Judgment

KULDIP SINGH, J.:- Steel Authority of India (the Authority), the appellant herein, issued a price circular dated March 17, 1989 (the circular) offering a discount scheme with a view to give a thrust to the off-take stainless steel of thinner gauges. The circular stated as under :-

"(a) For an off-take of over 400 mts. per month of thinner gauges namely O.3, O.4, O.5 and O. 63 taken together by any customer from any region will entitle them for an additional discount of Rs.2000/- PMT over and above the normal monthly discount on the incremental quantity.

(b) A bonus incentive of add1. Rs. 2000/-PMT would be admissible at the end of 6 monthly period provided the off-take is over 400 mts. in each of the 6 months. This additional incentive will be applicable on the incremental quantity in excess of 2400 mts. during the period of 6 months.

(c) Benefits under (a)and (b) above will be applicable to any customer including trade and their associate concerns both on direct despatch from plant as well as quantities lifted from stockyard of any region, irrespective of the region to which the customer is attached."

The circular was issued by the Calcutta office of the Authority.

2. Standard Metal Trading Company, respondent 3 herein, by its letter dated November 27, 1989 sought clarifications as to whether the subject discount would be available on the quantities lifted by a "group of dealers not related to each other by Constitution" and how the said discount would be disbursed to the individual dealers. A request was also made that the period of operation of scheme under the circular be extended to one year as against six months. The Authority by its letter dated December 2, 1989 furnished the necessary clarifications to respondent 3, which are as under : -

"Kindly refer to your letter dated 27th November, 1989 and 1st December, 1989 on the above subject. We wish to clarify as under :-

1. The quantity discount under the subject scheme will be paid on quantities lifted together by a group of dealers/actual users who are not related to each Other by constitution provided they declare their intention to join together for committing combined off take as per the scheme.

2. The scheme will be applicable on quantities lifted by a group of dealers not related to each other by constituting dealing at different regions.

3. After the completion of the current month on the basis of actual off-take the quantity as per the eligibility may be passed on to any one of the constituents or alternatively on pro rata basis to all the constituents subject to the entitled group. What they want.

4. Guarantee for, continuation of the scheme can be given for a minimum period of 6 months from the month in which off-take commences.

We also expect an increase in the off -take of material by the dealers in the Southern Region.

We also wish to make it clear that indents as per the existing procedure should be given well in advance to enable us to complete the despatch of material."

Thereafter six traders, including respondents 1 to 4, sent a letter dated December 4, 1989 to the Authority stating that they had formed a group and wanted to avail the additional discount on the basis of their combined off take as a group. They also suggested a formula for the distribution of the discount, on the basis of their combined off-take, amongst the individual members of the group.

3. The proposal of combined off-take by a group of traders was not warranted by the circular. The formula of distribution of discount amount amongst the individual members of an unorganised group was also not envisaged under the circular. In any case such formula was not even in accordance with the clarifications given by the Authority in its letter dated December 2, 1989.

4. The Authority sent a telegram dated December 19, 1989 to all the six traders including respondents 1 to 4 intimating them that the matter was still under consideration and till the time a final decision in that respect was taken the schem