Document Fragment View

Matching Fragments

1. This is an appeal against the judgment and decree of the Civil Judge of Dehra Dun dated 26th March 1935, by which the plaintiffs' claim for recovery of a sum of money was dismissed. Plaintiff 1, Devi Prasad Sri Krishna Prasad, Ltd, of Delhi is a limited liability company which was incorporated on 4th September 1931, with the object inter alia 'to enter into a contract of sale of forest produce with the Forests Officer, western circle.' Plaintiff 2 firm Devi Prasad Sri Krishna Prasad is a firm of Government Contractors in Delhi. The defendant is the Secretary of State for India in Council. On 21st May 1931, a sum of Rs. 25,000 was deposited by plaintiff 2 with Mr. V. A. Herbert, Conservator of Forests of the western circle who was-acting in the transaction on behalf of the defendant as security money for performance of a contract of lease and sale of forest produce. The plaintiffs, alleging that the contract for the performance of which the said sum was deposited remained incomplete and as the said sum of money was paid to plaintiff 2 by plaintiff 1, raised an action on 9th March 1933, in the Court of the Civil Judge of Dehra Dun for recovery of the said sum with interest due on it against the defendant. The trial Judge finding that the contract for the performance of which the said sum was deposited having been concluded between the parties and the plaintiffs being in default in not completing the bargain dismissed the claim and against the said dismissal the plaintiffs have made this appeal and the main controversy which arises in the case is whether the deposit was made in the midst of the negotiations for contract or at the conclusion of the contract.

2. The western circle of the Forest Department of the U.P. Government grows a large quantity of bbabar or baib grass which is suitable for manufacturing paper. The Conservator of Forest, western circle, is authorised on behalf of the Government to sell the grass and other forest produce and to enter into contracts with regard to it on behalf of the defendant. Prior to the year 1931 a lease and sale of grass and forest produce in western circle was executed by the defendant in favour of Beilgerow & Co. a firm of paper manufacturers in Calcutta. This contract had come to an end or was about to come to an end in 1931 when Mr. V. A. Herbert the Conservator of Forests by a notice dated 10th April 1931, invited tenders for a fresh lease of the bhabar or baib grass for any number of years upto ten. It was stated in the notice that:

7. On 12th May 1931, a meeting took place at Dehra Dun in which four partners of the firm of plaintiff 2, viz. Alopi Prasad, Kishori Saran, Jwala Prasad and Devi Prasad were present and so was Mr. V.A. Herbert, the Conservator of Forests. At this meeting the terms of the contract of lease and sale which was the subject-matter of the tender and correspondence mentioned above were discussed and settled and primarily the negotiations were between the Conservator of Forests, Mr. Herbert on one side and the four partners of plaintiff 2 on the other side; but Mr. Canning, the Chief Conservator of Forests, was also present in the house where the meeting took place and at the conclusion of the meeting the four partners were introduced to him and Mr. Canning was informed that the partners were the people who had taken the contract and of its terms generally. With regard to what was settled in this meeting and what remained to be settled there is a sharp controversy between the parties. Mr. Herbert's version is that the commodity to be sold and the price for which it was to be sold had all been settled by correspondence and by the tender and its acceptance. The detailed terms of the proposed lease and sale were also known to the plaintiffs and had been studied by them. As they were to be on the lines of the old lease a copy of it had already been supplied to the plaintiffs as stated above. The plaintiffs at the meeting raised four points in modification of the terms of the old lease relating to the reduction of security from Rs. 1,00,000 demanded by Mr. Herbert to Rs. 50,000 which the plaintiffs wanted to give and again with regard to the security of Rs. 50,000 which Mr. Herbert wanted all in cash the plaintiffs wanted to give half in cash and half in landed security and the second related to the duration of the contract and the option to terminate it. The plaintiffs wanted to give an option to either side to terminate the contract by one year's notice. The third related to a penalty which was provided in the event of non-payment of the instalment due from the plaintiffs in the last lease from which the plaintiffs wanted to be excused and the fourth related to the time when goods had to be removed from one portion of the forest to another with regard to which the plaintiffs wanted a change in date. According to Mr. Herbert, these four points which were raised at the meeting were mutually settled with the result that a contract for lease and sale of forest produce was finally concluded between the parties and the only thing which remained to be done was that the plaintiffs should deposit security, should register themselves as a company and should join in the execution of the deed and start working the contract according to its terms. It may be mentioned here that throughout the negotiations Mr. Herbert was acting on behalf of the defendant and the partners of plaintiff 2 were acting on behalf of the firm. The firm of plaintiff 2 not being a registered firm, at the meeting of 12th May it was mutually agreed that plaintiff 2 would get itself incorporated as a limited liability company and the formal deed of lease and sale of forest produce which was to be executed between the parties would be between plaintiff 1, the company on one side and defendant 1, the Secretary of State for India in Council, on the other.

To Messrs. Devi Prasad Sri Krishna Pd., Sadar Bazar, Delhi.
Dear Sirs, I am in receipt of your No. O/1/3, dated 21st May 1931, enclosing a fixed deposit receipt No. 14/191, dated 21st May 1931 with the Central Bank of India Ltd., Delhi, for the sum of Rs. 25,000 in my favour as security for the execution and due fulfilment of the agreement for the bhabar grass. I am not quite sure whether this fixed deposit is intended to be part of the permanent security under the contract or not. As you will remember the arrangement agreed to by the Chief Conservator of Forests and you was that instead of a security of Rs. 1,00,000 as originally offered by you ha would accept the security of Rs. 25,000 in fixed deposit, or Government promissory notes, and a further Rs. 25,000 in landed property. I presume that you are making arrangements as regards the latter without delay, but I am not clear whether this fixed deposit receipt is the security you offered for the former part or not. If it is intended to be the security of Rs. 25,000 in fixed deposit, or in Government promissory notes, I do not think that it is really acceptable as it stands, because I notice that the receipt states that the deposit remains 'till notice of twelve months on either side expires' and it also states on the top that notice to withdraw was given on 21st May 1931 and is therefore due to expire on 21st May 1932. I am writing to the bank to ascertain the exact position, but I am sure you will see that the security deposit for the contract must be absolutely at my disposal. That is an invariable condition of any contract with the forest department in this province. If therefore the fixed deposit receipt is intended to be the actual security of the contract, the condition of the deposit will have to be altered, so that the deposit is with draw able on my request alone. Will you kindly let me know exactly what form you are proposing to furnish the full security for the contract?