Madras High Court
The Madurai District Milk ... vs P.Velraj on 15 April, 2021
1 S.A.(MD)Nos.868 & 869 OF 2013
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 15.04.2021
CORAM
THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN
S.A.(MD)Nos.868 & 869 of 2013 and
M.P.(MD)Nos.2 of 2013 & 1 of 2014
S.A.(MD)No.868 of 2013
The Madurai District Milk Producers'
Co-operative Union, Cattle Feed Unit,
Through the General Manager. ... Appellant/Respondent/
Defendant
Vs.
P.Velraj,
S/o.V.Paramasivam,
M/s.Arun Chemicals Proprietor,
No.46.C, C.M.R.Road, Madurai. ... Respondent/Appellant/
Plaintiff
Prayer: Second appeal filed under Section 100 of
C.P.C., to set aside the Decree and Judgment in A.S.No.4 of
2011 passed by the VI Additional District and Sessions Judge,
Madurai, by allowing revised rate of interest and modifying
the Decree and Judgment of the I Additional Sub Judge,
Madurai, in O.S.No.114 of 2002 dated 31.08.2010 in other
respects and pass such further appropriate orders as
expedient to the facts and circumstances of the appeal.
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1/21
2 S.A.(MD)Nos.868 & 869 OF 2013
S.A.(MD)No.869 of 2013
The Madurai District Milk Producers'
Co-operative Union, Cattle Feed Unit,
Through the General Manager. ... Appellant/Appellant/
Defendant
Vs.
P.Velraj,
S/o.V.Paramasivam,
M/s.Arun Chemicals Proprietor,
No.46.C, C.M.R.Road, Madurai. ... Respondent/Respondent/
Plaintiff
Prayer: Second appeal filed under Section 100 of
C.P.C., to set aside the Decree and Judgment passed by the VI
Additional District and Sessions Judge, Madurai passed
commonly in A.S.No.34 of 2011 dated 25.07.2012 modifying
the Decree and Judgment of the I Additional Sub Judge,
Madurai in O.S.No.114 of 2002 dated 31.08.2010 and pass
such further appropriate orders as expedient to the facts and
circumstances of the appeal.
(in both S.As.)
For Appellant : Mr.S.Seenivasagam
For Respondent : Mr.G.Aravindhan
***
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COMMON JUDGMENT
The defendant in O.S.No.114 of 2002 on the file of the
I Additional Sub Judge, Madurai, is the appellant in these two
second appeals. The respondent herein Thiru.P.Velraj filed the
said suit seeking recovery of a sum of Rs.2,45,997.80/- from
the appellant herein with interest at 24% p.a. The suit was
decreed on 31.08.2010 and the appellant herein was directed
to pay a sum of Rs.1,59,892.45/- with interest at the rate of 9%
p.a. with effect from 08.02.1999 till the date of filing of the
suit and at the rate of 6% p.a. from the date of filing of the suit
till date of realisation. The plaintiff feeling aggrieved with
regard to the rate of interest awarded in his favour filed
A.S.No.4 of 2011. The defendant filed A.S.No.34 of 2011
before the VI Additional District and Sessions Judge, Madurai.
Both the appeals were heard together. By Judgment and
Decree dated 25.07.2012, A.S. No.34 of 2011 filed by the
defendant was dismissed. A.S.No.4 of 2011 filed by the
plaintiff was allowed and the defendant was directed to pay
interest on the principal amount of Rs.1,59,892/- at the rate of
15% from 08.02.1999 till the date of the Decree and at the
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rate of 6% p.a. from the date of decree till the date of
realisation. Challenging these two decrees and Judgments, the
aforesaid second appeals have been filed.
2. S.A.(MD)No.868 of 2013 was admitted on
09.01.2014 on the following substantial questions of law:-
“i) When the agreement/contract has no
provision for interest, is it permissible for the
Courts to direct payment of interest?
ii) Whether the Courts below properly
followed the rationale in deciding the rate of
interest?”
3. S.A.(MD)No.869 of 2013 was admitted on
09.01.2014 on the following substantial questions of law:-
“i) Whether the civil Court has
jurisdiction to entertain a suit on a subject
matter coming under Section 90 of the Tamil
Nadu Cooperative Societies Act?
ii) Whether the express bar of
jurisdiction of the civil Court by Section 156 of
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the Tamil Nadu Cooperative Societies Act is
applicable to the subject matter of the suit?
iii) Whether there is a proper cause of
action to institute the suit?
iv) Whether the suit was barred by
limitation?
4. Heard the learned counsel on either side on the
aforesaid substantial questions of law framed by this Court.
5. The learned counsel appearing for the appellant
submitted that the plaintiff was the successful tenderer in the
tender process floated by the appellant. The appellant had
undertaken to supply wheat bran, rice bran and other items of
cattle feed. The appellant had also remitted earnest money
deposits to the tune of Rs.75,000/- on various dates. The
appellant's counsel would submit that the materials supplied
by the plaintiff were substandard and not in accordance with
the specifications of the tender notification. The defendant
sent a sample of wheat bran supplied by the plaintiff to the
Food Analysis Laboratory, King Institute, Guindy, Chennai, for
analysis. According to the analyst report, the cattle feed
supplied by the plaintiff was of very inferior quality.
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Therefore, appropriate deductions had to be made making
payment to the plaintiff. The value of the materials supplied by
the plaintiff was Rs.2,68,807/-. The defendant had already paid
a sum of Rs.1,61,284/-. In view of the adverse report given by
the analyst, 74% cut had to be effected and it came to
Rs.1,98,917.81/-. Hence, the defendant had paid an excess
amount. Earnest money deposit was also pending with the
defendant. After making necessary book adjustments, the
defendant had to make payment to the plaintiff to the tune of
Rs.39,024.73/-. The learned counsel appearing for the
appellant would state that by suppressing all these material
facts, the suit had been filed as if the appellant had to pay a
sum of Rs.1,59,892.45/- to the plaintiff.
6. The core argument of the learned counsel
appearing for the appellant is that as per the terms of the
tender notification, the successful tenderer should become an
associate member of the appellant union. The appellant is a
cooperative society. Therefore, any dispute between the
management of the society and the members will have to be
resolved only through arbitration as contemplated under
Section 90 of the Tamil Nadu Co-operative Societies Act.
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Condition No.32 of the tender notification made it clear. The
learned counsel would further contend that even though this
point was not specifically taken in the written statement, it
was projected during arguments and the trial Court had also
referred to the same. In any event, this is a pure question of
law, he is entitled to canvass this contention. The learned
counsel would further point out that as per Section 156 of the
Tamil Nadu Co-operative Societies Act, there is an express bar
on jurisdiction of the civil Court. The supplies were made
during 1998 but the suit was instituted only on 04.02.2002.
Thus, it was patently barred by limitation. He also drew my
attention to Section 3 of the Limitation Act 1963 which states
that the bar of limitation will have to be borne in mind by any
Court even if it is not specifically pleaded in the written
statement.
7. The learned counsel appearing for the appellant
submitted that the Courts below have completely misdirected
themselves in law. He prays for reversal of the Judgments and
Decrees passed by the Courts below.
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8. Per contra the learned counsel appearing for the
respondent/plaintiff would contend that no substantial
question of law really arises for consideration in these second
appeals and called for dismissal of the second appeals and
confirmation of the Judgment and Decree passed by the first
appellate Court.
9. I carefully considered the rival contentions and the
went through the evidence on record.
10. Let me take the question regarding limitation first
for consideration. It is true that the supplies were made by the
plaintiff/respondent in the second half of the year 1998. it is
also true that the suit itself came to be instituted only on
04.02.2002. Limitation period in such cases is three years. But
on 08.02.1999, a sum of Rs.1,61,284/- was paid by the
appellant union. Therefore, limitation of three years would
have to be calculated afresh from the said date. The payment
challan has been marked as Ex.A.9. The Courts below rightly
found that the period of limitation of three years will have to
be calculated from 08.02.1999. The suit was obviously filed
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within time. I therefore answer the substantial question of law
framed in this regard in favour of the respondent.
11. The other major contention advanced by the
learned counsel appearing for the appellant is that the civil
Court lacked the jurisdiction to even entertain the suit.
12. The tender notification has been marked as
Ex.A.20. The appellant's counsel relied on condition Nos.31
and 32. They read as follows:-
“31. All the successful tenderers should
become an associate member of the union by
paying Rs.10/-(Rupees Ten only) as non-
refundable one.
32. If the union incurs any loss due to
the default of the contractor on account of poor
quality raw material supply to Cattle Feed Plant
then the same will be recovered from the party
from any other transactions with the Union or
through arbitration and supplier/tenderer will
not be permitted to participate in the future
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tenders without the clearance from the board of
our union.”
13. It is true that as per the condition No.31, the
successful tenderer should become an associate member of
the appellant union by paying Rs.10/- as non-refundable one.
The sheet anchor of the argument of the learned counsel
appearing for the appellant is predicated on this. His
argument is that since the respondent became a member of
the appellant union during the relevant time, the dispute
between the parties must be resolved only in terms of Section
90 of the Tamil Nadu Co-operative Societies Act, 1983.
Section 90 of the Act reads as follows:-
“ Settlement of disputes
90. Disputes .- (1) If any dispute
touching the constitution of the board or the
management or the business of a registered
society (other than a dispute regarding
disciplinary action taken by the competent
authority constituted under sub-section (3) of
section 75 or the Registrar or the society or its
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board against a paid servant of the society)
arises-
(a) among members, past members and
persons claiming through members, past
members and deceased members, or
(b) between a member, past member or
person claiming through a member, past
member or deceased member and the society, its
board or any officer, agent or servant of the
society, or
(c) between the society or its board and
any past board, any officer, agent or servant, or
any past officer, past, agent or past servant, or
the nominee, heirs or legal representatives of
any deceased officer, deceased agent, or
deceased servant of the society, or
(d) between the society and any other
registered society, such dispute shall be referred
to the Registrar for decision.
Explanation.- For the purposes of this
section, a dispute shall include-
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(i) a claim by a registered society for
any debt or demand due to it from a member,
past member or the nominee, heir or legal
representative of the deceased member whether
such debt or demand be admitted or not.
(ii) a claim by a registered society
against a member, past member or the nominee,
heir or legal representative of a deceased
member for the delivery of possession to the
society of land or other immovable property
resumed by it for breach of the conditions of
assignment or allotment of such land or other
immovable property and
(iii) a decision by the board under sub-
section (3) of section 34;
Provided that no dispute relating to, or
in connection with, any election shall be referred
under this sub-section till the date of the
declaration of the result of such election.
(2) The Registrar may, on receipt of
such reference;
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(a) decide the dispute himself or
transfer it for disposal to any person subordinate
to and empowered by him; or
(b) subject to such rules as may be
prescribed, refer it for disposal to an arbitrator
or arbitrators.
(3) Subject to such rules as may be
prescribed, the Registrar may withdraw any
dispute referred under sub-section (1) to any
person subordinate to him or transferred under
clause (a) or referred under clause (b) of sub-
section (2) by the Registrar or any person
subordinate to him and-
(a) decide the dispute himself; or
(b) transfer it for disposal to any person
subordinate to and empowered by him; or
(c) refer if for disposal to an arbitrator
or arbitrators; or
(d) retransfer the same for disposal to
the person from whom it was withdrawn; or
(e) refer it for disposal to the arbitrator
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or arbitrators from whom it was withdrawn.
(4) If a question arises, whether for the
purposes of this section any person is or was a
member of a registered society, or whether the
dispute referred for decision is a dispute
touching the constitution of the board, or the
management or the business of the society, such
question shall be decided by the Registrar.
(5) Where any dispute referred to the
Registrar under sub-section (1) or withdrawn by
him under sub-section (3) relates to immovable
property, the Registrar or the person or the
arbitrator or arbitrators to whom it is
transferred, referred or retransferred under sub-
section (2) or sub-section (3) may, on the
application of a party to the dispute direct that
any person who is interested in such property,
whether such person be a member or not, be
included as a party to the dispute and any
decision that may be passed on the reference, by
the Registrar, the person, the arbitrator or
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arbitrators aforesaid, as the case may be, shall
be binding on the party so included, provided
that he shall be liable only to the extent of such
property.
(6) The Registrar may pass such
interlocutory orders as he may deem fit in the
interests of justice.
(7) Nothing contained in the Arbitration
Act, 1940 (Central Act X of 1940) shall apply to
any arbitration under this section.
(8) Nothing contained in section 34 of
the Code of Civil Procedure, 1908 (Central Act V
of 1908) shall apply to any decision passed or
award made under this section.
(9) (a) The period of limitation for
referring a dispute under this section shall be
regulated by the provisions of the Limitation Act,
1963 (Central Act 36 of 1963) as if the dispute
were a suit and the Registrar a civil court,.
Subject to the following modifications, namely:-
(i) when the dispute relates to a society
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in respect of which a special officer has been
appointed under section 88 or to a society which
has been ordered to be wound up under section
137, the period of limitation shall be six years
from the date of the order issued section 88 or
section 137, as the case may be:
(ii) save as otherwise provided in clause
(i), when the dispute relates to any act or
omission on the part of any of the parties
referred to in clause (b) or clause (c) of sub-
section (1), the period of limitation, shall be six
years from the date on which the act or omission
with reference to which the dispute arose, took
place;
(iii) when the dispute is in respect of, or
in connection with, any election, the period of
limitation shall be two months from the date of
declaration of the result of the election.
(b) Notwithstanding anything contained
in clause (a), the Registrar may admit a dispute
after the expiry of the period of limitation if the
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applicant satisfies the Registrar that he had
sufficient cause for not referring the dispute
within such period and the dispute so admitted
shall be a dispute which shall not be barred on
the ground that the period of limitation has
expired. “
14. Section 90 of the Tamil Nadu Co-operative
Societies Act can be invoked only if the respondent is a
member of the appellant union. Condition No.31 only states
that a successful tenderer should become an associate
member of the union. The membership of the plaintiff in the
appellant union is a question of fact. It must be specifically
pleaded and established. It cannot be raised in the abstract.
The appellant union must have established by adducing
evidence that the plaintiff was a member of the union during
the relevant time. In the written statement, there is no
pleading in this regard. No document has been marked on the
side of the defendant. When there is no pleading in the
written statement and when there is no evidence, I have to
hold that the plaintiff was not a member of the appellant union
during the relevant time.
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15. I cannot also accept the construction put forth by
the appellant's counsel on condition No.32. It only states that
if the appellant union had suffered any loss on account of poor
quality of material, it will be set off against the contractor's
other bills or through arbitration. It does not anywhere state
that if the tenderer has any dispute with the management, he
has to invoke only arbitral remedy. On the other hand,
condition No.18 of part-II of the tender notification states that
the disputes must be settled within the jurisdiction of
Madurai Court only. Therefore, the Courts below did have the
jurisdiction to decide the dispute. Neither Section 90 nor
Section 156 of the Tamil Nadu Co-operative Societies Act will
come into play. This question is also answered against the
appellant.
16. The appellant had specifically taken a plea that
there was some serious dispute regarding the quality of the
material supplied by the plaintiff. In fact the report of the
analyst is adverse to the plaintiff. The defendant should at the
very inception taken up the matter with the plaintiff. There is
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no such correspondence between the parties. Only after the
plaintiff issued Ex.A.13 Notice dated 06.12.1999, the
defendant replied on 08.04.2000 vide Ex.A.17. Till then, the
defendant had not confronted the plaintiff. Therefore, the plea
regarding adverse quality of the materials supplied by the
plaintiff was rightly held as not established.
17. There cannot be any dispute on the proposition
that where is liability to pay but there is delay in making the
payment, even if the contract does not provide for it, payment
must be paid with interest. Hence, this is also answered
against the appellant. Next comes the question regarding rate
of interest. The principal amount due by the defendant was
Rs.1,59,892.45/-. The plaintiff also did not move the Court
immediately. The defendant had made their stand abundantly
clear way back in April 2000 itself. But the suit was filed only
in 2002. Taking note of the conduct of the plaintiff, the trial
Court rightly decreed that the plaintiff is entitled to 9%
interest from 08.02.1999 till filing of the suit and interest at
the rate of 6% p.a. thereafter. The appellate Court without any
justification enhanced the interest rate. S.A.(MD)No.869 of
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2013 is dismissed and S.A.(MD)No.868 of 2013 is partly
allowed. The Judgment and Decree of the trial Court is
restored. No costs.
15.04.2021
Index : Yes / No
Internet : Yes/ No
PMU
Note: In view of the present lock down owing to
COVID-19 pandemic, a web copy of the order may be
utilized for official purposes, but, ensuring that the
copy of the order that is presented is the correct
copy, shall be the responsibility of the
advocate/litigant concerned.
To:
1. The VI Additional District and Sessions Judge,
Madurai.
2. The I Additional Sub Judge,
Madurai.
3. The Record Keeper, V.R.Section,
Madurai Bench of Madras High Court, Madurai.
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G.R.SWAMINATHAN,J.
PMU
S.A.(MD)Nos.868 & 869 of 2013
15.04.2021
https://www.mhc.tn.gov.in/judis/
