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1977 Supreme(SC) 13
SUPREME COURT OF INDIA
H.R. KHANNA AND P.S. KAILASAM, JJ.
The Karnal Distillery Co. (P) Ltd., Appellant
Versus
Union of India etc. etc., Respondents.
Civil Appeals Nos. 1678 and 2124 of 1968.
D/- 12-1-1977.
Advocates appeared
Mr. S. P. Jaiswal, Managing Director (In person) for Appellant; Mr. V. C. Mahajan, Sr. Advocate, (Mr. R. N. Sachthey, Advocate with him), for Respondents.
Headnote:
Punjab Excise Act - Liquor was supplied were necessary parties – Claim of compensation - Filed this suit for recovery of a sum – Plaintiff filed this suit for recovery of a sum principal being and interest at rate of per annum amounting - Case for plaintiff/appellant is that on July plaintiff and Himachal Pradesh Government entered into an agreement under Ex. P-1 by which the plaintiff agreed to supply gallons, with variation of quantity on either side of country liquors to the liquor licenses of District during the remaining period commencing from August at rates mentioned in agreement - Plaintiff offered to supply gallons of liquor during said period - Himachal Pradesh Government accepted gallons - While the Government disposed gallons remaining stock of gallons was taken over by Government - For this quantity of liquor plaintiff submitted a bill at contractual rates and the interest due thereon - Main defense to action with which court are concerned is that plaintiff is not entitled to contractual price of gallons of country liquor supplied to defendant according to the rates mentioned in agreement - Stand that was taken by Government was that liquor licenses to whom the liquor was supplied were necessary parties and that rights of parties were not governed under agreement Ex. P-1 as Government was acting as a sovereign body under Punjab Excise Act and rules made there under – Held, In present case agreement was entered into purely as a contract between plaintiff and Government for supply of liquor at a particular rate - There is no doubt that a license from Government is necessary for manufacture and Government had in fact permitted plaintiff to manufacture and supply liquor and had contracted for the price to be paid and has also agreed on price for liquor supplied - Court have also found that under the terms of the contract Govt. had agreed to pay the price of the liquor supplied - Therefore receipt of the supply and payment of the price for it is purely a bilateral contract and does not involve exercise of any sovereign power - Contractor having supplied the quantity is entitled to be paid at the rates specified - If on March Government wanted to seize or impound the liquor their obligation to pay at contract rate does not cease - Trial Court was therefore right in holding that Ex. P. 1 is a bilateral contract and that its terms cannot be changed according to the will of defendant - Trial Court is also right in coming to the conclusion that quantity of disputed liquor was not sold by plaintiff to liquor licenses but was taken over by the Government - Court are unable to agree with view taken by High Court that according to terms of contract the liquor was to be paid for by liquor licenses direct at the price agreed to between the plaintiff and Government - Court are also unable to agree with High Court’s conclusion that the contract came to an end by efflux of time and as the plaintiff gallons lying indisposed of plaintiff is not entitled to be paid according to the contract price - As court have pointed out the contractors have fulfilled their part of contract by supplying the quantity of liquor agreed upon - In the view that we have taken that the contract was between the plaintiff and the Government and the plaintiff can look to the Government for the value of the liquor supplied it is not necessary for us to consider question whether High Court should have permitted to treat suit as one for award of compensation for loss suffered by plaintiff due to Governments wrongful seizure of the liquor - Court are satisfied that on terms of contract Government was bound to pay the price gallons at contracted rate and plea of Government that the contract had come to an end by efflux of time and that they could fix price according to Excise Rules and Regulations cannot be acceded - High Court had also declined to award costs to plaintiff party in person brought to our notice letter Ex P-11 in which he requested that the agreed sum may be paid to him without prejudice pending a settlement but this request was not granted – Court find therefore that the plaintiff is entitled to the interest on the amount due - Appeals allowed
Judgment
KAILASAM J.:- In both the appeals the plaintiff is the appellant by virtue of the certificates issued by the High Court of Delhi, Himachal Pradesh Bench, Simla. The question that arises in both the appeals is the same and the learned counsel are agreed that the disposal of C. A. No. 1678 of 1968 would dispose of C. A. No. 2124 of 1968. We will therefore take up the facts in Civil Appeal No. 1678 of 1968 only.
2. The plaintiff, Karnal Distillery Co. Ltd. filed this suit for recovery of a sum of Rs. 25,270/-, principal being Rs. 22,264/6/3 and interest at the rate of 6% per annum amounting to Rs. 3,005/9/9. The case for the plaintiff/appellant is that on 20th July, 1950 the plaintiff and Himachal Pradesh Government entered into an agreement under Ex. P-1 dated 20-7-1950 by which the plaintiff agreed to supply 12,000 L. P. gallons, with 10% variation of quantity on either side, of country liquors to the liquor licensees of Mandi District during the remaining period of 1950-51 commencing from August 1, 1950, at the rates mentioned in the agreement. The plaintiff offered to supply 10,800 L. P. gallons of liquor during the said period. The Himachal Pradesh Government accepted 10580.3 L. P. gallons. While the Government disposed of 7934.5 L.P. gallons, the remaining stock of 2645.8 L. P. gallons was taken over by the Government. For this quantity of liquor the plaintiff submitted a bill for Rs. 22,264/6/3 at the contractual rates and the interest due thereon. The main defence to the action with which we are concerned is that the plaintiff is not entitled to the contractual price of 2645.8 L. P. gallons of country liquor supplied to the defendant according to the rates mentioned in the agreement. The stand that was taken by the Government was that the liquor licencees of Mandi to whom the liquor was supplied were necessary parties and that the rights of the parties were not governed under agreement Ex. P-1 as the Government was acting as a sovereign body under the Punjab Excise Act and rules made thereunder.
3. The trial Court, the Senior Sub-Judge, Simla holding that the plaintiff was entitled to contractual price of 2,645.8 L. P. gallons decreed the suit as prayed for. The trial Judge observed that the price of the disputed liquor which has been taken by the Government had not been sold by the plaintiff to the retail liquor licencees and the liquor whose price is now claimed was admittedly taken over by the defendant Government. The trial Court also negatived the plea of the defendant that the plaintiff is entitled only to the price fixed by the Collector under the Excise Act and rules i.e. Rupees 16,333/5/2 as the parties were governed by the terms of bilateral contract Ex. P-1, the terms of which cannot be changed. In this view the trial Court decreed the suit as prayed for, namely for a sum of Rupees 25,270/- with costs.
4. The State of Himichal Pradesh took the matter in appeal to the High Court of Delhi, Himachal Pradesh Bench, Simla, against the judgment and decree for recovery of Rs. 25,270/- and costs in favour of the plaintiff. A Bench of the High Court modified the decree holding that the plaintiff is entitled to a decree for a sum of Rs. 16,333/5/2 which was realized by the Government from the incoming warehouse contractors and not to any interest on the amount or to costs. In coming to this conclusion the High Court was of the view that there is nothing in the agreement from which a contract of sale and purchase of goods could be spelt out between the parties. As the agreement does not provide for the supply of liquor by the plaintiff to the Government as such on a consideration of the terms of the agreement Ex. P-1 the High Court came to the conclusion that the plea of the plaintiff that the Government was under an obligation to take over the extra stock of liquor lying at the Mandi warehouse and to pay for it at the contractual rates, was not maintainable. The court took the view that as the contract having come
