Back
1992 Supreme(Cal) 242
High Court Of Calcutta
S. K. SEN
PARAMESWARILALL PUROSHOTTAMLALL - Appellant
Versus
FOOD CORPORATION OF INDIA - Respondent
Matter 3762 Of 1990
Decided On : 06/25/1992
A party to a contract cannot forfeit the security deposit and refuse to deliver the goods to the other party if the other party has paid the full cost of the goods and has been unable to lift the remaining quantity due to circumstances beyond its control.
Headnote:
SALE OF GOODS - CONTRACT - BREACH - NON-DELIVERY OF GOODS - FORFEITURE OF SECURITY DEPOSIT - JURISDICTION OF HIGH COURT - WRIT PETITION - MAINTAINABILITY.
Fact of the Case:
Petitioner and respondent entered into a contract for the sale of pressure parboiled rice. Petitioner deposited the full cost of the stocks along with sales tax and all other taxes, less the amount of earnest money tendered and 5% of the value of the quantity accepted towards security deposit within 10 working days from the date of acceptance of the tender. Respondent issued a release order for 440 M.T. of rice instead of 480 M.T. Petitioner lifted 431.8 M.T. of rice and was unable to lift the remaining 8.2 M.T. due to a labor strike at the godown. Respondent wrongfully claimed that petitioner would have to deposit an additional sum of Rs. 65,000/- representing 5% of the value of the goods before the release order for the balance 40 M.T. could be released. Petitioner deposited the said amount under protest. Respondent declined to accept the amount as there were strikes at the godown at the relevant point of time. Petitioner requested respondent to extend the time for lifting the materials. Respondent failed and neglected to issue a release order for the balance 40 M.T. of materials in breach and violation of the contract between the parties. Respondent forfeited a sum of Rs. 54,504.00 being the security deposit. Petitioner filed a writ petition seeking a direction to the respondents to withdraw, revoke and cancel the letters dated 2nd December 1989, 20th February 1990, 19th June 1990, and the advertisement dated 28th June 1990, and for an order directing delivery of 48.2 metric tonnes of pressure parboiled rice (superfine variety) lying at the Pingli Godown, P.R. Karnal in Haryana to the petitioner forthwith and to issue necessary release order in this regard.
Finding of the Court:
The High Court held that the respondent wrongfully forfeited the security deposit and failed to deliver the balance quantity of goods to the petitioner. The Court further held that it had jurisdiction to entertain and decide the writ petition as the cause of action arose within its jurisdiction.
Issues: 1. Whether the respondent was entitled to forfeit the security deposit? 2. Whether the respondent was liable to deliver the balance quantity of goods to the petitioner? 3. Whether the High Court had jurisdiction to entertain and decide the writ petition?
Ratio Decidendi: 1. The Court held that the respondent was not entitled to forfeit the security deposit as the petitioner had deposited the full cost of the stocks along with sales tax and all other taxes, less the amount of earnest money tendered and 5% of the value of the quantity accepted towards security deposit within 10 working days from the date of acceptance of the tender. The Court further held that the respondent had issued a release order for 440 M.T. of rice instead of 480 M.T., which indicated that the respondent had accepted the petitioner's deposit as sufficient security for the entire quantity of rice. 2. The Court held that the respondent was liable to deliver the balance quantity of goods to the petitioner as the petitioner had paid the full cost of the stocks and had not been able to lift the remaining quantity due to a labor strike at the godown. The Court further held that the respondent had wrongfully claimed that the petitioner would have to deposit an additional sum of Rs. 65,000/- representing 5% of the value of the goods before the release order for the balance 40 M.T. could be released. 3. The Court held that it had jurisdiction to entertain and decide the writ petition as the cause of action arose within its jurisdiction. The Court relied on the fact that the petitioner had received the letters and notices issued by the respondent at its place of business within the jurisdiction of the Court.
Final Decision: The High Court disposed of the writ petition with the following directions: 1. The respondent was directed to refund the sum of Rs. 1,04,090/- to the petitioner within six weeks from the date of the order. 2. There was no order as to costs.
( 1 ) THE Court : The facts, inter alia, leading to this writ petition are that on or before 8th of July, 1987 the respondent No. 1 issued an invitation to tender for the sale of pressure parboiled rice (Sela) superfine and other common varieties lying at the Food Corporation of India godown at various places.
( 2 ) PURSUANT to the aforesaid notice inviting tender the petitioners tendered for a portion of goods put up for sale and a contract was concluded between the petitioner No. 1 and the respondent No. 1 for sale of 480 M. T. of P. P. B. Rice Superfine (84-85) per quintal for a total price of Rs. 10,90,080. 00p. The said tender was accepted by the respondents by telegram No. D/1 (1)/ppb/rice/disp/tev/87 dated 17th July, 1987. A copy of the telegram has been annexed to the writ petition and marked with the letter 'a'.
( 3 ) PURSUANT to the aforesaid the petitioner duly deposited the total sale price being a sum of Rs. 10,90,080. 00. The respondent No. 1 issued a release order dated 13th of August, 1987 valid upto 11th of September, 1987 for releasing of 440 M. T. of the materials on the terms and conditions which will appear from the said release order which has been annexed to the writ petition and marked 'b'. The respondents did not issue release order for the entire material though the entire price for 430 M. T. had in fact been deposited by the petitioners with the respondents.
( 4 ) IT has been alleged that at the material point of time there was a labour strike in the concerned godown at Pingli Road (Karnal) in the State of Haryana and the petitioners were prevented from lifting the entire goods pursuant to the release order. Between 19th August, 1987, and 7th November, 1987 the petitioner lifted a total of 431. 8 M. T. and was unable to lift 8. 2 M. T. out of the quantity covered by the said release order.
( 5 ) IT is the contention of the petitioners that the respondent No. 2 wrongfully claimed that the petitioner would have to deposit an additional sum of Rs. 65,000/- representing 5% of the value of the goods before release order for the balance 40 M. T. could be released. In order to expedite matters and to prevent further controversy though without prejudice to its contentions, the petitioner on or about 3rd of September 1987, duly tendered a sum of Rs. 65,000/- representing 5% of the purchase price though the petitioner's contention was that no further payments were required to be made in the aforesaid circumstances. The aforesaid fact will be evidenced inter alia by a certificate issued by the State Bank of Bikaner and Jaipur dated 27th April, 1989 a copy of which is annexed to the writ petition and marked 'c'. The respondents declined to accept the aforesaid amount as there were strikes at the godown at the relevant point of time.
( 6 ) BY letter dated 30th of November, 1987 the petitioner requested the respondent to extend the time for lifting the said materials. A copy of the said letter has been annexed to the writ petition and marked 'd'.
( 7 ) BY letter dated 8th of April, 1988 the petitioner wrote to the respondent No. 2 pointing out the difficulties which have arisen in lifting the balance 40 M. T. and requesting the said respondent to extend the time particularly in view of the fact that the petitioner had been prevented from lifting the materials by reason of the labour strikes which had resulted in the closure of the concerned godown. A copy of the said letter dated 8th April, 1988 has been annexed to the writ petition and marked 'e'.
( 8 ) IT has been alleged that despite repeated requests and reminders the respondents have failed and neglected to issue a release order for the balance 40 M. T. of materials in breach and violation of the contract between the parties. The respondents also refused to return the money already paid by the petitioner for the said quantity of rice.
( 9 ) THE respondent No. 1 issued a letter dated 2nd of December, 1989 which was received by the petitio
