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2024 DIGILAW 551 (CAL)

Tea Board v. Peermade Tea Co. Ltd.

2024-03-13

SUGATO MAJUMDAR

body2024
JUDGMENT : Sugato Majumdar, J. 1. The instant suit is filed by the Plaintiff praying for declaratory decree, return of machineries alternatively money decree for a sum of Rs.7, 01,274.54p. along with damages. 2. The Plaintiff is a statutory body established under the provisions of Tea Act, 1953 for the purpose of improving production of tea. The Plaintiff had a scheme known as “Tea Machinery Hire Purchase Scheme” whereunder the tea garden owners take on hire from the Plaintiff equipments and machineries. 3. The Defendant is the owner of a tea garden known as Cheenthalar Tea Estate situated at Pasuppara village in the district of Idukhi in the State of Kerala. The parties entered into and executed a hire purchase agreement whereunder certain machineries and equipments were to let out to the Defendant on hire purchase basis. The Defendant selected the manufacturer from which supplies were to be made. The hire purchase agreement was executed on 31.01.1978. Supplies were to be made to the Defendant on terms and conditions of the agreement. This agreement was executed in the office of the Plaintiff at Calcutta, within jurisdiction of this Court. 4. It is averred in the plaint that the machineries and equipments were despatched to the tea garden of the Defendant at Kerala. The last item was despatched on 26.09.1980. Ninety per cent bill of the manufacturer was settled by the Plaintiff. According to the agreement, the first instalment was due and payable on the anniversary of the date of the despatch of the last item. The Defendant was irregular in payment of instalments. The first instalment of Rs.1,71,573.88p. was paid on 05.11.1984 and 25.09.1985. The second instalment of Rs.1,11,z354.90p. was paid on 26.09.1985, 13.10.1985, 06.11.1987 and on 16.03.1988. The third instalment was partly paid as Rs.99,823/- on 27.01.1989, 18.08.1989 and on 25.10.1989. In terms of the hire purchase agreement, the Plaintiff is entitled to claim interest, additional interest and other casts and charges and expenses because of delay and default of payment in due time. 5. Case made out in the plaint is that in spite of repeated demands, the Defendant neglected and failed to pay the outstanding amount. The Plaintiff is still owners of the machineries and equipments described in the First schedule of the hire purchase agreement. The Defendant is to run the machineries and equipments in accordance with the terms of the agreement. Case made out in the plaint is that in spite of repeated demands, the Defendant neglected and failed to pay the outstanding amount. The Plaintiff is still owners of the machineries and equipments described in the First schedule of the hire purchase agreement. The Defendant is to run the machineries and equipments in accordance with the terms of the agreement. Since the Defendant neglected and failed to pay the outstanding amount, the Plaintiff is constrained to file the instant suit praying for declaration that the Plaintiff is the owner of the machineries and equipments described in the First Schedule of the hire purchase agreement, being part of the plaint; a decree for return of the machinery and equipments described in the First Schedule of the hire purchase agreement, alternatively a decree of Rs.7,01,274.54p. being the reasonable market value of the machineries, if return cannot be had; a decree of Rs.7,01,274.54p.; enquiry into damages for wrongful detention of the said machineries and equipments along with other prayers. 6. The Defendant contested the suit by filing written statement denying all material allegations contained in the plaint. Apart from the defense of non-maintainability of the suit, bar by law of limitation and non-disclosure of cause of action, the Defendant set up positive defense alleging existence of different material facts. Positive case of the Defendant is that the equipment manufacturer M/s Marshall Sons Company (India) Ltd. was selected by the Plaintiff and not by the Defendant. No part of negotiation took place at Kolkata, within jurisdiction of this Court. The entire negotiations took place at Cochin, in the registered office of the Defendant. At the instance of the Plaintiff order for supply of 16 ft. quality tea dryer and 12 other machineries were placed with the aforesaid manufacturer. It was expressly agreed upon between the Plaintiff and the manufacturer that the machineries would be delivered within 10 to 12 weeks from the date of the purchase order. The purchase order was issued by the Plaintiff on 03.03.1978. Responsibility of timely supply of the machineries rested with the Plaintiff. On receipt of advice from the manufacturer, the Plaintiff would send intimation to the Defendant and a joint inspection would be carried out and copy of shipping specification and inspection certificate would be sent to the purchaser. The purchase order was issued by the Plaintiff on 03.03.1978. Responsibility of timely supply of the machineries rested with the Plaintiff. On receipt of advice from the manufacturer, the Plaintiff would send intimation to the Defendant and a joint inspection would be carried out and copy of shipping specification and inspection certificate would be sent to the purchaser. The machineries would be deemed to be delivered to the Defendants and delivery would be complete and soon as railway receipt, bill of lading or air consignment note in respect of the last machinery or equipment, which, in the opinion of the Plaintiff would be available, would be delivered to the Defendant. The balance of hire purchase value of the machinery after deducting the amounts paid by the Defendant should be paid in ten equal annual instalments. Payment of instalment would commence from the first anniversary of the date of delivery of the last item of machinery. In the meanwhile amendment was sought for to the original order for supply of machinery and the manufacturer was requested to supply stove without chimney as the Defendant proposed to use an “induced drought fan”. The Plaintiff acceded to the request only after lapse of 8 months. But the communication made by the Plaintiff to the manufacturer was fraught with mistakes. The Defendant requested the Plaintiff, in terms of a letter dated 14.08.1978 to issue revised amended order to the manufacturer. 7. It is the case of the Defendants that out of the machineries ordered, several parts were not delivered; there was delay in delivery; some parts of the machineries were also broken and damaged. It was the Plaintiff who was responsible for short delivery and supply of damaged parts. Because of delay, attributable to the Plaintiff, the Defendant is not liable to pay any interest, as averred. Because of delay, machineries and equipments also became obsolete. According to the Defendant, repayment was to commence only from 05.02.1983. On 07.03.1988, the Defendant paid a sum of Rs.33,275.81p. towards 7th instalment. Thereafter, to the astonishment of the Defendant, the Plaintiff enhanced the annual instalment by Rs.2061.98p. amounting to Rs.35,937.16p. The Defendant denied liability to pay enhanced rate of annual instalment. It is the case of the Defendant that eight instalments amounting to Rs.2,66,204.50p. was paid to the Plaintiff. The Defendant also paid the 10th instalment of Rs.33,275.81p. under a cover letter dated 09.04.1989. amounting to Rs.35,937.16p. The Defendant denied liability to pay enhanced rate of annual instalment. It is the case of the Defendant that eight instalments amounting to Rs.2,66,204.50p. was paid to the Plaintiff. The Defendant also paid the 10th instalment of Rs.33,275.81p. under a cover letter dated 09.04.1989. According to the Defendant, on payment of the 10th instalment, no amount is due owe and payable to the Plaintiff. On payment of the last instalment, all the rights, title and interest in the machineries and equipments stood transferred in its favour and became vested in the Defendant. According to the Defendant, the suit is liable to be dismissed being not maintainable. 8. On the basis of the rival pleadings, the following issues were framed : 1. Whether the suit is maintainable? 2. Whether the suit is barred by limitation or any other principle of law? 3. Whether the suit discloses cause of action? 4. Whether there was a valid hire purchase agreement? 5. Whether the Defendant committed any breach of agreement? 6. Whether the Plaintiff is the owner of the machineries and equipments which are subject matter of the suit property? 7. Whether the Plaintiff is entitled to the relief prayed for? 8. What other relief/reliefs the Plaintiff is entitled to? 9. Issue no.2 is taken up first. This is the issue on limitation. In the plaint it is averred that last payment was made on 25.10.1989. In written statement, the Defendant stated that the last instalment was paid under a cover letter dated 09.09.1989. The suit was filed on 31.03.1992 well within three years calculating from either of the dates. So, the suit is not barred by the law of limitation. 10. Issue no. 2 is decided in favour of the Plaintiff. 11. The suit is one for recovery of money and taking possession of machineries and equipments. Prayer of declaration of title is also there. The plaintiff’s pleading is that the Defendant failed to pay in terms of the hire purchase agreement which the Defendant is bound to pay. Therefore, the suit discloses cause of action. 12. Issue no. 3 is also decided in favour of the Plaintiff. 13. In Defendant’s averments in the written statement did not raise any question on invalidity of the agreement. Therefore, the suit discloses cause of action. 12. Issue no. 3 is also decided in favour of the Plaintiff. 13. In Defendant’s averments in the written statement did not raise any question on invalidity of the agreement. The agreement is exhibited as marked as Ext.B. Case set up by the Defendant is that payments were made in full in terms of the agreement. In Defendant referred to various clauses of the agreement to substantiate his defence. This indicates that the Defendant acted upon the agreement. Therefore, the hire purchase agreement is undisputedly a valid agreement, accepted by the parties herein without any dispute. 14. Issue no. 4 is decided in favour of the Plaintiff. 15. Issue no. 5 to 8 and 1 are taken up together for the sake of brevity. 16. Existence and execution of a valid hire purchase agreement is not in dispute. The Defendant admitted that equipments and machineries were received by them. But allegations levelled are that there was delayed delivery of the machineries and the equipments and that some of the equipments and machineries were received in damaged and defective condition. 17. Para. 8 of the written statement contain averment that certain parts of machineries were delivered in May 1980. Ext.C a letter dated 23.09.1980 written on behalf of the Plaintiff to the Defendant shows that machineries had already despatched. Ext.D is another letter written on behalf of the Plaintiff to the Defendant dated 10.10.1980 shows that 14 cases of drier components were despatched. The Defendant did not adduce any evidence to show any delay. In any case the first instalment was to be paid on anniversary date of the last despatch. Allegation of delay, in absence of any evidence on behalf of the Defendant is not proved. 18. The Defendant alleged that some of the machineries and equipments were received in damaged and broken condition. Under Clause 10 of the agreement, the Defendant should report to the Plaintiff conditions of machineries so delivered within 15 days of delivery. In case of failure to report it would be presumed that the machineries and equipments were delivered in good condition. Para.8 of the written statement avers that certain parts of machineries were delivered in May 1980 but were defective, damaged or broken. This was brought to the notice of the manufacturer in terms of a letter dated 22.05.1989, after lapse of almost nine years. Para.8 of the written statement avers that certain parts of machineries were delivered in May 1980 but were defective, damaged or broken. This was brought to the notice of the manufacturer in terms of a letter dated 22.05.1989, after lapse of almost nine years. In this case, therefore, presumption contemplated in Clause 10 of the agreement came into play. There is no evidence that in terms of Clause 10 of the agreement the Defendant made report of defects or damage of the machineries within 15 days of delivery to the Plaintiff. On the contrary Ext.D is a letter dated 10.10.1980 written on behalf of the Plaintiff to the Defendant indicating specifically that the machineries were delivered in good condition. This apart Ext.J being a letter dated 04.04.1990 written by the Plaintiff to the Defendant shows that the Plaintiff Board received communication from the manufacturer in terms of a letter dated 19.12.1988 that the Defendant reported defects in the machineries. In Ext.J it was made clear that since defects were reported much later than the time frame fixed under Clause 10, it would be presumed that all the machineries were delivered in good condition. Defense of the Defendant that the machineries were delivered in damaged condition holds no ground. 19. Clause 7 of the agreement stipulates payment of additional interest in case of delayed payment of instalments. It is in the evidence of the Plaintiff that the Defendant delayed in payment of instalments attracting operation of Clause 7 of the agreement. Ext.G is a letter dated 17.05.1989 written by the Accounts Officer (H.P) of the Plaintiff’s Board. Extent of legal dues payable by the Defendant was clarified. It was also pointed out that the Defendant delayed payment. Other documents adduced in evidence shows the demand of the Plaintiff Board. No contrary evidence on behalf of the Defendant was adduced to rebut the documentary and oral evidence of the Plaintiff. Therefore, the Plaintiff is able to establish the monetary claim against the Defendant. Evidence adduced by the Plaintiff, as discussed above, shows and establish, un-contradicted, that the Defendant delayed in payment of instalments attracting additional rate of interest and neglected and failed to pay such amount which is a breach of the hire purchase agreement. 20. Clause 8 of the agreement provides that unless price and expenses are fully paid machineries shall be absolute properties of the Plaintiff Board. 20. Clause 8 of the agreement provides that unless price and expenses are fully paid machineries shall be absolute properties of the Plaintiff Board. Since the Defendant has not fully paid the legal dues under the hire purchase agreement, all the machineries are the absolute properties of the Plaintiff and title of the same remains with them. 21. In view of discussions made above, the suit is held to be maintainable. 22. The Plaintiff is entitled to the relief prayed for, for reasons discussed above. 23. Thus Issue No. 1, 5, 6, 7 & 8 are decided in favour of the Plaintiff. 24. In nutshell, the instant suit is allowed. 25. It is ordered that the Plaintiff do get a decree of Rs.7,01,274.54 p. with interest at a rate of 8% per annum from the date of institution of the suit till recovery. On recovery of the amount, title of the machineries and equipments mentioned in the First Schedule of the agreement shall pass on to the Defendant. The Defendant is directed to make payment as aforesaid within sixty days from the date of drawing up the decree, otherwise, the Plaintiff will be at liberty to draw up execution proceeding for recovery of the amount. 26. In case money decree is not satisfied, the Plaintiff shall be entitled to take possession of the machineries and equipments, as mentioned in the First Schedule of the hire purchase agreement. 27. Let decree be drawn up. 28. The instant suit is disposed of with all pending applications, if any.