( 1 ) OM Prakash Jain, plaintiff filed this suit alleging that the firm -V. K. Industries and Fabricators was constituted on or about 10th September, 1966 and dissolved on or about 10th May, 1967 by mutual consent of the partners. He was a partner in that firm alongwith defendants 4 to. 6. Firm-V. K. Industries was duly registered under Small. Scale Industries Scheme vide S. S. I. No.-D- 1/up/mtc/4219 dated 4th May, 1963 with the Government of Uttar Pradesh. Under an agreement dated 19th August, 1966, the plaintiff purchased the assets and goodwill of V. K. Industries. Thereafter V. K. Industries and Fabricators alognwith the letter dated 1st October, 1966 forwarded the application forms duly completed in triplicate to the Director of Industries, Kanpur for grant of S. S. I, registration number as re-roller in its favour in place of said V. K. Industries. .

( 2 ) IT is alleged that defendants 1 to 3 through their auctioneer-M/s. Thakur and Company held a public auction for sale of re- rollable scrap on 5th November, 1966 at Shakurbasti Track Depot, Delhi. Four conditions of auction in its supplementary clause provided as under:-

(A) Only the bona fide re-rollers who wish to participate in the auction of re-rollers will send their duly authorised representatives to participate in the auction. They should carry with them a proper authority from their firm.

(B) That the Re-rollers representing bona fide bidders will produce a power of attorney and certificate from the Iron and Steel Controller, Calcutta and/or Secretary, Steel Re-rolling Mills, Association of India, Calcutta or Directors of Industries of States certifying that the respective bidders are the bona fide ones and are registered with either of the above authorities. These documents will be required to be produced before the depot auctioning authority (viz. Presiding Officer) to his entire satisfaction.

(C) That the material to be auctioned should be inspected and examined before hand at the place of availability and it should be noted that the sale is on as is where is basis and that no claim with regard to incorrect description of quality, nature of the materials would be tenable at the time of " delivery.

(D) It is distinctly understood that although the material offered for sale is described as re-rollable scrap in the Iron. and Steel Controller, Calcutta Scrap price schedule, yet it is possible that same percentage of wrought iron might be found mixed in it at the time of delivery. Such wrought iron items, if found, will have to be taken over by the purchaser (s) at the bid accept rate without any compensation to this effect. No sorting, choosing or picking whatsoever, would be permitted at the time of delivery. "

( 3 ) IT is further alleged that at the time of auction it was representated by the said auctioneer at the instance of Presiding Officer that the said conditions had been modified and the purchasers were required to produce the certificate of registration as re-rollers during the course of their taking delivery and in any event before taking delivery of the last instalment of the auctioned goods so purchased and it was not necessary that the bidder should be a re-roller on the date of bid. This declaration was acted upon by defendants 1 to 3 in the case of other bidders including the firm-M/s. Altair Steel Rolling Mills who were not the certified re-rollers and obtained the certificate of registration-two months after auction. It is stated that V. K. Industries and Fabricators through its representative Janki Prasad Tyagi gave bid and purchased 400 M. Ts. ol scrap rails @ Rs. 460. 00 per MT. The firm deposited Rs. 46,000. 00 being 25% of the total sale consideration by way of earnest money with the said auctioneer who issued receipt No. 71 dated 5th November, 1966 on behalf of defendants 1 to 3. It further deposited a sum of Rs. 1,38,000. 00 with the Chief Cashier and Pay Master, Northern Railway, Delhi vide cash receipt No. 162/512472 dated 1