Back
High Court Of Calcutta
AJIT KUMAR SENGUPTA, S. K. SEN
STEEL AUTHORITY OF INDIA LIMITED - Appellant
Versus
STEEL CRACKERS - Respondent
Appeal 88 Of 1991
Decided On : 04/21/1994
CONTRACTUAL OBLIGATION - VARIATION CLAUSE - SPECIFIC RELIEF ACT - WRIT JURISDICTION - WHETHER WRIT COURT CAN INTERFERE IN CONTRACTUAL MATTERS IF GOVERNMENTAL AGENCY ACTS ARBITRARILY OR UNREASONABLY - WHETHER WRIT COURT WILL SCRUTINISE IN DETAILS THE FACTS OF DISPUTED NATURE AND ENTER INTO QUESTION OF INTERPRETATION OF CONTRACTS INVOLVING CLOSE SCRUTINY.
Fact of the Case:
The respondent, a partnership firm, purchased a wagon load of damaged C.I. Skull from the appellant, a government organization, at the listed price of Rs. 3,745/-. In return, the appellant agreed to sell 240 M.T. of C.I. Rolls above 10 M.T. per piece and 300 M.T. of rejected Steel Rolls above 20 M.T. per piece at the prevailing prices. The appellant supplied 176.170 M.T. of C.I. Rolls and 105.756 of Rejected Steed Rolls, leaving a balance quantity of 63.830 M/t Cast Rolls and 246.25 M/t of Steel Rolls. The respondent requested the appellant to expedite delivery of the balance quantity, but the appellant instead attempted to hold a public auction of the materials. The respondent challenged the auction as arbitrary and unreasonable and sought delivery of the materials.
Finding of the Court:
The court found that the appellant's action in attempting to hold a public auction of the materials was arbitrary and unreasonable. The court also found that the respondent was entitled to delivery of the balance quantity of the materials at the prices prevailing on the date of delivery as fixed by the appellant.
Issues: 1. Whether the appellant's action in attempting to hold a public auction of the materials was arbitrary and unreasonable? 2. Whether the respondent was entitled to delivery of the balance quantity of the materials at the prices prevailing on the date of delivery as fixed by the appellant?
Ratio Decidendi: 1. The court held that the appellant's action in attempting to hold a public auction of the materials was arbitrary and unreasonable because the appellant had already agreed to sell the materials to the respondent at a fixed price. The court also found that the appellant had not given the respondent any notice of its intention to hold the auction. 2. The court held that the respondent was entitled to delivery of the balance quantity of the materials at the prices prevailing on the date of delivery as fixed by the appellant because the appellant had agreed to sell the materials to the respondent at those prices.
Final Decision: The court allowed the appeal and set aside the order of the learned Single Judge of 15th February, 1991. The court also directed that it will be open for the respondent-writ petitioners to establish its claim in appropriate Court by instituting suit or any other procedure as the writ petitioner may be advised.
( 1 ) THIS appeal is directed against the judgment of the learned single Judge directing the respondent to desist from auctioning the goods which are subject matter of the sale order dared 6th September, 1989 end 28th July, 1989 being annexure 'b' to the writ petition without first effecting the delivery of the contracted quality and quantity of goads to the writ petitioners in terms of the sale orders dated 28th July, 1989 and plant instruction Memo dated 6th September, 1989 at a price stipulated in the last published price list of the respondent authority.
( 2 ) IN the writ petition the respondents/writ petitioners challenged the with-holding of delivery of rejected Steel Rolls and C. I. Rolls as wrongful end illegal.
( 3 ) THE facts involve in this appeal inter alia as appears from the writ petition are that the respondent No. 1/writ petitioner No. 1 is a partnership four and the respondent No. 2/writ petitioner No. 2 is a partner of the firm. They carry on business of Cast Iron processing and Steel Processing at Ghusuri, Howrah.
( 4 ) ON 28th July, 1989 Metal Scrap Trade Corporation Limited (the respondent MSTC) issued a Sale Order in favour of the respondents/writ petitioners under which the respondent MSTC sold to the respondents/writ petitioners 52 Metric Tonnes of used rejected Steel Rolls (above 20 Tonnes per piece) at Rs. 4,200/- per tome. For payment of the price writ petitioners/respondents have already opened a Letter of Credit for Rs. 2,54,000/towards the price of the rejected steel rolls as will appear from the said sale order.
( 5 ) IN the meantime on 15th July, 1989 a wagon load of C. I. Skulls (which are big chunks of Cast Iron Scrap) arrived at Shalimar Siding of Eastern Railway. This consignment was despatched from tare Rourkela Steel Plant of the respondent SAIL (sometime also referred to as RSP) and had been sold by the respondent MSTC to another firm namely M/s. Associated Enterprises. M/s. Associated Enterprises, however did not take delivery of this particular wagon load of C. I. Skull.
( 6 ) THE respondent MSTC being interested in having this particular wagon-load of C. I. Skull disposed of, invited various parties including the respondents/writ petitioners to negotiate for purchasing the concerned C. I. Skulls. The respondent MSTC was particularly anxious regarding the disposal of this particular wagon load of C. I. Skull because of inter, alia, the heavy liability that was accruing on account of demurrage.
( 7 ) NEGOTIATIONS were held on 16th August, 1989. The Associations, namely Cast Iron Spun Pipe Manufacturers Association, Metal Scrap Processors Association and All India Mechanical Processors Association, as well as a firm called Subhadra Trading Company also participated in the negotiations along with the respondents/writ petitioners. Except the respondent/writ petitioners no other party was willing to purchase this wagon load of C. I. Skull, because of the quality of the consignment in question and the liability already incurred on account of demurrage, pilferage etc.
( 8 ) THE respondents/writ petitioners proposed that they would purchase this wagon load of C. I. Skull at the then listed price MSTC (Rs. 3,745/-) provided MSTC agreed to sell 240 Metric Tomes of C. I. Rolls (above 10 Metric Tomes per piece) and 300 Metrric Tonnes of Rejected Steel Rolls (above 20 Metric Tomes per piece) at the then prevailing listed price on certain terms and conditions.
( 9 ) IT is the case of the writ petitioners that respondent MSTC after some further discussions/negotiations agreed to this proposal of the respondents/writ petitioners and the transactions were concluded by MSTC's letter dated 25th August, 1989.
( 10 ) IT has been further alleged on behalf of the writ petitioners that in implementation of this transaction in so far as it envisaged purchase of 240 Metric Tonnes of Cast Iron Rolls and 330 Metric Tonnes of rejected Steel Rolls, MSTC issued two sale orders one in respect o
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
