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IN THE HIGH COURT OF CALCUTTA
Manjula Chellur and Ashim Kumar Banerjee, JJ.
Govind Prasad Dalmia - Appellant
Versus
West Bengal State Electricity Board - Respondent
A.P.D. No. 55 of 2013 with C.S. No.323 of 1993
Decided On : 12-12-2014

Advocates Appeared:
For the Appellant :Dhrubo Ghosh, Shib Shankar Das, Advocates.
For the Respondent:Sabyasachi Chaudhury, Rajarshi Dutta, Sayantan Bose, Ishita Bose, Shiladitya Bose, Advocates.

Headnote:

CONTRACT - SALE OF GOODS - CLAIM FOR ESCALATION OF PRICE - PENALTY CLAUSE - FORFEITURE OF SECURITY DEPOSIT - LIMITATION - SECTION 2(c), 51, 67, 70 AND 74 OF THE CONTRACT ACT - DOCTRINE OF ELECTION - SECTION 18 OF LIMITATION ACT - ACKNOWLEDGMENT OF LIABILITY - JURAL RELATIONSHIP - INTENTION TO ADMIT LIABLITY - SUBSISTING LIABILITY - CONSTRUCTION OF DOCUMENTS - SURROUNDING CIRCUMSTANCES - FRESH PERIOD OF LIMITATION.

Fact of the Case:

Appellant supplied aluminum conductors to the respondent-Board as per purchase orders placed in November 1987. Appellant claimed an increase in price due to a Government order dated 19.1.1987. Appellant also claimed penalty for delayed supply and forfeiture of security deposit. Respondent-Board contended that appellant was not entitled to increase in price as the contract remained the same. Respondent-Board also deducted certain amounts on account of penalty and forfeited the security deposit. Appellant filed a suit for recovery of the amount claimed. The trial court dismissed the suit holding that it was barred by limitation.

Finding of the Court:

The High Court held that the appellant was not entitled to seek increase in price as the contract remained the same. The High Court also held that the respondent-Board was entitled to deduct the penalty and forfeit the security deposit as per the terms of the contract. The High Court further held that the suit was barred by limitation as the appellant failed to prove that there was a subsisting liability on the part of the respondent-Board and that the respondent-Board had acknowledged the liability in writing.

Issues: 1. Whether the appellant was entitled to increase in price of the subject material as pleaded in the plaint? 2. Whether the respondent was entitled to deduct any sums on account of penalty from the bills payable to the appellant? 3. Whether the respondent was entitled to forfeit the security deposit to levy penalty for late delivery or non-delivery of the goods as alleged in the written statement? 4. Whether the appellant was entitled to a decree of Rs. 29,89,511.77 p. as claimed in the plaint? 5. Whether the appellant was entitled to interest @ 23.75% as claimed or at any other rate? 6. Whether the appellant was entitled to a decree for declaration for adjudging the Bank guarantee dated 28th March, 1988 as void or to deliver up and cancellation thereof as claimed? 7. Whether the suit was barred by laws of limitation? 8. To what relief if any is the appellant entitled?

Ratio Decidendi: 1. The appellant was not entitled to seek increase in price as the contract remained the same. 2. The respondent-Board was entitled to deduct the penalty and forfeit the security deposit as per the terms of the contract. 3. The suit was barred by limitation as the appellant failed to prove that there was a subsisting liability on the part of the respondent-Board and that the respondent-Board had acknowledged the liability in writing.

Final Decision: The appeal was dismissed.

JUDGMENT :

Manjula Chellur, J.

The appellant was the plaintiff before the learned Single Judge who is before us aggrieved by the judgment and decree dated 9.10.2012 refusing grant of any of the reliefs to the plaintiff. In brief, the facts that led to the present appeal are as under:-

In response to the tender notice at Exhibit-A' issued by defendant, West Bengal State Electricity Board (for short hereinafter referred to as Board), the appellant also submitted his tender for supply of aluminum conductors. General terms and conditions came to be struck between the parties. From November, 1987, supply of aluminum conductors was commenced. According to plaintiff/appellant, it was made clear to the defendant that against orders that were placed by 30.11.1987, the supplies can be made at the rates quoted in their letter dated 11.9.1987. It is further contended that from time to time it was informed to the defendant by the appellant-plaintiff that if orders were made within a particular date then alone the supply of material will be done as indicated in their letters.

2. It is not in dispute that subsequently material was supplied between 9th March, 1988 to 28th March, 1988, at different places as per the instruction of the defendant. Further, plaintiff submitted bills for Rs. 24,42,925.60 wherein a claim for Rs. 1,02,859.57 to its increase of the cost was also indicated. Alleging penalty for delayed supply a sum of Rs. 10951.04 was deducted and a sum of Rs. 24,31,974.40 was paid to the appellant. At this stage, by letter dated 21.8.1990 defendant terminated the contract dated 31.01.1988 forfeiting the security deposit alleging penalty for delayed delivery of goods and also non-delivery of goods.

3. According to plaintiff, he had to stop delivery of the goods under order dated 14.3.1988 and as on the date of filing of the suit he contends that a sum of Rs. 9,64,136.29 was due and payable by the defendant to the plaintiff with an interest at the rate of 23.75% per annum in accordance with the special Act as applicable. Totally Rs. 29,89,511.77 was claimed as due and payable inclusive of interest upto 31.7.1993.

4. In response to the claim, respondent-defendant denying all the disputed material averments by the plaintiff filed written statement wherein they took defence that by letter dated 10.12.1987 the plaintiff expressed his willingness to supply the subject material. The defendant clearly informed by letter dated 10.12.1987 that only upon completion of delivery of goods covered under the order dated 27.11.1987 within December 19,1987 further order for materials would be placed by March, 1988. Defendant further contended that they never assured increase of price of the material and, on the other hand, according to them, plaintiff offered to supply material as per the agreement. According to them, the delivery of goods was not completed within the time stipulated. Further, defendant has paid all the amounts lawfully payable for the price of the materials supplied under the said order. A sum of Rs. 2,54,704.05 was deducted in accordance with the terms and conditions. Similarly, another sum of Rs. 25,757.18 was deducted for its delayed supply of the material. As a matter of fact, the order dated 14.3.1988 indicates price variation clause to which the plaintiff agreed to and a part of the goods was supplied as per this order. According to defendant they rightly terminated the order dated 8.2.1988 and 14.3.1988 for the failure of the plaintiff to comply with the terms and conditions. Therefore, plaintiff is not at all entitled to all the amounts claimed much less the interest claimed. On the basis of the above pleadings following 8 issues were framed which read as under:-

1. Was the plaintiff entitled to increase in price of the subject material as pleaded in the plaint?

2. Was the defendant entitled to deduct any sums on account of penalty from the bills payable to the plaintiff?

3. Was the defendant entitled to forfeit the security deposit to











































































































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