1990 requesting him to advise the Regional Manager at Haryana to desist from selling the stocks and to deliver the same to the petitioner. A copy of the said letter dated 5th of July, 1990 has been annexed tc the writ petition and marked 'L'.
17. On 24th of July, 1990 as the petitioner did not receive any response from the respondents, the petitioner caused a notice to be served upon the respondents by the petitioner's Advocate Messrs. C. K. Jain & Company demanding justice in the matter and calling upon the respondent to deliver the said quantity of rice and to refund the balance amount without delay. A copy of the said letter dated 24th of July, 1990 which was duly served upon the respondent by registered post has been annexed to the writ petition and marked 'M'.
18. It has been alleged that despite the aforesaid the respondent has failed and neglected to deliver the said balance quantity and/or to revoke the aforesaid advertisement tendering the sale of the said quantities of rice by public auction at the risk and costs of the petitioner.
19. It has been alleged that the respondents wrongfully contended that the amount deposited by the petitioner as and by way of security deposit was not to be taken into account for the purpose of the issuance of release order and accordingly withheld the release order for 40 metric tonnes of rice.
20. It has further been alleged that in fact, the respondents themselves in their dealing with the petitioners in Punjab and in Uttar Pradesh have consistently taken the security deposit into account for the purpose of issuance of release orders and as such the officers of the respondent No. 1 at Haryana cannot purport to act in a manner different from that of the officers of the respondent No. 1 at Punjab and U.P.
21. The petitioner, however, without prejudice to the aforesaid contention of the petitioners had agreed to deposit additional sum of Rs. 65,000/representing the value of the said balance 40 Metric Tonnes, and in fact such deposit had been tendered by way of Bank draft within the period of validity of the release order and or contract. The said Bank draft had not been accepted by the respondent No. 1 in the plea that there was a labour strike in the concerned godown of the respondent No. 1. The respondent did not accept the said additional deposit within the period of validity thereof by reason of its own difficulties and on the other hand, refused to extend the period of contract after its alleged difficulties had been removed.
22. In the circumstances, the petitioner moved the writ petition for an order directing the respondents to withdraw revoke and cancel the said letters dated 2nd of December, 1989, 20th of February, 1990, 19th June, 1990 and the advertisement dated 28th June, 1990 and for an order directing delivery 48.2 metric tonnes of pressure Parboiled rice (superfine variety) lying at the Pingli Godown, P. R. Karnal in Haryana to the petitioner forthwith and to issue necessary release order in this regard.
23. The petitioner further prayed that alternatively and if such delivery cannot be made, a total sum of Rs. 1,04,090/- be refunded with interest to the petitioner by the respondents forthwith.
24. The petitioner also prayed for an injunction restraining the respondents and/or their servants agents from giving any and/or any further effect Id the letters dated 2nd December, 1989, 20th February, 1990, 19th June, 1990 and the advertisement dated 28th June, 1990.
25. The petitioner also prayed for an injunction restraining the respondents and/or their servants agents from selling 48.2 metric tonnes of pres- sure parboiled rice from P. R. Karnal at the risk and cost of the petitioner and interim order was passed on 31st August, 1990 in terms of the prayers (e) and (f).
26. An affidavit was filed and the matter came up for final hearing before me.
On 27th March, 1992, the hearing was concluded.
27. It has been contended on behalf of the petitioner that the petitioner is entitled to the balance quantity of 48.2 M.T. of pressure parboiled rice superfine and other common varieties in respect of a tender opened on 8th July, 1987. It has further been submitted that the rates of the petitioner were found to be the highest and accordingly the said tender was accepted by F.C.I, by a Telegram on 17.7.87 for the total quantity of 480 M.T, of the said rice whereby the petitioner was asked to deposit full costs of stocks together with Sales Tax and all other Taxes less amount of earnest money tendered and 5% of the value of the quantity accepted towards Security Deposit within 10 working days from the date of issue of such acceptance.
28. The petitioner deposited a total sum of Rs. 10,90,080.00 on diverse dates by several pay orders towards full costs of the 480 M.T. of the said rice. Admittedly few payments were made by the petitioner within time and few were out of time. Particulars of such payments will appear from a chart given hereinbelow:-
(a) 466211 dt. 24.7.87 Rs. 1,50,000.00
(b) 466227 dt. 31.7.87 Rs. 2,00,000.00
(c) 426885 dt. 28.7.87 Rs. 2,50,000.00
(d) 466233 dt. 04.8.87 Rs. 1,50,000.00
(e) 466237 dt. 05.8.87 Rs. 1,00,000.00
(f) 463238 dt. 05.8.87 Rs. 1,00,000.00
(g) 713894 dt. 07.8.87 Rs. 85,080.00
(h) earnest money deposited with
HRO on 13.7.87 Rs. 55,000.00
Rs. 10,90,080.00
29. The respondent received the said payments and accepted the same but issued a release order on 13.8.87 only for 440 M.T. instead of 480 M.T. of rice. It appears from the said release order that the respondent has submitted on account of adjustment of Rs. 10,90,080.00 given by it in the manner following. The said adjustment as mentioned in the release order is set out herein below:-
The above amount is split into following components:-
(a) Cost of 440 M. T. @ Rs. 227/10p.
per quintal. Rs. 9,99,240.00
(b) 4% S. Tax on differential value. Rs. 1,689.60
(c) interest of Rs. 4,50,000/- for four
days and Rs. 4,35,080/- for 13 days
@ 18% per annum. Rs. 3,728.02
(d) 5% security on Rs. 10,90,080/- i.e.
the cost of 480 M.T. Rs. 54,504.00
Rs. 10,59,161.62
Excess Rs. 30,918/38p.
30. From the said adjustment it is clear and was admitted that the excess amount of Rs. 30,918/38p. was paid by the petitioner. It also appears from the said release order that there was a request to the Depot Incharge to issue 440 M.T. As part of the total quantity allotted was 480 M.T., the petitioner demanded the balance quantity of goods; which was not delivered to the petitioner. On the contrary by a letter dated 2nd January, 1989 and 20th February, 1990 the Security amount deposited was forfeited without, however, cancelling the contract. It was the contention of the petitioner that the petitioner deposited the entire amount in terms of the contract. Since there was strike in the godown the petitioner could not deposit the entire amount in time. However, after such deposit was accepted and after part of the contract was allowed to be performed, it is not open for the respondent to contend that they are not entitled to balance quantity. In fact from the release order for 440 M.T. it appears 5% security on Rs. 10,90,080/i.e. the cost of 480 M.T. being Rs. 54,504.00 was already adjusted, Even then balance amount of Rs. 3O,918/38p. was lying with the respondent as exr cess. By the said letter dated 11th September, 1987, the respondent did not mention that the petitioner was not entitled to the balance quantity nor it was mentioned that the security deposit was forfeited and the contract was cancelled. In fact the contract was performed in part by the respondent. Considering the facts and circumstances of the case it cannot be said that the time was of the essence of the contract and for non fulfilment of a condition within the stipulated period of the entire contract has failed. In the facts of the case it appears to me that the respondent has failed to deliver the balance quantity of goods although they have kept Rs. 30,918/38p. excess with them.
31. It appears that the petitioner has issued the said release order on 13th August, 1987, for 440 M.T. after expiry of 10 days from 17th July, 1987 without forfeiting the Security Deposit of Rs. 54,504/-. It is now not open to the respondent to contend that they were entitled to forfeit the Security Deposit since full amount was not paid within 10 days from 17th July, 1987 stipulated in the tender conditions. The respondent by its own conduct has given a go-bye to the delay in making payment and forfeiture clause. Time is no longer the essence of the contract.
32. It has not been denied by the respondent that owing to labour trouble at the godown of the respondent the balance 8.22 M.T. of rice against the release order for 440 M.T. of rice could not be lifted by the petitioners and as such the respondent can not later on say that the petitioners have failed to lift the balance stock.
33. The respondent wrongfully, illegally and fraudulently sold the said 8.22 M.T. of rice against which the release order was issued and which was already sold to the petitioner.
33a. It has been admitted by the respondent that it has earned profit by selling the balance 48.22 M.T. of the said rice.
34. The respondent has admittedly not suffered any loss or damages. On the contrary the respondent has earned profit. As such, the question of forfeiting the security deposit does not and cannot arise. The meaning and concept of security deposit will be changed, if the respondent is allowed to forfeit the amount wrongfully and illegally withheld by the respondent on account of Security Deposit.
35. In the case of Hindustan Sugar Mills v. The State of Rajasthan and Ors., reported in AIR 1981 SC 1981 it was held that the Central Government should honour its legal obligation arising out of contract and not drive the citizen concerned to file a suit for recovery of the amount. In a democratic society governed by the rule of law, it is the duty of the State to do what is fair and just to the citizen, and the State should not seek to defeat the legitimate claim of the citizen by adopting a legalistic attitude but should do what fairness and justice demand.
36. In the facts and circumstances of the case it appears that the petitioner has genuine cause to be aggrieved.
37. The learned Advocate for the respondents however, raised two objections to the maintainability of the writ petition. Firstly it has been contended that the rights, if any of the petitioner has arisen out of a contract entered into between the parties and the court will not enter into the said controversy in writ jurisdiction. The other contention is that this court has no territorial jurisdiction to decide the question involved in the petition.
38. In the case of Kumari Shrilekha Vidyarthi v. State of U.P. and Ors., it has been held by the Supreme Court "applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, can it be said that the State can thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more? We have no hesitation in saying that the personality of the State requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the ether party in addition. It is not as if the requirements of Article 14 and contractual obligations are alien concepts, which cannot co-exist."
39. The Supreme Court further observed in the said judgment in. paragraph 21 of the said report at page 549 as follows:-
"In our opinion, it would be alien to the Constitutional Scheme to accept the argument of exclusion of Article 14 in contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard form contracts between unequals."
40. The Learned Advocate for the petitioner also relied upon the judgment and decision in the case of Hyderabad Commercials v. Indian Bank and Ors. . In that case it was held that the Bank is an instrumentality of the State and it must function honestly to serve its customers. Where a nationalised Bank transferred huge amount from the account of one of its customers to another unauthorisedly and agreed to rectify the mistake by recrediting the amount to former customer's account but resiled from, complying with the same on plea by way of an afterthought that the amount was transferred on oral instructions of the customer" (which plea did not inspire any credence), the Bank which is an instrumentality of the State was under a legal obligation to pay back the disputed amount to the customer. When liability was admitted by the Bank, High Court in exercise of its writ jurisdiction could direct it to recredit the amount to 'the account of the customer and he could not be directed to file suit on ground that the case involved disputed questions of acts. Such functioning of a Nationalised Bank is detrimental to public interest and if it follows the practice of transferring money of its customers to some other persons' account in oral authority, people will loose faith in the credibility of Bank.
41. It is, therefore, well-settled that the modem trend is that in case of contractual obligation the Court is entitled to interfere in the event Governmental Authority Acts in an unreasonable or arbitrary manner.
42. With regard to question of jurisdiction it is the case of the petitioner that petitioner carries on business at 26/3, Armenian Street, Calcutta-1 within the jurisdiction of this Court. The petitioner has received the letter dated 2nd December, 1989 forfeiting the security deposit amount at the said place of business. The petitioner also received a letter dated 20th February, 1990 at the aforesaid place of business. Further letter was also received on 19th June, 1990, regarding the sale of the balance stock of 48.22 M.T. of rice at the risk and costs of the petitioner at the said place of business within the jurisdiction. The Notice inviting offers to purchase 48.2 M.T. of rice at the risks and costs of the petitioner was published by the respondent on 28th June, 1990 in the Statesman of Calcutta within the jurisdiction of this Court. The petitioner has suffered loss and damages at the aforesaid place of business.
43. Under such circumstances, it is the contention of the petitioner that this Court has jurisdiction to grant the relief.
44. The Division Bench of this Court in the case of Union of India and Ors. v. Hindustan Aluminium Corporation Limited and Anr., as follows:-
"Under Article 226(2) of the Constitution the High Court may exercise its power conferred by Clause (1) of Article 226 to issue, directions, orders or writs if the cause of action wholly or in part, arises within the territory over, which it exercises jurisdiction. It is, now well settled that cause of action means every fact which the plaintiff should prove, if traversed in order to succeed in the suit. HINDALCO has come with a case that in view of the impugned orders, it has been suffering loss in its business in the sale of aluminium and its products produced and manufactured by it in Calcutta where its principal office is situate. If there had been no allegation of incurring of any loss as a result of the impugned orders, we are afraid, there would not have given rise to any cause of action either wholly or in part in Calcutta. Normally no person institutes any suit or proceeding unless his right is jeopardized or prejudiced in consequence of any action of a private individual or of the Government. In the writ petition, there has been a categorical averment of the suffering of loss by HINDALCO by the sale of aluminium and aluminium products in Calcutta. We are now not concerned with the truth or otherwise of the allegation as the question of jurisdiction is to be determined on the basis of the allegations made in the writ petition. If there was no such allegation of any loss suffered by HINDALCO in Calcutta the High Court would not entertain the writ petition, however illegal the impugned orders may be. A writ petition is not entertained unless the petitioner comes with a case that he has been prejudiced by any action of the Government or a statutory body or authority. So, in our opinion, the writ petition, prima facie, discloses that a part of cause of action arose in Calcutta within the jurisdiction of the court."
45. The question of territorial jurisdiction of the Writ Court was considered by me in a judgment in the case of General Saw & Blades Co. and Ors. v. Bharat Coking Coal Ltd. and Ors., . In that case Bharat Coking Coal Ltd. in or about March, 1987 issued tender notice whereby sealed tenders were invited from intending buyers for the sale and disposal of various iron and steel scrap materials from various places of Central Coal Washeries Organisations situate at Dugda, Bhojudih and Pathedih. On the terms and conditions mentioned in the said tender notice and or conditions of sale which were sold in cyclostyled form against payment of Rs. 100/-. Such tender forms were sold at various places including Dhanbad and 6 Lyons Range, Calcutta. On or about 10th April, 1987 petitioner duly submitted tender for purchase and lifting of the various scrap and rejected iron and steel materials, conveyor belt scrap lying at Dugda, Bhojudih and Patherdih coal washeries. Petitioner duly quoted rate for purchase of individual items of scrap materials and the said rates were highest rate in respect of different such items. Petitioner in terms of the said tender conditions on or about 10th April, 1987, duly deposited a sum of Rs. 67,000/- being an aggregate amount of earnest money with respondent No. 1 at the office of the respondent No. 3. On 10th April, 1987, the tender of the petitioner No. l along with other tenders submitted by other intending buyers was opened and it was found and declared that the petitioner No. 1 was the highest bidder/offerer in respect of several items of materials lying at Dugda and Bhojudih.
The writ petitioner was duly assured that the formal acceptance of the said tender in respect of the said tender would be issued in due course. By its letter dated 27.10.87 addressed to the writ petitioner at Calcutta the Company asked him to extend the validity of the tender till 30.11.1987. The writ petitioner duly extended the validity of the said tender upto 31.12.1987. Immediately after the receipt of the above letter, the writ petitioner visited from time to time the office of the company and requested for issuance of formal letter of acceptance. In spite of assurance given to the writ petitioner, the Company did not take any effective step whatsoever for issuance of formal letter of acceptance. That apart, the writ petitioner in March, 1988 received a letter from the Company along with a cheque for the amount of the earnest money, whereby the earnest money as deposited by the writ petitioner, was refunded. The writ petitioner protested against such illegal and unilateral action of refund of the earnest money by or on behalf of the company. The company decided to retender the materials. The company by its letter in June 1988 merely quoted a clause of the tender according to which it had reserved the right to withdraw from sale any item advertised prior to acceptance of any tender and to accept or to reject any or ail tenders or to decrease/increase the quantity as advertised without assigning any reason thereto. On writ petition, it was alleged that such a rejection of this tender was illegal, unconstitutional, arbitrary and whimsical. The jurisdiction of the High Court to entertain the writ petition was also at issue. It was held that (i) in the facts of the aforesaid case that the part of cause of action really arose within the jurisdiction of this court on the basis of the letters issued by the Company and served upon the writ petitioner at Calcutta which were received by the petitioner from the company at its Calcutta address within the jurisdiction of this court. This really constituted integral part of the cause of action and as such it could not be said that this court had no jurisdiction to entertain and decide the writ petitions.
46. In the instant case it is clear from the facts mentioned hereinbefore that the cause of action arose at 26/3 Armenian Street, Calcutta, within the jurisdiction of this Court on the basis of the letters and notices issued by the Food Corporation of India which were all served and received by the petitioner at the aforesaid place of business which really constituted integral part of cause of action and, as such, this Court has jurisdiction to entertain and decide the writ petition.
47. Under such circumstances, the submission of the Learned Advocate for the petitioner that this Court has jurisdiction to decide the writ petition cannot be said to be without any substance.
In my view, considering the facts and circumstances of the case, the petitioner is entitled to succeed in this writ petition.
48. It appears that the said-48.2 MT of pressure parboiled rice (Superfine variety) has already been sold by the respondent, and, as such, it is not possible for the respondent, Food Corporation of India, to deliver the said rice. However, the Food Corporation of India be directed to refund the sum of Rs. 1,04,090/- to the petitioner within six weeks from the date.
The writ petition is, accordingly, disposed of with the directions as above.
There will be no order as to costs.