Madhya Pradesh High Court
M/S Super Auto Pvt.Ltd. vs Protyush Chatterjee & Anr on 11 April, 2011
1
HIGH COURT OF MADHYA PRADESH : JABALPUR
FIRST APPEAL No.266/2003
M/s Super Auto Forge Private Ltd.
Vs.
Protyush Chatterjee & another
____________________________________________________________
Shri R.K. Verma, learned Counsel for the appellant.
Shri Naveen Dubey, learned Counsel for the respondent
No.1.
____________________________________________________________
Present : Hon'ble Shri Justice K.K. Trivedi
____________________________________________________________
JUDGMENT
(11/04/2012) This first appeal under Section 96 of the Code of Civil Procedure has been preferred against the judgment and decree dated 25.01.2003 passed in Civil Suit No.4-B/2002 by the XVIII Additional District Judge (Fast Track), Jabalpur. The suit having been decreed in favour of respondent No.1/ plaintiff, the defendant No.1 has come before this Court as appellant in this appeal. The facts giving rise of filing of this appeal are summarized herein after.
2. An agreement was executed between the appellant and respondent No.1/plaintiff for performing certain duties and rendering certain services to the appellant by the respondent No.1 in execution of certain tender works, supply of materials, realization of bills etc. The appellant is involved in manufacturing of Cold Forged Precision Components and is registered as a Company under the Companies Act, having its registered office at Chennai (Tamilnadu). The respondent No.1 was running an agency in the name and style of 'Premier Agency', which was earlier a partnership firm but subsequently was devolved into a 2 proprietary firm of which the respondent No.1 alone was the owner. The respondent was undertaking the work of agency and liaisoning and for the said purpose, an agreement was executed between the appellant and respondent No.1 on 24.09.1986. There was condition mentioned in the said agreement that the same was for a period of five years. The period of agreement came to an end on 28.04.1991 and since thereafter no further agreement was executed in between the parties. Certain demands were made by the respondent with respect to the payment of his commission/fees/service charges, which were not accepted by the appellant and, therefore, a suit was required to be filed for rendition of the account. A specific plea was made in the plaint with respect to such conduct, discharge of functions of the respondent and prayer was made in the plaint to the following effect :
"(i) Issue a preliminary decree directing defendants to render uptodate and complete accounts of transactions done with Ordnance Factory, Khamaria, Jabalpur, the total payments received by defendants relating to the contracts entered by defendant and the plaintiff rendered his services in pursuance to various contracts till date and the commission/remuneration payable to the plaintiff;
(ii) to issue a final decree for payment of net amount of commission/remuneration payable to the plaintiff after scrutiny of accounts by this Hon'ble Court including punitive interest at the rate of 18% pa in form of damages for illegal withholding from date of due till payment and cost of this litigation,
(iii) to pass any other decree deemed proper to the facts and circumstances of the case."
3. The appellant resisted the claim made by the respondent No.1/plaintiff and earlier filed an application under Order 7 Rule 11 of the Code of Civil Procedure contending that the Court at Jabalpur was having no jurisdiction in view of the specific agreement executed in 3 between the appellant and respondent No.1 and, therefore, the suit was liable to be dismissed. The trial Court passed an order and returned the plaint as not maintainable at Jabalpur. The respondent No.1 was required to file a miscellaneous appeal against such an order before this Court and this miscellaneous appeal having been allowed, the suit was restored. However, this Court specifically ordered that in case the defendant, that means the appellant herein, raises objection in its pleadings regarding the territorial jurisdiction of the Court, the same may be considered on merits and decided in accordance with law by the Trial Court. The written statement was filed by the appellant categorically contending that since the agreement dated 29.04.1986 specifically contains the condition that the jurisdiction of any other Court will be barred and except the Court at Madras, the Courts will have no jurisdiction to entertain any claims with respect to the aforesaid agreement or arising out of work performed under the aforesaid agreement, therefore, the Court at Jabalpur had no jurisdiction to entertain the suit. The other objections raised by the appellant was that the suit was hopelessly barred by limitation as the period for which the rendition of account was claimed, was not specifically mentioned in the prayer. It was also contended that the claims made by the respondent/plaintiff were all frivolous. The suit was, thus, liable to be dismissed. After filing of the written statement, the Trial Court framed the issues, recorded the evidence of the parties and as the appellant has not produced any witness, proceeded to decide the suit of the respondent No.1. The Trial Court has decreed the suit of the respondent No.1 by passing a decree, therefore, this appeal has been preferred.
4. Shri R.K. Verma, learned Counsel for the appellant, has vehemently contended that two issues were framed with respect to jurisdiction of the Court, namely Issues No.4 and 4 5 and the Trial Court has categorically recorded the finding that the Court at Jabalpur was having jurisdiction to hear the suit, contrary to the law, therefore, the judgment and decree is bad in law. The attention of this Court is drawn to the agreement Exhibit D-1, said to be executed on 29th April, 1986 and the specific provisions contained in Clause 5.2 of general provisions. It is contended that it is specifically provided under the said agreement that the agreement shall supersede any and all previous commitments, both oral and written and the provisions herein contained shall not be omitted from or added to or amended in any manner except in writing and signed by both the parties in consent thereof. Reading Clause 8.1 of the agreement, learned Counsel for the appellant has contended that it is specifically provided that the contract shall be deemed to have been executed at Madras, where it has been signed on behalf of SAF (appellant herein) and all obligations hereunder shall be deemed to be located at Madras and the Courts at Madras will have jurisdiction to the exclusion of all other courts. These presents shall at all times will be subject to the jurisdiction of the High Courts of Judicature at Madras. Thus, it is contended that this being the specific condition mentioned in the agreement itself, the jurisdiction of all other Courts was barred. Taking this Court to the provisions of Section 10 and 13 of the Contract Act, 1972, it is contended by learned Counsel for the appellant that in view of the specific provisions made in the Act aforesaid, if an agreement with the free consent of parties is executed, it becomes a contract. If the parties have agreed to a particular provision or prescription or a term or condition, it is contended by learned Counsel for the appellant that the same was binding on both the parties. Taking this Court to the provisions of Section 62 of the Act aforesaid, it is contended that unless there is a new contract in between the parties, the original contract will continue. If the respondent No.1 has accepted the work to 5 be performed or services to be rendered for the appellant, it was pursuant to the agreement/contract dated 29.04.1986 and, therefore, the Court at Jabalpur was having no jurisdiction to try the suit. It is further pointed out by the learned Counsel for the appellant that this particular aspect was not disputed by the respondent/plaintiff that there was an agreement or a contract for performing such services for the appellant, executed by the respondent No.1 and there was no novation of the contract, therefore, the original contract was to remain in operation. If by accepting the work to provide services to the appellant the respondent/plaintiff agreed to continue rendering such services, the same would mean nothing but it was in continuity of the agreement/contract dated 29.04.1986. Taking this Court to the various pleadings made in the plaint, it is contended by learned Counsel for the appellant that in view of the aforesaid, the respondent No.1 was not entitled to file a suit before Jabalpur Court invoking the jurisdiction of the said Court, in violation of the specific condition mentioned in the agreement/contract aforesaid.
5. Putting reliance in the case of Kirloskar Bros. Ltd. Indore vs. Engineering Machinary Mart, Narsinghpur, AIR 1982 MP 75, and reading paragraph 17 of the report, learned Counsel for the appellant has contended that the conduct of the respondent/plaintiff itself is enough to demonstrate that he in fact accepted the continuance of the aforesaid agreement and, therefore, he was not entitled to file a suit before the Jabalpur Court. Further placing reliance in the case of A.B.C. Laminart Pvt. Ltd. and another Vs. A.P. Agencies, Salem, .AIR 1989 SC 1239, it is contended that as per the law laid-down by the Apex Court, if more than one Courts were having the jurisdiction, by agreement, parties may agree to the vesting of jurisdiction in any of them, if it is not against the public policy. It is contended that in view of this if in the 6 agreement a specific bar of jurisdiction was created with respect to the Courts other than the Madras Court, by consent of the parties, it could not be said that such an act was bad in law in any manner or was not binding on the parties concerned. It is further contended that as per the law laid-down in case of M/s Angile Insulations vs. M/s Davy Ashmore India Ltd. and another, AIR 1995 SC 1766, if parties to the contract are agreeing to vest jurisdiction in one of any such Court having jurisdiction to try the disputes, such a contract cannot be said to be hit by Section 23 or Section 28 of the Contract Act and as such it cannot be said that such a condition prescribed was violative in any manner and was not enforceable.
6. Learned Counsel for the appellant has further put his reliance in the case of C.I.T. Punjab, Haryana, J&K, H.P. and Union Territory of Chandigarh vs. M/s Panipat Woollen and General Mills Co. Ltd., Chandigarh, AIR 1976 SC 614, and has contended that in fact the Court is required to look into the agreement and to examine its substance or the essence and not its form only and it has to be examined that what was the nature of the contract and whether for the said purposes its continuity even after expiry could be inferred or not. Placing reliance in the case of Lata Construction and others vs. Dr. Rameshchandra Ramniklal Shah and another, AIR 2000 SC 380, learned Counsel for the appellant has contended that unless terms of original contract and subsequent contract are inconsistent and not in conformity of each other, there would be no novation of the contract and the earlier contract has to continue. This being the position of law, it is contended by learned Counsel for the appellant that the suit was not maintainable at Jabalpur and was liable to be dismissed. It is further contended that since a preliminary decree was passed, no new facts have come on record, even if a final decree is passed, appeal 7 against the preliminary decree would be maintainable in view of the law laid-down by Apex Court in case of Sital Parshad and another vs. Kishori Lal, AIR 1967 SC 1236.
7. As far as the limitation part is concerned, learned Counsel for the appellant has vehemently contended that no witness was examined by the appellant but from the evidence of the respondent/plaintiff himself, it was crystal clear that there was no agreement afresh executed in between the parties. Letters said to be sent were not to be treated as an agreement. Since there was continuity of the work for which earlier an agreement/contract was executed in between the parties, it was necessary for the respondent/ plaintiff to file the suit as soon as there was a dispute or any cause of action accrued to the respondent for filing of said suit, within the period of limitation as prescribed under the law, before the competent Court. It is contended that several documents were produced along with the plaint with a list of documents but many of such documents were not exhibited. In some of the documents, denial of claim of the respondent was made by the appellant as back as in the year 1993 and up to the year 1995, more precisely up to 15.04.1995. As per the Limitation Act, such a suit was required to be filed within a period of 3 years but the suit itself was filed on 10.08.1998 and, thus, it is contended that the suit was hopelessly barred by limitation and was liable to be dismissed. It is contended further that the respondent/plaintiff has taken the cause of action from the reply of notice sent by the appellant and from that day it is said that the suit has been filed within limitation whereas law is not such and as such it was necessary on the part of the Trial Court to dismiss the suit of the respondent. It is contended that the impugned judgment and decree is not sustainable in law.
88. In reply to such submissions made by learned Counsel for the appellant, Shri Naveen Dubey, learned Counsel for the respondent No.1, has contended that jurisdiction is not required to be taken from the agreement dated 29.04.1986 as by subsequent letter and correspondence, the appellant has assigned the work to the respondent/plaintiff for providing services in different matters. Though the assignment was with respect to supply of the material, obtaining information with respect to the tenders, supply of material and realization of amount but it is contended that the same was done on verbal instructions given on phone and by the letters sent on different occasions. There were no expressions given in the said letters that such acts were to be done in continuity to the provisions of agreement, which had come to an end and this fact was categorically mentioned in the reply to the notice issued by the respondent/plaintiff that such an agreement has already come to an end and there was no continuity of the same as there was no renewal of the agreement. It is contended that if such was the situation, the bar of jurisdiction of any other Court except the Court at Madras was not coming in the way of the respondent/plaintiff for filing of the suit. Since the payments were to be received by the respondent/ plaintiff at Jabalpur, the work was required to be performed at Jabalpur, the jurisdiction for filing of the suit was available at Jabalpur to the respondent/plaintiff and, therefore, the suit was rightly filed. It is further vehemently contended that in the notice Exhibit P-18 for the first time there was a complete denial of the claim of the respondent No.1 whereas in earlier correspondence duly placed on record and exhibited in evidence, such claims were admitted by the appellant, therefore, from the date of denial, the suit was well within time filed before the Court. This being so, the suit was rightly decreed and, therefore, there was no force in the appeal and the same is liable to be dismissed. Relying in the Full Bench decision of Punjab 9 and Haryana in case of Karnail Singh and others vs. Kapur Singh and another, AIR 1980 Punjab & Haryana 202, learned Counsel for the respondent No.1 has contended that the suit was rightly decreed by the Court and against the preliminary judgment and decree since no appeal was preferred by paying the advalorem court fees on the memo of appeal with respect to the claim granted in the final decree, present appeal was liable to be dismissed. Thus, it is contended that the appeal being devoid of any substance, deserves dismissal.
9. Heard learned Counsel for the parties at length and perused the records.
10. From the pleadings available in record and submissions made by learned counsel for parties as also specific claim made in the plaint filed by the respondent/ plaintiff following issues are crept up for consideration of this Court, namely :-
(i) Whether the plaintiff was entitled to file a suit for rendition of accounts ?
(ii) Whether in view of specific exclusion of jurisdiction of all Courts except the Court at Madras the suit filed by respondent/plaintiff at Jabalpur was maintainable ?
(iii) Whether the suit of respondent/plaintiff was barred by limitation ?
11. To examine whether the respondent/plaintiff was entitled to file a suit for rendition of accounts by the appellant, or not, the nature of work to be performed by the respondent is required to be examined. As was claimed by the respondent/plaintiff, the appellant was in need of a person who could act as an agent of the appellant to get the tendered work executed at Jabalpur. In fact, after acceptance of tender of appellant by the consumers at Jabalpur, it was to be seen by the respondent that all 10 supplies made pursuance to such tenders are received by the consumers within time and after their acceptance, the payment of supply is released in favour of the appellant by the consumers. The rate of commission for such services was already fixed in the contract agreement dated 29.4.1986. The respondent/plaintiff being an agent of the appellant was required to maintain an account of all such supplies as without his knowledge nothing could have been done. In such a case, he was required to spend amount for performing such duties. He was again required to keep an account. If any payment was made by the appellant towards the commission or expenses, it was to be noted by the respondent. The number of articles so supplied by the appellant to the consumer were to be noted by the respondent/plaintiff and as his commission was fixed at the item supplied by the appellant, he could easily calculate the amount of his commission and after deducting the amount received could have easily quantified his monetary claim and could have made a specific money claim in suit on payment of requisite Court fee. The Apex Court on number of occasions has held that in garb of rendition of account, such money suit should not be allowed or else there will be an opening of a flood gate for such suits on fixed Court fee which in fact would be nothing but abuse of process of Court. In case of K.C. Skaria V. Govt. of State of Kerala and another [(2006) 2 SCC 285], the apex Court has summarized the law in issue in para 15 to 18 of report in very specific manner, which are reproduced for better appreciation, thus :-
"
15. It is now well-settled that the right to claim rendition of accounts is an unusual form of relief granted only in certain specific cases and to be claimed when the relationship between the parties is such that the rendition of accounts is the only relief which will enable the plaintiff to satisfactorily assert his legal right [vide Jowahar Singh v. Haria Mal (1899) 60 P.R. 1899, followed in Gulam Qutab-
11ud-din Khan v. Mian Faiz Bakhsh (AIR 1925 Lahore
100), State of Jammu & Kashmir v. L. Tota Ram (AIR 1971 J&K 71), Triloki Nath Dhar v. Dharmarath Council (AIR 1975 JK 76)]. The right to seek rendition of accounts is recognized in law in administration suits for accounts of any property and for its administration, suits by a partner of a firm for dissolution of the partnership firm and accounts, suits by beneficiary against trustee/s, suits by a member of the joint-family against the Karta for partition and accounts, suits by a co- sharer against other co-sharer/s who has/have received the profits of a common property, suits by principal against an agent, and suits by a minor against a person who has received the funds of the minor.
16. Even where there is no specific provision for rendition of accounts, courts have recognised an equitable right to claim rendition of accounts. In Narandas Morardas Gajiwala v. S.P.A.M. Papammal (AIR 1967 SC 333), this Court considered the maintainability of a suit by an agent against the principal for accounts. Negativing the contention that only a principal can sue the agent for rendering proper accounts and not vice versa, (as Section 213 of the Contract Act provided that an agent is bound to render proper accounts to his principal on demand without a corresponding provision in the Contract Act enabling the agent to sue the principal for accounts), this Court held :
"In our opinion, the statute is not exhaustive and the right of the agent to sue the principal for accounts is an equitable right arising under special circumstances and is not a statutory right. .. Though an agent has no statutory right for an account from his principal, nevertheless there may be special circumstances rendering it equitable that the principal should account to the agent. Such a case may arise where all the accounts are in the possession of the principal and the agent does not possess accounts to enable him to determine his claim for commission against his principal. The right of the agent may also arise in an exceptional case where his remuneration depends on the extent of dealings which are not known to him or where he cannot be aware of the extent of the amount due to him unless the accounts of his principal are gone into."
17. To summarise, a suit for rendition of accounts can be maintained only if a person suing has a right to receive an account from the 12 defendant. Such a right can either be (a) created or recognized under a statute; or (b) based on the fiduciary relationship between the parties as in the case of a beneficiary and a trustee, or (c) claimed in equity when the relationship is such that rendition of accounts is the only relief which will enable the person seeking account to satisfactorily assert his legal right. Such a right to seek accounts cannot be claimed as a matter of convenience or on the ground of hardship or on the ground that the person suing did not know the exact amount due to him, as that will open the floodgates for converting several types of money claims into suits for accounts, to avoid payment of court fee at the time of institution.
18. Let us now examine whether a contractor engaged to execute a particular work, can file a suit for accounts against the employer in regard to payment for the work done. Such a right is not created or recognized by any statute. The independent contractor is not an agent of the employer. Nor is the employer in the position of a trustee with reference to the independent contractor. Can the claim be supported in equity by stating that where the relationship is such that rendition of accounts is the only relief which will enable the contractor to satisfactorily assert his legal right ? A contractor who is engaged to execute a work, is expected to maintain his own accounts. At all events, there is no bar for a contractor to keep an account of the work done. Even where the contract between the employer and independent contractor may provide for payment on the basis of measurements to be recorded by the employer, nothing prevents the contractor from measuring the work done by him and then suing for the value of the work done. The contractor may also demand joint-measurements to determine the quantum of work done. If the employer for some reason does not co-operate or prevents the contractor from taking a physical measurements, the contractor can seek appropriate legal remedy which will enable him to take measurements or to secure the information from the measurement book in the custody of the employer. Therefore, either the fact that the measurement book is maintained by the employer, or the fact that the contractor does not possess the exact measurements, will not entitle the contractor to file a suit for rendition of accounts against the employer."
13In view of the clear enunciation of law by the Apex Court and in view of the facts as have been described hereinabove, the suit so filed by the respondent/plaintiff for rendition of accounts in such circumstances, itself was not maintainable and was liable to be dismissed on this count alone.
12. Now for the purposes of ascertaining whether the Court at Jabalpur was having the jurisdiction to try the suit or not, pleadings in the plaint are required to be examined as to how the respondent/plaintiff contends that agreement dated 29.04.1986 had come to an end. In paragraph 3 of the plaint the respondent/plaintiff has categorically contended that the appellant Company was in urgent need of an agent at Jabalpur for liaison duties in relation to various supply contracts to defence installations at Jabalpur and other consumers in and around Jabalpur. The very purpose of appointment of such an agent was for the effective liaison between the appellant Company and the consumers in and around Jabalpur city in order to ensure prompt and speedy supplies of material, communications and release of payment, procurement of approvals for supply of material, effective monitoring of approval tests, processing of bills of defendant company with purchasers etc. For this purpose, the agreement dated 29.04.1986 was executed. In paragraph 5 of the plaint, the respondent/plaintiff has categorically contended that after coming into an end of the aforesaid agreement/contract, a letter was written on 01.12.1992 by the appellant, stepping back from the telephonic promises relating to payment of agent's commission for certain supply. If that was the situation, the respondent was not required to perform any work for the appellant company. Upon his own showing, the respondent/plaintiff has contended in the plaint in paragraphs 7 and 8 that there were certain agreements, of 14 course oral, with respect to which the documents have not been exhibited that the respondent was made to understand that he was to perform certain works. However, it is abundantly clear from such pleadings that the work was again the same for which earlier agreement was executed on 29.04.1986. There is nothing on record or in the pleading to indicate that any new contract was executed in between the appellant and the respondent/plaintiff or that with the consent, both the parties rescinded with earlier contract dated 29.04.1986. In paragraph 11 of the pleadings it is claimed that certain amounts were to be paid to the respondent by the appellant but again whether such were with an understanding that the same were to be paid as fees for the new work was not clearly stated. It is tried to point out by stating in para 11 of the plaint that these amounts were towards the work performed by the respondent on the strength of the new assignment of work and not in continuity with the previous work, which the respondent was performing. If the documents in this respect are examined, it will be clear that such letters of which reference is made in the pleadings in the plaint were only for the work, which was to be performed by the respondent but whether the said work was assigned to the respondent separately or not in continuity of the agreement is not clear.
13. Since the respondent has pleaded that the agreement dated 29.04.1986 has come to an end, it was the duty of the appellant to establish that there was continuity of such a contract there was no novation of the contract. In fact, it was the contention of the appellant right from the very beginning that in terms of the agreement dated 29.04.1986, the respondent/plaintiff was not entitled to file a suit for his claims at Jabalpur Court. If the said conditions were there in the agreement, whether the same were applicable even when the agreement itself has come to an end and whether 15 there was a renewal of the said agreement or not was required to be proved. As stated earlier the appellant has not examined any witnesses and accept proving the agreement dated 29.4.1986 as Ex.D/1 in cross examination of respondent/plaintiff no other document was proved by the appellant. That being so, such contentions of the appellant cannot be treated to be proved to hold that there was continuity of agreement/contract dated 29.4.1986, beyond the period for which the said agreement/contract was executed. Undisputedly, the agreement was for a period of five years. If the period itself was prescribed in the agreement, for the purpose of the life of the said agreement and there was no extension of the said period by a mutual consent, the plain and simple meaning is that the agreement would come to an end on the date when the period for which the agreement is executed, has completed. If it was desirable that the terms and conditions of the said agreement remain in operation even after the period prescribed, it was necessary for the parties to the agreement to execute a new agreement, atleast giving the life to the original agreement beyond the period for which the said agreement was executed. The appellant has also utterly failed to produce any evidence in this respect. It is merely said in the written statement that the work was again assigned to the respondent/plaintiff pursuant to the earlier agreement but it is nowhere stated whether there was any agreement, even a formal agreement, extending the life of the original agreement, which came to an end on expiry of the period for which the same was executed. It is said that terms were mentioned in the letter issued to the respondent/plaintiff. If the letters so issued are examined, it cannot be said that the agreement dated 29.04.1986 was given life after its expiry on 28.04.1991. At the same time, it is also to be examined whether the respondent/plaintiff has established that a new agreement had taken place or that the work subsequently assigned to him after 16 28.04.1991 by the appellant was not in continuity of the terms and conditions of the agreement dated 29.04.1986.
14. For the said purposes, the evidence as adduced is required to be examined. In the Court statement the respondent No.1, who was examined as PW-1, has categorically contended that there was an agreement on 29.04.1986, which came to an end automatically on 28.04.1991. Then he stated that the appellant has contended that since earlier agreement has come to an end, respondent No.1 to continue to work for the appellant. If this is his statement, how could it be said that the agreement itself was made applicable or continued. The other part of the statement of the respondent is that a new agreement Exhibit P-13 had taken place on 24.04.1993. Such a document cannot be termed to be an agreement in any manner as the same has been simply written assigning certain work to the respondent No.1/plaintiff but it nowhere says that it is a new contract or it is in continuity of the previous contract. The verbatim of whole of the letter is required to be referred for proper appreciation which reads thus :
"We refer to your various faxes and the telephonic conversation the undersigned had with you a week back. We confirm having agreed for a service charge of Rs.12/- per piece for the expected order of 84 mm HE Shell Body.
As regards payment for the previous order of 8,000 Nos just completed by us in Mar'93, we wish to inform you as follows :
An amount of Rs.1,12,000/- is due to you against the above order @ Rs.14/- for 8,000 Nos. against this amount, an amount of Rs.75,000/- as per details enclosed is alreadi paid. A further sum of Rs.8,380/- debited to your account towards expenses incurred by us on your account. Therefore, an amount of Rs.28,620/- is due to you out of the above order. A Demand Draft for Rs.28,620/- is enclosed. The receipt of which may please be acknowledged.17
Although substantial amount is due to you against various previous orders, in view of the hold up payment from OFK, we are unable to release the same. We can consider releasing this amount only when you collect these old outstandings from OFK. For your information, we are enclosing a list of outstanding amount receivable from OFK as on today. Please arrange for immediate collection of the same.
As regards 23mm, we have already spoken to CQA and clearance for Lot 9 is being given by them. However, we are surprised to note that Lot 4&5 have also been fired and found OK. How is it that you were not even aware such a test was going to be conducted ? Did they also test Lot 1 & 2 again ? Please let me know their thinking and plan on this subject."
15. On bare reading of this document, it cannot be said that the letter dated 24.04.1993 was a fresh contract. Such a statement made in paragraph 13, the respondent has categorically admitted the fact that he has worked as an agent for the appellant with effect from 1986 to 1991 and he continued to work after 1991 for the same work on the same heads but only the supply orders were different. The respondent has made a somersault and has contended that the letter dated 24.04.1993 referred to herein above was not the new contract but new contract had taken place on 01.12.1992 vide Exhibit P-8. The said document Exhibit P-8 if examined, will make it clear that it was a letter and not an agreement whatsoever. For this purpose and comparison of these two documents, the contents of Exhibit P-8 are reproduced herein below :
"We refer to your letter dt.7.11.92 sent by Speed Post. As the undersigned was away on a foreign tour and returned only yesterday, we could not reply you earlier. We have made a note of various points suggested by you, with regard to the negotiations of price with OFB as well as possibility of further 10,000 Nos for next year.
As regards commission for this item, please note that we can pay you only Rs.14/- per piece as 18 has been paid for the earlier order. Though you had asked for a commission of Rs.15/- vide your letter dt.7.11.92 we had not given you any acceptance for the same. Please understand that we are also under tremendous pressure due to heavy cost escalations on all fronts and therefore not in a position to be very liberal. We do hope you will appreciate the situation."
If this is the conduct of the appellant, how could it be said that the agreement dated 29.04.1986 had not come to an end and there was continuity of the said agreement. Even from the reply to the legal notice sent by respondent/ plaintiff, it is very categorically stated by the appellant that the contract dated 29.04.1986 has come to an end on expiry of period of such agreement/contract.
16. Section 62 of the Contract Act specifically prescribes effect of novation, rescission and alteration of contract. If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. Though a stipulation of limitation or a period for remaining in operation, the said contract was prescribed but by the conduct if parties to the agreement or contract agree to continue it even after the period of expiry, without making any new contract, the original contract has to remain in operation. This particular aspect has already been considered by the Apex Court in the case of Lata Constructions and others (Supra). The essential requirement of novation as contemplated by Section 62 of the Contract Act is that there should be complete substitution of a new contract in place of the old one. It is in that situation that the original contract need not be performed. Substitution of new contract in place of old contract, which would have the effect of rescinding or completely altering the terms of the original contract, has to be by an agreement between the parties. The substituted contract should rescind or alter or extinguish the previous 19 contract and if the terms are different, they could not stand together and subsequent contract cannot be said to be in substitution of the earlier contract. But the said law cannot be made applicable for a contract which has to come to an end automatically on expiry of the period prescribed in the contract. The parties to the contract are required to extend the period of contract by executing an agreement. However, by conduct also the intention of parties to contract can be ascertained whether they were willing to extend such period of contract. Though claimed, but appellant has utterly failed to prove such intention.
17. In view of this pronouncement if Exhibit P-8 and P-13 referred by the respondent in his Court statement as new contract are looked into, which have been referred herein above, it will be clear that the complete contract as had entered into by the parties vide Exhibit D-1 cannot be said to be extended or substituted. For the comparison of the aforesaid document, the service contract and the contents thereof are to be compared with. As has been held herein above, neither Exhibit P-8 nor Exhibit P-13 can be said to be a service contract as was entered into on 29.04.1986 vide Exhibit D-1. In fact that was the service contract in appropriate manner and, therefore, it remained in operation only upto the period for which it was executed. By virtue of readiness to perform the same work with slight change in the terms such as rates, the respondent cannot be said to have accepted the continuity of the earlier contract. That being so, since there was no agreement in force for the ouster of the jurisdiction of all other courts except the Court at Madras, it was open to the respondent to file a suit for payment of his dues with respect to work performed for the appellant after 28.4.1991 before the Court at Jabalpur, but this was not done. In fact the Court at Jabalpur was having jurisdiction to entertain such a suit. The suit was not liable to be dismissed on this count alone. Instead of doing this, 20 the respondent/plaintiff filed the suit for rendition of account for the total period when he worked as agent for appellant, including the period under contract dated 29.04.1986. This composite suit was not maintainable because of the bar of jurisdiction and was liable to be dismissed. Thus, it is to be held that Court at Jabalpur was having no jurisdiction to try such a composite suit.
18. The last issue is whether the suit was barred by limitation or not ? According to the respondent/plaintiff the cause of action accrued to him for filing of the suit from the date when he received the reply to the legal notice sent by the appellant. Exhibit P-18 is the reply to the said notice. What was the demand made, how the notice was given and how the reply was given, is to be considered. The notice sent by the respondent/plaintiff is contained in Exhibit P-17. The notice dated 20.11.1996 itself says that work was started pursuant to some letter dated 24.03.1993 by the respondent and for certain work, payment was not made to him. Thus, in 1996 also the claim was with respect to the work, which was done in 1993 and 1994. The reply was a denial that such a claim was unwarranted and unworthy. If this reply was received by the appellant in the month of February, 1997, how could it be said that the claim of the year 1993 was within limitation. Not only this, as has been pointed out, in the relief clause no period for which rendition of account was demanded, has been mentioned. This was referred in certain documents and it was said that the respondent/plaintiff was making demand for payment of dues as were admitted by the appellant. It is contended that in some of the letters, which have been placed on record, amounts were admitted which were due towards the respondent/plaintiff. However, such letters are of the year 1993. As per the provisions of the Limitation Act, for such purposes and for filing of such a suit, limitation of 3 years was available from the date of cause of action first accrued 21 to the respondent. There was no question of recurring cause of action as according to the respondent himself, he has performed the work on the basis of different orders with respect to different supply, though the same were under the same head. If that is the evidence of the respondent, how could it be said that the claim as filed by him was within limitation. Thus, the suit of the respondent was barred by limitation for some of the claims. This particular aspect has not been examined in appropriate manner by the Trial Court while holding that the suit was well within limitation. The Full Bench case relied by the respondent would not be attracted in the case in hand inasmuch as the factual aspects are different. There was novation of contract and on different facts and grounds a final decree was passed, which was not on the grounds on which the preliminary decree was obtained. Therefore, it was not necessary for the appellant to challenge the final decree. In the considered opinion of this Court, the trial Court has completely failed to examine this aspect and erroneously granted a decree of rendition of account in full. The same cannot be sustained in the eye of law.
19. For the aforesaid reasons, the judgment and decree impugned cannot be sustained in law. The appeal deserves to be and is hereby allowed. The impugned judgment and decree is set aside and the suit of the respondent/plaintiff is dismissed. In the facts and circumstances of the case, the parties to bear their own costs.
(K.K. Trivedi) Judge Skc