Nagnath Kaulwar And Sons vs Govindram Shyamsunder
2004 Latest Caselaw 360 Bom

ORDER

S.T. Kharche, J.

1. By invoking the jurisdiction of this Court under Section 100 of the Code of Civil Procedure, the appellant-original defendant has filed this appeal being aggrieved by the judgment dated 22-12-1989 passed by the Additional District Judge in Regular Civil Appeal No. 42/1988 whereby the appeal was allowed and judgment and decree passed by the trial Court on 14-1-1988 is set aside and the suit of the respondent-plaintiff is decreed with cost with further direction to the defendant to pay Rs. 11.969/- with interest @ Rs. 12% per annum from the date of the suit till realisation.

2. Relevant facts are required to be stated as under :

The respondent-plaintiff a registered partnership firm filed Regular Civil Suit No. 228 of 1980 against the appellant-defendant claiming damages and notice charges amounting to Rs. 11.969/- on the contentions that it is carrying on business in the name of M/s. Govindram Shyamsunder under registration No. 568 of 1960-61. The plaintiff-firm deals with grocery articles and also acting as commission agent. The defendant is also a registered firm carrying its business in the name of M/s. Nagnath Kaulkar and Sons at Vijayawada dealing in rice, wheat, bran and cake, pulses, chillies and other commodities. The defendant has its commission agent at Nagpur by name Makharia and Company. On 13-2-1979 the defendant agreed to sell one wagon consisting of 320 bags of rice of Jagannath quality @ Rs. 148/- per quintal through its agent Satyanarayan Makharia and this transaction was confirmed by him by the telegram. That transaction was builty cut transaction. It was duty of the defendant to book the goods in railway wagon after indenting the wagons and to send the railway receipt and Hundi of the price through the Bank to the plaintiff from Vijayawada to Wardha. The plaintiff was to pay the amount of Hundi to the Bank and take the railway receipt from it and then obtain the delivery of the goods at railway station, Wardha after production of the railway receipt. The first consignment was received by the plaintiff and there is no dispute whatsoever about the same. The plaintiff contended that the second transaction was dated 16-2-1979 on which dale the defendant agreed to sell to the plaintiff one wagon of Jagannath quality rice @ Rs. 149/- per quintal through the same agent and then he had confirmed the bargain by telegram. Thereafter on 26-2-1979 the defendant informed by letter to the plaintiff of having booked one, wagon of Jagannath quality rice of first consignment and asked the plaintiff to obtain the railway receipt through the Bank and honour the Hundi. The defendant also in the same letter promised to book another wagon of the second contract as soon as the wagon was made available by the Railway Department and that he would inform the plaintiff accordingly, by telegram. Thereafter the plaintiff obtain the railway receipt on 13-3-1979 on payment of Hundi through the Bank and took delivery of Jagannath rice of 320 bags as per the agreement in respect of the first consignment. Thereafter by letter dated 163-1979 the defendant complained of nonavailability of the railway wagon and also of gunny bags and that the railway wagons were ordinarily available within a period of one month and gunny bags were also available in the open market. Then by the letter dated 29-3-1979 the defendant persisted his difficulty of obtaining the railway wagon, and therefore, the plaintiff requested the defendant by letter dated 5-4-1979 to dispatch the goods immediately by railway wagon as per the agreement. On 12-4-1979 and 22-5-1979 the plaintiff sent telegrams and requested to dispatch the goods immediately, but in vain. On 6-6-1979 the defendant informed that the wagons were not available and therefore goods could not be sent and the goods were sold in the local market. Therefore, the plaintiff served the notice dated 21-7-1979 calling upon the defendant to pay the damages including loss sustained by it to the tune of Rs. 11,944/- because the defendant has committed the breach of contract and the plaintiff was entitled to recover the damages. The defendant has given evasive reply to the said notice on 29-7-1979 and therefore, the plaintiff was constrained to file the suit for recovery of the damages together with loss sustained by it with notice charges, etc. The defendant combated the claim of the plaintiff by filing written statement and contended that Makharia of Nagpur was acting as an agent of the plaintiff. The defendant contended that they had helped Shri Makharia and purchased two wagons of rice for the plaintiff as an commission agent of the millers and also dispatched the first wagon of rice but could not dispatch the second wagon of rice due to non-availability of the railway wagons. The defendant contended that the plaintiff did not make any advance payment of the said rice as demanded by the millers from whom the rice was purchased and therefore, the second consignment could not be sent. It is contended that the defendant being an agent is not bound by the contract entered into by him on behalf of his principal and there were no direct relation between the plaintiff and the defendant. The defendant further contended that the millers and the plaintiffs agent Makharia are necessary and proper parties to the suit and in absence of them, the suit was liable to be dismissed. The defendant further contended that the rice of the second consignment was sold by the millers in the local market and therefore, the plaintiff was informed that the transaction of the second contract dated 16-2-1979 has been cancelled. The defendant contended that it was not possible for it to send the second consignment and no breach of contract has been committed by it. The defendant further contended that in the meantime prices of rice had gone up and the claim of the plaintiff is false and vexatious and therefore, claimed the compensatory cost.

3. On the aforesaid pleadings of the parties, the trial Court framed the issues. Parties adduced the evidence and relied on oral as well as documentary evidence in the nature of correspondence. The trial Court after consideration of the evidence, had recorded finding that Satyanarayan Makharia of Nagpur was not an agent of the defendant, that the plaintiff has failed to establish that the defendant entered into an agreement on 16-9-1979 for sale of rice of Jagannath quality @ Rs. 149/- per quintal of one wagon consisting of 320 bags and that the defendant did not commit breach of any contract and question of awarding damages does not arise and consistent with these findings, he dismissed the suit with cost. The plaintiff being aggrieved by this judgment and decree, carried appeal to the District Court. The learned Additional District Judge on consideration of the evidence in detail and by giving elaborate reasons, allowed the appeal and set aside the judgment and decree passed by the trial Court and directed the defendant to pay Rs. 11,969/-to the plaintiff with interest @ Rs. 12/% per annum from the date of the suit till realisation. This judgment of the appellate Court is under challenge in this second appeal.

4. Mrs. Shirpurkar, the learned counsel for the defendants contended that the burden of proof was on the plaintiff to show that M/s. Satyanarayan Makharia was the agent acting on behalf of the defendant and no evidence in that context has been adduced. She contended that there was no privity of contract between the parties because the rice was to be supplied by the millers to the plaintiff through M/s. Satyanarayan Makharia of Nagpur. The millers have not been impleaded as parties to the suit and therefore, the suit is bad for non-joinder of necessary parties. The defendants were merely working as commission agent and therefore, they are not liable to pay damages or loss suffered by the plaintiff on account of breach of contract, for which M/s. Satyanarayan Makharia and the millers are responsible. She contended that in absence of the necessary parties, namely millers and the principal M/s. Satyanarayan Makharia, the suit was not maintainable against the defendant for want of privity of contract and the trial Court had no jurisdiction to entertain the suit because the cause of action occurred within the territorial jurisdiction of Vijayawada Court. She contended that the trial Court rightly dismissed the suit on consideration of the evidence adduced by the parties and the appellate Court has committed an error of law in holding that there was privity of contract between the parties and that the defendant is liable to pay damages and the loss suffered by it on account of the so-called breach of contract. She contended that the defendant had rightly informed the plaintiff that due to non-availability of the railway wagons, the second consignment could not be dispatched and since 320 bags of rice which was purchased @ Rs. 149/- per quintal from the millers, were sold by the millers in the local market and therefore, in these circumstances, there was no breach of contract. She further contended that the impugned order passed by the appellate Court is not sustainable in law,

5. Mr. Sudame, the learned counsel for the plaintiff contended that there is documentary evidence in the nature of the letters and telegrams which were exchanged between the parties during the period 13-2-1979 to 29-7-1979 and it is established that the plaintiff is buyer/purchaser and the defendant is seller and that there was transaction to sell one wagon of Jagannath quality rice @ Rs. 149/- per bag and the defendant deliberately did not deliver the consignment as per the contract. He contended that the relationship of buyer and seller is established and the suit for damages for breach of contract for sell of the goods would be perfectly maintainable under Section 57 of the Sale of Goods Act, 1930. He contended that the letter dated 6-6-1979 addressed to the plaintiff by the defendant would clearly show that the contract was cancelled and the defendant has committed breach of the contact and this has given rise for cause of action for filing the suit for claiming damages and loss suffered by the plaintiff. He contended that the appellate Court has appreciated the oral as well as documentary evidence in proper perspective and was perfectly justified in coming to the conclusion that the defendant is liable to pay damages/loss suffered by the plaintiff on account of breach of contract. He contended that the impugned judgment passed by the appellate court is perfectly legal and valid and no case has been made out for interference into the same. He further contended that the delivery of the consignment was to be given at Wardha and therefore, the cause of action arose within the territorial jurisdiction of the trial Court and consequently the trial Court had territorial jurisdiction to entertain the suit. He contended that there is concurrent findings of both the Courts below on this point and it is held by both the Courts that the trial Court had jurisdiction to entertain the suit and there is no merit in the contentions of the defendant that the trial Court had no territorial jurisdiction in the matter. He further contended that no substantial question of law arises in this appeal and the same may kindly be dismissed with costs.

6. This Court has given thoughtful consideration to the contentions canvassed by the learned counsel for the parties. It is not in dispute that defendant had purchased 320 bags rice from the millers @ Rs. 148/- per bag and accordingly informed the plaintiff by the telegram dated 13-2-1979. It is also not in dispute that thereafter the defendant had dispatched the said consignment to the plaintiff and the goods under the contract were delivered to the plaintiff on 13-3-1979 and the goods were sent by railway wagon to the plaintiff at Wardha. So far as this first transaction is concerned, there is no dispute between the parties.

7. In order to appreciate the contentions of the learned counsel for the parties, it may be stated that Chapter 10 of the Indian Contract Act, 1872 deals with appointment and authority of agents. Section 182 defines "agent" and "principal". An agent is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom, such act is done, or who is so represented, is called the "principal". Section 226 contemplate that contracts entered into through an agent and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts done by the principal in person. Section 230 deals with the enforcement of liability against the agent and contemplate that in the absence of any contract to that effect an agent cannot personally enforce contract entered into by him on behalf of the principal, nor is he personally bound by them.

Presumption of contract to contrary.--Such a contract shall be presumed to exist in the following cases--

(1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad;

(2) where the agent does hot disclose the name of the principal;

(3) where the principal, though disclosed, cannot be sued.

8. However, Section 27 of the Indian Sale of Goods Act, 1930 contemplate that; subject to the provisions of this Act and of any other law for the time being in force, where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell; Provided that where a mercantile agent is, with the consent of the owner, in possession of the goods or of a document of title to the goods, any sale made by him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorised by the owner of the goods to make the same; provided that the buyer acts in good faith and has not at the time of the contract of sale notice that the seller has no authority to sell.

9. This Court may usefully refer the Single Bench decision of this Court in the case of Jagmohanprasad v. Firm of Sampatlal Mulchand, 1931 Nagpur Law Reports 324 : (AIR 1932 Nagpur 27). This Court considered Section 230 of the Indian Contract Act in that case and held that; under Section 230 an agent who does not disclose the name of his principal is personally liable on the contract.

10. Similarly, it may be useful to refer the decision of the Division Bench of Calcutta High Court in the case of J. Thomas and Co. Pvt. Ltd. v. The Bengal Jute Baling Co. Ltd., wherein it has been held in para 36 as under :

"............This letter is extremely damaging to the respondent's case made before us. If it was a contract between the respondent and the appellant as an agent for an undisclosed principal, the undisclosed principal can never be liable. The question of joint and several liability does not arise in such cases. The liability under Section 230(2) of the Indian Contract Act, 1872 is that of the agent only. It would be legitimate to conclude from this reply which the respondent had given that the respondent knew from the date of the contract who the principal was and now that the principal was refusing to grant extension of time or honour the respondent's bills the respondent was seeking to make both the principal and the agent liable."

11. In the light of the provisions of law and the decisions cited hereinabove, let us examine the present case. So far as the second consignment is concerned, there is no dispute that defendant had sent telegram (Ext. 24) on 16-2-1979 wherein it was informed as under :

"According Makharia Co. purchased one wagon Jagannath 149 : Nakwar"

The telegram would show tbat Satyanayaran Makharia had placed order with the defendant on behalf of the plaintiff for purchase of one wagon rice containing 320 bags @ Rs. 149/- per bag. Satyanarayan Makharia wrote a letter dated 16-2-1979 to the plaintiff by which it was informed that the defendant had agreed to sell one wagon of rice @ 149/- per quintal and the sale was confirmed. Thereafter the defendant had sent a letter dated 26-2-1979 and it is necessary to reproduce the said letter which is translated, as under :

"Today one wagon Jagannath bags 320 weight 74 kg. Dispatched and telegraphically informed to you. Pucca bill of Mill is also sent and Hundi Builty sent through Central Bank of India. After you receive it kindly acknowledge and inform. As per bill fill 'C' Form put bill amount and given in the Bank, some Millers as for 'F' Form and some 'C' Form.

About your second wagon Jagannath intimation will be given by Telegram after dispatch. Presently, there is some problem with booking, Empty wagon are first given to Govt. Rice Military supply and high rated traffic. write about more work, keep love and affection.

Yours affectionately,

Sd/- Chandrakant Kaulwar

Copy to M/s. Satyanarayan Makhariya"

12. The defendant, by another letter dated 6-6-1979 had put certain difficulties in the dispatch of the second wagon of rice. The translated version of that letter is as under:

"Received your letter noted contents. Your one wagon Jagannath was cancelled and intimation given to Nagpur. Here due to unavailability of Booking for 2-3 months Milwallas asked to lift goods by lorry. We had informed this over Telephone to Nagpur to M/s. Satyanarayan Makhariya. Goods should be lifted by Lorry or goods should be paid for and kept till wagon is available, both things were not agreeable so transaction is cancelled. No liability to pay amount and goods by Lorry are not commercially viable. Goods were ready for 2 months wagon were not available, Miller has sold goods in local market. Whatever booking we could get that goods were dispatched to you.

Rates of Rice are increasing Maruti 190=00 to 195=00 D 14 170/- to 175/- Super Ratna 195=00. Jagannath goods are out of stock. Please Reply.

Yours affectionately

Sd/-

Chandrakant Kaulwar

Copy to Satyanarayan Makhariya"

13. Bare perusal of the aforesaid correspondence between the parties, it would reveal that the order was placed with the defendant through Satyanarayan Makharia for purchase of the second consignment of 230 bags of rice. Then the defendant had confirmed by telegram dated 16-2-1979 that he had purchased the rice of one wagon of Jagannath quality @ Rs. 149/- per quintal which was ready for dispatch. It would further reveal that only because of the nonavailability of the railway wagons, the defendant did not dispatch the goods and ultimately the defendant informed by letter dated 6-6-1979 that the contract was cancelled and this is a letter, which gave cause of action for the plaintiff to file the suit for damages and loss sustained by him on account of non-delivery of the second consignment.

14. It is pertinent to note that the defendant purchased one wagon of Jagannath quality rice @ Rs. 149/- per quintal, he sent the telegram but in the telegram he did not disclose as to from whom that Jagannath rice was purchased by him. However, Satyanarayan Makharia also informed the plaintiff that the rice has been purchased by the defendant and the plaintiff should take a note of the contract and even Satyanarayan Makharia did not inform the plaintiff as to who was the miller from whom the rice was purchased. It was disclosed only by a letter dated 26-2-1979 that the final bill issued by the miller was sent along with Hundi drawn on Central Bank of India and thereafter the plaintiff came to know that the first consignment was purchased from the miller whose name was appearing in the final bill. In this letter dated 26-2-1979, the defendant did not inform as to who was the miller from whom the rice, which was to be delivered by second consignment, was purchased.

15. The letter dated 16-3-1979 has been addressed by the defendant to the plaintiff wherein it has been clearly mentioned that the rice for second consignment was purchased on 26-2-1979 and again the name of the miller does not find place in this letter. Thus, contents of the telegram dated 16-2-1979 and the letters dated 26-2-1979 and 16-3-1979 would clearly reveal that the defendant did not disclose the name of the miller from whom the rice was purchased as per the order placed by M/s. Satyanarayan Makharia, on behalf of the plaintiff. It is totally immaterial as to whether Satyanarayan Makharia was acting as an agent of the defendant or of the plaintiff. The fact remains that the plaintiff placed the order with the defendant and it was the defendant who had purchased the rice for the second consignment on behalf of the plaintiff. In such a situation, it would be obvious that in view of the provisions of Section 230(2) of the Indian Contract Act, the liability would be that of the defendant because the defendant did not disclose the name of his principal and especially when the contract was concluded and can be enforced in accordance with Section 226 which contemplate that the contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts done by the principal in person. It would be clear that the present case is one, in which the name of the principal was not disclosed and secondly, the defendant himself had purchased the rice from the miller and it was to be dispatched as second consignment to the plaintiff. Therefore, there was a concluded contract between the plaintiff and the defendant so far as the delivery of rice by way of second consignment is concerned and hence the contention of Mrs. Shirpurkar that there was no privity of contract between the plaintiff and the defendant is required to be rejected.

16. The defendant, by a letter dated 29-3-1979 had putforth the difficulties in the dispatch of the goods of second consignment. The contents of this letter are as under :

"..... .This is to inform you that here all the Banks have reduced Hundi discounting limits as per the orders from Reserve Bank. So it is find difficult for us to discount bills with banks. There is alternative but to send the Railway Receipts by Registered post, direct to parties, after receiving the hundi amount by Telegraphic transfer. Even if the RR is sent through Bank, it must be paid on presentation of intimation from Bank, to avoid blocking of limits.

There is also railway booking trouble. Wagons supply is very poor and empty wagons are not available for rice loading. There are still pending of bargains transacted two months back due to lack of wagon supply. Mills have to incur Rs. 3 to 5 per bag for transport and loading expenses. Mills are asking this extra charges. It seems that Booking position will not improve for two months more. Mango season will commence soon, for which wagons are supplied on priority first basis. As such booking position will be more tight. Such the position here. This is for your kind information. ......"

17. After the aforesaid letter, then it was finally informed to the plaintiff that it was not possible to dispatch the rice of second consignment to the plaintiff due to nonavailability of the railway wagons and therefore, the contract was cancelled. When it was a concluded and confirmed contract, it was not proper on the part of the defendant to rescind the same by informing to the plaintiff that due to non-availability of railway wagons, the rice could not be dispatched and that rice was sold by the millers in the local market, therefore it would clearly reveal that it is the defendant who has committed breach of the contract by sending the final letter dated 6-6-1979.

18. In such circumstances, it is obvious that the plaintiff would be entitled to claim damages of loss sustained by him on account of breach of contract committed by the defendant. Section 36 of the Indian Sale of Goods Act deals with rules as to delivery and it contemplates as under :

(1) Whether it is for the buyer to take possession of the goods or for the seller to send them to the buyer is a question depending in each case on the contract, express or implied, between the parties. Apart from any such contract, goods sold are to be delivered at the place at which they are at the time of the sale, and goods agreed to be sold are to be delivered at the place at which they are at the time of the agreement to sell, or, if not then in existence, at the place at which they are manufactured or produced.

(2) Where under the contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time.

(3) Where the goods at the time of sale are in the possession of a third person, there is no delivery by seller to buyer unless and until such third person acknowledges to the buyer that he holds the goods on his behalf:

Provided that nothing in this section shall affect the operation of the issue or transfer of any document of title to goods.

(4) Demand or tender of delivery may be treated as ineffectual unless made at a reasonable hour. What is a reasonable hour is a question of fact.

(5) Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state shall be borne by the seller. Sub-section (2) of Section 36 clearly reveals that where under the contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time. The defendant is seller and he ought to have dispatched the goods i.e. Rice to the plaintiff within a reasonable time but though the contract was concluded on 26-2-1979 itself when the telegram was sent by the defendant, the latter had only put-forth a difficulty of non-availability of the railway wagons and on one pretext or the other, delayed in dispatching the second consignment. Ultimately, he informed the plaintiff that it was not possible to dispatch the goods of second consignment due to aforesaid difficulty and cancelled the contract. In the present case, no time was fixed for delivery of goods, therefore this is a case wherein the seller has not dispatched the goods within a reasonable time and straightway cancelled the contract.

19. Section 57 of the Indian Sale of Goods Act contemplates as under :

Damages for non-delivery.-- Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery.

The present case is one wherein the defendant did not deliver the goods within a reasonable time to the plaintiff and therefore, the plaintiff would be certainly entitled to claim the damages and the loss suffered by him on account of non-delivery of the goods especially when there is no dispute that the quantum of damages and loss suffered by the plaintiff is to the tune of Rs. 11,969/-.

20. Admittedly the delivery of second consignment was to be made through railway wagon at Wardha. As per the customs in the trade, the plaintiff was to make payment in the Bank as per the Hundi and to take back railway receipt and then after production of the railway receipt at the railway station, he was to get the delivery of the goods. This practice has actually been followed by the parties when the first consignment was delivered to the plaintiff. Therefore, it is obvious that by no stretch of imagination it could be that the Court at Wardha had no jurisdiction to entertain the suit filed by plaintiff claiming damages and the loss suffered by him on account of breach of contract. There is concurrent finding recorded by both the Courts below on this point that the trial Court had jurisdiction to entertain the suit and there is no reason for this Court to take a different view of the matter.

21. It has been established through the documentary evidence that there was concluded contract to supply rice by the defendant to the plaintiff. The defendant may be acting as a commission agent of the millers, but in this case he did not disclose the name of the principal to the plaintiff at the time when the contract was concluded, so far as the second consignment is concerned, and in such circumstances, either M/s. Satyanarayan Makharia of Nagpur or the millers from whom the rice was purchased by the defendant without disclosing their names would not be necessary or proper parties for the adjudication of the dispute between the parties. In such circumstances, this Court did not find any merit in the contentions of Mrs. Shirpurkar that the suit was bad for not Joinder of necessary parties.

22. In the result, it is obvious that there is no merit in the present appeal, which is liable to be dismissed and the same stands, dismissed with costs throughout.