Shree Tulsi Commercial Co. Ltd. v. Food Corporation of India
2014-07-24
DEBANGSU BASAK
body2014
DigiLaw.ai
Judgment DEBANGSU BASAK, J.: In or about October 1976 the Defendant Nos. 1, 2 and 3 formulated a scheme to increase the hired storage capacity of foodgrains for the Defendant No. 1 by offering private parties guaranteed occupation of such godowns for the periods from 3 to 5 years implying a mechanism to repay the loans that may be advanced by banks to private entrepreneurs availing of the scheme from out of the rent receivable. The plaintiff availed of the scheme and constructed 20 godowns for the Defendant No. 1 at Burdwan. According to the plaintiff, the Defendant No. 1 had agreed to take 20 godowns to be constructed by the plaintiff for an agreed period at an agreed rate. The plaintiff constructed the godowns in accordance with the specifications required by the Defendant No. 1. The Defendant No. 1 took two godowns and did not take the balance 18 in spite of offers by the plaintiff to the Defendant No. 1. The plaintiff offered the 18 godowns to Defendant No. 1 on April 4, 1979. The plaintiff, thereafter, approached this Hon’ble Court and obtained leave to let out those 18 godowns to third parties. The 18 godowns were let out to third parties on November 20, 1980. The plaintiff was, therefore, seeking compensation on account of rent for a period of 19 months at the agreed rate of 40 paise per square feet, for the area which the Defendant No. 1 did not takeover, and for the period, from the date when the godowns were ready, and the date when they were let out to third parties pursuant to orders of Court. The claim of the plaintiff was contested by the Defendant No. 1. The Defendant No. 1 filed a written statement. According to the Defendant No. 1, the construction of the godowns was not as per specifications. Moreover, the construction of the godowns was not completed within the stipulated time. The Defendant No. 1 also contended that, since there were defects in the godowns constructed they were not liable to pay such rent. Admittedly, according to the Defendant No. 1 the plaintiff did not cure the defects and as such the Defendant No. 1 was not liable to pay any rent.
The Defendant No. 1 also contended that, since there were defects in the godowns constructed they were not liable to pay such rent. Admittedly, according to the Defendant No. 1 the plaintiff did not cure the defects and as such the Defendant No. 1 was not liable to pay any rent. Although the plaintiff claimed various reliefs, it limited its claim at the hearing of the suit to two claims; one was the claim for compensation on account of unpaid rent for the period between April 6, 1979 and November 20, 1980 being about 19.5 months at the agreed rate of 40 paise per square feet for an aggregate area of 2,38,560 square feet and the other was a direction upon the learned Advocate on Record for the Defendant No. 1 holding the sums receivable by the plaintiff as rent to be made over to the plaintiff. The parties disclosed their respective documents. The plaintiff produced one witness who was examined-in-chief and cross-examined. The Defendant No. 1 also produced one witness who was examined and cross-examined. On behalf of the plaintiff it was contended that, pursuant to the scheme formulated by the Government the plaintiff undertook construction of the godowns. The parties to the suit entered into an agreement dated March 19, 1977 whereby the plaintiff agreed to construct 20 godowns within 6 months and the Defendant No. 1 agreed to take such godowns on rent for 5 years at the rate of 40 paise per square feet. Such construction was financed by the Defendant No. 2. According to the plaintiff, the Defendant No. 1 had extended the date of completion of construction from time to time and had agreed to take delivery in phases. In support of such contention the plaintiff relied upon letters dated March 27, 1978, September 20, 1978 and January 30, 1979 being Exhibits ‘I’, ‘K’ and ‘L’ respectively. The plaintiff also relied upon the certificate of completion dated January 18, 1980, June 23, 1979 and April 26, 1980 marked Exhibits ‘O’, ‘V’ and ‘W’ issued by the Defendant No. 1. The plaintiff contended that, the Defendant No. 1 took possession of two godowns on October 16, 1978 as would appear from the certificate of completion dated January 18, 1980 being Exhibit ‘O’.
The plaintiff contended that, the Defendant No. 1 took possession of two godowns on October 16, 1978 as would appear from the certificate of completion dated January 18, 1980 being Exhibit ‘O’. According to the plaintiff, it had requested the Defendant No. 1 to take possession of the remaining godowns which were all ready for delivery from April 6, 1979 within the mutually agreed extended time for completion of such godowns but the Defendant No. 1 had failed and neglected to take possession of the same, which the plaintiff contended, was in breach the agreement dated March 19, 1977. The plaintiff relied upon various letters in support of the contention that, the plaintiff had made repeated requests to the Defendant No. 1 but the Defendant No. 1 had failed and neglected to do so. The plaintiff contended that, the godowns were constructed exclusively for the Defendant No. 1 and, therefore, it was not easily marketable. Finding that the plaintiff was not taking possession of the godowns in spite of repeated requests, the plaintiff approached this Hon’ble Court under Article 226 of the Constitution of India for permission to let out such godowns to third parties in order to mitigate the damages. Upon such writ petition, the High Court passed an order dated March 21, 1980 permitting the plaintiff to let out 18 godowns to third parties. Pursuant to such order, the plaintiff had let out 15 out of the 18 godowns on varying dates between September 1, 1980 to October 28, 1981. The total area comprised in the 15 godowns was 2,19,380 square feet. The agreed rate of rent payable by the Defendant No. 1 was 40 paise per square feet in respect thereof. The plaintiff was seeking compensation for the period between April 6, 1979 to November 20, 1980 from the Defendant No. 1. Although no Counsel advanced any argument on behalf of the Defendant No. 1 at the time of final hearing, the Advocate for the plaintiff pointed out the defence taken by the Defendant No. 1. According to the Defendant No. 1 the agreement dated March 19, 1977 required the plaintiff to complete the construction of the 20 godowns within 6 months thereof. The plaintiff failed to do so. The time to complete the construction of the 20 godowns was extended by the letter dated September 1, 1978.
According to the Defendant No. 1 the agreement dated March 19, 1977 required the plaintiff to complete the construction of the 20 godowns within 6 months thereof. The plaintiff failed to do so. The time to complete the construction of the 20 godowns was extended by the letter dated September 1, 1978. By such letter the Defendant No. 1 had set a deadline of September 30, 1978 for completion of the godowns with no option for further extension. The godowns not being completed within the deadline of September 30, 1978 the Defendant No. 1 was not required to take possession thereof and to pay rent in respect thereof. Moreover, it was contended by the Defendant No. 1 that, the godowns constructed were not as per specification. In support of such contention the Defendant No. 1 relied upon the inspection of the godowns on April 7, 1980 carried out when various deficiencies of construction were found in such inspection. The Defendant No. 1 also contended that, the letters dated June 23, 1979 and April 26, 1980 issued by the Defendant No. 1 were issued by persons not authorized to do so. Therefore, according to the Defendant No. 1 it could not be said that, there was no complaint with regard to the completion of the godowns and its quality of construction. According to the plaintiff, the Defendant No. 1 had extended the deadline for completion of the construction from time to time and the plaintiff did complete the construction within such extended time. In that regard, the plaintiff relied upon Exhibits ‘I’, ‘K’ and ‘L’. The constructions made by the plaintiff were in accordance with the specifications and were certified as satisfactory by the letters issued by the Defendant No. 1 marked as Exhibits ‘O’, ‘V’ and ‘W’. The plaintiff contended that, the letters dated June 23, 1979 and April 26, 1980 issued on behalf of the Defendant No. 1 were issued by the depot in charge, who was competent and authorized to issue such letters. So far as the claim for defect in construction was concerned, it was contended on behalf of the plaintiff that, all complaints of the Defendant No. 1 in that regard were duly taken care of by the plaintiff. I have considered the pleadings, the documents marked as exhibits and the evidence adduced by the parties as well as the contentions raised.
I have considered the pleadings, the documents marked as exhibits and the evidence adduced by the parties as well as the contentions raised. The plaintiff was seeking to realize from the Defendant No. 1 rent at the rate of 40 paise per square feet for a period of about 20 months in respect of an area of 2,38,560 square feet. The fact that, the Central Government formulated a scheme for construction of godowns by private parties with the offer of financial help of nationalized bank so that the godowns could be taken on lease by the Defendant No. 1 could not be disputed. Exhibits ‘A’, ‘B’ and ‘C’ were circulars issued by the Central Government in that regard. The plaintiff and the Defendant No. 1 had entered into an agreement dated March 19, 1977. This agreement was produced in evidence and was marked as Exhibit ‘D’. The agreement dated March 19, 1977 contemplated that, the plaintiff would construct 20 numbers of godowns at Mouza Hatsimul, district Burdwan in accordance with the specifications laid down by the Defendant No. 1. The Defendant No. 1 would take on lease such godowns for a period of 5 years at a rent of 40 paise square feet per month provided the godowns with service were completed and made ready for occupation within 6 months from the date of signing of the agreement. The plaintiff would obtain completion certificate from the Defendant No. 1, and after issuance of such completion certificate the plaintiff would handover the godowns to the Defendant No. 1. The agreement also provided that, in the event of undue delay of completion of work, the Defendant No. 1 would not be bound to take the structures on lease. By the said agreement the plaintiff undertook to raise the level of the land on which the godowns were to be constructed to the satisfaction of the Defendant No. 1 and to provide and maintain an all weather approach road from Burdwan bypass of the G.T. Road to the site. In the event of failure on the part of the plaintiff to raise the level of the land, the Defendant No. 1 would be entitled not to take the structures on lease. The plaintiff did not complete the construction of the structures within the stipulated 6 months from the date of agreement. That was an admitted position.
In the event of failure on the part of the plaintiff to raise the level of the land, the Defendant No. 1 would be entitled not to take the structures on lease. The plaintiff did not complete the construction of the structures within the stipulated 6 months from the date of agreement. That was an admitted position. The plaintiff relied upon Exhibits ‘I’, ‘K’, ‘L’, ‘O’, ‘V’ and ‘W’ in support of the contention that, the time to complete the construction was extended from time to time and that, the Defendant No. 1 agreed to take delivery of the structures phase wise. The plaintiff had entered into an agreement for loan with the Defendant No. 2. By Exhibit ‘I’ which was a letter dated March 27, 1978 the Defendant No. 1 informed the Defendant No. 2 that, the application of the plaintiff for grant of extension of time to complete the construction was under consideration of the Defendant No. 1 and that, the Defendant No. 1 was prepared to accept possession of the godowns in a fresh manner within the extended period. Apparently the plaintiff had failed to obtain electric connection at the godowns. In order to obviate such difficulty, the Defendant No. 1 by a letter dated July 29, 1978 which was marked as Exhibit ‘J’ called upon the State Electricity Board for electric connection. The opening paragraph of such letter stated that, the Defendant No. 1 was going to take over the newly constructed godowns at the Hatsimul complex and that, the main hindrance was the want of electric power at the godown complex. By the letter dated September 20, 1978 being Exhibit ‘K’ the Defendant No. 1 represented to the State Electricity Board that, the godown complex at Hatsimul constructed by the plaintiff would be taken over on September 30, 1978 under the Agricultural Refinance and Development Corporation Scheme. The plaintiff took over two sheds, namely, shed nos. 9 and 10 on October 16, 1978 and the same would appear from the writing issued by the Defendant No. 1 on January 18, 1980 being Exhibit ‘O’. These two godowns were godown nos. 9 and 10 admeasuring 44,718 square feet. By its letter dated June 23, 1979 being Exhibit ‘V’ the Defendant No. 1 stated that, the take-over of the new space area will be considered by the competent authority of the Defendant No. 1.
These two godowns were godown nos. 9 and 10 admeasuring 44,718 square feet. By its letter dated June 23, 1979 being Exhibit ‘V’ the Defendant No. 1 stated that, the take-over of the new space area will be considered by the competent authority of the Defendant No. 1. By another letter of April 26, 1980 being Exhibit ‘W’ and also in Exhibit ‘V’ the Defendant No. 1 acknowledged that, it did not experience any defect in the floors of the two sheds. All the 20 godowns were not completed at the same time. The plaintiff made over possession of the two godowns out of 20 godowns to the Defendant No. 1. For the balance 18 godowns the plaintiff issued letters from time to time to the Defendant No. 1. It would appear from Exhibits ‘Q’ and ‘R’ that, the Defendant No. 1 within its organization were exchanging letters for the purpose of taking over possession of the balance 18 godowns. However, the possession thereof was not taken by the Defendant No. 1. Therefore, the defence of the Defendant No. 1 that there were defects in construction or that there were delays in construction of the godowns releasing the Defendant No. 1 the obligation to take on rent the godowns were not available to it in view of the discussion herein. The defence of the Defendant No. 1 required consideration. The first defence was that, the agreement between the plaintiff and the Defendant No. 1 stipulated 6 months period for the purpose of completion of construction of the godowns. The construction of the godowns was admittedly not concluded within the agreed period. Therefore, the Defendant No. 1 was not liable to take the godowns and pay rent in respect thereof. This defence of the Defendant No. 1 was without any basis. Firstly, the Defendant No. 1 as would appear from Exhibits ‘I’, ‘K’ and ‘L’ extended the time for completion of the godowns. Exhibit ‘I’ was a letter dated March 27, 1978 written by the Defendant No. 1 to the Branch Manager of the Defendant No. 2. The contents of the letter spoke of extension of time to complete the construction. In similar vein were the letters marked as of Exhibits ‘K’ and ‘L’. Moreover, the internal correspondence between the officers of the Defendant No. 1 at Exhibit ‘R’ spoke of taking possession of the remaining godowns.
The contents of the letter spoke of extension of time to complete the construction. In similar vein were the letters marked as of Exhibits ‘K’ and ‘L’. Moreover, the internal correspondence between the officers of the Defendant No. 1 at Exhibit ‘R’ spoke of taking possession of the remaining godowns. Therefore, time to complete the construction by the plaintiff was extended by the Defendant No. 1. The Defendant No. 1 having extended such time it could not refuse to accept the godowns on the ground of delay in construction by the plaintiff. The second defence of the Defendant No. 1 that, the construction was not in accordance with the specifications was also without substance. This contention was again belied of the contents of Exhibit ‘R’. Internal correspondence of the Defendant No. 1 being Exhibit ‘R’ as late as in 1980 was discussing the takeover of possession of the godowns. The third contention of the Defendant No. 1 that, the Defendant No. 1 agreed to take the godowns subject to downward revision of rent was also without substance. The contents of Exhibit ‘R’ which were internal letters of the Defendant No. 1 showed that, the defendant No. 1 was contemplating takeover of the possession of the godowns with negotiations with the rate of rent. The contents did not specify that, there would be a downward revision of rent. Assuming it to be so, nothing was placed before me to show that the Defendant No. 1 negotiated a downward revision of the rent for the purpose of taking over of the godowns. The defendant No. 1 did not take possession of the godowns at all. The fourth defence of the defendant No. 1 was that, there were deficiencies in the construction and till such time the deficiencies in the construction were not rectified, the Defendant No. 1 was not liable to pay. The fact that, there were minor deficiencies in the construction was admitted. The plaintiff offered to rectify all defects in the construction. Nothing was placed before me to show that, the deficiencies were of such nature that the Defendant No. 1 was unable to take possession of the godowns. The Defendant No. 1 not taking possession of the remaining godowns the plaintiff was constrained to move the Hon’ble Court for the purpose of letting out the godowns to a third party.
Nothing was placed before me to show that, the deficiencies were of such nature that the Defendant No. 1 was unable to take possession of the godowns. The Defendant No. 1 not taking possession of the remaining godowns the plaintiff was constrained to move the Hon’ble Court for the purpose of letting out the godowns to a third party. The Hon’ble Court by an Order dated March 21, 1980 granted liberty to the plaintiff to let out such godowns to the third parties. The plaintiff could let out such godowns to third party on November 20, 1980. Therefore, the plaintiff was entitled to rent for the period from May 1979 till October 1980 at the agreed rate of 40 paise per square feet. Three components were required to be established by the plaintiff for the purpose of receiving compensation. One of such component was the quantum of the rent agreed. The plaintiff established that, the quantum of the rent agreed was 40 paise per square feet. The next component required to be established by the plaintiff was the area of the godowns and the third component was the period for which the plaintiff was entitled to the rent from the Defendant No. 1. In respect of the second and third component there were sketchy evidence on record at best. The quality of the evidence on record on those two counts was such that, a plausible view of dismissing the suit could be taken apart from the view that I took. I proceeded to decree the suit in favour of the plaintiff solely on the consideration that, the plaintiff acted on a published scheme of the State authorities. The plaintiff had constructed twenty godowns covered under the scheme for the Defendant No. 1. Two out of the twenty godowns were taken over on lease by the Defendant No. 1. The Defendant No. 1 refused to take over the balance 18 although liable to do so. The plaintiff let out 18 of the godowns to a third party after obtaining leave from the Court. Those factors weighed heavily on me prompting me to pass a decree in favour of the plaintiff although the evidence in respect of the two components as noted by me above was, well, sketchy at best. The quantum of the floor area required consideration. There was no direct evidence as to the area comprised in the 18 godowns.
Those factors weighed heavily on me prompting me to pass a decree in favour of the plaintiff although the evidence in respect of the two components as noted by me above was, well, sketchy at best. The quantum of the floor area required consideration. There was no direct evidence as to the area comprised in the 18 godowns. In the plaint it was stated that, the 20 godowns measured an area of 3,02,984.80 square feet. 15 godowns were stated to have an area of 2,19,380 square feet. The two godowns for which the defendant had taken on rent comprised an area of 44,718.80 square feet. In such circumstances the plaintiff was required to be compensated for 2,58,266 square feet which was arrived at after subtracting 44,718.80 square feet from 3,02,984.80 square feet. Question that arose next for consideration was, what was the date on which the 18 godowns were ready. There was no direct evidence on record as to the actual date of completion. The date of completion was required to be deduced from the circumstances brought on record. The plaintiff claimed that, the godowns were ready on and from April 6, 1979. Therefore, the Defendant No. 1 could have taken the godowns only from the month of May 1979. The plaintiff let out the godowns on November 20, 1980. The defendant, therefore, would be liable till October 1980. The Defendant No. 1 was, therefore, liable for 18 months for the period from August 1978 till October 1980. The rent at the rate of 40 paise per square feet on 2,58,266 square feet for 18 months (0.40 X 2,58,266 X 18) would be an aggregate of Rs.18,59,515.20p. Plaintiff will be entitled to a decree for Rs.18,59,515.20p. against the Defendant No. 1. The defendant will pay such sum within one month of the date of the decree. In default, the plaintiff will be entitled to interest at the rate of 6% per annum on the sum of Rs. 18,59,515.20p. on and from November 1, 1980 till realization. In respect of the two godowns which the Defendant No. 1 took possession, the rent thereof was deposited by the Defendant No. 1 with its learned Advocate on record. Such rent was not paid to the plaintiff as would appear from the deposition of the witness of the plaintiff.
18,59,515.20p. on and from November 1, 1980 till realization. In respect of the two godowns which the Defendant No. 1 took possession, the rent thereof was deposited by the Defendant No. 1 with its learned Advocate on record. Such rent was not paid to the plaintiff as would appear from the deposition of the witness of the plaintiff. The witness of the plaintiff also stated that, the rent so paid was kept in a fixed deposit by the Advocate for the Defendant No. 1 and was renewed periodically. The plaintiff will, therefore, be entitled to the rent deposited in respect of the two godowns of which the Defendant No. 1 had possession. The plaintiff will, therefore, be entitled to the proceeds of the fixed deposit made by the Advocate on Record for the Defendant No. 1 together with all accruals thereto. The learned Advocate on Record for the Defendant No. 1 will make over the entire proceeds of the fixed deposit lying with him to the plaintiff on account of rent within seven days hereof. There will be a decree to such effect in favour of the plaintiff. C.S. No. 85 of 1982 is decreed accordingly. There will be no order as to costs.