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1996 Supreme(AP) 227
Andhra Pradesh High Court
Judges : S.S.M.QUADRI, V.BHASKARA RAO
Surana Commercial Co. - Appellant
Versus
Food Corporation of India - Respondent
Decided On : 03-21-96
Headnote:
Food corporation Act, 1964 - Section 37 - Civil Procedure Code,1908 - Order XXIX, Rule 1 - Tenders of contractors - Agreement entered - Suit for recovery - Claim was based on following facts - In year plaintiff-Food corporation of India had agreed to supply to the Army Purchase Organization Reserve grain Depot - To fulfill that obligation FCI invited tenders for milling whole - First defendant submitted two tenders first one on relating to conversion of metric tonnes of whole into dal which was accepted by FCI on and the second tender relating to metric tonnes was submitted on which was accepted on - Under agreement entered into between the parties first defendant delivered tonnes of and same was despatched to RGD who rejected tonnes of dal on ground that same did not conform to specification - Held, Therefore to extent of liability of contractors to deliver that quantity there cannot be any dispute and no effort is made to dispute same before us - Argument however was that trial court erred in calculating value of said stock at rate of per quintal - Fact that contractors are liable to deliver the stock arose in or about period when was executed - Though itself is found to be bad in law yet price of goods per metric tonne mentioned in can be taken as representative of market price during period when breach occurred when contractors failed to deliver goods occurred - There is nothing on record to show that dal was available in market at a lesser price - Appeal dismissed.
( 1 ) THESE two appeals arise out of the judgment and decree in OS No. 574 of 1981 on the file of the I Additional Judge, city Civil Court, Hyderabad, dated January 25,1983. The defendants in the suit are the appellants in CCCANo. 123 of 1983 and the plaintiff in the said suit is the appellant in cccano. 41 of l985.
( 2 ) THE plaintiff laid the suit for recovery of a sum of Rs. 48,44,19l/- together with subsequent interest and the costs of the suit. The claim was based on the following facts. In the year 1977-78, the plaintiff-Food corporation of India (hereinafter referred to as the FCI) had agreed to supply arhar dal to the Army Purchase Organisation, Reserve grain Depot (for short RGD), Lucknow. To fulfil that obligation the FCI invited tenders for milling arhar whole into dal. The first defendant submitted two tenders; the first one on 10-5-1977 relating to conversion of 1,500 metric tonnes of arhar whole into dal which was accepted by the FCI on 6-6-1977 and the second tender relating to 2,000 metric tonnes was submitted on 1-8-1977 which was accepted on 30-9-1977. Under the agreement entered into between the parties the first defendant (hereinafter referred to as "the contractor") delivered 1607. 495 tonnes of arhar dal and the same was despatched to RGD, Lucknow, who rejected 786. 505 tonnes of dal on the ground that the same did not conform to the specification. Out of the rejected dal the contractor took back 208. 245 tonnes of dal and replaced with upgraded dal of only 23. 845 tonnes leaving a balance of 184. 400 tonnes of rejected dal with the contractor. The contractor entered into a supplementary agreement to upgrade and replace all the quantity of rejected dal including the above said quantity of 184. 400 tonnes and accordingly delivered a quantity of 47. 388 tonnes on 5-6-1978; 23. 750 tonnes on 8-6- 78 and 23. 655 on 9-6- 78 after duly upgrading the same. Thus, out of 184. 400 tonnes of rejected dal, the contractors were still having 89. 607 tonnes in their custody. It is claimed that the FCI is entitled to damages for non-delivery of 89,607 tonnes of dal by the contractors at the rate of Rs. 600/- per quintal amountingtors. 5,37,642/ -. Further they failed to lift the quantity of 578. 260 tonnes of arhar dal rejected by the RGD, lucknow, which was lying in the FCI godown. The FCI took steps for upgradation; floated tenders for that purpose on 24-11 -1978 and again on 23-4-1979. On the ground that no party was coming forward, it sold the stocks in public auction as the goods were perishable. The auction fetched a sum of Rs. 9,60,111/- and thus a loss of rs. 25,09,449/- was caused to FCI. Alternatively, it is claimed that the FCI is entitled to damages arising out of sale of rejected arhar dal by public auction in a sum of Rs. 25,09,449/ -. The contractor agreed to the price of the arhar dal @ Rs. 600/- per quintal for release of stocks to them so the price of the stock of rejected dal is recoverable at that rate. Thus, a sum of rs. 31,97,727-73 is sought to be recovered towards the principal amount and a sum of rs. 16,46,463-37 p. towards interest on the said sum at the rate of 18% per annum for the period from May 19, 1978 to June 7, 1981. In addition, a claim of interest at 18% per annum is made on the sum total of the said amount, namely Rs. 48,44,191-10 from the date of suit till realisation and also the costs of the suit.
( 3 ) THE relevant pleas taken by the contractors as per the amended written statement are; that the District Manager, fci, has no legal competence to institute the suit; that according to the contract, dal, after milling arhar whole into dal, was to be inspected by the staff of the FCI although they supervised the whole operation; the stocks of dal were taken delivery of after second inspection by the authorities of the fci; that the contractors are not liable if the said stocks of milled dal were ultimately rejected by RGD, Lucknow, after the same was accep
