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1954 DIGILAW 168 (KER)

R. S. A. Kasi Iyer v. State

1954-10-04

M.S.MENON, SANKARAN, SUBRAMONIA.IYER

body1954
Judgment :- 1. This is an appeal by the plaintiffs against the dismissal of their suit for money as also the decreeing of a counter-claim made by the defendant against them. 2. The facts may be briefly stated. Plaintiffs are a firm of yarn merchants doing business in Trivandrum. They are agents of the Harvey Mills at Madura. The Defence of Travancore Rules had fixed a ceiling price for yarn by notification dated 28.7.1941, which was published in the Gazette dated 29.7.1941, Part I at page 1533. The price fixed for 20s. yarn was Rs. 6-6-0 per bundle. The plaintiffs had entered into forward contracts with the Madura Mills for delivery of 150 bales of yarn per month from July 1941 to March 1942 at rates varying from Rs. 5-12-0 to Rs. 6-2-0 per bundle, one bale being made up of 40 bundles. When matters stood thus on 13.8.1941 there was a conference at the Madura Mills which was attended by the representatives of the Madura Mills, Mr. Doak, the representative of the plaintiffs as also the representative of the respondent, the State of Travancore, Dr. Parameswaran otherwise known as Warren. At that conference the desirability and necessity of fixing a higher ceiling price for 20s. yarn was discussed and it was decided that the ceiling price be fixed at Rs. 7-10-0 per bundle. There was a discussion as to the price at which the yarn as per the aforesaid forward bookings should be sold. There was a controversy at to whether that price was fixed on the agreement of parties or not. A few days after the conference that is, on 25.8.1941, the State issued Ext. A to the plaintiffs. Ext. A reads as follows: "I have the honour to inform you that under the Defence of Travancore Rules, the price of yarn already under control by this Government will have to be revised to meet the changed prices at which yarn is being purchased now. They therefore consider that the prior bookings arranged by you at lower rates with your mills in advance will stand now acquired by them as these bales arrive in the State from time to time in future. It is anticipated that these acquisitions will hardly cause any hardship or loss to you since the commission on the turn-over of this quantity now coming will only be to your profit. It is anticipated that these acquisitions will hardly cause any hardship or loss to you since the commission on the turn-over of this quantity now coming will only be to your profit. Further the arrangements made by Government for the import of extra yarn from Harveys through you will give you an additional advantage of an increased turnover in future. As such, it is understood you are in a position to meet all your obligations out of the new supply as and when they are received. Therefore, considering these old bookings of yours as absorbed by Government at the booked rates you are to conduct your further sales of yarn out of the new bookings at the rates notified in the Government Gazette of the 26th August 1941". The plaintiffs were permitted to retail this yarn accounting to the State for the difference between the price at which it was acquired and the ceiling price to be fixed at which it would be sold. The next day, that is, on 26.8.1941, a notification was issued in the Gazette at page 62 of Part I fixing the ceiling price per bundle of 20s. yarns at Rs. 7-12-0. On account of the agreement to fix a higher ceiling price the Madura Mills agreed to give an enhanced quota of supply to the plaintiffs a portion of which they were bound to sell to the State. 3. Accordingly sales were made by the plaintiffs to the State and the suit was for Rs. 56,795 and interest thereon by way of the price of yarn supplied. The price was claimed at Rs. 7-12-0 per bundle. The suit was preceded by a notice under S.65 of the Travancore Code of Civil Procedure corresponding to S.80 of the Indian Code. Ext. AD dated 26.7.1944 is the notice. It was not replied to. The suit was filed on 12.6.1120. The defence inter alia was that the plaintiffs owed the State Rs. 72,539-8-0 by way of the difference between the price at which the bales represented by the forward bookings were acquired under Ext. A and the price at which the quantity of yarn was sold to consumers by the plaintiffs. The price of acquisition which was first fixed at the price as per the bookings was afterwards raised to Rs. 6-6-0 which was the ceiling price that prevailed at the time of the acquisition. A and the price at which the quantity of yarn was sold to consumers by the plaintiffs. The price of acquisition which was first fixed at the price as per the bookings was afterwards raised to Rs. 6-6-0 which was the ceiling price that prevailed at the time of the acquisition. The rate of Rs. 7-12-0 per bundle claimed by the plaintiffs for the supply made to the State was also questioned as according to the State the plaintiffs were entitled to get only Rs. 7-8-0 per bundle. This last controversy was decided by the court below in favour of the plaintiffs and that conclusion not having been challenged has become final. The controversy that there was in respect of the number of bales as per the forward bookings dealt with by the plaintiffs was also decided against the State and that finding has also become final for want of a challenge. 4. The court below found in favour of the plaintiffs upon the claim made by them but found against them upon the counter-claim made by the defendant. The latter being the larger amount the result was a dismissal of the plaintiff's suit and a decree in favour of the respondent State for the balance due to them after setting off the two claims one against the other. The appeal is, therefore, valued at the total amount of the claim made by the plaintiffs against the State as also of the amount of the counter-claim made by the State against the appellants - plaintiffs. 5. The sole question for consideration in this appeal relates to the authority for the acquisition made by the State under Ext. A. Though Ext. A does not in terms refer to the authority under which the acquisition was made in Ext. B dated 7.10.1941 the State mentions the defence of Travancore Rules as that authority. No specific rule is however quoted even there. In the Travancore State the Defence of India Rules were re-enacted as the Defence of Travancore Rules unlike in some other States for instance Cochin which enacted that the Defence of India Rules and amendments as and when made shall be law in the State mutatis mutandis. No specific rule is however quoted even there. In the Travancore State the Defence of India Rules were re-enacted as the Defence of Travancore Rules unlike in some other States for instance Cochin which enacted that the Defence of India Rules and amendments as and when made shall be law in the State mutatis mutandis. The rule that was relied upon to sustain the acquisition in the court below is R.81(2)(a) of the Defence of Travancore Rules, which reads as follows:- "(2) The Government, so far as appears to it to be necessary or expedient for securing the defence of Travancore or the efficient prosecution of the war, or for maintaining supplies and services essential to the life of the community, may by order provide - (a) for regulating or prohibiting the production, treatment, keeping, storage, movement, transport, distribution, disposal, acquisition, use or consumption of articles or things of any description whatsoever (and in particular for prohibiting the withholding from sale, either generally or to specified persons or classes of persons, of articles or things kept for sale, and for requiring articles or things kept for sale to be sold either generally or to specified persons or classes of persons or in specified circumstances)". This rule can have no application to the present case. First because it only provides for the passing on an order regulating particular matters between the subjects of the State, in other words, it only enables the passing of a legislation and does not by itself constitute an enforceable law though the authorised legislation if made would be. R.81(2) will not allow the promulgation of an order enabling the Government to make the concerned acquisition. The next rule that is relied upon by the learned Government Pleader for the State in this court is R.83 which reads as follows: "(1) Where, in the opinion of the Government, any product, article or thing can be used in connection with the prosecution of the war, the Government may, by order in writing, requisition such product, article or thing, and may make such further orders as appear to the Government to be necessary or expedient in connection with the requisition. (2) Wherever in pursuance of sub-r. (1) the Government requisitions any product, article or thing the owner of such product, article or thing shall be paid such price therefor as the Government may determine. (2) Wherever in pursuance of sub-r. (1) the Government requisitions any product, article or thing the owner of such product, article or thing shall be paid such price therefor as the Government may determine. (3) Where the Government has requisitioned any product, article or thing under sub-r. (1), the Government may dispose of and use such product, article or thing in such manner as seems to the Government necessary or expedient. (4) If any person contravenes any order made in pursuance of this rule, he shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine". It is clear that that rule can have no application to an acquisition of this description. Because R.83 refers to an acquisition for the purpose of the prosecution of the war as distinct from maintenance of supplies essential to the life of the community. R.76(1) as it stands at present reads as follows: "If in the opinion of the Government it is necessary or expedient so to do for securing the defence of Travancore, public safety, the maintenance of public order or the efficient prosecution of the war, for maintaining supplies and services essential to the life of the community the Government may by order in writing requisition any property, movable or immovable, and may make such further orders as appear to the Government to be necessary or expedient in connection with the requisitioning. Provided that no property used for the purpose of religious worship and no such property as is referred to in R.66 or in R.72 shall be requisitioned under this rule". That rule might justify an acquisition of the kind that was made under Ext. A but that rule was introduced by substitution only on 15.7.1942 by notification R.O.C. No. 21/42/CS when R.83 which became unnecessary was deleted. On the date of the acquisition in question, that is, on 25.8.1941, there was the old R.76 which obviously would not apply to the present acquisition. It is thus clear that there is no rule under the Defence of Travancore Rules justifying the acquisition made under Ext. On the date of the acquisition in question, that is, on 25.8.1941, there was the old R.76 which obviously would not apply to the present acquisition. It is thus clear that there is no rule under the Defence of Travancore Rules justifying the acquisition made under Ext. A. If so it follows that that acquisition is ultra vires and will not clothe the State with any title to the yarn in question or to claim any amount from the plaintiffs in respect of that yarn, that is, the yarn covered by the forward bookings made by the plaintiffs. The counter-claim based on the aforesaid bales of yarn has therefore to be rejected. The plaintiffs were dealing with that yarn and collecting the monies therefor. No doubt, in submitting the accounts to the State in respect of their dealings with this yarn they credited the State with the difference between the price which was allowed, i.e., Rs. 6-6-0 per bundle and the new ceiling price Rs. 7-12-0 at which it was sold. The plaintiffs had been throughout mentioning in their correspondence with the State that they were doing so without prejudice to their rights. The State not being entitled to the amount representing the said difference in the price and the acquisition forming the foundation of their claim thereto being void as we have held, the principle of acquiescence successfully relied upon by the State in the Court below has no application in this case. 6. The next question in the appeal relates to the plaintiffs' claim to interest. Interest is claimed in the plaint by way of damages. In the statutory notice to Government though interest is claimed, no basis for it is mentioned nor is the date from which it is claimed stated. We consider that the notice is defective in regard to the claim for interest as under S.65 Travancore Code of Civil Procedure, corresponding to S.80 of the Indian Code, the cause of action and the relief claimed must be stated in the notice and a proper notice is a condition precedent to the institution of a suit against the State. The plaintiffs are not therefore entitled to interest as claimed in the plaint. Interest may, however, be given from this date which is the date of the decree as that award is independent of the claim in that regard to be made by the plaintiffs. 7. The plaintiffs are not therefore entitled to interest as claimed in the plaint. Interest may, however, be given from this date which is the date of the decree as that award is independent of the claim in that regard to be made by the plaintiffs. 7. In the result, we allow the appeal and set aside the decree of the court below. The plaintiffs will have a decree for the principal amount claimed in the plaint with costs thereon in the court below and with the full costs of this appeal and interest upon all these amounts from this date at 6 per cent.