Delhi High Court
Tinna Overseas Limited vs Food Corporation Of India on 21 February, 2018
#3
IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: 21.02.2018
RFA (OS) 22/2013
TINNA OVERSEAS LIMITED ..... Appellant
versus
FOOD CORPORATION OF INDIA ..... Respondent
Advocates who appeared in this case:
For the Appellant : Mr. Anupam Laldas, Advocate with Mr. Krishanu Barua, Advocate
For the Respondent : Ms. Kiran Suri, Senior Advocate with Mr. Purvesh Buttan, Ms. Urvashi
Garg and Ms. Aishwarya Kumar, Advocates
CORAM:
HON'BLE MR. JUSTICE SIDDHARTH MRIDUL
HON'BLE MS. JUSTICE DEEPA SHARMA
JUDGMENT
SIDDHARTH MRIDUL, J (ORAL)
1. The present Regular First Appeal under Section 96 of the Code of
Civil Procedure, 1908 read with Section 10 of the Delhi High Court Act,
1966, assails a judgment and decree dated 30.08.2012 passed by a learned
Single Judge of this Court in Civil Suit (OS) No.1894/1998 (for short 'the
subject suit'), whereby the same was dismissed in favour of the
respondent/Food Corporation of India.
2. The facts as are necessary for the determination of the present appeal
are adumbrated as follows:-
a) The respondent entered into contracts with various persons for
the sale of fine and superfine rice.
b) The contracts required such buyers to export the rice.
c) The appellant was one such buyer.
d) The parties herein entered into a contract dated 25.04.1995
(Annexure A-4 Colly)(Exhibit D-2), (hereinafter referred to as
'the subject contract')
e) It was the case of the appellant that on the basis of the subject
contract with the respondent, the former entered into further
contract with foreign buyers.
f) The appellant also stated that pursuant to the terms of the
subject contract, earnest money to the extent of 1 per cent of the
total value of quantity was deposited with the respondent in the
month of June, 1995.
g) It is an admitted position that the stocks of rice were lifted by
the appellant in the months of August, September, October and
November of the year 1995.
3. Learned counsel appearing on behalf of the appellant would urge that
the contract between the parties was concluded simultaneously with the
deposit of the earnest money, and the respondent could not unilaterally
increase the price for the period of 30 days thereafter, as has been done in the
present case.
4. It is urged on behalf of the appellant that the act of respondent in
raising the price, after having agreed upon a fixed price, amounts to unjust
enrichment and the appellant is entitled to recover the excess amount
received by the respondent under the subject contract.
5. The principle of contra proferentem is also pressed into service on
behalf of the appellant to urge that if the clauses of the contract permit more
than one interpretation, the one that favours the buyer must be enforced by
the Court.
6. To encapsulate briefly, it is the submission on behalf of the appellant
that once the earnest money deposit of 1 per cent of the total value of
quantity had been made, the respondent was bound to deliver the rice to him
at the price prevalent on the date of the said deposit, and the respondent
could not charge the price which obtained on the date of delivery of the rice.
7. On the contrary, Ms. Kiran Suri, learned Senior Counsel appearing on
behalf of respondent, whilst supporting the impugned judgment and decree
in its entirety would invite our attention to the relevant clauses of the subject
contract to urge that clause (c) in particular,which is an integral part thereof,
clearly provides that rates as fixed on the date of delivery of rice would be
applicable.
8. In this behalf, it is urged that the price for the sale of rice was fixed by
the Government of India, who had formulated the policy therefor and not by
the respondent.
9. In the subject suit, the following issues were struck on 13.08.2003:-
"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."
10. In order to determine the issues, evidence was led by the parties,
principally on the terms of the subject contract.
11. The relevant clauses of the subject contract are extracted as follows:-
"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 same under Open Market Sales Scheme for
purposes of exports.
Ref: Your Telex/FAX/Letter No.
Dated 18/4/95
Dear Sirs,
This is in 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 as 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 along with Extent
Money to the extent of 1% (one per cent) 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 nationalized scheduled bank preferably
State Bank of India.
4. Please note that your replies should reach positively
latest by 4th May, 1995 failing which it will be presumed that
you are no more interested in purchasing rice from FCI. It
may also be noted that acceptance of Earnest money by FCI
would in no way commit the FCI management to accept your
offer which would be considered on merits subject to
availability of stocks and other relevant factors.
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
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 24.04.95 and would be
valid till further orders
NE
a) .....................
b) .....................
c) Rates applicable on the date of delivery would be
applicable. This will be condition of sale of rice by
FCI".
d) Sale of rice by FCI will be only on pre-payment basis."
(Emphasis supplied)
12. Having construed the terms of the subject contract, the learned Single
Judge opined as follows:-
"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."
13. From a perusal of the above extracted paragraphs, the following
findings are reflected:-
1. Although, as per para 3 of the subject contract one percent of the
earnest money deposit was taken from the appellant on the basis
that the delivery was to be effected within one month, it is not the
case of the appellant that the respondent was bound to deliver the
stock within one month. Even otherwise, that could not have been
the case of the appellant, since the subject contract also doesn't
require for the deliveries to be compulsorily made within one
month. Further, since there is no such pleading, no such evidence
has been lead by the appellant.
2. It is a settled principle of law that a contract has to be read as a
whole. The prices stated in Annexure I to the subject contract are
only indicative, since Clause (c) thereof specifically provides that
the rates which would be applicable would be those that were
prevalent on the date of delivery of the rice. Even Note '1' of
Annexure I specifically states that the rates would be applicable
only till further orders i.e. the rates are tentative and
changeable/variable under further orders.
3. The assertion that the appellant had entered into further contracts
with buyers abroad cannot be of any consequence, so as to mean
that the terms of the subject contract could be interpreted or
contradicted thereby by the appellant.
4. In any event, even the purported contracts with the foreign buyers
had neither been filed along with the plaint nor proved in the suit.
14. In this view of the matter, the learned Single Judge proceeded to
determine Issue Nos.1, 2 and 3 against the appellant and in favour of the
respondent.
15. Having perused the entire record, as well as, the impugned judgment,
and after hearing counsel for the parties, we are of the considered view that
the submissions made on behalf of the appellant hold no water and are
devoid of any merit.
16. In our view, a cogent reading of the relevant clauses of the subject
contract clearly manifest that the prices for the sale of rice were to be
determined on the date of delivery; which bargain was fundamental to the
contract entered into between the parties. The prices stated in the subject
contract were only indicative and the rates expressed were valid till further
orders, which conclusion is buttressed by a plain reading of Note '1'
appended thereto.
17. Even otherwise, clause (4) of the subject contract clearly provided that
the acceptance of earnest money by the respondent would in no way commit
it to accept the offer, which would be considered on merits, subject to
availability of stocks and other relevant factors.
18. Clause (5) of the subject contract further stipulated that stocks of rice
were offered subject to availability on "as-is-where-is" basis, without any
guarantee with regard to specifications.
19. In this view of the matter, the submission made on behalf of the
appellant that the prices were fixed on the date of the deposit of the earnest
money, is untenable and contrary to the express terms of the subject contract.
20. In relation to the submission made on behalf of the appellant, invoking
the principles of contra proferentem, it is observed that neither were there
any pleadings in this behalf before the learned Single Judge nor was an issue
struck in relation thereto. Similar is the case with the assertion made on
behalf of the appellant before us in relation to unjust enrichment. In this
behalf, it is trite to state that the appellant cannot be permitted to make out a
case in appeal, which has neither been pleaded nor canvassed in the suit
proceedings that culminated with the impugned judgment and order.
21. In our view, the parties must be strictly held to the bargain struck
between them, as evidenced by the terms and conditions of the subject
contract. No other points were raised before this Court.
22. The appeal is resultantly dismissed. There shall be no order as to
costs.
SIDDHARTH MRIDUL
(JUDGE)
DEEPA SHARMA
(JUDGE)
FEBRUARY 21, 2018
dn
