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2007 DIGILAW 597 (JHR)

Food Corporation Of India v. Bhagwan Das Sao

2007-07-27

DABBIRU GANESHRAO PATNAIK

body2007
JUDGMENT D.G.R. Patnaik, J. 1. The appellant Food Corporation of India has filed this appeal against the judgment dated 20.1.1998 and its corresponding decree dated 7.2.1998 passed by the learned Subordinate Judge, Chaibasa in Money Suit No. 9 of 1993 whereby the suit of the plaintiff/respondent was decreed in favour of the plaintiff respondent. 2. The suit was filed by the plaintiff/respondent against the present appellant for realization of a sum of Rs. 2,73,476/-together with interest pendente lite. The case of the plaintiff is that the plaintiff was engaged as a transport contractor for transportation of food grains from the Rail head to different godowns situated at Chakradharpur. The defendent No. 2, namely, the Food Corporation of India appellant represented by its Senior Regional Manager was the principal employer of the plaintiff for the purpose of the employees provident fund and other schemes. Prior to the allotment of the contract to the plaintiff, a tender was floated by the defendants for executing transportation work for the period from 1989 to 1991. The plaintiff being the lowest bidder, the work was allotted to him and he had deposited a sum of rupees fifty thousand as earnest money. Despite mentioning the distance between the rail head and various godowns in the tender notice, the actual distance was measured by a higher committee and the transportation charges were calculated on the basis of the actual distance covered. The plaintiff executed the contract work and submitted bills periodically for the job done and the defendants used to pay the bills after retaining 20 percent of the bill amount towards provident fund etc. However, the defendants withheld payment of the plaintiffs Bill Nos. 119 to 130 of Rs. 1,43,434.55-p and further amount of Rs. 16,342.30-p pertaining to other bills and also retained the plaintiffs earnest money/security deposit of rupees fifty thousand. The claim of the plaintiff is that the defendants have wrongly and without justification withheld hid amount. The plaintiff has claimed realization of the amount along with interest at the rate of 12% per annum accrued thereon from the date due and till final payment of the bills. 3. The claim of the plaintiff is that the defendants have wrongly and without justification withheld hid amount. The plaintiff has claimed realization of the amount along with interest at the rate of 12% per annum accrued thereon from the date due and till final payment of the bills. 3. The defendant/appellants resisted the claim of the plaintiff on the ground that the plaintiff was earlier awarded contract for the same work of transportation of food grains from the rail head to the same godowns and the plaintiff had submitted inflated bills by claiming charges for transportation for distances more than actually covered and in this manner, the plaintiff had received excess payment which was paid to the plaintiff by mistake. The specific plea of the defendants is that the amount of Rs. 2,05,734.74-p was received by the plaintiff in excess of his dues for execution of the contract and the defendants were legally entitled to recover the amount, from the plaintiff by way of adjustment from the plaintiffs pending bills. 4. On the basis of the rival pleadings, the learned Court below besides framing issues relating to the maintainability of the suit and the issue as to whether the plaintiff was entitled to recover the amount claimed, had also framed the following two issues, namely: (i) Whether the defendants are entitled to refuse payment to the plaintiff on the plea of excess payment in respect of an earlier contract? (ii) Has the defendants a right of adjustment under the law for recovery of the alleged excess payment? Issues No. (i) and (ii) as aforesaid, were decided by the learned Court below against the defendants. 5. The learned Court below had, observed that the defendants cannot avail the benefit of the provisions of Section 72 of the Indian Contract Act since there was no mistake relating to the terms of previous contract or in respect of the amount of bills payable under the previous contract, nor were the defendants coerced to pay the money to the plaintiff. The learned Court below has also observed that even otherwise, the defendants had no right to recover or adjust any amount from the plaintiffs bill unilaterally and that too, in absence of any such agreement in the contract. The learned Court below has also observed that even otherwise, the defendants had no right to recover or adjust any amount from the plaintiffs bill unilaterally and that too, in absence of any such agreement in the contract. On the facts of the case, the learned Court below had observed that even under the previous contract as well as in the present contract, the rate for transportation of food grains from rail head to the godowns was fixed at a fixed rate of Rs. 3 per km per M.T. for distance above one Km to 5 kms and therefore there was no occasion for the defendants to claim any excess payment and to make recovery or adjustment of any amount from the plaintiffs pending bills. 6. The appellants have challenged the findings in the judgment of the learned Court below on the ground that the findings are against the weight of evidence on record and are against the principles of law applicable under the provisions of Section 72 of the Indian Contract Act. Sri N. Bak-shi, learned Counsel for the appellants explains that as per the tender relating to the previous year i.e., for the years 1986-88, the terms were stipulated in the annexures to the tender form. The distance to be covered for transportation of goods from rail head to the particular godowns was mentioned tentatively and the rate for transportation was fixed per kilo metre. Learned Counsel explains that the learned Court below erred in failing to consider that the respondent had submitted bills misrepresenting the distance actually covered for transportation of the foodgrains and had submitted inflated bills, the amounts of which were paid by the appellants due to ignorance of the fact that the actual distance was less than what was mentioned in the bills. The respondent was therefore entitled as per the terms of the contract to receive payment of the amounts as could be calculated at the rate fixed on the basis of the actual distance covered for transportation of the goods. The respondent was therefore entitled as per the terms of the contract to receive payment of the amounts as could be calculated at the rate fixed on the basis of the actual distance covered for transportation of the goods. Learned Counsel further adds that the payment of the excess amount was made to the respondent by the appellants by mistake and the appellants were entitled to recover the same from the respondent and the law of equity demands that the respondents should not be allowed to make unjust enrichment for himself by obtaining excess amount than what was actually due to him. Learned Counsel adds further that under the principles of law, the appellants were entitled to adjust the amounts paid in excess to the respondent, from the pending bills of the respondent and such right cannot be denied to the appellants. 7. Mr. A.K. Sriyastava, learned Counsel for the respondents, on the other hand, would refute the entire grounds advanced by the appellants. Contention of the learned Counsel is that the tender notice had clearly specified the distance to be covered for the purpose of transportation of the food grains from the rail head to the different godowns and the bills were raised by the respondents on the basis of the distance mentioned in the tender notice. The appellants had acknowledged the bills and had paid the amounts thereof without any objection whatsoever and as such, it cannot be argued that the payment was made by mistake or that the respondents had. made any misrepresentation in the bills submitted by them for payment. Learned Counsel submits further that the provision of Section 72 of the Indian Contract Act is not applicable to the instant case since there is no mistake in the terms of the contract, nor can the contract be said to be unenforceable oh account of any mistake. Rather, both the parties to the contract were in agreement as regards the rate fixed for transportation of the food grains and the amounts payable to the respondents for executing the contractual work. From the pleadings of the parties, admitted facts are that the notice inviting tender was issued by the appellants for the purpose of transportation of the foods grains from rail head to the different godowns located at two different places. From the pleadings of the parties, admitted facts are that the notice inviting tender was issued by the appellants for the purpose of transportation of the foods grains from rail head to the different godowns located at two different places. The distance from the rail head to the godown was also mentioned in the Appendix-I to the tender papers. Clauses (vi) of appendix qualifies that the particulars given in the tender notice are intended merely to help tenderers to form their own idea of the approximate quantum or the work involved in the contract and the tenderers must acquaint themselves fully with the size and the location of the godowns vis-a-vis the loading/unloading points and they were warned not to rely on the particulars entitled to make any claim whatsoever against the corporation for compensation, revision of rates or otherwise, on the basis of the particulars referred to in the notice. The further admitted fact is that the respondent had. submitted bills on the basis of the distance mentioned in the tender notice only and the amount of bills raised was paid to him by the appellants. It is also admitted that while the contract for further period of two years was awarded by the appellants to the respondent for execution of the same work in respect of the transportation of the food grains from the rail head to the same godowns, the actual distance between the rail head and the individual godowns were measured with the consent of the respondent and the same was fixed for the purpose of enabling the bills to be raised at the stipulated rates. It is also admitted that there is no dispute that the relation between the parties were to be guided by the terms of the contract awarded by the appellants to the respondents. The terms of contract are available in the various Appendixes to the tender notice on the basis of which the respondent had submitted his tender offering to execute the work under contract. The stipulation in the appendix (vii) to the contract mentions that the distance covered for the transportation of the food grains will be reckoned as fixed by the Chief Engineer, PWD or any officer nominated by him, or the Senior Regional Manager, Food Corporation of India or checked by an officer acting on his behalf, rounded off to the nearest 0.50 km. It is not disputed by the respondent that while executing the contract job under the previous contract, the same distance was covered by him for transportation of the food grains from the rail heads to the same godowns as carried out by him in course of executing the contract for subsequent years. It is not disputed that actual distance was measured and it was found that the distance actually covered for transportation of the food grains was much less than what was represented in the bills raised by the respondent for payment in respect of the previous contract. 8. It is claimed by the appellants that due to ignorance of the actual distance between the rail head to different godowns, the bills as raised by the respondents representing the distance covered, were accepted and the amounts as claimed by the respondent were paid and that such payment was made by mistake which was detected only later when actual measurement of the distance was carried out. The appellants have claimed that since the respondent has received the amount in excess of what was actually due to him, the respondent is liable to refund the same, or in the alternative, the appellants have right to adjust the excess amount from the pending bills of the respondent. 9. The question which arises for determination in this appeal is whether the findings arrived at by the learned Court below on the issue as to whether the defendant/respondent had received excess payment than what was due to him and whether the appellants were entitled to adjust such amount from the pending bills of the respondent is based on proper appreciation of the evidence on record and on. correct appreciation of the principles of law involved in the case. 10. From the facts and circumstances of the case, it is apparent that the contract between the parties was in essence to pay for the actual distance covered between the rail head to the godowns at the rate stipulated per kilometre irrespective of the tentative distance mentioned in the tender notice. 10. From the facts and circumstances of the case, it is apparent that the contract between the parties was in essence to pay for the actual distance covered between the rail head to the godowns at the rate stipulated per kilometre irrespective of the tentative distance mentioned in the tender notice. Clause (vi) of Appendix I to the tender notice issued by the appellants clearly qualifies that the particulars given in the tender notice are intended merely to enable the tenderers to form their own idea of the approximate quantum or the work involved in the contract and the tenderers must acquaint themselves fully with the size and location of the godowns vis-a-vis loading and unloading. The distance mentioned in the tender notice from the rail head to the godowns cannot therefore be said to be the correct distance and it is only tentative. The respondent being the transporter, is deemed to have knowledge of the actual distance covered in the process of transporting the foodgrains from the rail head to the godowns and under the terms of the contract, he was expected to raise bills for payment at the stipulate rates on the basis of the actual distance covered in transporting the foodgrains. The respondent has apparently wanted to take advantage of the distance mentioned in the tender suppressing the fact in his bills that the actual distance covered was less than the distance suggested in the tender notice. It is therefore apparent that by incorrect representation of the distance actually covered, the respondent has obtained payment of money from the appellants beyond what was legally due to him. The appellants had apparently believed the representation of the respondent in respect of the distance covered from the rail head to the godowns and had paid the bills to the respondents. The mistake later on detected on taking actual measurements of the distance from the rail-head to the godowns. Significantly, the actual measured distance was acknowledged by the respondents himself and against the execution of the second contract, he has raised bills on the basis of the measured distance. The above facts make out clearly a case of unjust enrichment on the part of the respondents which they have made at the expense of the appellants and this justifies the restitution. The respondent is certainly under obligation by the ties of natural justice to refund the excess amount. The above facts make out clearly a case of unjust enrichment on the part of the respondents which they have made at the expense of the appellants and this justifies the restitution. The respondent is certainly under obligation by the ties of natural justice to refund the excess amount. The law implies debt and this gives occasion to the appellants in the equity of the plaintiffs case as it was upon a contract. Section 72 of the Indian Contract Act deals with the liability of a person to whom money is paid or thing delivered by mistake or under coercion and it lays down that a person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it. The above principle of law is certainly applicable to the facts and circumstances of the instant case. 11. The contention of the learned Counsel for the respondent that the provision of Section 72 of the Contract Act cannot be applicable in this case since there was no mistake on the part of the appellants regarding the genuineness of the amount claimed by the respondent towards the payment for the job executed by him under the earlier contract, is not correct. The facts of this case clearly point out firstly that the respondent being himself a transporter is deemed to have knowledge of the actual distance covered by him in transportation of the foodgrains from the rail head to the godowns. Yet, he had wrongly represented a greater distance covered and has raised bills for payment of the amount based on such wrong representation. The facts of the case also point out that the appellants by mistake had paid bills to the respondent believing his representation and the mistake was detected on carrying out measurement of actual distance. 12. It further appears from the impugned judgment that the learned trial Court has wrongly interpreted the clause in the Contract relating to the rates at which payment was to be made to the respondents. The stipulation in the contract regarding the rate was that for distance covered above 1 km to 5 km, the rate per km Per M.T. is Rs. 3/-. In other words, the calculation would be in terms of Rs. 3/- per every km per MT. The stipulation in the contract regarding the rate was that for distance covered above 1 km to 5 km, the rate per km Per M.T. is Rs. 3/-. In other words, the calculation would be in terms of Rs. 3/- per every km per MT. In the instant case, the computation would be on the basis of the actual measured distance covered at the rate of Rs. 3/- per km per M.T. The learned trial Court has wrongly construed the clause by inferring that since the rate per Km is the same for the distance above 1 km to 5 km, there is no occasion for the defendants/appellants to either recover or adjust any amount from the respondents bill. 13. In the light of the above discussion, I find merit in this appeal and the same is allowed with costs against respondent. The impugned judgment and decree passed by the learned Court below is hereby set aside. The suit filed by the plaintiff for realization of Rs. 2,73,476/- against the defendant jointly and severally together with interest pendente lite till realization and costs of the suit is dismissed.