Bombay High Court
Sanjay M.Pawar vs Malegaon Municipal Council & Anr on 14 August, 2017
Bench: B.R. Gavai
2-FA-1768-2002 NEW.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO. 1768 of 2002
Sanjay M. Pawar ...Appellant
Aged major, Occupation: Business, (Orig.
R/o. Near Aroma Theatre, Defendant
Soygaon, At Malegaon, No.1)
District Nashik.
Versus
1 Malegaon Municpal Council (as it ...Respondents
existed on the date of filing of the
suit) now : Malegaon Mun.
Corporation, through The Municipal
Commissioner Malegaon Municipal
Corporation, Malegaon, Dist. Nashik.
(Orig. Plaintiff)
2 Shri. Ramdas Chindha Pagare,
Age Adult, Occupation : Editor,
R/o. Ekata Printing Press,
Sangameshwar, Malegaon,
District Nashik.
(Orig. Defendant No.2)
----------
Mr. M. M. Sathaye, for the Appellant.
Mr. S. M. Gorwadkar a/w Mr. S. M. Sabrad, for the Respondent
No.1.
----------
CORAM : B.R. GAVAI AND
RIYAZ I. CHAGLA, JJ.
RESERVED ON: 17 July 2017
PRONOUNCED ON: 14 August 2017
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JUDGMENT : (Per Riyaz I. Chagla, J.)
1. The Appellant has challenged the Judgment and Decree
dated 27th February 2002, passed by the learned Civil Judge,
Senior Division, Malegaon at Malegaon in Special Civil Suit
No.129/1995, filed by the Respondent No.1 (Orig. Plaintiff).
2. The facts in brief are as under:
Respondent No.1 had invited tenders for awarding of
contract for collection of octroi duty for the period from 16 th
April 1994 to 31st March 1995. Two tenders were submitted,
one by the Appellant and the other by M/s. Mehanat Sales
Services Private Limited (Mehanat). The tenders submitted by
the Appellant was accepted despite the tender submitted by
Mehanat being of a higher value. Mehanat being unresponsive
and not giving commitment to furnish a bank guarantee which
was a pre-condition of the contract, their tender was not
accepted. The Appellant entered into a contract with
Respondent No.1 on 13th April 1994. The Appellant started
collecting octroi duty in terms of the contract with effect from
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16th April 1994.
3. Respondent No.2, a citizen / social worker of Malegaon
filed a Suit being Suit No.160 of 1994, challenging the award of
the contract in favour of the Appellant and obtained ex-parte
order of injunction on 27th April 1994 which was served upon
the Appellant on 28th April 1994. The Appellant having been
served with the injunction order, stopped the collection of octroi
duty and gave charge of collection to Respondent No.1. The
Appellant had filed Suit No.164 of 1994 against Respondent
No.1 for damages to the tune of Rs.1.10 crores for failure on the
part of Respondent No.1 to take steps to vacate the injunction
order. On 16th May 1995, the injunction order was vacated by
the Civil Judge, Senior Division, Malegaon, Nashik. Respondent
No.1 called upon the Appellant to resume collection of octroi
duty under the contract. However, the Appellant did not
resume the octoi collection.
4. The Suit was filed by the Respondent No.1 on 19 th October
1995, being Special Civil Suit No.125 of 1995 in the court of
Civil Judge, Senior Division, Malegaon, Nashik. The Suit was
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filed for damages on account of breach of contract by the
Appellant. The Suit was also filed against Respondent No.2,
who had obtained the injunction order in the Malegaon Court.
Respondent No.1 in the Suit claimed that the injunction order
was obtained by Respondent No.2 in collusion with the
Appellant. The Suit has claimed damage in the sum of
Rs.3,11,09,808/- against the Appellant and Rs.1,09,79,842.60/-
against both the Appellant and Respondent No.2, with interest
on both the amounts at 20% p.a. from the date of the Suit till
realisation. In the plaint filed in the Suit on 9th October 1995,
Respondent No.1 has claimed damages under three headings:
(i) The Appellant under the contract was to deposit a sum of
Rs.23,35,650/- every week. The Appellant had defaulted in
depositing the said amount and had deposited a total amount of
Rs.23,45,991.75/- upto 20th April 1994, whilst the obligation of
the Appellant was to deposit Rs.43,37,636/- upto that period.
The Appellant had thus deposited a shortfall of
Rs.19,92,044.25/- with the Respondent No.1. The Appellant is
liable to pay interest at 20% p.a. on the said amount which
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came to Rs.5,35,941.76/- upto 31st August 1994 and thus
Respondent No.1 has claimed total sum of Rs.25,27,986.01/-
towards that claim.
(ii) The Appellant had committed a breach of his promise to
furnish a bank guarantee for Rs.1.76 crores. Respondent No.1
has claimed a sum of Rs.49,88,889/- due to the non-acceptance
of the high tender offer of Mehanat which Respondent No.1
would have accepted had it been aware of the Appellant not
honoring his promise to furnish the bank guarantee. The
Appellant is liable to pay the said amount together with interest
at 20% p.a. and a total sum of Rs.63,63,908/- towards this
claim.
(iii) Respondent No.1 has made a claim for an amount
equivalent to the bank guarantee of Rs.1.76 crores which the
Appellant had failed to furnish. Respondent No.1 has claimed
that had the Appellant furnished the bank guarantee as
promised by him, the Respondent No.1 would have encashed
the said bank guarantee upon the Appellant's failure to collect
octroi duty from 28th April 1994. Respondent No.1 has claimed
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the sum of Rs.1.76 crores together with interest at 20% p.a.
which sum came to Rs.2,23,06,191.78/-.
The above three sums claimed by Respondent No.1
comes to a total of Rs.3,11,98,085/-. In addition, Respondent
No.1 has claimed the sum of Rs.1,09,79,842.60 jointly and
severely from the Appellant and Respondent No.2. This claim
was for the joint and several liability of the Appellant and
Respondent No.2 to pay the electricity and telephone charges
and 50% of the salaries of the employees of Respondent No.1
engaged in collection of octroi during the contract period.
Respondent No.1 had to incur this amount on the failure of the
Appellant to perform the said contract owing to the injunction
order obtained by Respondent No.2. Respondent No.1 has
claimed interest at 20% p.a. on this decreetal amount from the
date of Suit till realisation.
5. The Appellant had filed a written statement in the said
Suit on 20th November 1996. The Appellant had claimed that
the Suit of Respondent No.1 is barred by the doctrine of
estoppel and has also submitted that the claim made by
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Respondent No.1 in the said Suit is untenable and grossly
inflated. The Appellant has also claimed that they were served
with an injunction order granted by the Malegaon Court in the
Suit No.160 of 1994 filed by the Respondent No.2 and the
injunction order was served on the Appellant on 28 th April 1994.
The Appellant had therefore to immediately surrender his right
to collect octroi and gave charge to Respondent No.1 council.
The Respondent No.1 had not raised any of the contentions as
now raised in the Suit but had taken upon itself the work of
collecting octroi. The Appellant has denied the claims made by
the Respondent No.1 in the said Suit and has prayed for the Suit
filed by Respondent No.1 be dismissed with costs. The
Appellant has also filed an additional written statement which
has dealt with the amendment carried out by Respondent No.1
in the said Suit and has claimed that by the amendment in the
Plaint, the figure of Rs.5,35,947.76/- has been replaced by the
figure of Rs.25,27,986.01/- which is an afterthought and illegal.
The additional written statement was filed on 20th December
2001.
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6. The Respondent No.1 led the evidence of one
Digamber Anant Palshikar, Senior Clerk, working with
Respondent No.1. The witness claimed to have knowledge of
the present Suit. He claimed to have worked with the octroi
department of Malegaon Nagar Palika from 1975 till 1999. He
has deposed at paragraph No.15 of cross-examination at page
no.198 of the Appeal paper book that "There was collusion in
the Defendant Nos.1 and 2, I came to know that fact in 1994. I
came to know from the discussion from the people. Some of the
people had come in our office, there was discussion, so we came
to know about the collusion. Now I can not tell their names. I
had disclosed this fact to the C.O. and Octroi Superintendent
what I heard from the people. But not in writing. In spite of
they did not take any cognizance." The witness has also
deposed to the issue of non-furnishing of bank guarantee and in
that context at paragraph no.16 of his cross-examination at page
no.200 has sated that "It is true when furnishing the guarantee
was under consideration, Court order was served on the
Municipality". Palshikar has further deposed to the claim of
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Respondent No.1 for the higher tender amount which
Respondent No.1 would have received had tender of Mehanat
been accepted. In that context Palshikar at paragraph no.16 of
his cross-examination at page 200 of the Appeal paper book has
deposed that "It is true it was necessary for Mahanat Sales to
submit four guarantees for Rs.One Crores Seventy Six Lacs at a
time. It is true for submitting the tender it was important
condition for furnish Bank Guarantee as a security. It is true as
Mehanat Sales did not shown willingness to submit bank
guarantee for like amount it was not necessary to consider it's
tender and it's tender was not valid." Palshikar has also deposed
to the claim of Respondent No.1 for the unpaid electricity,
telephone, salaries of workers and as in examination-in-chief at
paragraph no.8 stated that "I am ready to produce record
regarding electricity bill, telephone bill and salaries of workers
provided to the Defendant No.1 for the work of collection of
octroi because due to year ending record is not available." The
witness of Respondent No.1, Palshikar in the context of the non-
collection of octroi duty after vacation of the interim injunction
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has deposed paragraph no.9 of his cross-examination page 192
of the Appeal paper book deposed that "Then the Plaintiff
informed to the Defendant No.1 as order of injunction has been
vacated, you should proceed with the work of recovery of octroi
and informed by way of telegram. I have produced certified
copy of the issue of telegram from the post office. It is at Exhibit
No.135. But the Defendant refused to accept the telegram.
Then it was sent through post. Post informed that he refused to
accept the same. That letter of the post office has been
produced. It is at Exhibit No.136. In spite of vacating the
injunction order, the Defendant No.1 failed to proceed with the
work of octroi."
7. The Appellant produced himself as witness. In the context
of the non-furnishing of the bank guarantee, the Appellant has
deposed in examination-in-chief at paragraph 3 at page no.215
of the Appeal paper book that "When order of injunction was
served on me, at that time bank guarantee period was in
existence. Whatever bank guarantee was to be given by me that
was to be given as per agreement. I have not deposited the
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amount of bank guarantee." He has also deposed in context of
the allegation that the Suit filed by Respondent No.2 was a
Collusive Suit with the Appellant at paragraph no.2 of his
examination-in-chief that "The contentions of the Defendant
No.2 that I engaged Mr. R. U. Agarwal, Advocate for him is not
correct. Exhibit 145 which is pursis of the Defendant No.2 is
false. If I would not have served with the injunction order, I
would not have left the work of collection of octroi. The
Plaintiff has filed the present Suit against me on the ground, I
should withdraw the Suit filed by me against them which is for
damage." The Appellant has also deposed in cross-examination
to the allegation made by Respondent No.1 against the
Appellant that the copy of the contract between the Appellant
and Respondent No.1 had been forwarded by the Appellant to
Respondent No.2. He has deposed in cross-examination at
paragraph no.6 at page 222 of the Appeal paper book that "It is
not true as I was sustaining losses during the course of recovery
of octroi and, therefore, I supplied copy of agreement to Ramdas
Chindha and managed to get injunction."
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8. Respondent No.2 has not led any evidence and/or
presented himself for cross-examination. The Respondent No.2
has only filed a written statement to the said Suit. The
Respondent No.2 has in the written statement opposed the Suit
and stated that the Suit should be dismissed against him with
costs.
9. The impugned judgment dated 27th February 2002 was
passed by the Learned Judge of the Court of Civil Judge, Senior
Division, Malegaon, Nashik, after considering the pleadings and
evidence on record and answers the issues at paragraph no.14 in
following manner:-
Sr.No. ISSUES FINDINGS
(1) Does the Plaintiff prove that the Defendant Yes.
No.1 filed Suit bearing Regular Civil Suit
No.160 of 1994 with the help of the Defendant
No.2 and there was collusion in the Defendant
Nos.1 and 2 and obtained ex-parte injunction
and caused damage to it?
(2) Does the Plaintiff further prove that the Yes.
Defendant No.1 committed breach of promise
by not giving pro-forma guarantee in the shape
of bank guarantee to the tune of Rs.1.76
crores?
(3) Does the Plaintiff further prove that the Yes.
Defendant No.1 committed breach of contract
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by not making weekly payment as alleged?
(4) Does the Defendant No.1 prove that the Suit No.
filed by the Plaintiff is not tenable in the eye of
law?
(4A) Does the Defendant No.2 prove that as he is No.
citizen of Malegaon and social worker, he has
right to file the Suit Regular Civil Suit No.160
of 1994 as contended?
(4B) Does he further prove that the Suit of the No.
Plaintiff bad in law due to non joinder of
necessary party as contended in the Written
Statement?
(5) Does the Defendant No.1 further prove that he No.
abondoned the contract as performance of it
became impossible?
(6) Does the Defendant No.1 prove that Suit filed No.
by the Plaintiff is barred by the principles of
estoppel?
(7) Whether the Plaintiff is entitled to partly the Partly
decree for damages as contended entitled in entitled.
the plaint?
(8) What order and decree? As per final
order.
10. The impugned judgment and decree dated 27th February
2002 partially decreed the Suit in favour of Respondent No.1 for
the sum of Rs.88,91,894.82/- as damages together with interest
at 20% p.a. on that amount from the date of filing of Suit i.e.
11th October 1995 till realisation. The impugned judgment has
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also decreed the Suit in favour of Respondent No.1 against the
Appellant and Respondent No.2, jointly and severely for the sum
of Rs.1,09,79,842.60/- as damages together with the interest at
rate on 20% p.a. i.e. from 11th October 1995 till realisation.
11. The Appellant being aggrieved by the impugned judgment
has filed the present First Appeal on 2nd May 2002.
12. Shri. Sathaye, learned counsel for the Appellant has dealt
with each of the claims of Respondent No.1 as well as the
findings in the impugned judgment. Shri. Sathaye has
submitted that the claims of Respondent No.1 are erroneous.
Shri. Sathaye pointed out that the impugned judgment has
rejected the claim of Respondent No.1 in the Suit to an amount
of Rs.2,23,06,191.78/- against the Appellant for the failure on
the part of the Appellant to furnish a bank guarantee for a sum
of Rs.1.76 crores. Respondent No.1 had claimed that loss had
been caused to it by non-furnishing of the bank guarantee and
depriving Respondent No.1 from encashment of the bank
guarantee on account of a breach of contract committed by the
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Appellant. The impugned judgment has held that the bank
guarantee was only security and could not have been encashed
by Respondent No.1. Shri. Sathaye has submitted that the
impugned judgment has erroneously granted the higher tender
amount which would have been received from the Mehanat had
the tender been accepted by Respondent No.1. This claim could
not have been granted by the impugned judgment in the light of
the evidence of the 1st Respondent's witness Palshikar at
paragraph 16 of his cross-examination at page 200 of the Appeal
paper book which has been reproduced above. Shri. Sathaye
has submitted that the impugned judgment has also erroneously
granted the claim of Respondent No.1 of an amount of
Rs.1,09,79,842/- in respect of electricity and telephone charges
and 50% of salaries of the employees which Respondent No.1
has alleged that it had to incur in the collection of octroi duty
upon charge being given by the Appellant. Shri. Sathaye has
submitted that this claim could not have been granted and has
relied on the evidence of 1st Respondent witness Palshikar at
paragraph 8, page no.192 of the Appeal paper book which has
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been reproduced above. Shri. Sathaye has contended that there
was no material to support this claim. Shri. Sathaye has
submitted that the claim of Respondent No.1 to shortfall in
octroi duty collected of the sum of Rs.25,27,986/- who has been
granted by the impugned judgment by failing to take into
consideration the admission on the part of the Respondent No.1
at paragraph 14 of the plaint where it is admitted that
Respondent No.1 had itself collected octroi for the said period.
Respondent No.1 has stated that they had collected a sum of
Rs.10,89,03,174.96 towards octroi for the contractual period i.e.
16th April 1994 to 31st March 1995 and had the Appellant
carried out collection of octroi duty during that period it would
have received a sum of Rs.11,21,11,111/- from the Appellant.
Shri. Sathaye has submitted that the Respondent No.1, had also
received a sum of Rs.23,45,991/- which had been deposited by
the Appellant upto 28th April 1994. Shri. Sathaye had thus
submitted that an amount of Rs.8,61,946/- was the only amount
which Respondent No.1 could have claimed from the Appellant
in the Suit. Shri. Sathaye has relied upon the judgment of the
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Apex Court in the M/s. Murlidhar Chiranjilal V/s. M/s.
Harishchandra Dwarkadas, reported in AIR 1962 SCC 366 at
paragraph 9. Shri. Sathaye has contended that the impugned
judgment be set aside and decree cancelled, particularly since
the injunction order was operative against the Appellant and
due to which the Appellant could not perform his contractual
duty of collection of octroi. He has relied on the well settled
principal of law that an "act of court prejudices no one" i.e.
"actus curiae neminem gravabit". Reference can be made to the
judgment of the Apex Court in Chitra V/s. State of Kerala,
reported in (2016) 1 SCC 685.
13. Shri. Gorwadkar, learned senior counsel appearing for the
Respondent No.1 has opposed the Appeal and attempted to
justify the amounts claimed as and by way of damages by
Respondent No.1 in the Suit. Shri. Gorwadkar has contended
that Respondent No.1 is entitled to receive compensation
equivalent to the bank guarantee amount i.e. Rs.1.76 crores.
Shri. Gorwadkar has relied on Clause 5M of the Procedure,
Forms and Terms and Conditions for appointment of agent
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prescribed in Government order dated 28th February 1994.
Shri. Gorwadkar has contended that the Government Order
being issued in exercise of power under Section 143-A of the
Maharashtra Municipal Council Act, 1965 is statutory in nature
and the recovery of octroi was a statutory process with
legislative sanction. Shri. Gorwadkar has submitted that an
agent is obliged to give a bank guarantee upto 16% of the
agreed offered amount in advance to the Municipal Council and
this amount could be recovered by the Municipal Council in the
event of default by the agent of the Terms and Conditions of the
said contract. Shri. Gorwadkar has also sought to justify the
amount claimed by Respondent No.1 being the higher tender
amount which Respondent No.1 would have recevied had the
offer of the Mehanat being accepted. Shri. Gorwadkar has
contended that this amount would be in addition to the shortfall
in collection of octroi duty contractually agreed upon. Shri.
Gorwadkar has submitted that the Suit filed by Respondent No.2
in the Malegaon Court being Suit No.160 of 1994 was a
Collusive Suit with the Appellant. Shri. Gorwadkar has
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contended that Respondent No.2 had secured ex-parte
injunction in collusion with the Appellant thereby relieving the
Appellant from collecting octroi duty. Shri. Gorwadkar has
contended that Respondent No.1 is entitled to its claims in the
said Suit and that although the impugned judgment had not
granted the claim of Respondent No.1 for the compensation
equivalent to the bank guarantee amount i.e. Rs.1.76 crores
together with interest, Respondent No.1 is still entitled to claim
this amount. Shri. Gorwadkar has submitted that Respondent
No.1 is not required to file cross-objection and has relied upon
authorities in support of the same. Shri. Gorwadkar has also
relied upon provisions of II part of Section 73 and explanation of
Section 74 of the Contract Act in support of this claim. Shri.
Gorwadkar has also relied upon judgments of the Apex Court in
support of his contention that liquidated damages of an amount
equivalent to the bank guarantee viz. Rs.1.76 crores had been
agreed upon and that Respondent No.1 had a right to recover
the same. Shri. Gorwadkar has also contended that the
impugned judgment has justifiably upheld the rest of the claims
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of Respondent No.1 including the claim to the expenses incurred
by Respondent No.1 for use of their own staff for recovery of
octroi till 31st March 1995 and expenses on the said machinery
with interest.
14. Issues which arises for our determination and finding are
as under:-
Sr.No. ISSUES FINDINGS
(1) Whether Respondent No.1 is entitled to a Partially
decree for damages as claimed? entitled
(2) Whether the impugned judgment is upheld No.
(3) What order and decree? As per final
order.
15. We are of the considered view that under the said
contract, the Appellant was obliged to collect octroi duty of the
sum of Rs.23,35,650/- and deposit the same with Respondent
No.1 on a weekly basis. A failure to do so would entitle
Respondent No.1 to recover the said amount with interest at the
rate of 20% p.a. on the defaulted amount. It is an admitted fact
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that the Appellant only deposited an amount of
Rs.23,46,991.75/- with Respondent No.1, till the date of the
injunction order i.e. 28th April 1994. It was the duty of the
Appellant under a contract to deposit a sum of Rs.43,47,636/-
over the said period and hence the Appellant paid an amount
less than the contractual amount by Rs.19,90,042.25/-. This
amount was recoverable by Respondent No.1 with interest at
20% p.a. as observed in the impugned judgment which has
upheld this claim.
16. We are of the considered view that upon the
injunction order being passed by Malegaon Court and served on
the Appellant on 28th April 1994, and till the injunction order
was in operation, the Respondent No.1 are not entitled to claim
any loss. We are of the considered view that the above findings
is not in any way affected by the contentions of Shri. Gorwadkar
that the Suit No.160 of 1994 filed by Respondent No.2 is a
Collusive Suit, filed in collusion with the Appellant. We are of
this view that Respondent No.1 was very much a party to that
Suit and still refrained from taking steps to have the injunction
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order vacated. We have taken into consideration the deposition
of the Respondent No.1's witness Shri. Palshikar in his cross-
examination at paragraph no.15, at page 198 of the Appeal
paper book which we reproduce:
"There was collusion in the Defendant Nos.1 and 2, I
came to know that fact in 1994. I came to know from
the discussion from the people. Some of the people
had come in our office, there was discussion, so we
came to know about the collusion. Now I can not tell
their names. I had disclosed this fact to the C.O. and
Octroi Superintendent what I heard from the people.
But not in writing. In spite of they did not take any
cognizance"
Respondent No.1, despite being aware of the injunction
order, had acquiesced in the injunction order continuing and
knowing fully well that this prevented the Appellant from
collecting octroi duty under the said contract. The impugned
judgment has not considered this material evidence in arriving
at its conclusion that Respondent No.1 is entitled to the
damages claimed for the non-performance of the said contract
by the Appellant during the operation of the injunction order.
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We also observe that the Appellant had himself filed a Suit,
being Suit No.164 of 1994 against Respondent No.1 for
damages to the tune of Rs.1.10 crores for failure on the part of
Respondent No.1 to take steps to vacate the injunction order.
Respondent No.1 has suppressed this material fact in the Suit
filed in the Malegaon Court. We are of the considered view that
had Respondent No.1 taken steps to vacate the injunction order,
the Appellant would have continued with collection of octroi
duty and the losses claimed by Respondent No.1 would have
been avoided. We are of the view that the impugned judgment
in arriving at the finding that Suit No.160 of 1994 was a
Collusive Suit has failed to take into consideration the material
evidence on record including the evidence of the witness of the
Appellant who had deposed in paragraph no.6 of his cross-
examination at page 222 of the Appeal paper book that he had
not supplied the copy of the agreement to Respondent No.2
and/or managed to get the injunction. However, we are not
going into the issue as to whether the said Suit was a Collusive
Suit, as we are of the considered view that had Respondent No.1
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taken steps to vacate the injunction order, the Appellant would
have collected octroi duty and the loss claimed by Respondent
No.1 would have avoided.
17. We are also of the view that it is not open for
Respondent No.1 to raise its claim to compensation for the
amount equivalent to the bank guarantee not furnished by the
Appellant. This claim has been rejected in the impugned
judgment and Respondent No.1 has accepted this claim by not
challenging the impugned judgment. The witness of
Respondent No.1, Palshikar has also deposed that the bank
guarantee has been extended by Respondent No.1 and during its
extension the injunction order came to be served. Reference is
made to paragraph no.16 of his cross-examination at page 200
of the Appeal paper book. The Appellant is not liable for the
loss caused to Respondent No.1 on account of the bank
guarantee not being furnished as the injunction order was in
operation and Respondent No.1 has not taken any steps to
vacate the injunction order and/or cancel the agreement for
non-furnishing of the bank guarantee from the Appellant. The
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impugned judgment has also observed that the bank guarantee
was towards security and has rejected the claim of Respondent
No.1 that they have sustained loss of the amount equivalent to
the bank guarantee. We are of the considered view that the
contention of Shri. Gorwadkar by placing reliance on the
Government Order dated 28th February 1994 and Section 143-A
of the Maharashtra Municipal Council Act, 1965 and the reliance
on the judgments of the Apex Court are misconceived as
Respondent No.1 has by its own conduct given up this claim
apart from the material fact that the bank guarantee was given
as security as held in the impugned judgment.
18. We are of the considered view that Respondent No.1
has not suffered any losses in relation to their claim for amounts
which it has alleged would have been received had it accepted
the higher tender offer of Mehanat and/or that by accepting the
tender of the Appellant, it has been deprived of this amounts.
We are of the view that the tender of Mehanat was not accepted
since Mehanat was unresponsive and failed to furnish bank
guarantee under the contract. There was no loss caused to
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Respondent No.1 as it had not accepted the tender offer of
Mehanat. We place reliance upon the deposition of the witness
Shri. Palshikar of Respondent No.1 at paragraph 16 of his cross-
examination at page 200 of the Appeal paper book reproduced
above. The witness has deposed that as Mehanat did not show
willingness to submit bank guarantee, it was not necessary for
Respondent No.1 to consider its tender and its tender was not
valid.
19. We are also of the considered view that the claim of
Respondent No.1 for expenses incurred by it towards electricity
and telephone charges and 50% of salaries of employees in the
collection of octroi duty and which was payable by the Appellant
to it as the Appellant had committed breach of the said contract
is also unsustainable. Particularly since there are no supporting
documents to substantiate this claim as deposed by the witness
of Respondent No.1 in examination-in-chief at paragraph no.8,
page 192 of the Appeal paper book.
20. We are of the considered view that the only claim
which Respondent No.1 would have been entitled to is for the
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shortfall in collection of octroi duty contractually agreed upon
and the octroi duty payable by the Appellant to Respondent
No.1 subsequent to the injunction order having been vacated on
16th March 1994. The latter amount has not even been claimed
in the Suit. However, this claim of Respondent No.1 for non-
deposit of the contractually agreed amount of octroi duty would
also be subject to Respondent No.1 not having mitigated their
losses. We accept the contention of Shri. Sathaye and the
reliance placed upon the judgment of the Apex Court in M/s.
Murlidhar Chiranjilal V/s. M/s. Harishchandra Dwarkadas,
reported in AIR 1962 SCC 366 at paragraph 9 on the issue of
mitigation of damages. We are of the considered view that the
contract in Clause 19 also contemplated mitigation of loss and
Respondent No.1 has admitted in paragraph 14 of the Suit that
it had collected octroi duty of the sum of Rs.1,89,03,174.96/-
for the contractual period i.e. 16th April 1994 to 31st March
1995 and it would have received Rs.11,21,11,111/- had the
Appellant had performed his contractual duty of collection of
octroi duty. We are of the considered view that Respondent
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No.1 would be entitled to the difference between these two
amounts after taking into account the sum of Rs.23,45,991/-
which had already been deposited by the Appellant with
Respondent No.1. This would amount to a sum of
Rs.8,61,946/-, which in our view would be the sum which
Respondent No.1 is entitled to. We are of the considered view
that the principle of law laid down in the judgment of the Apex
Court in Chitra V/s. State of Kerala (Supra) would squarely
apply to the facts of the case viz. that "act of Court prejudices no
one." We are of the considered view that the injunction order
cannot prejudice the Appellant and the Appellant is not liable to
Respondent No.1 for any loss allegedly suffered by Respondent
No.1 due to the non-collection of octroi duty during the period
when the injunction order was in operation. In addition to the
sum of Rs.8,61,946/-, Respondent No.1 will also be entitled to
the octroi duty which the Appellant ought to have collected
upon intimation by Respondent No.1, subsequent to the
vacation of the injunction order on 15th March 1995. This has
been deposed to by the witness of Respondent No.1, Palshikar in
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paragraph 9 at page 192 of the Appeal paper book which has
been reproduced above.
21. We are of the considered view that Respondent No.1
is entitled to the octroi duty for the period 15th March 1995 till
31st March 1995 of the contractually agreed amount of deposit
of Rs.23,35,650/- per week together with interest at the rate of
20% p.a. This would come to a sum of Rs.46,71,300/- for the
two week period together with interest at 20% p.a. on the said
amount from the date of filing of the Suit i.e. 11th October 1995
till realisation. We are of the considered view that the Appellant
has been unable to give any reason as to why he had not
collected the octroi duty for the period when the injunction oder
was no longer in operation.
22. For the reasons stated above, we allow the First
Appeal and set aside the impugned judgment. The decree of the
impugned judgment is substituted by the following decree:-
(i) Appellant / Defendant No. 1 is directed to pay a
sum of Rs.8,61,946/- as damages in addition to
interest at the rate of 20% p.a. on that amount
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from the date of filing of this Suit i.e. from 11 th
October 1995 till realisation.
(ii) Defendant No.1 is directed to pay a sum of
Rs.46,71,300/- as non-deposit of octroi duty, in
addition to interest at the rate of 20% p.a. on that
amount from the date of filing of this Suit i.e. 11th
October 1995 till realisation.
(iii) The rest of the claim of the Plaintiff/ Respondent
No. 1 is dismissed.
(iv) Decree to be drawn up accordingly.
[RIYAZ I. CHAGLA J.] [B.R. GAVAI, J.]
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