M/S. Thakral And Sons vs Indian Petro Chemicals ...
1993 Latest Caselaw 152 Del

JUDGMENT

1. The present suit has been filed by the plaintiff for recovery of Rupees 2,08,200/- against the defendants.

2. The brief facts of the case are that the plaintiff is a registered partnership under the Indian Partnership Act, 1932, carrying on its business at AT 50/ 3, Baljit Nagar, New Delhi. Shri Des Raj son of Shri Gaila Ram is one of the registered partners and is competent to file the suit, sign and verify the pleadings.

3. Defendant No. 1 is a Corporation, engaged in the manufacture and selling of various products including the product by the name of Koylene Waste Wax or "P.P.Wax".

Defendant No. 2 is the branch office of defendant No. 1 and defendant No. 3 is the Chairman and Managing Director of defendants 1 and 2.

4. It is alleged that the defendants had been selling their product Koylene Waste Wax or 'P.P.Wax' at the rate of Rs. 3000/- per metric ton but were unable to clear their huge stock of the water at the above said rate and, therefore, in order to clear the piled up stock of waste, defendant No. 2 offered to sell to the plaintiff this product at the reduced rate of Rs. 1000/- per metric ton on or about June 4, 1979. Plaintiff agreed to purchase the 'Koylene Waste Wax' or 'P.P.Wax' from defendant No. 2 at the rate of Rs. 1000/- per metric ton on or about June 28, 1979. The plaintiff was asked by defendant No. 2 to place his orders for the above said goods, as well as, pay the price of goods at the defendant No. 2's office in New Delhi, as and when plaintiff required the goods and could take delivery of the same, which were lying at defendants' plant at Baroda.

5. In pursuance to the above said agreement, plaintiff deposited Rs.41,600/- at defendant No. 2's office at New Delhi on July 2, 1979, by means of a pay order of the same date, issued by Bank of India, Kamla Nagar Branch, Delhi, towards the cost of 40 metric tons of 'Koylene Waste Wax' or 'P.P. Wax'. The defendants delivered the goods for the amount of Rs. 39,847.60 to the plaintiff and the invoice dated July 4, 1979 showing the delivery of goods for the said amount is filed with the plaint. The plaintiff again deposited Rs. 52,000/- at defendant No. 2's office at New Delhi on July 4, 1979 by means of pay order of the same date, issued by the New Bank of India, Rajouri Garden, Najafgarh Road, New Delhi, towards the cost of 50 metric tons of 'Koylene Waste Wax' or 'P.P. Wax'. The counter-fail of the receipt of Rs. 52,000/- against the issue of pay order in the name of defendant No. 2 is also filed with the plaint. The defendants delivered the said goods for the amount of Rs.44,16l/- to the plaintiff.

6. Finally, the plaintiff placed the order for 100 M.Tons of 'Koylene Waste Wax' or 'P.P. Wax' and deposited Rs. 1,04,000/- at defendant No. 2's office at New Delhi on July 12, 1979, by means of a pay order No. B-2 /68/790520 of the same date, issued by the State Bank of India, Moti Nagar, New Delhi, towards the cost of 100 M. tons of 'Koylene Waste Wax' or 'P.P. Wax'. The copy of the letter dated July 12, 1979, placing the order for the goods and the counterfoii for receipt of the amount by State Bank of India, Moti Nagar,. New Delhi, against the issue of pay order in the name of defendant No. 2 are filed with the plaint.

7. It is further alleged in the plaint that the defendants issued to the plaintiff 8 delivery orders on July 13, 1979, each for 12.5 M. tons of the goods, numbering 1862 to 1869. After giving the delivery of only 32.42 tons of goods against the delivery orders Nos. 1862, 1863 and 1864. the defendants stopped the further delivery of plaintiff's goods against the rest of the delivery orders 1865, 1866, 1867, 1868 and 1869 on July 16, 1979. The said five delivery orders, issued by the defendants for 12.5 M. tons each remained unexecuted because the defendants stopped giving the delivery of the remaining goods of the plaintiff. The plaintiff was further informed on July 16,1979 that the delivery of all the goods had been stopped and no further delivery would be given. The plaintiff made repeated requests and demands and defendants did not give the delivery of rest of the goods against the payment, which had already been made to defendant No. 2 at New Delhi. The plaintiff also went to Baroda along with his legal representative to discuss the matter with the defendant's Marketing Executive Officer but did not yield any result. The plaintiff accordingly has alleged in the plaint that the defendants did not deliver the balance of the goods for the price of Rs. 70,704/- and the said refusal on the part of the defendants was illegal and wrongful and amounted to the breach of contract by the defendants. The plaintiff has further averred in paragraph 26 of the plaint that it had agreed to sell the alleged goods to M/s. Prashar Sales Corporation, Azad Market, Delhi, at the rate of Rs. 3,000/- per metric ton and thus, has suffered a loss of Rs. 1,35,000/ - on account of defendants' breach of contract and non delivery of the said goods. The present suit accordingly has been filed for recovery of the following amounts :

(a) Rs. 70,704/- as the price of the goods paid

(b) Rs. 1,35,000/- for the loss and damage due to breach of contract by the defendants for non delivery;

(c) Rs. 2,500/- towards the expenses incurred by the plaintiff;

The defendants were liable to pay Rupees 2,08,204/- to the plaintiff. The plaintiff has further claimed costs of the suit and future interest at the rate of 18 per cent per annum from the date of suit till realisation.

8. Defendants have filed the written statement. In their written statement, a preliminary objection was raised that this Court has no jurisdiction to entertain the suit, especially, when no cause of action arose within the jurisdiction of this Court and the office of defendant No. 1 is situated at P.O. PetroChemicals, District Baroda in the State of Gujarat, which had expressly stipulated in the relative orders/invoices that the Baroda Court alone had jurisdiction to entertain any disputes by and between the parties and touching upon the said orders/invoices covering the goods in question. It was, however, not denied that defendant No. 1 has an administrative office or place of Business at Himalaya House, 23, Kassturba Gandhi Marg, New Delhi. It was reiterated that the said office, at all material times, had no dealing with the plaintiff.

9. On merits, the defendants have contended that the goods have a specific use for which they were purchased. These cannot be resold and/or as PBR compounds or other material purposes to achieve wrongful gains by the buyers. The plaintiff had from time to time deposited Rs. 1,97,600/- in the aggregate with the defendants' Administrative office at New Delhi in or towards the payment or part payment of the said agreed quantity of the goods in question. The said supplies were effected to the plaintiff for its specific or avowed purpose but the plaintiff indulged in resetting waste wax as PBR and PBR compounds, which was detrimental to the PBR market where the defendants had interest being the only manufacturer of PBR in the country. All such supplies were effected by the defendants to the plaintiff in good faith. The defendants never refused to deliver any lawfully agreed quantity of goods to the plaintiff for which they had valid orders. There has been no breach of contract or any wrongful action on the part of the plaintiff as alleged in the plaint. Plaintiff has committed breaches of its obligations. The question of defendants' delivering any balance goods against the alleged payment of Rs. 70,704/-could not and did not arise as mentioned in the plaint.

10. On the pleadings of the parties, the following issues were framed on November 21, 1980 :

1. Whether this court has jurisdiction to entertain the suit ?

2. Whether there has been a breach of the contract or any wrongful action on the part of the defendants, as pleaded in para 19 of the plaint?

3. Whether the defendant was legally justified in refusing to deliver the goods' P.P. Wax' of the value of Rs. 70,704/ - after having received the price of the goods ? If so to what effect ?

4. Whether the plaintiff is a registered firm within the meaning of Indian Partnership Act and the person suing is one of its partners?

5. Whether suit as framed is not maintainable against the defendants?

6. Whether the plaintiff has no cause of action against the defendants or any one of them as pleaded in paras 1, 2 and 3 of the preliminary objections?

7. Whether plaintiff is entitled to claim Rs. 2500/ - as expenses incurred for obtaining the remaining goods from the defendants ?

8. To what amount of damages, if any, is the plaintiff entitled to ?

9. Whether plaintiff is entitled to the claim of interest ? If so how much ?

10. Relief,

11. In support of their case, the plaintiff as well as defendants have led their respective evidence. Reliance has also been placed on the documents on record.

12. I have heard learned counsel for the parties and have also gone through the record.

13. An objection has been raised by the defendants that this Court has no jurisdiction to entertain this suit, especially when no cause of action arose within the jurisdiction of this Court. In this regard, plaintiff has examined PW 1 Shri Vinod Jain, who has submitted that he was doing the liaison work for the plaintiff and used to look after sale and purchase of articles on behalf of the plaintiff firm. The defendants were interested in selling Koylene Waste Wax also known as P.P. Wax to the plaintiff. The said witness went with the plaintiff to the office of the defendants at Himalaya House, Kasturba Gandhi Marg, New Delhi, in June/July, 1979. The officer of the Department talked with the plaintiff as well as with this witness and offered to sell the goods at Rs. 1,000/- per metric ton, to be lifted by the plaintiff at Baroda. The plaintiff agreed to this proposal to purchase the goods. The amount of Rs. 40,000/- for the purchase of 40 metric ton of P.P. Wax was deposited with the defendants at New Delhi. The further payment of Rs. 52,000/- was also made at New Delhi to defendant No. 2. He has reiterated that the payments to the defendants were made at the office of defendant No. 2 at New Delhi and the goods were to be lifted from Baroda on receipt of a message from New Delhi.

14. P.W. 2 Shri Ramesh Chand Jain has also reiterated that he had been dealing with the defendant firm at its office at Himalaya House, Kasturba Gandhi Marg, New Delhi, and he used to go to the defendants' office in the said building. He paid the price of the goods in the office of defendants company at New Delhi and defendant company used to deliver copy of the telex in favor of the factory at Baroda. The plea of having entered into contract at New Delhi, by the plaintiff with the defendants and making the payment in regard thereto was also confirmed by the statement of PW 3 Shri Des Raj.

15. The counsel for the plaintiff has vehemently argued that the dealings for the supply of the goods took place between plaintiff and defendant No. 2 at New Delhi, where the payment for the consignment were made. The said defendant accepted the same at New Delhi and accordingly this Court has jurisdiction to entertain the suit.

16. The counsel for the defendant, on the other hand, has contended that this Court has no jurisdiction to entertain the suit, especially when no cause of action arose within the jurisdiction of this Court and the office of defendant No. 1 is situated at P.O. PetroChemicals, District Baroda in the State of Gujarat, which had expressly stipulated in the relative orders/invoices that the Baroda Court alone had jurisdiction to entertain any dispute, arisen by and between the parties and touching upon the said orders/ invoices covering the goods in question. The counsel for the defendants has referred to the judgment in Hakam Singh v. M/s. Gammon (India) Ltd., . The counsel has accordingly argued that the parties had specifically agreed to vest the jurisdiction in the courts at Baroda and an agreement that one of the Courts, having such jurisdiction alone shall try disputes, is not contrary to public policy and does not contravene Section 28 of the Contract Act. He has submitted that the 'conditions of sale' as mentioned on the back of the invoices Exhibits P.1/20, P.2/21 and P.3 stated that any dispute arising out of or in connection with the contract shall be subject to the jurisdiction of the Courts at Baroda only.

17. The counsel has further relied on the judgment of the Supreme Court in A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem, to support the proposition that in case of breach of contract, a suit can be filed at a place where the contract was made or at a place of performance where part of cause of action had arisen and the contract to vest jurisdiction in one of the competent courts is not against public policy. Reference is made to paragraph 17 of the judgment which reads as follows :

"In S. Manuel Raj & Co. v. J. Manilal & Co. where one of the parties to the contract signed an order form printed by the other party containing the words "subject to Madras jurisdiction" and sent the order form to the other party it was held that the party must be assumed to have agreed that Madras was the place for settlement of the dispute and it was not open to that person who signed the order form of the opposite party containing the printed words to show that printed words were not part of the contract and that those words in the contract were to exclude the jurisdiction of other Courts and to keep sole jurisdiction to one Court. It was observed that the object of printing such words as "subject to Madras jurisdiction" in the contract was to exclude the jurisdiction of other Courts and to give sole jurisdiction to one Court and it was in consonance with the commercial practice in India. Similarly in Sri Rajendra Mills v. Haji Hasan, where there was a contract between the plaintiff and defendant No. I under which the parties agreed that all suits arising on or out of the contract would be instituted in the Court at Salem, The Division Bench held that it was true that the suit could have been instituted either at Salem or at Howrah under Section 20(c) of the Code of Civil Procedure, as the cause of action, admittedly arose in part in both the places and it was, therefore, a case where two Courts had concurrent jurisdiction and, in such a case, it was open to the parties to make a choice restricting the Court in which the suit under or upon the contract could be instituted. In other words, both the Courts having territorial jurisdiction the parties by their agreement waived their right, to institute any action, as aforesaid except at Salem. It was observed that under those circumstances it was not open to the plaintiff to object to the order for return of the plaint for presentation to the Court at Salem as the choice of forum in case of alternative forums lies with the plaintiff and the plaintiff having debarred or precluded itself from going to any other Court except at Salem which would be a proper Court as against the defendants it would not be just to allow the plaintiff at the instance of any other party or under cover of its objection to institute the suit except in the Court at Salem."

18. The law is well settled that "an agreement between the parties to a contract to the effect that a suit concerning disputes arising between them on the basis of that contract should be instituted in one only out of two competent Courts, having territorial jurisdiction over the subject matter of that suit is valid and enforceable and is not void under Section 28 of the Contract Act." There is also nothing against public policy which dictates that, because other Courts which can also hear the mailer cannot hear it in view of the agreement so long as the matter is heard by competent court, which has jurisdiction in every way to hear it. This proposition of law was laid down by a Full Bench of the Lahore High Court as reported in Musa Ji Lukman Ji v. Durga Dass, AIR 1946 Lahore 57.

19. Adverting back to the facts of the present case, there is no denial to the effect that the oral contract between the plaintiff and defendant No. 2 was entered into at Delhi. The negotiation with the defendants were held in their sales office at New Delhi and the payments were also made at New Delhi in the office of defendant No. 2. The plaintiff was given the challans and copy of the telex for Baroda office in respect of the materials purchased by the plaintiff. The Sales office at New Delhi used to receive the payment and conduct the business for the supply of goods to the plaintiff. The contract for supply of the goods was also oral and was never reduced in writing. Therefore, there was no written agreement between the parties to the effect that the suit concerning dispute arisen between them, on the basis of the contract should be instituted in one only out of two competent courts, having territorial jurisdiction over the subject matter of that suit. The invoices were issued by the office of the defendants at Baroda, which on the reverse specify the conditions of sale. The plaintiff did not sign any order form with the defendants to accept that in case of dispute arisen between the parties, the jurisdiction will vest only in the Courts at Baroda. The negotiations with the defendants were held in their sales office at New Delhi and the plaintiff was given the challans and copy of the telex from Baroda office in respect of the materials. The defendants, in the circumstances of the present case, cannot take advantage of one of the conditions of sale, specified on the back of the invoices.

20. I accordingly hold that this Court has jurisdiction to try this suit and the same has been rightly entertained. The issue is decided accordingly.

21. The suit has been filed by the plaintiff firm and it is reiterated in the plaint that Shri Des Raj is one of the registered partners and is competent to file the suit, sign and verify the pleading. There is no evidence to the contrary. This issue is also decided in favor of the plaintiff and against the defendants.

22. The written statement has been filed by the defendants and a plea is taken that the plaintiff has no remedy or relief against the defendants and in particular against defendants 2 and 3, when defendant No. 1 is an independent entity, being a Government company within the meaning of Section 617 of the Companies Act, and defendant No. 3 had no dealings of his own with the plaintiff and defendant No. 2 has no separate legal entity as it is a place of business of defendant No. 1 and descriptions of defendants, as set out in the cause title of the plaint, are vague incorrect, incomplete and wanting in material particulars etc. The suit has been filed against Indian PetroChemicals Corporation Ltd. and the dealings took place between the plaintiff and defendant No. 2 at New Delhi, where the payments were made. The goods had to be lifted from the works of the defendant No. 1. Defendant No. 3 is the Chairman and Managing Director of the Company and he is sued in that capacity. There is, therefore, no infirmity in the plaint and the same does not lack material particulars. The issue is decided in favor of the plaintiff and against the defendants.

23. The counsel for the plaintiff has stated that the defendants did not deliver the goods for the price of Rs. 70,704/- to the plaintiff and the refusal to deliver the goods is illegal and wrongful and amounts to breach of contract by the defendants.

24. It is common case of the parties that the plaintiff has entered into an oral contract with the defendants for the supply of the goods. It is also not denied that the defendants did not deliver the goods for the price of Rs.70,704/- to the plaintiff. The only plea, which has been made in the written statement is that the remaining supplies of the goods were withheld because the plaintiff indulged in resetting the waste wax as PBR and FBR compounds which was detrimental to the PBR market. The plaintiff had no jurisdiction to resell the same at profit as they were meant for its personal use and the said supplies were effected in good faith.

25. The defendants have not established by any evidence on record that the goods had to be used in the factory of the plaintiff and they could not be offered in the market for re-sale. It is also denied by PW1 that the P.P. Wax was sold by the defendants to the plaintiff on the condition that the same would be used by the plaintiff firm in its factory and that it would not be re-sold. The defendants have not produced any evidence contrary to this. Defendants have also admitted vide their letter dated November 29, 1980 addressed to the plaintiff, wherein it is admitted that there is a credit balance of Rs. 80,296.06 in their favor. I accordingly hold that there was breach of contract and the defendants have wrongly withheld the delivery of goods for the amount as claimed in the plaint, after having received the price of the same. These issues are decided in favor of the plaintiff and against the defendants.

26. Plaintiff has alleged in the plaint that it has incurred Rs.2,500/- towards expenses for traveling to Baroda by Air. P W 1 has reiterated that the partner of plaintiff along with another employee had gone with him to Baroda by Air and incurred Rs.2,500/- on this trip. They had also returned by Air. The Air tickets from Delhi to Baroda and from Baroda to Delhi are exhibited as Exhibits P. 1 to P.6. There is no evidence in rebuttal, which has been led by the defendants. Plaintiff is accordingly entitled to a sum of Rs. 2,500/- as expenses incurred for trying to obtain the balance of goods from the defendants. The issue is decided in favor of the plaintiff and against the defendants.

27. The plaintiff has claimed damages for the non supply of remaining goods to the extent of Rs. 1,35,000/-. The damages are assessed on the basis that the remaining goods were not delivered to the plaintiff against the delivery orders Nos. 1865 Exhibit P.12,1866, Exhibit P.13, 1867 Exhibit P.14, 1868 Exhibit P. 15 and 1869 Exhibit P. 16 respectively. The plaintiff suffered a loss of Rs. 1,35,000/- for breach of contract by the defendants for non delivery of these supplies. It has been stated in paragraph 26 of the plaint that the plaintiff had agreed to sell the alleged goods to M/s. Prashar Sales Corporation, Azad Market, Delhi, at the rate of Rs. 3,000/- per metric ton and accordingly the non delivery of the same by the defendants caused a loss of Rupees 1,35,000/- on account of defendants breach of contract. Reliance is placed on the judgment of this Court in Union of India, Dept. of D.G.S. & D., New Delhi v. M/s. Commercial Metal Corporation, AIR 1982 Delhi 267, wherein it has been held that in case of non delivery by the seller, it is not essential that the purchaser should have repurchased equivalent goods in the market after the date of the breach before he can claim damages. The measure of damages is the difference between the market price on the date following the breach and the contract price. The object of awarding damages is to place the purchaser so far as money can do it, in the same situation with respect to damages as if the contract had been performed. Reference is also made to the judgment of the Supreme Court in M. Lachia Setty and Sons Ltd. v. The Coffee Board, Bangalore, . This Authority lays down "that the principle of mitigation of loss does not give any right to the party who is in breach of the contract but it is a concept that has to be borne in mind by the Court while awarding damages. The non defaulting party is not expected to take steps, which would injure innocent persons. If so, then steps taken by him in performance or discharge of his statutory duty also cannot be weighed against him. In substance, the question in each case would be one of the reasonableness of action taken by the non defaulting party.

28. The plaintiff has alleged in the plaint that he has suffered a loss of Rs. 2,000/- per metric ton, as he had agreed to sell the alleged goods to M/s. Prashar Sales Corporation, Azad Market, Delhi, at the rate of Rs. 3,000/- per metric ton and thus suffered a loss of Rs. 1,35,000/- on account of defendants' breach of contract and non delivery of goods. The plaintiff, however, has not produced any cogent evidence in this regard to support the contention that the market value of the goods at the relevant time was Rs. 3,000/ per metric ton, except making a bare averment in the plaint. The plaintiff has neither produced any documentary evidence to prove that he had effected the sale at a profit of Rs. 2,000/ -per metric ton, nor he has produced any witness, who is alleged to have purchased the same at that rate.

29. There is no doubt that some witnesses have stated that the goods were re-sold at higher price and in particular PW 3 Shri Des Raj has mentioned in cross-examination that there was a contract for the supply of P.P. Wax to Prashar Sales Corporation, Delhi. The said Corporation had placed order on telephone. There was no witness to corroborate the statement nor any bill or invoice was produced in this regard. The account books were also not produced. The entire transaction was alleged to be oral and no attempt was made to produce any witness of the alleged buyer to support the contention that the market value of the goods was at the rate of Rs. 3,000/ - per metric ton. On the countrary, it has been averred in the plaint, that the defendants had been selling their product at the rate of Rs. 3,000/- per metric ton but were unable to clear their huge stock of this waste at the above said rate and in order to clear this piled up stock offered to sell the same to the plaintiff at the reduced rate of Rs. 1,000/- per metric ton. I, therefore, hold that the damages, as a result of non delivery of the alleged goods, have not been proved by the plaintiff. The cases cited by learned counsel for the plaintiff are of no assistance as they are based on their own facts. The material on record in the present case does not show that the prices of the goods for the relevant period had risen to the level of Rs. 3,000/- per metric ton, particularly when the defendants have stated that the goods were supplied to the plaintiffs for the use at their own works. This issue is decided against the plaintiff and he is held not entitled to any damages.

30. The plaintiff has claimed interest at the rate of 18 per cent per annum in the plaint, from the date of filing of the suit till realisation. It has already been held that the plaintiff deposited Rs. 1,04,000/- in defendant No. 2's office at New Delhi for the price of goods and it is also not denied that the defendants did not deliver the goods for the amount of Rs.70,704/- against the said payment of Rs. 1,04,000/ - There was wrongful retention on the part of the defendants in respect of the amount, which was due to the plaintiff. The same could have been refunded to the plaintiff and no attempt was made even during the pendency of the suit, which was validly due to the plaintiffs. The plaintiffs are accordingly held entitled to the interest at the rate of 18 per cent per annum, as claimed in the plaint.

31. In view of my findings on the issues, I pass a decree with costs in favor of the plaintiff and against the defendants of Rs.70,704/-, as price of the goods and Rupees 2,500/- towards the expenses incurred by the plaintiff towards air travel. The plaintiff shall further be entitled to interest at the rate of 18 per cent per annum on the decretal amount from the date of filing of the suit till realisation.

32. Order accordingly.