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CASE NO.: Appeal (civil)  5261 of 2003

PETITIONER: Food Corporation of India                                        

RESPONDENT: M/s Laxmi Cattle Feed Industries                                 

DATE OF JUDGMENT: 22/02/2006

BENCH: ARIJIT PASAYAT & TARUN CHATTERJEE

JUDGMENT: J U D G M E N T

ARIJIT PASAYAT, J.

       Appellant-Corporation calls in question legality of the judgment  rendered by a Division Bench of the Delhi High Court dismissing the  First Appeal questioning correctness of the order dated 13.11.1987 of   learned Additional District Judge, Delhi who had granted a decree of  Rs.81,442.53 with interest in favour of the respondent who was the  plaintiff before the Trial Court.   

       The background facts in a nutshell are as follows:-

       The appellant invited tenders from persons intending to purchase  damaged foodgrains, by advertisement dated 9.6.1983. Tender submitted  by the respondent was accepted on 22.7.1983.  It is to be noted that the  respondent was one of the successful bidders.  Certain terms of the  agreement which shall be indicated in detail stipulated payment of the  price and the consequence of failure to do so i.e. levy of storage charges  for the stock not lifted and interest.  The tendered  quantity was 2246  M.T. of damaged foodgrains. Respondent deposited certain amounts.  On  1.2.1984 the respondent requested that part of the agreement which was  not capable of being executed may be cancelled and balance amount may  be refunded.  Prayer was also made for waiver of storage charges levied  by the concerned district Manager.  A sum of Rs.1,46,049.50 was  refunded by the appellant.  Subsequently on 16.7.1984, a further sum of  Rs.9959.68 was also refunded. The total amount of deposit by the  respondent was Rs.8,45,972.31. Out of the same, a sum of  Rs.1,44,864.85 was refunded by the district office of the appellant- Corporation, Amritsar.  On 16.2.1982 a telegram was issued by the  Senior Regional Manager of the appellant-Corporation, Punjab Region  requesting the respondent to immediately lift the balance stocks from  Jalandhar Depot latest by 5th March, 1985 failing which, it was  mentioned the stocks would be disposed of at the respondent’s risk as  per the terms indicated in the contract.  A suit was filed by the  respondent which was numbered as Suit No.310 of 1985 for recovery of  Rs.99,900/- from the appellant alleging breach of contract.  On  15.1.1986 written statement was filed substantially denying the  allegations. It is to be noted that the plaintiff-respondent did not tender  any evidence and evidence was led only by the appellant-Corporation.   The Trial Court decreed the suit holding that the appellant had  committed breach of the contract in refunding the balance of amount  and not supplying the goods to the entire extent for which the bid was  submitted by the plaintiff-respondent.  Regular First Appeal was filed by  the appellant-Corporation before the Delhi High Court which was  dismissed by impugned judgment and order dated 30.1.2003 upholding

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the judgment and decree of the Trial Court.

       In support of the appeal learned counsel for the respondent  submitted that the Trial Court and the High Court have not considered  the clauses relevant for the purpose of adjudication. The Trial Court  proceeded on the basis as if appellant was required to supply the goods  for the whole amount deposited. The Trial Court as well as the High  Court have also erroneously held that when the appellant had failed to  deliver the goods for the whole amount deposited, there was breach of  contract and storage charges and interest on account of late payment  cannot be claimed.  The Trial Court also erroneously held that the goods  were justifiably not lifted by the plaintiffs in time and it had paid more  amount, and therefore no question of charging interest arises. The  respondent has not entered appearance in spite of service of notice.  

       It is to be noted that the following issues were framed by the Trial  Court:                  

"1.     Whether the defendant is entitled to adjustment  of Rs.31,097.91 on account of storage charges  and Rs.5,374.20 on account of interest for the  late payment? OPD

2.      To what amount, if any, in the plaintiff \026 firm  entitled on account of principal sum and  interest? OPP.

3.      Relief."

       A few conditions in the contract need to be noted. They read as  follows: "A. (ii)        It will be the responsibility of the buyer to obtain  necessary import/export permits from the concerned  authorities in case the stocks are to be moved to place  outside the one, where they are held. Such permit  shall have to be produced at the time of taking  delivery.  

B.      The Food Corporation of India do not guarantee  to make any definite quantity of damaged foodgrains  available to the buyers.

                       xx              xx              xx              xx    E(ii)   The earnest money deposited by the successful  tenders, along with the tender will be adjusted towards  security deposit for due performance of the contract  and would be liable to forfeiture. The security deposit  will be refunded on the due completion of the contract  but the Corporation will not be liable to pay interest  thereon.

(iii)(a)        If the contractor fails or neglects to observe or  perform any of his obligations under the contract, it  shall be lawful for the Corporation to forfeit either in  whole or in part in its absolute discretion the security  deposit furnished by the contractor or any part thereof  towards the satisfaction of any sum due to be claimed  from the contractor for any damages, losses charges  expenses or costs that may be incurred or suffered by  the Corporation.  The decision of the Corporation in  this regard shall be final and binding on the  contractor.

                       xx              xx              xx              xx

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(F)(ii) In the event of failure to complete the payment  and present the demand draft or deposit at call receipt  within the aforesaid period of seven days, the Food  Corporation of India shall have the option to forfeit the  security and resale stocks at the risk and cost of the  original buyer and also recover the loss sustained by  the Food Corporation of India as a result of such  failure or extend the period by 7 days for making the  payments provided interest of 18% per annum and  storage charges at the rate of three paise per bag or  part thereof are paid by the party. Any saving or profit  on resale as aforesaid shall be exclusively to the  account of the Food Corporation of India.    (G)     The buyer will make his own arrangements for  transport and will not be entitled to claim any facility  or assistance for transport from the Food Corporation  of India.  The things shall be placed at Food  Corporation of India’s cost by godown labour on  buyer’s trucks at the godown rates, or wagons of  godowns labour or buyer will be responsible for  subsequent handling including stacking of bags in the  trucks/wagons."                           It is to be noted  from the judgment of the Trial Court that no  evidence was led by the plaintiff.  The High Court proceeded on the basis  as if the plaintiff had led evidence and the appellant-Corporation had not  led any evidence.  On the contrary, the records clearly show that   evidence was led to establish loss suffered on account of delay in lifting  damaged stock.  Without any material whatsoever the Trial Court as well  as the High Court held that the appellant had committed breach. On the  contrary the evidence clearly established that the appellant had proved  the loss sustained.  The plaintiff was to establish its own case. It did not  choose to lead evidence.  Therefore, the Trial Court in the absence of any  evidence tendered by the plaintiff should not have decreed the suit. The  High Court committed error by proceeding under the erroneous  assumption that the plaintiff had led evidence and not the appellant- Corporation who was the defendant.

       Above being the position, the judgment and decree of the trial  Court as affirmed by the High Court cannot be sustained, and are set  aside.  The appeal is allowed.   No costs.