The main legal point established is that the plaintiff had the necessary authorization to file the suit and that the contract was not a forward contract, but a simple breach of contract.

1. The appellants are the defendant in this suit O.S.No.1456 of 1998 on the file of the Principal Sub Court Coimbatore. While the trial Court has dismissed the suit filed for recovery of money arising out of damages towards breach of contract, the First Appellate Court in A.S.No.118 of 2008 [On the file of District Judge Coimbatore on The First Additional District Judge] allowed the appeal and decreed the suit with interest at the rate of 6 % per annum with costs.

2. Aggrieved over the reversal judgment, the present Second appeal is preferred by the defendants.

Brief facts leading to the appeal

3. For the sake of brevity the parties are referred as per their description and ranking in the suit. The plaintiff who is the respondent herein is a Public Limited Company incorporated under the Companies Act 1956. Many of the sick Textile mills throughout India had been taken over by this Plaintiff in order to rehabilitate and reconstruct the units. One such unit is Cambodia Mills at Coimbatore. During the month of January 1996, the plaintiff company invited tenders for sale of cotton waste/blended waste for the quarter year from January to March 1996. To tender notice dated 09.01.1996, the first defendant firm M/s. G.M.Vyas & Co. represented by its Managing partner Manish M.Vyas and partner Mr. M.G.Vyas, who arrayed as 2nd and 3rd defendants respectively participated in the tender and given the best offer. The plaintiff firm accepted the quotation submitted by the first defendant and entered into contract with the first defendant firm. On 01.02.1996 the acceptance of the tender was informed to the defendants. As per terms of tender, as and when stocks get accumulated between January to March 1996, same will be intimated to the defendants. The first defendant should pay the value and take delivery of the accumulated stocks within 30 days of the intimation. Accordingly, on 06.02.1996 the plaintiff intimated the first defendant about the availability of cotton waste / blended waste valued at Rs.4,59,130.52 for the month of January 1996 and requested the first defendant to effect the payment and take delivery of the goods on or before 21.02.1996.

4. On receipt of the said letter, the first defendant requested the plaintiff to split up this supply into three invoices. Accordingly the plaintiff split the performa into three invoices and forwarded the same to the defendant on 14.02.1996. The defendant took delivery of first two items and for the third item, the first defendant did not effect the payment and the stocks was laying over with the plaintiff. While so, for the month of February 1996 stocks got accumulated and the plaintiffs send three performa invoices to the first defendant on 05.03.1996 for total value of Rs.4,14,421.33 and requested the defendant to take delivery of accumulated stocks as per terms of contract. The First defendant again neglected to perform its obligation. Defendant neither effected payment as per performa invoice nor made any attempt to pay and take delivery of the goods in the month of March 1996. The third set of performa invoices for total sum of Rs.3,60,337.22 was sent to the defendants on 05.04.1996 and requested them to take delivery of the accumulated stocks on payment. Since, the defendants did not show any interest, letter was sent on 18.03.1996, 10.04.1996 and 19.04.1996 to the first defendant to take delivery of the goods and remit the payment. In the said letters it was informed to the first defendant that if they fail to pay and took delivery of the accumulated stocks, the same will be sold at the first defendant risk and the Earnest Money Deposit of Rs.10,000/- will be forfeited and the loss, if any, result in re-sale, will be recovered from the first defendant. Since the first defendant did not respond to any of the communication sent to them, accumulated goods were sold to third parties namely (i) M/s. Jaganath Textile Co. (P) Ltd., Coimbatore (ii) M/s. K.G.S.Mills Coimbatore. (iii) M/s.