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2013 DIGILAW 402 (CAL)

Neo Metaliks Limited v. UNION OF INDIA

2013-07-03

ASHIM KUMAR BANERJEE, MRINAL KANTI CHAUDHURI

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Judgment :- Ashim Kumar Banerjee, J. The subject matter of the writ petition that resulted in the judgment and order impugned would relate to a sale transaction to the extent of thirty thousand metric ton of LAM coke that the appellants wanted to purchase from the respondent company MMTC Ltd. (hereinafter referred to as ‘MMTC’). The practice followed in such type of transaction was as follows: i) MMTC would produce LAM Coke that they required for their own consumption. However, the surplus coke they used to offer to outsiders at the price quoted by MMTC. ii) The price fixed by MMTC was for a fixed period that varied from time to time depending upon the market. The appellants claimed, they had requirement of LAM Coke for the purpose of manufacture of pig iron. They participated in a live Eauction for LAM Coke that MMTC failed to supply. The appellants would also contend, on December 24, 2009 they received a price circulation through facsimile message quoting a particular price. The price was ex-plant exclusive of excise duty, sales tax, freight and other statutory duties and payment would have to be made within three working days and delay in deposit would attract penalty at the rate of Rs.50.00 per day. The delivery would be made against hundred percent advance payments. The facsimile message they received, came from Delhi office of MMTC and received at Calcutta in the office of the appellants. By the letter of the same date they offered to purchase thirty thousand metric ton when MMTC was requested to confirm supply. They sent such message to the Calcutta office of MMTC as well as Orissa office. The MMTC did not reply to their letter and only when the scheduled date expired they enhanced the price. The appellants sent letters on January 4, 2010 and January 6, 2010 through their Advocates on the issue that the respondent did not reply. Hence, they approached the learned Single Judge by filing a writ petition. The respondent contested the writ proceeding. The respondent claimed, the price was variable depending upon the market. The price offered to the appellants, was for a fixed period. The Terms of Contract was to supply against hundred percent advance payment that the appellants failed to pay. Hence, MMTC did not have any obligation to entertain their claim. The respondent contested the writ proceeding. The respondent claimed, the price was variable depending upon the market. The price offered to the appellants, was for a fixed period. The Terms of Contract was to supply against hundred percent advance payment that the appellants failed to pay. Hence, MMTC did not have any obligation to entertain their claim. The learned Single Judge initially passed an interim order on January 13, 2010, directing MMTC to supply thirty thousand metric ton within a week from the said date. However, the appellants did not deposit the price, as according to them, MMTC demanded much more than the price originally offered. The learned Single Judge heard the writ petition on merits after completion of affidavits. The learned Single Judge dismissed the writ petition inter alia holding, the petitioners were to make hundred percent advance payment within the time stipulated. Their failure in deposit resulted in non-supply. Such action on the part of the MMTC could not be held to be arbitrary or unreasonable or unjust. The writ petitioners did not make advance payment, others made it promptly and got the supply. Such action could not be said to be arbitrary. The learned Judge observed, the decision in the case of ABL International Ltd. & Anr. Vs. Export Credit Guarantee Corporation of India Ltd. & Ors. reported in 2004 Volume-III Supreme Court Cases pagae-553 would have no application at all. His Lordship considered the other decisions cited at the Bar and observed, that did not inspire the confidence of His Lordship to allow the writ petition. Being aggrieved, the appellants preferred the appeal that we heard on the above mentioned dates. Mr. Jishnu Saha, learned counsel appearing for the appellants would strenuously argue, Section 5 and 11 of the Sale of Goods Act would suggest, how a contract of sale could be made. According to him, stipulation as to time of payment could not be deemed to be the essence of contract. In the present case the sale was subject to availability of stock that the respondent failed to confirm, despite reminders being given. He also relied upon Section 55 of the Contract Act that would pre-suppose, failure to perform a contract within the stipulated time, the contract became voidable at the option of the promisee in case the parties would agree, time would be the essence of contract. He also relied upon Section 55 of the Contract Act that would pre-suppose, failure to perform a contract within the stipulated time, the contract became voidable at the option of the promisee in case the parties would agree, time would be the essence of contract. In the instant case, since the respondent MMTC failed to confirm the availability of stock the obligation of the appellants to deposit money did not arise at all. Hence, the contract could not be said to be a time-bound one having time, the essence of contract. He would further contend, there was no disputed question of fact that could cause hindrance in the way of admission of the writ petition. Mr. Saha relied on the following decisions to support his contention: 1. All India Reporter 1930 Allahabad page-661 (Pearelal-Kishan Prasad Vs. Diwan Singh-Ganeshi Lal); 2. All India Reporter 1986 Calcutta page-240 (Sadhusaran Singh Vs. West Bengal State Electricity Board & Anr.); 3. 1974 UJ (Supreme Court) page-562 (Union of India Vs. Hariram Shamji Thakkar); 4. All India Reporter 1979 Supreme Court page-720 (M/s. Hind Construction Contractors Vs. State of Maharashtra); 5. 2004 Volume-III Supreme Court Cases page-553 (ABL International Ltd. & Anr. Vs. Export Credit Guarantee Corporation of India Ltd. & Ors.); 6. 1969 Volume-III Supreme Court Cases page-769 (Smt. Gunwant Kaur & Ors. Vs. Municipal Committee, Bhatinda & Ors.) Per contra, Mr. Ashok Kumar Banerjee, learned senior counsel appearing for MMTC would contend, the appellants purchased small quantity in the past. Requirement of thirty thousand metric ton was nothing but an attempt to speculate. Hence, they were not serious about such purchase. Had they been serious, they would have deposited the money in advance, others did it and MMTC supplied. Mr. Banerjee would also contend, the intention of the appellants was deliberate as would be apparent when they communicated with the Calcutta office that did not deal with the subject issue. According to Mr. Banerjee, LAM Coke, a free commodity, having no control of the State, was available in open market. The appellants was free to purchase it at any time either from the market or from MMTC, however they would have to deposit the price in advance as per their requirement and subject to availability of stock. The present case did not suggest any arbitrary act on the part of MMTC, the appellants did not allege either. The appellants was free to purchase it at any time either from the market or from MMTC, however they would have to deposit the price in advance as per their requirement and subject to availability of stock. The present case did not suggest any arbitrary act on the part of MMTC, the appellants did not allege either. Having not alleged any arbitrary act specifically or having not alleged any mala fide of the officials of MMTC, the writ petition could not be held to be maintainable. While replying, Mr. Saha would contend, Mr. Banerjee did not deal with the legal issue that he raised. With regard to the letter at Calcutta office Mr. Saha would contend, the MMTC did not deny receipt of the said letter. In any case they did not allege any ploy having been taken by the appellants. The letters of the Advocates were not answered at all that would make the issue clear, MMTC was not in a mode to sell the stock to the appellants that would demonstrate their discriminatory attitude. We have considered the rival contentions. We have carefully examined the judgment and order impugned herein. MMTC is a Government organization having deep and pervasive control of the Union of India, hence, it is ‘State’ within the meaning of Article 12 of the Constitution. However, the issue involved herein would relate to a commercial dealing that the parties had. We fail to appreciate how such commercial dealings could be a subject matter of judicial review in a writ proceeding particularly when no specific allegation as to mala fide and/or arbitrariness were pleaded in the writ petition. MMTC would produce LAM Coke for their own consumption. They would sell the surplus stock at a price fixed by them. The present case would not suggest, MMTC sold it at a lower price. There was no definite allegation as to discrimination. LAM Coke was a free item available in the market. The appellants were free to purchase it in the market at the marketable rate. MMTC would not sell any LAM Coke at a subsidised price. They also fixed their price considering the market. The appellants did not deposit the money at the appropriate stage, hence, MMTC was free to sell it to others who would comply with the requirement. The appellants were free to purchase it in the market at the marketable rate. MMTC would not sell any LAM Coke at a subsidised price. They also fixed their price considering the market. The appellants did not deposit the money at the appropriate stage, hence, MMTC was free to sell it to others who would comply with the requirement. It is neither the case, MMTC sold it to others at a lower price nor it is alleged, it was sold subsequently to someone to the exclusion of the appellants at the old rate. MMTC was free to sell it at the best possible price. They would make profit by selling the surplus quantity as they would not be requiring the same. It was not their principal product. The procedure so far followed by MMTC cannot be said to be arbitrary or discriminatory to attract jurisdiction of the writ Court. A commercial decision to sell it at a price on the terms suggested by them and the follow up action, in our view, would not be amenable to judicial review. Even otherwise, we do not find any concluded contract between the parties that would give rise to some right to sue. Even it is so LAM Coke being a moveable property, the right to claim specific performance would not be available in common law. what is prohibited in common law cannot be granted by the writ Court in equitable jurisdiction. Mr. Saha handed over a compilation of cases. Mr. Saha cited Hariram (supra) on the question of maintainability. He relied on paragraph 16, the Union of India argued, a claim for specific performance should not be entertained under Article 226 of the Constitution. Having regard to the facts involved therein, the Apex Court observed, petitioner was not seeking to enforce a contractual obligation. He was enforcing his right to the goods on payment of the price. A public authority could not refuse to deliver goods without any adequate grounds being shown. In the said case, the price was paid and the title to the property had passed. Hence, the Court found, Port Trust was not entitled to withhold delivery. We do not find any scope to apply such ratio in the present case. In the instant case, MMTC declined to sell the stock for non-payment of price. The Allahabad and Calcutta decisions were cited for the proposition that Mr. Hence, the Court found, Port Trust was not entitled to withhold delivery. We do not find any scope to apply such ratio in the present case. In the instant case, MMTC declined to sell the stock for non-payment of price. The Allahabad and Calcutta decisions were cited for the proposition that Mr. Saha argued taking a cue from the sale of Goods Act. We wonder, how a writ Court could go in detail on that score. Similarly, the Apex Court decision in the case of Hind Construction (supra) relating to Section 55 of the Contract Act would be of no assistance to us. In the said case, time was the essence of contract. The Apex Court, considering the subject matter observed, “question whether or not time was of the essence of the contract would essentially be a question of the intention of the parties to be gathered from the terms of the contract”. Mr. Saha relied on this decision to support his contention, once the confirmation was asked for and not granted failure to deposit the price within the time stipulated could not operate as a fetter against the appellants. The other two decisions in ECGC (supra) and Smt. Gunwant (supra) were relied on the proposition, since no disputed question of fact was involved the writ Court should interfere to give redressal to the petitioner. The Apex Court in ECGC (supra) observed, “the writ Court has jurisdiction to entertain a writ petition involving disputed question of fact and there is no absolute bar”. This well-settled principle would still hold the field, however we doubt its applicability in the facts and circumstances involved herein. The present writ petition would have immense hurdles to cross. The subject matter would indicate a pure and simple commercial transaction involving interpretation of the Terms of the Contract, if any. Even if, the case made out by the appellants were taken as sacrosanct specific performance could not be given, not being permitted by law. The appellants never allowed any specific case of mala fide or arbitrariness or any loss to the State. There is nothing on record, by selling the stock to others MMTC caused any loss to the company. There is nothing on record to show, exercise of any power by any official for extraneous consideration. We fail to wonder, how the writ petition could be admitted. There is nothing on record, by selling the stock to others MMTC caused any loss to the company. There is nothing on record to show, exercise of any power by any official for extraneous consideration. We fail to wonder, how the writ petition could be admitted. The learned Judge rightly approached the problem that would require no interference. The appeal fails and is hereby dismissed. There would be no order as to costs. Dr. Mrinal Kanti Chaudhuri, J: I agree.