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2010 DIGILAW 629 (MP)

Mohit Traders v. Union of India

2010-06-28

SANJAY YADAV

body2010
JUDGMENT : Shri Vijay Nayak, learned counsel with Shri Anand Nayak, learned counsel for the petitioner. Shri Abhay Pandey, learned counsel for respondents No. 1 and 2. Shri Siddharth Gulati, learned counsel for respondent No. 3. 2. The petitioner in pursuance to Indo Srilanka Free Trade Agreement for the year 2007-2008 for stock and sale, entered into contract on 9-5-2007 with respondent No. 3, a private entity, situated at Srilanka for supply of vegetable oil and applied for importing the same which was sanctioned on 21-6-2007. The shipment in pursuance to the contract the shipment of Vanaspati Ghee (Hydrogenated Vegetable Oil) was to take effect in May-June, 2007. The petitioner was, however, informed by respondent No. 3 by its letter dated 29-6-2007 expressing its inability to export the vegetable oil in May-June, 2007 and sought extension of import licence. 3. The petitioner thereafter sought extension of time limit for completion of import obligation pertaining to first quarter of 2007-08 for import of Hydrogenated Vegetable Oil. The approval of extension of time was conveyed to the petitioner on 31-10-2007 for completion of import obligation of vegetable oil pertaining to first quarter ending 30-6-2007 to extent of 50 % by the Third quarter ending 31-12-2007 and balance 50% by last quarter ending 31-3-2008. 4. In the meantime, since there was escalation in the market price of the vegetable oil, respondent No. 3 insisted for a fresh contract. This led to correspondence between the petitioner and respondent No. 3 and the claim for damages by the petitioner whereon the respondent No. 3 replied in the following terms: "Your claim against shipment of 13 containers of 217.244MT of Hydrogenated vegetable oil Vanaspati Ghee per my Tokyo tower 001W against B/L CMBNS A070006 dated 30-3-2007. We wish to bring to your kind attention the following in respect of your claim. (1) The difference US $455 being Extra container detention Charges will be paid. Damages to TINS - (1) We are not agreeable to your claim for damages of your estimated 3400 Tins amounts to 42.12% of the consignment packed in TINS. (2) We have not received any complaints for TIN DAMAGES in excess of 5% from our other Indian Buyers from March, 2006 to date. (3) The Tin damages would have occurred whilst in transit as well as due to bad handling by your Agents to take delivery and store the TINS in their warehouses. (2) We have not received any complaints for TIN DAMAGES in excess of 5% from our other Indian Buyers from March, 2006 to date. (3) The Tin damages would have occurred whilst in transit as well as due to bad handling by your Agents to take delivery and store the TINS in their warehouses. (4) Independent survey of the damages to the Tins was not done at the time of receipt of the consignment by your agents and same is not submitted to us to date. (5) The damages to Tins were covered under the Insurance cover vide Insurance Certificate No. MEP/2007/000478/DOI dated 30-3-2007 whereas you have failed to claim the Insurance. In view of the above, taking into consideration the business relations with you, we have decided to reduce your loss and pay 50% of your estimated damages 1700TINS @ US $ 1.5 amounting to US $ 2550.00. We are therefore agreeable to pay a total US $ 3005.00 in order to develop and maintain good business relationship with you. Export of 250 MT of Hydrogenated Vegetable Oil (Vanaspati Ghee) against our sales contract 18/2007 dated 9th May, 2007. We entered into the Sales Contract 18/2007 dated 9th May, 2007 for export of 250 MT Hydrogenated Vegetable Oil (Vanaspati Ghee) for shipment during May/June, 2007 for payment against Irrevocable Letter of Credit. You have failed to obtain Import License with a minimum period of two weeks Lead time required to manufacture the product and secure Shipping space. You had obtained License No. 1150000044/11/00/01 dated 25th June, 2007 allowing only 5 days to manufacture secure shipping space and export the consignment. Further you have failed to establish and letter of credit as per terms of sales contract to collect payment for the product against shipping documents on negotiation. We had vide our letter PL/01/GEN/03 8 dated 29th June requested you to get the validity of the Import License extended up to 30th September, 2007. The Export License No. 115000044/11/00/01 dated 25-6-2007 was extended on 13th November, 2007 for 50% of the quantity of 125 MT to be shipped prior to 31-12-2007 and the balance 50% 125 MT to be shipped prior to 31st March, 2008. It may be noted that the extension of the Import License was obtained after two quarters from the date of contract. It may be noted that the extension of the Import License was obtained after two quarters from the date of contract. In this context, we wish to bring to your kind attention that the Crude Palm Oil Price (CPO) on 9th May, 2007 the date Sales Contract signed was US $ 722.50 per MT, and the CPO price had increased by a considerable amount due to the escalation of CPO price in the world Market. In view of the above, we regret our inability to export the said 250 MT and Hydrogenated Vegetable Oil (Vanaspati Ghee) at US $ 975.00 per MT. In view of the above you will observe and agree that we have to sign a New Sales Contract at US $ 1300 with terms of payment under Irrevocable Letter of Credit at sight to supply 250 MT of Hydrogenated Vegetable Oil (Vanaspati Ghee) during the 4th Quarter viz. 1st January, 2008 to 31st March, 2008. Your kind attention is therefore hereby requested to confirm that you are agreeable to accept the 250 MT of Hydrogenated Vegetable Oil (Vanaspati Ghee) as per the said terms." In the background of above facts the petitioner seeks following relief in the writ petition: 7.1 It is therefore, prayed that the respondent's No. 2 to 4 may kindly be directed to compensate the loss suffered by the petitioner due to the inaction in extending the license date. And further be pleased to direct the respondent Nos. 1 and 2 review the condition of export of the respondent No. 3 as the respondent No. 3 frequently breach the contract for their own advantage which is causing loss to the country. 7.2 Any other relief, which this Hon'ble Court deems fit and proper in the facts and circumstances of the case, may also kindly be passed in the interest of justice. 5. As apparent from the pleadings and documents that petitioner entered into a private contract with respondent No. 3 on 29-5-2007 and thereafter was accorded the sanction for implementing the vegetable oil on 21-6-2007. There was thus no delay in according the sanction by the respondents No. 2 and 4. 5. As apparent from the pleadings and documents that petitioner entered into a private contract with respondent No. 3 on 29-5-2007 and thereafter was accorded the sanction for implementing the vegetable oil on 21-6-2007. There was thus no delay in according the sanction by the respondents No. 2 and 4. It was however, respondent No. 3 who delayed the shipment for the reasons spelt out in the correspondence dated 29-6-2007 (Annexure P/4), which led to extension of permission, communicated to the petitioner on 31-10-2007, the respondents No. 1, 2 and 4, therefore, cannot be blamed for the delayed shipment and the alleged loss occurred to respondents due to price escalation at the hand of respondent No. 3 with whom the petitioner has already raise the dispute as is evident from the correspondence noted above. 6. It appears that under the garb of extension permission dated 31-10-2007, the petitioner is attempting to put blame on respondents No. 1, 2 and 4; whereas, as evident from the entire event, it is the respondent No. 3 for the reasons assigned has shown its inability to ship the consignment in May-June 2007. 7. In the considered opinion of this Court for the alleged act/omission of respondent No. 3, the respondents No. 1, 2 and 4 cannot be held liable on any count. 8. Regarding writ against respondent No. 3, the law is trite that unless engaged in a public utility service, no writ would lie against a private entity. 9. In Assistant Excise Commissioner and others vs. Issac Peter and others, (1994) 4 SCC 104 their Lordships were pleased to observe: 26...........In short, the duty to act fairly is sought to be imported into the contract to modify and alter its terms and to create an obligation upon the State which is not there in the contract. We must confess, we are not aware of any such doctrine of fairness or reasonableness, Nor could the learned counsel bring to our notice any decision laying down such a proposition. Doctrine of fairness or the duty to act fairly and reasonably is a doctrine developed in the administrative law field to ensure the rule of law and to prevent failure of justice where the action is administrative in nature. Doctrine of fairness or the duty to act fairly and reasonably is a doctrine developed in the administrative law field to ensure the rule of law and to prevent failure of justice where the action is administrative in nature. Just as principles of natural justice ensure fair decision where the function is quasi-judicial, the doctrine of fairness is evolved to ensure fair action where the function is administrative. But it can certainly not be invoked to amend, alter or vary the express terms of the contract between the parties. This is so, even if the contract is governed by statutory provisions, i.e., where it is a statutory contract or rather more so. 10. In State of U. P. and others vs. Bridge and Roof Company (India) Ltd., (1996) 6 SCC 22 it was observed: 15. In our opinion, the very remedy adopted by the respondent is misconceived. It is not entitled to any relief in these proceedings, i.e. in the writ petition filed by it. The High Court appears to be right in not pronouncing upon any of the several contentions raised in the writ petition by both the parties and in merely reiterating the effect of the order of the Deputy Commissioner made under the proviso to section 8-D(1). 18. Accordingly, it must be held that the writ petition filed by the respondent for the issuance of a writ of Mandamus restraining the Government from deducting or withholding a particular sum, which according to the respondent is payable to it under the contract, was wholly misconceived and was not maintainable in law. [See the decision of this Court in Assistant Excise Commissioner vs. Isaac Peter, 1994(4) SCC 104 = 1994 AIR SCW 2616, where the law on the subject has been discussed fully.] The writ petition ought to have been dismissed on this ground alone. 22. So far as the High Court' s direction to deduct at the rate of one percent is concerned, it may be a case of stating the obvious, as contended by the appellants. But it must also be realised that more than that could not have been legitimately granted in a writ petition. It must also be noticed that the declaration granted is effective only for a limited period, i.e., March 31, 1995. It does not apply to payments made on or after April 1, 1995. But it must also be realised that more than that could not have been legitimately granted in a writ petition. It must also be noticed that the declaration granted is effective only for a limited period, i.e., March 31, 1995. It does not apply to payments made on or after April 1, 1995. What does it mean in the facts and circumstances of the case, we do not know. Whatever it means, it cannot certainly be construed as a direction to the appellants to pay over the said sum of Rs. 82,24,969 to the respondent as claimed by it or as upholding the basis of the respondent's claim put forward in the writ petition. In State of Bihar and others vs. Jain Plastics and Chemicals Ltd., (2002) 1 SCC 216 : their Lordships were please to observe: 3. Settled law - writ is not the remedy for enforcing contractual obligations. It is to be reiterated that writ petition under Article 226 is not the proper proceeding for adjudicating such disputes. Under the law, it was open to the respondent to approach the court of competent jurisdiction for appropriate relief for breach of contract. It is settled law that when an alternative and equally efficacious remedy is open to the litigant, he should be required to pursue that remedy and not invoke the writ jurisdiction of the High Court. Equally, the existence of alternative remedy does not affect the jurisdiction of the court to issue writ, but ordinarily that would be a good ground in refusing to exercise the discretion under Article 226. 11. The petitioner though has relied upon the judgment in ABL International Ltd. and another vs. Export Credit Guarantee Corporation of India Ltd. and others, (2004) 3 SCC 553 , to bring home the submission that a writ petition would lie in a contractual matter. 12. However, as evident from paragraphs 8 of the judgment in ABL (supra) that the same pertained to whether a writ petition under Article 226 of the Constitution of India is maintainable to enforce a contractual obligation of the State or its instrumentality by an aggrieved party. 13. In the case at hand, the respondent No. 3 is neither a State nor its instrumentality as would entitle the petitioner to maintain a petition under Article 226 of the Constitution of India. 13. In the case at hand, the respondent No. 3 is neither a State nor its instrumentality as would entitle the petitioner to maintain a petition under Article 226 of the Constitution of India. Apparent it is from the pleadings and the material on record that the respondent No. 3 is nor engaged in public utility service. 14. Having thus considered the petitioner does not merit consideration. 15. In the result petition fails and is hereby dismissed. However, no costs. Petition dismissed.