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M/s. Bhagawati Enterprises v/s M/s. Prakash Engineering Works

    C.S.No. 250 of 1994 (Original Side)

    Decided On, 02 December 2014

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE DEBANGSU BASAK

    For the Plaintiff: Aniruddha Mitra, G.S. Gupta, Advocates. For the Respondent: Shakya Sen, P. Saha, H.B. Dubey, Mukush Mishra, Advocates.



Judgment Text

Debangsu Basak, J.

The plaintiff seeks money decree against the defendant.

According to the plaintiff, it had entered into an agreement with the defendant to buy 450 metric tonnes of cast iron scraps at a rate of Rs.4,000/- per metric tonne. As consideration thereof the plaintiff paid an advance of Rs.18 lakhs by four several cheques between the period September 1, 1990 and September 13, 1990. All the aforesaid cheques were encashed and proceeds thereof appropriated by the defendant. According to the plaintiff, the defendant failed and neglected to deliver any cast iron scraps. The plaintiff demanded refund of the advance. Since the defendant did not have money to refund, it agreed to refund the advance with interest at the rate of 18 per cent per annum.

The defendant refunded an aggregate sum of Rs.10 lakhs during the period November 4, 1991 till April 20, 1993. The plaintiff claims that it is entitled to appropriate the said sum of Rs.10 lakhs first towards interest and then towards the principal amount outstanding.

According to the plaintiff it is entitled to interest at the rate of 18 per cent per annum as the defendant had agreed of such rate of interest. According to the plaintiff after giving credit to the interest account and after adjusting the sum of Rs.10 lakhs first towards the interest accrued and, thereafter towards principal, a sum of Rs.20,49,065/- became due and payable by the defendant to the plaintiff.

In addition to such claim the plaintiff claims a sum of Rs.6,54,825/- on account of loss and damages that it suffered for the failure of the defendant to deliver 450 metric tonnes of cast iron scraps. The plaintiff claims to have purchased 450 metric tonnes of cast iron scraps at the rate of Rs.5,000/- per metric tonne while the contracted price was Rs.4,000/- per metric tonne. The plaintiff claims difference between the purchase price and the contracted price.

The defendant has entered appearance in the suit and has filed a written statement. In the written statement the defendant claims that it is a manufacturer of cast iron sleeper plates. It sells cast iron scraps which did not meet the requirement of the defendant for its manufacturing purposes. The defendant usually sells cast iron scraps at a price lesser than the prevailing price of Steel Authority of India. Consequently, according to the defendant, since it offers a lower price that the prevailing market price there is always a great demand of cast iron scraps sold by it. The defendant admits that an agreement was entered into between the parties for case iron scraps to be sold by the defendant to the plaintiff. The defendant, however, disputes the rate. According to the defendant it agreed to sale cast iron scraps to the plaintiff at a rate of Rs.150/- per metric tonne less than the prevailing rate of pig iron inclusive of 4 per cent sales tax subject to availability. The defendant admits to have received the sum of Rs.18 lakhs as advance from the plaintiff. The defendant claims that since there was hardly any cast iron scraps available to the defendant in 19991-1992, the defendant returned an aggregate sum of Rs.10 lakhs by account payee cheque to the plaintiff.

According to the defendant, the plaintiff was aware of the unavailability of cast iron scraps with the defendant and that, the plaintiff agreed to accept the refund of the said sum of Rs.10 lakhs without any protest. For the balance sum of Rs.8 lakhs the defendant claims that it sold 137.930 metric tonne of cast iron scraps to the plaintiff for the value of Rs.7,90,614.76/-. In support of such sale the defendant relies upon 13 challans which according to the defendant bears the seal of the plaintiff and its authorized representative. The defendant raised three bills to the said supply an aggregate of a sum of Rs.7,90,614.76/-. According to the defendant, no amount is payable inasmuch as balance of Rs.9,000/- and odd was paid by the defendant pursuant to an order passed under Chapter XIIIA of the Original Side Rules.

The parties disclosed various documents. Two witnesses were examined on behalf of the plaintiff and one on behalf of the defendant.

The pleadings raise few issues which may be summarized as follows:-

(i) What was the rate at which the defendant agreed to sale the plaintiff the cast iron scraps?

(ii) Did the defendant agree to pay any interest on the failure of the defendant to refund the sum of Rs.18 lakhs to the plaintiff, and if so, then at what rate?

(iii) Did the defendant sale and deliver 137.930 metric tones of cast iron scraps to the plaintiff and if so, at what rate?

(iv) Is the plaintiff entitled to compensation for loss and damages and if so, the quantum thereof?

(v) Is the plaintiff entitled to any relief in the suit?

The first issue between the parties, presupposes a contract between the parties whereby and whereunder the defendant agreed to sale cast iron scraps to the plaintiff. Such a contract is admitted. What is disputed is the rate at which the goods are to be sold by the defendant to the plaintiff. Both the parties claim the contract to be oral. In the plaintiff’s version of the oral contract, the rate is of Rs.4,000/- per metric tonne while the defendant claims the rate to be Rs.150/- less than prevailing price of Steel Authority of India. The evidence on record does not substantiate or corroborate any of the two claims of the parties with regard to the rate of the contract. The rate, therefore, cannot be decided on the basis of the materials made available on record.

The defendant in support of its claim of the rate relies upon few delivery challans and bills in respect of 137.930 metric tonnes of goods that it claims to have sold and delivered to the plaintiff. The receipt of the goods is disputed by the plaintiff. The seal of the plaintiff claimed to be affixed on the delivery challans is also disputed by the plaintiff. Leaving aside the challans and the bills for the 137.930 metric tonnes of goods, there is no other evidence in writing on record to show that the parties agreed to a particular rate.

The second issue is next taken up for consideration. The fact that the plaintiff paid a sum of Rs.18 lakhs to the defendant by four several cheques during the period September 1, 1990 till September 30, 1990 is admitted. The plaintiff claims that, since the defendant was not in a position to supply materials and was not in a position to refund the advance, the defendant agreed to pay interest on the sum of Rs.18 lakhs at the rate of 18 per cent per annum on and from the respective dates of the advances until payment.

The defendant denies any such arrangement. The evidence on record is the oral testimony of the witness of the plaintiff as against the oral testimony of the witness of the defendant. There is no material in writing to come to a finding one way or other. None of the oral testimony the parties is even remotely substantiated or corroborated by any evidence in writing on record. It would be hazardous to arrive at a finding as to the rate of interest. In fact, it is hazardous to arrive at a finding that the defendant agreed to pay any interest. The issue is, therefore, answered in the negative as against the plaintiff. However, the nature of transactions between the parties is commercial. The defendant received advance from the plaintiff for sale of cast iron scraps. Admittedly, the defendant did not sale the cast iron scraps at least for the value of Rs.10 lakhs for which it sought to be refund the said sum of Rs.10 lakhs which was paid on several dates between November 4, 1991 till July 20, 1993. Even though the parties did not agree as to the rate of interest, the Court can award interest to compensate for the delay in payment.

On the third issue, the learned Counsel for the plaintiff submits that, the plaintiff did not receive the so-called 137.930 metric tonnes of goods. According to the plaintiff, it did not receive the goods. The challans were not signed by it or any person on its behalf. The seal on the challans was not affixed by a person authorized by it. Suraj Kumar, a person who is claimed to be the broker was not appointed as the broker by the plaintiff. The plaintiff is not aware of any person by the name of Kanwar Singh. He never worked as the employee of the plaintiff. The thirteen challans were allegedly signed at the godown of the defendant. There was no occasion for the plaintiff to sign such delivery challans. In cross-examination the witness of the plaintiff has stated that it maintains a register of employees and such register of employees did not bear the name of Sri Kanwar Singh. The witness of the plaintiff in cross-examination denied the rubber stamp of the plaintiff appearing in the challan and stated that the plaintiff never received the bills or the materials covered under the challans.

Learned Counsel for the plaintiff relies on Section 60 of the Evidence Act. He submits that, there is no direct evidence as to the receipt of the goods. The witness of the defendant did not see the goods to be delivered by the defendant to the plaintiff. He did not see the seal of the plaintiff to be affixed on the delivery challan. He was not present when such documentation and the alleged supply took place. He points out that the evidence of the witness of the Defendant No. 1 is at best hearsay. He relies upon 2007 Volume 10 Supreme Court Cases page 371 (Sunder Lal v. State of Rajasthan) in support of the proposition that oral evidence can be permitted to be given by a person who has seen the incident. For the same proposition he relies upon All India Reporter 2011 Supreme Court page 760 (Kalyan Kumar Gogoi v. Ashutosh Agnihotri & Anr.). Learned Counsel for the plaintiff refers to Section 61 of the Evidence Act, 1872 and submits that, the contents of the delivery challans have not been proved by requisite evidence. He relies upon All India Reporter 2009 Supreme Court page 432 (Hardip Singh v. State of Punjab) in this regard.

Learned Counsel for the plaintiff refers to Section 67 of the Evidence Act, 1872 and submits that, the signature and the hand writing on the delivery challans have not been proved adequately on behalf of the plaintiff. He relies upon All India Reporter 1981 Madhya Pradesh page 69 (Smt. Rami Bai v. Life Insurance Corporation of India, Bhopal). It is submitted on behalf of the plaintiff, relying upon Sections 101 and 102 of the Evidence Act, 1872 that, the defendant did not prove delivery of the goods to the plaintiff and as such did not discharge its burden of proof for it to shift to the plaintiff. He relies upon All India Reporter 2000 Supreme Court page 1203 (Subhra Mukherjee & Anr. V. Bharat Coking Coal Ltd. & Ors.) and 2004 Volume 1 Calcutta High Court Notes page 142 (Tarak Nath Sha v. Bhutoria Brothers Pvt. Ltd.) in this regard.

Learned Counsel for the defendant submits that, the seal on the challans are that of the plaintiff. It is for the plaintiff to disprove the seal on the challans. According to him, the burden of proof to establish that the challans are forged lies upon the plaintiff. In support of such proposition he relies upon 2011 Volume 1 Supreme Court Cases page 167 (Alva Aluminium Limited, Bangkok v. Gabriel India Limited), 2011 Volume 12 Supreme Court Cases page 220 (Rangammal v. Kuppuswami & Anr.) and 2006 Volume 5 Supreme Court Cases page 558 (Anil Rishi v. Gurbaksh Singh).

The defendant claims delivery of 137.930 metric tonnes of goods by several delivery challans. There are 13 delivery challans involved. These 13 delivery challans have been marked as Exhibits ‘7’ and ‘8’ in the suit. The defendant claims to have raised 3 bills on the plaintiff for 137.930 metric tonnes of goods claimed to be supplied by the defendant to the plaintiff. These 3 bills are marked as Exhibit ‘9’ collectively in the suit. The 13 challans being exhibited as ‘7’ and ‘8’ contains a seal claimed to be of the plaintiff. The plaintiff is a partnership firm. The witness of the Defendant No. 1 in evidence said that, he was not present when the delivery of the goods was taking place. He did not see any person of the plaintiff affix the seal on the delivery challans of the plaintiff. The witness of the defendant was not present personally when the goods were allegedly delivered to the plaintiff. The goods were allegedly delivered by the defendant to the plaintiff at the godown of the defendant. The defendant did not produce any person who was present at the time of the alleged delivery of the goods.

The witness of the defendant in cross-examination has stated that, the defendant maintained 3 sets of challans for delivery of goods. The first set is given to the purchaser. The second set is sent with the transporter and the third set of the challan is retained in the challan-book. The defendant has a bound challan book for the 3 sets of challans. The third set of challan is kept in the bound challan of the defendant. This challan-book was not produced in evidence by the defendant. In cross-examination the witness of the Defendant No. 1 acknowledged that the income-tax authorities had questioned the alleged delivery of the goods.

The witness of the Defendant No.1 was not in a position to give name of the person who collected the bills. The bills are not receipted.

In Sunder Lal (supra) the Supreme Court was considering an appeal where a person was found guilty of offence punishable under Section 302 of the Indian Penal Code, 1860. In Kalyan Kumar Gogoi (supra) a proceeding under the Representation of People Act, 1951 was before the Supreme Court. It is of the view that, 'an assertion other than one made by a person while giving oral evidence in the proceeding is inadmissible as evidence of any fact asserted'. In Hardip Singh (supra) the Supreme Court was concerned with a conviction under the Narcotic Drugs and Psychotropic Substances Act. In the facts of the case their Lordships found a document not to pass the test of genuineness. In Smt. Rami Bai (supra) the Madhya Pradesh High Court noted how a signature appearing in a document can be proved. In Subhra Mukherjee (supra) the Supreme Court was of the view that, where the issue raised had two parts that is to say, whether the transaction in question was bona fide and genuine one or a sham and bogus or fictitious transaction in such a case only when the first part is proved that the party alleging the document to be sham had to dislodge it by proving that it is a sham transaction. In Tarak Nath Sha (supra) the Division Bench was of the view that, when a particular document was required to be proved, the burden lay upon the person who would suffer if the document was not admitted in evidence.

In Alva Aluminium Limited, Bangkok (supra) the Supreme Court was of the view that the onus and burden of proof lies on the party seeking to deny a contract on the ground of misrepresentation, fraud or coercion. In Rangammal (supra) the Supreme Court considering Section 101 of the Evidence Act, 1872 was of the view that the burden lies on the plaintiff to prove his case on the basis of the material available. In Anil Rishi (supra) the Supreme Court considered the Evidence Act, 1872 and held in paragraph 19 as follows:-

'19. There is another aspect of the matter which should be borne in mind. A distinction exists between burden of proof and onus of proof. The right to begin follows onus probandi. It assumes importance in the early stage of a case. The question of onus of proof has greater force, where the question is, which party is to begin. Burden of proof is used in three ways: (i) to indicate the duty of bringing forward evidence in support of a proposition at the beginning or later; (ii) to make that of establishing a proposition as against all counterevidence; and (iii) an indiscriminate use in which it may mean either or both of the others. The elementary rule in Section 101 is inflexible. In terms of Section 102 the initial onus is always on the plaintiff and if he discharges that onus and makes out a case which entitles him to a relief, the onus shifts to the defendant to prove those circumstances, if any, which would disentitle the plaintiff to the same.'

In the instance case, the defendant claims that it sold and delivered goods to the plaintiff. This transaction is subsequent to the failure of the defendant to sell any goods to the plaintiff after the defendant had received the advance for the same. In fact, it is subsequent to the defendant refunding Rs.8 lakhs from the sum of Rs.18 lakhs that it had received as advance. The initial contract was entered into in 1990. The refunds commenced from November 4, 1991. The alleged sale took place in 1993. The witness of the Defendant No. 1 claims that the sale took place pursuant to a further oral contract. The second contract is not established by any evidence. In this case there is only the oral testimony of the witness of the Defendant No. 1 to say that there was a contract for sale in 1993. The witness for the plaintiff denied the 1993 transaction. In view of Subhra Mukherjee (supra) it is for the defendant to establish the genuineness of the 1993 contract. The genuineness of the 1993 contract in my view is not established.

The seal of the plaintiff on the delivery challans is used both as a shield and a sword by the defendant in support of its case that there was a 1993 contract. The seal appears on the third set of the delivery challans which ought to be in a bound book. The witness of the Defendant No. 1 in cross-examination has stated that, the defendant has 3 sets of delivery challans and all 3 sets are from the bound delivery challan-book and that, the third delivery challan is retained in such bound book. The bound book of the delivery challans has not been produced in evidence.

Moreover, the witness of the Defendant No. 1 did not see any person of the plaintiff to affix the seal of the plaintiff on the delivery challans. No person of the defendant has come forward as witness to say that the plaintiff received the goods, affixed the seal on the delivery challan and that the signature appearing on the delivery challan on behalf of the plaintif

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f was signed in his presence. Applying the ratio of Rangammal (supra) which requires that, the genuineness of a document has to be proved by the party who relies on the validity of the document. Only then will the onus shift on the opposite party to dislodge such proof and establish that the document is sham or bogus. In my view, in the facts of the present case the defendant has failed to establish the 1993 contract, the genuineness of the delivery challans as also the 3 bills that it claimed to have raised and as such it has failed to discharge its burden of proof with regard thereto. In such circumstance issue No. 3 is answered in the negative and against the defendant. Since the defendant did not sell and deliver any goods to the plaintiff, the question of fixation of rate in respect thereof does not arise. Issue No. 4 is answered in the negative against the plaintiff. The plaintiff has failed to establish the rate for the initial contract. Consequently, although the plaintiff has purchased materials from the third party in view of the absence of the rate of the first contract between the plaintiff and the defendant, no compensation can be awarded. The plaintiff relies on Section 73 of the Contract Act, 1872. Again the rate of the first contract is not established, no compensation can be awarded. So far as issue No. 5 is concerned, the plaintiff is entitled to a decree for a sum of Rs.8,00,000/- together with interest at the rate of 12 per cent per annum on and from April 21, 1993 till realization. Such rate of interest is awarded keeping in view the commercial nature of transactions between the parties and the rates at which nationalized banks lend and advance money in respect of commercial transactions. The plaintiff has paid court-fees and has incurred expenses in conduct of the suit. The plaintiff is entitled to costs assessed at Rs.55,000/-. C.S. No. 250 of 1994 is decreed accordingly. The department will draw and complete the decree as expeditiously as possible.
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