K. Ramamoorthy ( 1 ) NATIONAL Textile Corporation (Delhi Punjab andrajasthan) Ltd. , Unit - Ajudhia Textile Mills has filed this suit against the three defendants for recovery of Rs. 1,47,106. 03. Very briefly stated the facts are these. The second defendant through the first defendant M/s. Subhkarandas Chiranjilal placed the indents with the plaintiff which are Ex. P. 9 and P. 10 for the purchase of yarn. Pursuant to the indents Ex. P. 9 and P. IO plaintiff despatched the goods to the second defendant to a place called Maunath Bhanjan in the District of Azamgarh through the third defendant Delhi Kanpur Gondia Transport Co. Regd. , the carrier. ( 2 ) THE plaintiff prepared G/rs, the bills and the hundies and were sent through the Bank. Ex. P. 29 to P. 33 are the hundies and Ex. D. 11 to D. 15 are the G/rs First defendant, the commission agent, was informed about second defendant not having honoured the hundies. The first defendant requested the plaintiff to redraw the hundies. As per the directions of the first defendant the plaintiff redrew the hundies and they are evidenced by Ex. P. 34 to P. 38. This time also the second defendant did not chose to honour them. Under Ex. D. 2 and D. 3 notices were sent to defendants 2 and 3. Under Ex. P. 39 letter was also sent to third defendant. A copy of Ex. P. 39 was sent to defendant No. 1 also. Then Ex. P. 42 legal notice was sent to the third defendant. The goods in the custody of the third defendant were not sent back to the plaintiff and defendants 1 to 3 did not pay the value also. ( 3 ) IT appears from the record that the first defendant was appointed as selling agent of the plaintiff w. e. f. 16. 4. 1974 as evidenced by Ex. P. 2 dated 6. 12. 1974. The first defendant was acting as selling agent of Ajudhia Textile Mills which was taken over by the plaintiff. That was perhaps the reason why the plaintiff appointed the first defendant as the commission agent. As the defendants had neither returned the goods nor paid the value thereof, the suit was instituted. ( 4 ) ON 12. 5. 81 the following issues were framed :- Issues 1. That was perhaps the reason why the plaintiff appointed the first defendant as the commission agent. As the defendants had neither returned the goods nor paid the value thereof, the suit was instituted. ( 4 ) ON 12. 5. 81 the following issues were framed :- Issues 1. Is the plaintiff duly incorporated Company and the suit has been instituted and the plaint signed and verified by a person duly authorised to do so? 2. Did the contract of agency in question between the plaintiff and defendant No. I requires rectification, if so, to what effect? 3. Is the suit within time? 4. Is the suit bad for non-joinder of the Punjab National Bank the brake Shrikrishandassorm/skanpur Express Tranport Company and also they necessary parties to the suit? 5. Were the goods in question which were to be ultimately supplied to defendant No. 2 booked by the plaintiff at the costand risk of defendant No. 1? If not to what effect? 6. Was defendant No. I to furnish a separate guarantee in respect of each order booked by the plaintiff at his instance or otherwise under the contract of agency? 7. Is defendant No. I still liable to the plaintiff if the aforesaid issue is proved but no separate guarantee has been furnished by defendant No. I? 8. Did the plaintiff entrust the goods in question to defendant No. 3 as carrier at the instance of defendant No. I? 9. Did defendant No. 3 deliver the goods in question to defendant No. 2 in accordance with the instructions given by the plantiff? It so what and when? 10 ). In case the foregoing issue is not proved, is defendant No,. 3not liable to the plaintiff for wrong delivery? 11. Did the plaintiff instruct defendant No. 3 to rebook the goodes back to Delhi? If so, the goods rebooked accordingly and to what effect 12. Has defendant No. 3 misappropriated the goods or fradulently or illegally delivered the same to defendant No. 2? 1880 so to what effect? 13. Are the defendants or any one f them liable to the paintiff for price of the goods? If so who and to what extent? 14. Did the plaintiff enter into any contract with Kanpurexpress Transport Company as alleged by defendant No. 3? If so, to what effect 15. Was the plaintiff bound to insure the goods in question? 13. Are the defendants or any one f them liable to the paintiff for price of the goods? If so who and to what extent? 14. Did the plaintiff enter into any contract with Kanpurexpress Transport Company as alleged by defendant No. 3? If so, to what effect 15. Was the plaintiff bound to insure the goods in question? If not to what effect? 16. Did the plaintiff not pursue its criminal complaint against defendants 2 and 3 deliberately? If so, to what effect? 17. Did title to or risk in the goods in question pass to any of the defendants? If so when to whom and to what effect? 18. Is the plaintiff entitle to any interest? If so, at what rate, on what amount and for what period? 19. To what amount is the plaintiff entitled as price of the goods and from whom? 20. Relief. ( 5 ) ON 12. 7. 1982 Public Witness. I Mr. M. K. Khare, Assistant Manager (Legal) of the plaintiff was examined. This is just to prove the competency of the person suing on behalf of the plaintiff. ( 6 ) PUBLIC Witness. 2raj Prakash was examined on 12. 7. 1982, who is the Sr. Administrative Manager of Ajudhia Textile Mills. He has spoken about the complaint made about the loss of goods to the police. ( 7 ) PUBLIC Witness. 3 R. K. Chaturvedi was examined on 12. 7. 1982, an officer from M. M. Court, Delhi to prove about the challan filed. ( 8 ) PUBLIC Witness. 4 Padam Sain Jain, Store Keeper of plaintiff Co. at Ludhiana was examined on 2. 8. 1982. ( 9 ) 0n 12. 9. 1982 the following additional issues were framed :- Additional Issues 21. Whether any of the goods booked with defendant No. 3 for carriage were stolen from the custody and godown of M/s. New Kanpur Express Transport Co. If so, of what value and what would be its effect on the liability of defendant No. 3? 22. Whether the amended written statement has not been signed and verified by a competent person? 23. Whether defendant No. 3 is estopped to raise the plea subject matter of issue No. 21? (Issue regarding relief will be treated as issue No. 24 ). ( 10 ) PUBLIC Witness. 5 Ganga Dutt, Supervisor Accounts of Ajudhia Textiles Mills was examined on 4. 8. 23. Whether defendant No. 3 is estopped to raise the plea subject matter of issue No. 21? (Issue regarding relief will be treated as issue No. 24 ). ( 10 ) PUBLIC Witness. 5 Ganga Dutt, Supervisor Accounts of Ajudhia Textiles Mills was examined on 4. 8. 1982 and his evidence was completed on 5. 12. 1985. ( 11 ) PUBLIC Witness s 4 and 5 have spoken to the entire facts relating to the consignment of goods and the failure on the part of the defendants 1 to 3 to send back the goods or return the value of the goods. They have also proved all the documents filed on behalf of the plaintiff. ( 12 ) D1w1 Shyarn Sunder, partner of M/s. Bharat Udyog Ltd. was examined on 5. 12. 1985 to show that the plaintiff used to insure goods. In the instant case, the plaintiff did not insure the goods, and according to the plaintiff under Clause 19 of the agreement Ex P. 2 it was the obligation of the defendants 2 and 3 to insure the goods. Therefore the evidence of D1w1 is of no use to the defendants. ( 13 ) ON 5. 12. 1985 Chiranji Lal, partner of the first defendant firm was examined as DIW 2. Entire tenor of his evidence is that first defendant is not liable, as a matter of fact no complaint was lodged against the first defendant by the plaintiff and no commission has been paid by the plaintiff on the value of the consignment. In the cross-examination by the plaintiff he admits "all these five consignments in question were booked by defendant No. 2 through us. I cannot say if defendant No. 2 got these five consignments in question booked through us by our placing indents Ex. P. 9 and P. 10 with the plaintiff". He says that he does not understand the contents of the letter Ex. D. 1 but he admits that the letter bears his signatures. He would further state that he does not remember whether he had given instructions to the plaintiff-corporation to get the goods rebooked from Maunath Bhanjan back to Delhi on the second defendant failing to take delivery of the goods. The witness admits the transaction but he is trying to escape liability. ( 14 ) D3wi Ram Charan Dass Jindal was examined on 6. 12. 1985. The witness admits the transaction but he is trying to escape liability. ( 14 ) D3wi Ram Charan Dass Jindal was examined on 6. 12. 1985. He also admits the receipt of the goods for transport. He says that he is carrying on business of transport of Jindal India Transport Co. as a sole proprietor and he has Head Office at Kanpur. He admits that "we had taken our commission for getting the consignment goods in our godown from the driver of the truck of defendant No. 3 through which the goods were brought to their godown at Maunath Bhanjan. He also admits that the goods receipts Ex. P. 6 to P. 8 were delivered by third defendant to them at Mahunath Bhanjan. Third defendant did not have any office at Mahunath Bhanjan. He would state that when the goods were lying in his godown they had been stolen. ( 15 ) D3w2 Lahori Lal was examined. According to him, he is a partner in defendant No. 3. He would state that defendant No. 3 used to entrust consignments for carriage from the plaintiff s factory to any party at Mahunath Bhanjan to M/s New Kanpur Express Transport Co. He would also admit that the plaintiff had entrusted the carriage of their goods i. e. yarn from their factory to Mahuanth Bhanjan. He would also state that it was defendant No. 3 who made arrangement with New Kanpur Express Transport Co. by which the goods were to be delivered at Mahunath Bhanjan and it was the responsibility of that Co. Therefore, the evidence of D3w2 is that the third defendant was not any way responsible for the loss. ( 16 ) THE learned Counsel for the plaintiff argued that by virtue of the terms of agreement Ex. P. 2 first defendant cannot escape liability and it is bound to pay the plaintiff the value of the goods. The relevant clauses of the agreement are as follows:- "13. The Agent shall be responsible for the arrangement for lifting of the goods within seven days from the date of contract or as specified therein. P. 2 first defendant cannot escape liability and it is bound to pay the plaintiff the value of the goods. The relevant clauses of the agreement are as follows:- "13. The Agent shall be responsible for the arrangement for lifting of the goods within seven days from the date of contract or as specified therein. The Agent may, with the consent of the manufacturer in writing, arrange for the indents to be made in their own name or in the name of another person as indentor in which case the following certificate shall be endorsed on the indent ; "i hereby agree that in the event of the hundi /draft not being honoured or retired by the indentor, I shall make the immediate payment of the amount with all incidental charges to the manufacturers, failing which the amount may be debited to my account. " 15. That all upcountry despatches shall be made against demand drafts/ hundies drawn on the bank of the discretion of the manufacturers. 16. That the Agent will be responsible in case the demand draft is not honoured by the party immediately to the manufacturer the amount of such dishonoured demand draft together with incidental charges, if any, and will take delivery of the goods despatched at their own expenses at the destination station. 17. That the manufacturers, at the request of the Agent, may make arrangement for despatch of goods to indentors, by a suitable mode of transport, at the risk and cost of the Agent and the indentors, and shall not be responsible for any loss or damage occasioned to the goods after the same leave the premises of the manufacturers. 18. That after the execution of the indents of the Agents or their indentors, the despatch documents such as invoice together with a bill of exchange/ hundi, drawn upon them for the value of the goods specified in the invoice, shall be sent through Bank which shall have to be retired on presentation by payment of the value of the Bill of exchange or hundi together with interest and other charges as may accrue thereon or demanded by the Bank on presentation. 21. 21. That the Agent shall be responsible for the due fulfillment of all the contracts and other agreements entered into by them in connection with the Agency, whether for ready or forward delivery, all obligations, costs, expenses in connection therewith and incidental thereto. Provided, further, that any failure on the part of the Agent in fulfilling any terms of the contract or failure to take delivery of any goods indented for or default in meking payment or otherwise would render forfeiture of the benefits such as commission and /or interest and /or any other dues accrued to the Agent and also entitle the manufacturer to realize any loss suffered on account of these failures on the part of the Agent, from them. The Manufacturer shall also be entitled to adjust all such loss etc. , from the security deposit and/or other amounts due to the Agent. 24. That the Selling Agent shall at all times during the continuance of the said agency obey and observe all reasonable directions and instructions which may be given to them by the manufacturers concerning the sales or disposal of the goods or otherwise relating to and in the course of the business of the said selling Agency. 32. That in case the goods ordered or indented by the Agent or the indentor are not lifted/retired by them, the Agent shall pay to the Manufacturer storage charges at the rate of0. 10 p. per day, per bale/bag and interest at the rate of 6% per annum over the then current Reserve Bank rate, from the date of default till such time as the goods are taken delivery on payment or the same are otherwise disposed off". ( 17 ) LEARNED Counsel for the first defendant would argue that the first defendant was only an agent of the second defendant and once the principal second defendant has been impleaded, who is a disclosed principal, the plaintiff cannot seek to fasten liability on the first defendant. The learned Counsel for the first defendant relied upon two decisions of the Madras High Court reported in P. K. Kalasami Nadarv. K. Ponnuswami Mutlalia and Others, AIR 1962 Madras 44 and Messrs Konda Ram Eswara lyer and Sons, Madurai, and Others v. Messres Madras Bangalore Transport Co. , Madurai, and Others, AIR 1964 Madras 516. I went through the decisions. K. Ponnuswami Mutlalia and Others, AIR 1962 Madras 44 and Messrs Konda Ram Eswara lyer and Sons, Madurai, and Others v. Messres Madras Bangalore Transport Co. , Madurai, and Others, AIR 1964 Madras 516. I went through the decisions. I fail to see how they help the first defendant in the light of the specific terms of the agreement Ex. P. 2. ( 18 ) NONE appeared for the second defendant. Second defendant did not examine himself. ( 19 ) THE third defendant filed a written statement and also examined as I have mentioned above. From L. e evidence of the witnesses examined by the third defendant, it is clear that third defendant cannot escape any liability. It was a bailee under Section 151 of the Contract Act, 1872 and no case has been pleaded under Section 152 of the Contract Act stating that the third defendant had taken as much care of goods entrusted to it as a man of ordinary prudence would take care of his own goods. Therefore, he is bound to make good the loss to the plaintiff. It was not brought to my notice of any principle of law by which defendants 1 to 3 can escape liability. It is clear that they had colluded to defeat the rights of the plaintiff. The defendants have admitted the entrustment and the loss and the plaintiff cannot be held to be responsible for the same. Therefore, all the three defendants are jointly and severally liable to make good the loss to the plaintiff. Therefore, I have no hesitation in holding that all the defendants are liable. The plaintiff has established its case against the defendants. All the issues are answered accordingly in favour of the plaintiff. The suit is in time and on the facts and circumstances of this case no question of limitation would arise. ( 20 ) THE plaintiff has claimed interest at 20% per annum from 5. 12. 1977 when the amended plaint was presented. I don t think I can allow the rate of interest at 20% per annum for the entire period. From 5. 12. 1979 upto 5. 12. 1985 the plaintiff is entitled to interest @ 12% per annum and from 6. 12,1985 upto the date of payment the plaintiff shall be entitled to interest @ 18% per annum. ( 21 ) THERE shall be a decree in the above terms. From 5. 12. 1979 upto 5. 12. 1985 the plaintiff is entitled to interest @ 12% per annum and from 6. 12,1985 upto the date of payment the plaintiff shall be entitled to interest @ 18% per annum. ( 21 ) THERE shall be a decree in the above terms. The plaintiff shall also be entitled to costs from the defendants. ( 22 ) THE first defendant has filed Suit No. 1018/77 for the recovery of Rs. 3,32,186. 44. The learned Counsel for the plaintiff herein submitted that if this Court is inclined to decree the Suit No. 916/77, this Court may consider his claim in suit No. 1018/77. The following are the claims by the plaintiff in this suit :- " (I) Refund of the Security Amount deposited with the Defdts. Vide defendants receipt dt. 26. 4. 72 in. favour of the plaintiff. Rs. 50,000. 00 (ii) Interest on aforesaid deposit w. e. f. 1. 4. 1974 to date @ 6% p. a. as per clause 6 of the said Agency Agreement dt. 6. 12. 74 between the parties (Interest till 31. 3. 74 already paid by the defendants to the plaintiff) Rs-11,000. 00 (iii) Ascertained amount of commission due to the plaintiff on the sales effected by the plaintiff to the extent of Rs. l,40,14,804. 90p. as per para 5 of the plaint. Rs. 2,10,2206 (iv) Interest on the above at the rate of 12% p. a. , w. e. f. 1. 7. 75 to date since the defendants intentionally, deliberately and wilfully did not pay the ascertained amount due to the plaintiff. Rs-60,964. 38 Total Rs. 3,32,1186. 44 (Rupees Three lakhs thirty two thousand one Hundred eighty six and paise forty four only ). " ( 23 ) THE first defendant had taken the plea that in view of the Sick Textile Undertakings (Nationalisation) Act, 1974, the plaintiff can make the claim only before the Commissioner of Payments. Sections 20, 21 and 23 and the second schedule are as follows:- "20. " ( 23 ) THE first defendant had taken the plea that in view of the Sick Textile Undertakings (Nationalisation) Act, 1974, the plaintiff can make the claim only before the Commissioner of Payments. Sections 20, 21 and 23 and the second schedule are as follows:- "20. Claims to be made to the Commissioner.-Every person having a claim against the owner of a sick textile undertaking shall prefer such claim before the Commissioner within thirty days from the specified date; Provided that if the Commissioner is satisfied that the claimant was prevented by sufficient cause from preferring the claim within the said period of thirty days he may entertain the claim within a further period of thirty days but not thereafter. 21. Priority of claims.-The claims arising out of the matters specified in the Second Schedule shall have priorities in accordance with the following principles namely:- (a) Category I will have precedence over all other categories and Category II will have precedence over Category III and so on; (b) the claims specified in each of the categories except Category IV shall rank equally and be paid in full, but if the amount is insufficient to meet such claims in full, they shall abate in equal proportions and be paid accordingly, (c) the liabilities specified in category IV shall bedischarged, subject to the priorities specified in this Section, in accordance with the terms of the secured loans and the priority inter sc of such loans, and (d) the question of payment of a liability with regard to a matter specified in a lower category shall arise only if a surplus is left after meeting all the liabilities specified in the immediately higher category. 23. Admission or rejection of claim: .- (1) After examining the claims with reference to the prority set out in the Second Schedule, the Commissioner shall fix a certain date on or before which every claimant shall file the proof of his claim or be execluded from the benefit of the disbursement made by the Commissioner. 23. Admission or rejection of claim: .- (1) After examining the claims with reference to the prority set out in the Second Schedule, the Commissioner shall fix a certain date on or before which every claimant shall file the proof of his claim or be execluded from the benefit of the disbursement made by the Commissioner. (2) Not less than fourteen days notice of the date so fixed shall be given by advertisement in one issue of the daily newspaper in the English language and one issue of the daily newspaper in the regional language as the Commissioner may consider suitable, and every such notice shall call upon the claimant to file the proof of his claim with the Commissioner shall within the time specified in the advertisement. (3) Every claimant who fails to file the proof of his claim within the time specified by the Commissioner shall be excluded from the disbursements made by the Commissioner. (4) The Commissioner shall, after such investigation as may, in his opinion be necessary and after giving the sick textile undertaking an opportunity of refuting the claim and after giving the claimants a reasonable opportunity of being heard, in writing, admit or reject the claim in whole or in part. (5) The Commissioner shall have the power to regulate his own procedure in all matters arising out of the discharge of his functions including the place or places at which he will hold his sittings and shall, for the purpose of making any investigation under this Act, have the same powers as are vested in a civil Court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely:- (a) the summoning and enforcing the attendance of any witness and examining him on oath; (b) the discovery and production of any document or other material object producible as evidence; (c) the reception of evidence on affidavits; (d) the issuing of any commission for the examination of witnesses. (6) Any investigation before the Commissioner shall be deemed to be ajudicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code and the Commissioner shall be deemed to be a Civil Court for the purposes of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973. (6) Any investigation before the Commissioner shall be deemed to be ajudicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code and the Commissioner shall be deemed to be a Civil Court for the purposes of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973. (7) A claimant who is dissatisfied with the decision of the Commissioner may prefer an appeal against the decision to the principal Civil Court of original jurisdiction within the local limits of whose jurisdiction the sick textile undertaking is situated. Provided that where a person who is a Judes of a High Court is appointed to by the Commissioner, such appeal shall lie to the High Court for the State in which the sick textile undertaking is situated, and such appeal shall be heard and disposed of by not less than two Judges of that High Court. " the SECOND SCHEDULE Order of priorities for the discharge of liabilities in respect of a sick textile undertaking. ( 24 ) GIVING liberty to the plaintiff to approach the Commissioner of Payments within six months from today, the suit is dismissed. Parties are left to bear their own