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2002 DIGILAW 912 (JHR)

Central Coalfields Ltd. v. Allahabad Bank Ltd.

2002-08-23

GURUSHARAN SHARMA

body2002
JUDGMENT Gurusharan Sharma, J. 1. The plaintiff is appellant. The suit for realization of Rs. 67,990.00 from the defendant No. 1, for price of coal-tar lifted by the defendant No. 2, as detailed in Schedule A to the plaint, plus Rs. 1,98,724.50 paise from the defendant No. 2, being the amount of loss suffered as detailed in Schedule B to the plaint or in alternative for realization of total amount of Rs. 2,66,714.50 paise from the defendant No. 2, in case it was found that the defendant No. 1 was not liable to pay Rs. 67,990.00 was dismissed, holding that the plaintiff was not entitled to claim the aforesaid sum from either of the defendants. 2. According to the contract in question, the defendant No. 2, a registered partnership firm, during the period commencing from 1.1.1967 to 31.12.1967 was to lift 17.40 tones of coal-tar from the plaintiffs Coke Oven Plant at Giridih @ Rs. 390.75 paise per tone. 3. As per Clause 10 of the General Conditions of tender contract, the defendant No. 2 was asked to deposit Rs. 67,990.00 towards security in cash. An option was offered to deposit Rs. 57,990.00 after adjustment of earnest money of Rs. 10,000.00 held by the plaintiff, under the contract. The contractor had also to deposit Rs. 56648.75 paise being the value of 145 tones of coal-tar. It was allowed to be lifted on production of cash receipt. The defendant No. 2 had accepted the contract and offered to furnish bank guarantee, in lieu of cash deposit of Rs. 67,990.00 and the plaintiff agreed to the said offer. 4. The plaintiff claimed to have offered bank guarantee of Rs. 70,000.00. Up to May, 1967, the defendant No. 2 lifted total quantity of 318.025 tones of coal-tar only and inspite of repeated offers the defendant No. 2 failed to take delivery of the balance 1421.975 tones of coal-tar as per the contract. 5. The defendant No. 1 contested the suit, denying its liability to pay anything Under the bank guarantee, Exhibit 8, because no action to enforce the claim was made within three months from 31.12.1967. 6. Further, according, to the defendant No. 1, contract was cancelled and the defendant No. 2 never defaulted in payment of the price of coal-tar lifted by it. So the terms of the bank guarantee were not enforceable against the defendant-bank. 7. 6. Further, according, to the defendant No. 1, contract was cancelled and the defendant No. 2 never defaulted in payment of the price of coal-tar lifted by it. So the terms of the bank guarantee were not enforceable against the defendant-bank. 7. The defendant No. 2 also contested the suit by filing separate written statement and accepted the contract, under which it was to lift 17.40 tones of coal-tar in the year 1967. According to it, lifting of 145 tones of coal-tar per month was dependent on the quantity of coal-tar available. Non-availability of 145 tories coal-tar was a breach of fundamental terms of the contract and the bank guarantee in question was a guarantee only against the payment of price of coal-tar, which was never violated by it to occasion demand for payment of alleged price of coal-tar. The defendant No. 2 also denied alleged claim of cancellation of the contract by letter dated 18.9.1967, as claimed in paragraph 14 of the plaint. 8. Trial Court dismissed the suit holding that plaintiff was not entitled to recover sum of Rs. 67,990.00 from either of the defendants. It was also not entitled to claim any loss or damage in the suit for the period after the alleged date of cancellation of the contract, i.e, 18.9.1967, as stated in paragraph 14 of the plaint. 9. The plaintiff has, therefore, preferred the present Appeal under Section 96 of Civil Procedure Code. 10. It is relevant to refer to Clause 10 of the General Conditions of Contract relating to security deposit, which prescribed as under :-- "On acceptance of tender in whole or in part, buyer shall be at the option of the Sales Manager, Calcutta, and within the period specified by him deposit with the Financial Controller (A/Cs), Council House Street. Calcutta, security deposit which will be 10% of the total value of the contract. The security shall be in cash and the Corporation shall not be liable to the payment of any interest thereon." 11. The defendant No. 2 the buyer by letter dated 6.1.1967 called upon by the Sales Manager, Calcutta, to deposit security in cash. The plaintiff thereafter by letter dated 6.1.1967, Exhibit 6/1 communicated acceptance of the contract. The defendant No. 2 informed the Sales Manager on 12.1.1967. Exhibit 6/m that the Senior Sales Manager has allowed to furnish bank guarantee instead of security deposit in cash. The plaintiff thereafter by letter dated 6.1.1967, Exhibit 6/1 communicated acceptance of the contract. The defendant No. 2 informed the Sales Manager on 12.1.1967. Exhibit 6/m that the Senior Sales Manager has allowed to furnish bank guarantee instead of security deposit in cash. On 17.1.1967, the plaintiff also communicated acceptance of the said proposal to furnish bank guarantee. 12. In this manner the bank guarantee, Exhibit 8 submitted by the defendant No. 1 was accepted, in lieu of security deposit in cash, which was against nonpayment of the price of coal-tar to be lifted by the defendant No. 2, which was duly specified by the Senior Sales Manager vide Exhibit C(8). Therefore, there was neither any legal sanctity to claim the aforesaid sum of Rs. 67.990.00 as detailed in Schedule A to the plaint, nor there was any dues against the quantity of coal-tar lifted by defendant No. 2. As such the Court below rightly held that plaintiff was not entitled to claim the aforesaid amount from either of the defendants. 13. In terms of Clauses 12 and 14 of the General Conditions of contract, relating to the contingency where payment was to be made before delivery of the goods, but if the buyer defaulted in paying for the goods, the Sales Manager was authorized to sell the same and recover any loss sustained from the defaulter/buyer. Such contingency in the present case never occurred in the matter of lifting or removal of coal-tar in question from the Coke Oven Plant of the plaintiff-Company at Giridih. This shows that on production of coal-tar by the plaintiff, the buyer was given intimation to lift the same, but nothing has been produced on behalf of the plaintiff that any such intimation was ever made to the defendants. It is also not In dispute that on 18.9.1967, contract with the defendant No. 2 was cancelled and at any rate thereafter the plaintiff was not entitled to claim any loss or damages from the defendant No. 2. 14. In such circumstance, I find no reason to interfere with the impugned judgment and decree. This Appeal is dismissed, having no merit, but without costs. Lower Court records may be sent down.