Delhi High Court
Tinna Overseas Limted vs Food Corporation Of India on 30 August, 2012
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) No.1894/1998 & CS(OS) No.2162/1998
% 30th August, 2012
TINNA OVERSEAS LIMTED ...... Plaintiff
Through: Mr. M.Dutta, Adv.
VERSUS
FOOD CORPORATION OF INDIA ...... Defendant
Through: Ms. Aparna Mattoo, Adv. for
Ms. Kiran Suri, Adv.
&
TINNA FINEX LIMTED ...... Plaintiff
Through: Mr. M.Dutta, Adv.
VERSUS
FOOD CORPORATION OF INDIA ...... Defendant
Through: Ms. Aparna Mattoo, Adv. for
Ms. Kiran Suri, Adv.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
1. Both these suits are being disposed of by this common
judgment as facts and issues are more or less identical. For the sake of
convenience reference is being made to the facts of CS(OS) No.1894/1998.
CS(OS) No.1894/1998 & CS(OS) No.2162/1998 Page 1 of 10
2. The plaintiff is the buyer and the defendant is the seller. The
defendant/Food Corporation of India entered into contracts with different
persons for sale of fine and superfine rice. Contracts were entered into
with such buyers who had to export the rice. The plaintiff was one such
buyer from the defendant. The case as stated in the plaint is that the parties
are governed by the contract dated 25.4.1995, Ex.D2, and as per which the
defendant was entitled to only take the price as specifically provided
therein i.e. in other words it is pleaded that the defendant could not enhance
the price from the price as provided in Ex.D2. It is further pleaded in the
plaint that the plaintiff on the basis of this contract entered into further
contracts with foreign buyers and for this additional reason also the
defendant was not entitled to claim the increase in price. The plaintiff has
filed this suit for recovery of the increased prices which the plaintiff was
forced to pay to the defendant.
3. In the written statement, the defendant has referred to the
contract, Ex.D2 and stated that the prices as stated therein are not fixed but
the prices as per Clause (c) at page 2 of Annexure 1 were to be the prices as
applicable on the date of delivery. That the price stated is only a tentative
price is also clear from Note 1 to Annexure I which states that the rates are
valid „till further orders‟. It is argued that the price is fixed not by the
CS(OS) No.1894/1998 & CS(OS) No.2162/1998 Page 2 of 10
defendant/FCI but by the Government of India, and the defendant simply
implements the orders of the Government of India, and which prices are
applicable across the board to all buyers.
4. The following issues in this case were framed on 13.8.2003:
"1. Whether the plaintiff is entitled to recover a sum of
`3,16,40,408.22 in light of the averments made in the plaint?
OPP.
2. Whether the plaintiff is entitled to interest on the amounts due
to it? If yes, at what rate and to what amount? OPP.
3. Whether the defendant is entitled to increase the price in light
of the Government of India instructions and contrary to the
contract between the parties? OPD.
4. Relief."
Issue No.1
5. Since for determination of this issue, certain Clauses of the
contract are necessarily to be referred to, the said Clauses are being
reproduced as under:-
"No.J/1(6)/94/TOL/S.III APRIL 25, 1995
M/s. Tina Overseas Ltd.
New Delhi.
Sub: Offer of Fine(raw/boiled) and Superfine (raw/boiled)
rice by FCI for sale under Open Market Sales Scheme for
purposes of exports.
Ref: Your Telex/FAX/Letter No.
Dated 18/4/95.
Dear Sirs,
CS(OS) No.1894/1998 & CS(OS) No.2162/1998 Page 3 of 10
This is in the context of your reference(s) captioned above
wherein you have expressed interest for purchase of rice-
fine(raw/boiled) and/or superfine (raw/boiled) under Open
Market Sales Scheme (OMSS) from FCI for purposes of
exports. In this regard, you are informed that while FCI has
decided sale of FCI rice to prospective buyers aiming for
exports and would consider your request as well on merits
subject to your response which should reach latest by 4th
May 1995 if you still have interest in purchase of rice from
FCI.
.................
3. Above information/documents alongwith Extent
Monay tot he extent of 1% (ONE PERCENT) of the total
value of the quantity which you intent to purchase from FCI
should accompany the offer letter in the form of Bank Draft
drawn in favour of "Food Corporation of India" payable at
New Delhi and drawn on any nationalised scheduled bank
preferably State Bank of India.
...................
5. The prices meant for sales of rice by FCI under the
Open Market Sales Scheme for purposes of exports are
enclosed- Annexure- „I‟. Kindly note that FCI will be
offering stocks of rice, if any, subject to availability on "as-
is-where-is" basis without any guarantee with regard to
specifications. FCI will, however, offer rice of 1994-95
crop „A‟ & „B‟ categories to buyers aiming for exports.
Deliveries will be given ex-FCI depots on FOT (free on
truck) basis and you will be required to lift stocks within a
free period of "15 FCI working days" failing which FCI will
levy storage charges of Paise 10 per Bag/per Day or part
thereof subject to a minimum of 40 paise per bag. These
charges will be recovered in respect of the entire quantity of
the unlifted stocks at the end of the free period before the
delivery of such stocks is actually effected. FCI would try
to cooperate in giving deliveries by operating separate
delivery points for you and can give before or after office
hours also subject to your meeting the OTA cost of Staff
detained/deployed.
.............
ANNEXURE - „I‟
STATE WISE PRICES MEANT FOR SALE OF RICE BY
FCI UNDER OMSS FOR PURPOSES OF EXPORTS
Sl. Name of the State/ PRICE OF FINE/ SUPERFINE RICE UNDER
No. Port Towns EXPORT ORIENTED OPEN SALE SCHEME
(RATE: RS/PER MT)
______________________________________
FINE SUPERFINE
(RAW/BOILED) (RAW/BOILED)
__________________ _____________ ____________________
..............
13(a)A.P.Kakinada/Vizag* 6400 6700
(b) Rest of A.P. 6300 6600
..............
NOTES
1. Above rates are effective from
24.4.95 and would be valid till
further orders
NE
a) ....................
b) ...................
c) Rates applicable on the date of delivery would be
applicable. This will be concition of sale of rice by FCI"
6. Once a written contract is entered into in writing between the
parties, Sections 91 and 92 of the Evidence Act, 1872 provide that nothing
can be pleaded so as to contradict or vary the terms of the written contract.
Also it is settled principle of law that a contract has to be read as a whole.
No doubt as per Para 3 one per cent of the earnest money deposit was taken
on the basis that the delivery was to be effected within one month,
however, it is not the case of the plaintiff that the defendant was bound to
deliver the stock within one month. Such could also not be the case as the
contract does not require deliveries to be compulsorily made in one month.
There is no such pleading and therefore there is no such evidence on behalf
of the plaintiff. What is pleaded and urged on behalf of the plaintiff is only
that the prices are fixed because fixed prices are stated in Annexure 1 and
the prices are also fixed because of the aforesaid para 3 of the contract,
Ex.D2 pertaining to earnest money deposit. Another reason for claiming
that the price should not be unilaterally varied by the defendant is that the
plaintiff had entered into further contracts with the buyers abroad and
therefore the plaintiff cannot be put at a disadvantage.
In my opinion, the arguments as urged on behalf of the
plaintiff carry no weight. Once the contract is read as a whole, Clause (c)
specifically provides that the rates which would be applicable would be
those on the date of delivery i.e. the rates would be as prevalent
(i.e.variable) on the date of delivery of the rice. I thus really fail to
understand as to how the plaintiff can argue that it was a fixed price
contract. The prices stated in Annexure I were only indicative, and this
becomes clear not only from Clause (c) stated above, but the Note 1 of
Annexure I which specifically states that the rates would be applicable only
till further orders i.e. the rates are tentative and changeable under further
orders. Merely because the plaintiff has entered into further contracts with
buyers abroad cannot mean that the terms of the contract, Ex.D2 entered
into between the plaintiff and the defendants can be contradicted by the
plaintiff. In fact if the plaintiff was prudent, it would not have entered into
the fixed price contracts with the buyers abroad. At this stage, I must
hasten to add that I am presuming that the plaintiff entered into fixed price
contracts with the foreign buyers, inasmuch as, except making an oral
statement in the pleadings and in the depositions, the contracts with the
foreign buyers have not been filed and proved to show that the contracts
with the foreign buyers were at fixed prices. In any case, the contracts of
the plaintiff with the foreign buyers have no bearing for the interpretation
of the contract, Ex.D2 entered into between the plaintiff and the defendant.
7. Learned counsel for the plaintiff sought to place reliance on
Section 5 of the Sale of Goods Act, 1930 which reads as under:-
"Section 5. - Contract of Sale how made.-(1) A contract of
sale is made by an offer to buy or sell goods for a price and the
acceptance of such offer. The contract may provide for the
immediate delivery of the goods or immediate payment of the
price or both, or for the delivery or payment by instalments, or
that the delivery or payment or both shall be postponed.
(2) Subject to the provisions of any law for the time
being in force, a contract of sale may be made in writing or by
word of mouth, or partly in writing and partly by word of
mouth or may be implied from the conduct of the parties."
8. Once again, I fail to understand how can Section 5 help the
plaintiff because Section 5 does not say that if the parties agreed that the
price were to be variable and as prevalent on the date of the delivery, the
seller cannot claim such price as prevalent on the date of delivery. It is
not disputed that the plaintiff was only charged price as payable on the date
of delivery, and which price was charged not only from the plaintiff but
also from other buyers to whom rice was sold by the defendant.
9. Learned counsel for the plaintiff has placed reliance upon a
Full Bench judgment of the Madras High Court in Alumminum Industries
Ltd. Vs. Minerals & Metals Trading Corp. AIR 1998 Madras 239 to
canvass the proposition that the price prevalent on the date of delivery
cannot apply. I have gone through the facts of the cited case. In the facts
of the cited case the prices as payable on the date of delivery were held not
to be payable because the buyer/plaintiff in that case had gone for taking of
delivery, however, for frivolous reasons delivery was refused and given on
a later date when the price had increased, and consequently, it was held by
the Full Bench that the seller cannot take advantage of his own wrong i.e.
once delivery was not given after completion of all formalities by the buyer
i.e. delivery could not have been stopped, and therefore if delivery was
illegally stopped and the price thereafter increased, increased prices could
not be paid. The cited case has therefore no relevance to the facts of the
present case.
10. In view of the above, I hold issue no.1 against the plaintiff and
hold that the plaintiff is not entitled to the suit claim.
Issue No.2
11. Since issue no.1 has been held against the plaintiff, there does not
arise any issue of granting any interest to the plaintiff.
Issue No.3
12. Issue no.3 is also decided against the plaintiff inasmuch as
while discussing issue no.1, I have already observed that the defendant is
entitled to increase the price inasmuch as the contract itself provided that
the prices as indicated in Annexure 1 were only indicative and the prices
which would be prevalent on the actual date of delivery would be charged.
This is also further made clear by Note 1 of the contract which shows that
the prices as stated in Annexure 1 are only applicable till further orders i.e.
the prices were not fixed/firm but were variable.
Relief.
13. In view of the above, the suit of the plaintiff will stand
dismissed. Considering the fact that the suit has been pending since 1998
i.e. for over 14 years, and since the defendant would have been put to
expenditure, considering the fact that the plaintiff has no case whatsoever,
and the defendant was forced to enter into litigation, the defendant will be
entitled to actual costs and which I quantify at `50,000/- for each of the
suit. I exercise my powers under Rule 14 of the Delhi High Court (Original
Side) Rules, 1967 to exempt the applicability of the rules with regard to
costs and apply the ratio of the recent judgment of the Supreme Court in
Ramrameshwari Devi and Others v. Nirmala Devi and Others, (2011) 8
SCC 249, which states that it is high time that the actual costs should be
awarded. Decree sheet be prepared.
14. Suit No.2162/1998 will also stand dismissed in view of the
aforesaid discussion, and also with costs of `50,000/- in favour of the
defendant and against the plaintiff. Decree sheet be prepared in this suit
also.
VALMIKI J. MEHTA, J
AUGUST 30, 2012
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