Rajasthan Vanaspati Products ... vs Union Of India & Anr.
2011 Latest Caselaw 5256 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         RFA No.331/2002

%                                                 31st October, 2011

RAJASTHAN VANASPATI PRODUCTS LIMITED                 ...... Appellant
                    Through: Mr. C.V. Francis, Advocate with Mr.
                             Arun Francis, Advocate.
                    VERSUS

UNION OF INDIA & ANR.                                   ...... Respondents
                          Through:    Dr. Chaudhary Shamruddin Khan,
                                      Advocate with Mr. Aamir Naseem,
                                      Advocate for the respondent No.1.
                                      Mr. Neeraj Malhotra, Advocate for the
                                      respondent No.2.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

    1.   Whether the Reporters of local papers may be
         allowed to see the judgment?

    2.   To be referred to the Reporter or not?

    3.   Whether the judgment should be reported in the Digest?

VALMIKI J. MEHTA, J (ORAL)

1.            The challenge by means of this Regular First Appeal under

Section 96 of Code of Civil Procedure, 1908 (CPC) is to the impugned

judgment dated 11.1.2002 which dismissed the suit for recovery of

Rs.1,45,719.09/- filed by the appellant/plaintiff and decreed the claim of

the respondent No.2/State Trading Corporation of India for Rs.1,85,090/-

alongwith interest @ 12% per annum.

2.            The facts of the case are that the appellant/plaintiff was the

manufacturer of vanaspati oil. In the manufacture of vanaspati oil, there

was requirement of use of imported vegetable oil. Eighty percent of the

imported vegetable oil was to be used in the manufacture of vanaspati.
RFA No.331/2002                                                   Page 1 of 5
 Since the imported vegetable oil was used, and which was a scarce

commodity, the respondent No.1/Union of India had channelized its import

through the respondent No.2/State Trading Corporation of India.          The

respondent No.1 used to fix from time to time the issue price of the

imported vegetable oil in order to maintain the selling price of vanaspati

in public interest. The respondent No.1, so far as the present facts are

concerned, fixed a tentative issue price of imported vegetable oil at

Rs.6,100/- per tonne by a notification dated 1.8.1978. On the basis of this

provisional price fixed, allocation of 592 metric tonnes of the imported

vegetable oil was made to the appellant/plaintiff for the month of March,

1979. Two delivery orders dated 6.3.1979 and 13.3.1979 for 104 metric

tonnes and 43.46 metric tonnes were issued in favour of the plaintiff. Two

further delivery orders dated 13.3.1979 and 9.3.1979 for 45 metric tonnes

and 50 metric tonnes were also issued in favour of the plaintiff making a

total of 242.46 metric tonnes. The appellant/plaintiff after paying the price

at Rs.6,100/- per tonne asked for delivery, however, complete delivery

was not given and only 65.190 metric tonnes was delivered before

13.3.1979. The balance quantity of 177.272 metric tonnes was delivered

later. The respondent No.1 vide its letter dated 18.3.1979 finally fixed the

issue price of the imported vegetable oil @ Rs.7,250/- per metric tonne.

This aspect was duly communicated by the respondent No.2 to the

appellant/plaintiff at the time of delivering the imported vegetable oil to

the appellant/plaintiff.   The appellant/plaintiff had given its undertaking

dated 6.3.1979 like all other buyers that delivery may be made at the


RFA No.331/2002                                                  Page 2 of 5
 provisional price and when the final price is fixed the said final price will

be accepted by the appellant/plaintiff/buyer as per the undertaking dated

6.3.1979 Ex.PW1/D1. By this undertaking, the appellant/plaintiff undertook

and agreed that the appellant/plaintiff/buyer shall immediately pay to the

respondent No.2 the difference between the final price and the provisional

price on the first demand being made. The appellant/plaintiff after having

taken delivery of the allocated quantity of imported vegetable oil @

Rs.6,100/- per metric tonne made further payments for supply of further

imported vegetable oil and from which monies the respondent No.2 in

terms of the undertaking adjusted an amount of Rs.1,53,881.50/- being

part of the demand of Rs.3,31,986.60/-. The appellant/plaintiff objected to

this mode of recovery by the respondents and therefore the subject suit

came to be filed. In the subject suit, the respondent No.2/defendant No.2

raised a counter claim for the balance amount payable for the quantity

delivered because of the difference in the provisional price of Rs.6,100/-

per metric tonne and the final price of Rs.7,250/- per metric tonne.

3.          The issues which were required for determination on this

aspect were issue Nos.2 and 9 for the appellant/plaintiff and issue Nos.8

and 11 to 13 for the respondents/defendants. These issues are:-

            "2.   Whether the plaintiff's agreement/undertaking of
         6.3.1979, on the basis of which release orders for March,
         1979 allocation were issued by defendant No.2 on the earlier
         issue price, was without authority of law, illegal, vitiated,
         without free consent etc and was not binding on the plaintiff,
         as alleged, in paragraph 4 (reply to preliminary objections) of
         the plaintiff's replication? If so, to what effect? OPP
         9. Whether the plaintiff is entitled to the said sum of
         Rs.1,45,719.90/- or any part thereof from defendant No.2?
         OPP

RFA No.331/2002                                                  Page 3 of 5
          8. Whether the deft. No.2 could have appropriated its said
         dues in the sum of Rs.1,45,719.90 from the monies received
         from the pltff. for supply of oil in the usual course of its
         business, and whether the adjustment so made amounts to
         misappropriation? If so, to what effect? OPD
         11.       If issues Nos.7 to 9 are decided in favour of the pltff,
         whether deft. No.2 is entitled to the said amount of
         Rs.1,45,719.89 towards difference in issue price from the
         pltff. by way of set off or counter claim? OPP-2
         12.       If issue No.11 is decided in favour of deft. No.2,
         whether deft. No.2 is entitled to interest on the said sum of
         Rs.1,45,719.80 @ 20% per annum from 5.5.79 till set
         off/payment? OPD-2
         13.       Whether the deft. No.2 is entitled to the sum of
         Rs.39,370.91 by way of difference of issue price in respect of
         42.262 M.T. of oil for which orders were issued before, but
         delivery by the pltff. was taken at Kandla after 31st March, 79
         by way of set off or counter claim? OPD-2"

4.          On these issues, the trial Court has returned the findings that

the undertaking dated 6.3.1979 Ex.PW1/D1 was undisputed so far as the

appellant/plaintiff is concerned and therefore the appellant/plaintiff was

bound to make the payment at the final rate which was fixed by the

respondent No.1/Union of India. For the sake of convenience, I reproduce

the letter of undertaking as under:-

     "                                           6.3.79
     The Deputy Marketing Manager
     The S.T.C. of India Ltd.
     Oils & Fats Div.
     New Delhi
     Dear Sir,

            We agree that you may hereinafter issue us DOS for the
     edible oil for manufacturing of vanaspati/direct consumption on
     your existing release price which shall be provisional price. We
     unconditionally agree and undertake that as and when the final
     price is fixed by you we shall accept the said final price without
     any reservation whatsoever and shall immediately pay you the
     difference between the final price and the provisional price if any
     on your demand. Similarly refund if any becomes payable to us
     the same shall be paid by you immediately. We will abide by the
     decision taken by STC in the matter.

RFA No.331/2002                                                   Page 4 of 5
             Thanks
                                                Yours
                               For Rajasthan Vanaspati Products Ltd.

                                           Authorized Representative"

            A reading of the aforesaid undertaking leaves no manner of

doubt that the appellant/plaintiff had always undertaken to pay the final

price determined and therefore it cannot back out of its liability. There is

nothing unusual in this course of dealing inasmuch as not only the

appellant/plaintiff but also all other buyers have been charged for and

have paid at the final rate fixed by the respondent No.1.

5.          The contention of the learned counsel for the appellant that if

they would have not given the undertaking, delivery would not have been

effected under the delivery orders which would have stopped the running

of the factory, is an argument without merit because no one can back out

of its commitment after taking advantage of the same. The commitment

was to pay at the correct final price which was determined, and which

surely ought to bind the appellant because delivery was taken only

pursuant to the undertaking. And, it is not as if the appellant has been

singled out for any adverse treatment inasmuch as all other buyers have

also similarly paid at the finally determined price.

6.          In view of the above, I do not find any merit in this appeal

which is accordingly dismissed, leaving the parties to bear their own

costs. Trial Court record be sent back.



OCTOBER 31, 2011                                       VALMIKI J. MEHTA, J.

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