Partly allowed

M/S. Nesco Limited v. M/S.Steel Authority of India Ltd.

Bombay HC5 Sept 2008S/739/1979

Case brief

AI extract

What is this about?

The court examined a suit for recovery of balance price and wage escalation for ingot moulds supplied under a contract. It held that the claim for escalation was rejected due to lack of proof regarding wage variations post-base date. However, the claim for balance price was partially allowed within the limitation period of three years.

What did the court decide?

Suit decreed for Rs.6,43,500 with interest at 12% per annum; claim for escalation dismissed; remainder of price claim barred by limitation.

M/S. Nesco Limited Vs M/S.Steel Authority of… — Contract and Commercial Disputes | Bombay HC (2008)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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SUIT NO.739 OF 1979

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M/s.New Standard Engineering Co. Ltd.

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..Plaintiffs.

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Vs.

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M/s. Steel Authority of India

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..Defendants.

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Mr. U. J. Makhija, Senior Counsel with Mr. M. G. Mimani for the Plaintiffs.

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Mr. Girish Desai with Ms. M. V. Thakkar i/b. M/s. Kanga & Girdharlal for the Defendants.

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CORAM : S.J. VAZIFDAR, J. DATE : 5th SEPTEMBER,2008.

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ORAL JUDGMENT :

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The suit is filed to recover a sum of Rs.44,65,613.61 together with interest on Rs.36,99,287.87 at the rate of 15% per annum from the date of the suit till payment. The claim falls under two categories. Rs.7,30,795.27 is claimed as being the balance

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price of the goods sold and delivered by the Plaintiff to the Defendant under an agreement. Rs.29,68,467.60 is claimed towards the escalation in price, also as per the suit agreement.

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M/s. Bokaro Steel Limited (BSL), under the Public Sector Iron & Steel Companies (Restructuring) and Miscellaneous Provisions Act, 1978 and in particular, section 4 thereof, stood dissolved and its undertaking stood transferred to and vested in the Defendant. Section 23 of this Act provided that all contracts, deeds, bonds and other instruments of whatsoever nature, to which BSL was a party subsisting or having effect immediately before 1.5.1978, shall from that day be of full force and effect against or in favour of the Defendant and may be enforced as fully and effectively as if the Defendant had been a party thereto. The reference in this judgment to the Defendant therefore would also include a reference to “BSL”.

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By an order confirmation dated 19.4.1972, the Plaintiff agreed to manufacture, sell and supply to the Defendant 216 tonnes ingot moulds on the terms and conditions mentioned therein. According to the Plaintiff, it has not been paid the entire consideration for the supplies made thereunder. The present suit however does not include the claim in respect of this order.

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During the subsistence of the above order, the Defendant evidenced an interest in obtaining 216 tonnes of ingot moulds. The plaint and the affidavit in lieu of examination-in-chief

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of the Plaintiff's witness sets out in considerable detail the negotiations between the parties in this regard. Although there may be some inaccuracies in co-relating the averments with the precise documents, the formation of the agreement and the identity of the terms and conditions thereof, are not disputed.

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Pursuant to the Defendant's tender enquiry, the Plaintiff submitted its offer by a letter dated 27.7.1973 for the supply of the said goods. Discussions were held between the parties on 11.9.1973, minutes whereof were maintained. The Plaintiff addressed further letters dated 17.9.1973 and 7.11.1973 suggesting further terms and its comments regarding the existing terms. By a letter dated 12.1.1974 the Defendant conveyed its intention for accepting the Plaintiff's quotation dated 27.7.1973 read with the minutes of the meeting held on 11.9.1973 and the said letters dated 17.9.1973 and 7.11.1973 for the supply of 400 ingot moulds for casting 16 tonne steel ingots. It was inter-alia stated that the quantities, specifications, unit rate, total price and delivery would be as per Annexure “A” and that the letter of intent would be governed by the Defendant's “General Conditions of contract” and the previous contract except to the extent modified in

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Annexure “B”. The delivery of the 400 ingot moulds for casting 16

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tonnes ingot moulds (hereinafter referred to as “the said goods”) was to be completed progressively by September, 1975.

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The Plaintiff by its letter dated 26.4.1974/4.5.1974 enclosed its confirmation of the said order. The Plaintiff suggested a variation regarding the percentage of the agreed price to be paid

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at the three stages. This variation does not affect the decision in this matter.

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It is admitted between the parties that the contract accordingly stood concluded between the parties for the supply of the said goods by the Plaintiff to the Defendant. The material terms and conditions as per the said letter dated 12.1.1974 are as follows:-

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“7. Payment terms :

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(a) 10% advance on release of firm order against Bank Guarantee as per proforma enclosed. The Bank Guarantee will be reduced prorata against the supplies made and accepted by BSL.

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(b) 80% Against proof of despatch and inspection certificate.

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(c) 10% to be paid within 6 months from date of receipt of moulds. This 10% can also be released immediately after receipt of

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moulds at site provided Bank Guarantee valid for six months for the like amount is furnished in the proforma prescribed by BSL.

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8. Price variation :

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(i) Price variation on account of pig iron and B. P. hard coke would be allowed on the basis of prices fixed by J. P. C. or the Coal Controller as the case may be subject to documentary evidence. For this purpose, the base price should be taken as prevailing on 06/08/1973.

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(ii) Escalation on wages will be applicable as per BSL's standard wage escalation clauses and the basic date shall be 06/08/1973. The standard wage escalation is indicated hereunder:

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“For every rupee or part of a rupee exceeding fifty paise per month of 208 hours by which the wage structure of the minimum rated unskilled workers (as provided in the Gazette Notification for minimum wages applicable to the area where the equipment is being manufactured) varies from that of the base month as a result of Governmental action, arbitration, adjudication, the rate of

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supply of equipment shall be adjusted by Rs. 2/- (Rupees Two only) per ton and such adjustments shall be applied to such rates in respect of deliveries effected one month after the date of the variation and will be limited to the contract period. The claim, will be subject to verification of records by Bokaro Steel Limited. For the purpose of this clause, the base date shall be the date of the opening of the tender the wage structure shall be defined as comprising basic wages, dearness allowance, leave with pay, provident fund and employees state insurance contribution.

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For every mould 16 tonnes capacity, 24 tonnes of Pig Iron Grate III (High Manganese) and 5 tonnes of hard coke would be needed.

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Delivery : Delivery as confirmed in

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your letter no....G dated 29^th October, 73 shall be adhered to, which is reproduced bellow :

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“Delivery for the 400 Nos. of Ingot Moulds will commence by January, 1974 or earlier, and will continue @ 20 Ingot Moulds or more per month and the same will be completed by

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September, 1975”.

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Arbitration : As per our standard clause i.e., Article 33 of BSL General Conditions of Contract.

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The Plaintiff' s Case :

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The Plaintiff manufactured and supplied the said goods to the Defendant, who accepted the same. Between August, 1974 and July, 1975 the Plaintiff supplied 207 ingot moulds and between August, 1975 and January, 1977 the Plaintiff supplied the balance 193 ingot moulds.

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In respect of the said supplies, the Plaintiff claims to have opened and maintained an account with the caption “M/s. Bokaro Steel Limited Order No. PUR-B3-90627-NSE-32186 dtd. 28.2.1974 advance account” hereinafter referred to as “the advance account”. All advances received by the Plaintiff from the Defendant were credited in this account. The Plaintiff's witness, who was the sole witness in the trial, has set out in detail in his affidavit in lieu of examination-in-chief the advances paid by the Defendant.

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The Plaintiff also opened another account with the

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caption “M/s. Bokaro Steel Limited Order No. PUR-B3-90627-NSE32186 dtd. 28.2.1974 for supply of 400 nos. ingot moulds” (hereinafter called “the supply account”).

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The Plaintiff from time to time debited to the advance account, the amounts transferred therefrom, to the supply account. Ultimately, according to the Plaintiff, on 31.3.1977 the advance account was squared of.

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In the supply account, the Plaintiff debited the value of the invoices for the supply of the said goods made by the Plaintiff to the Defendant from time to time. The advance amounts lying credited to the advance account were transferred to the supply account and credit for the same was given by the Plaintiff in respect of this amount in the supply account. The Plaintiff's witness has set out in detail the amounts lying to its credit in the supply account for the period ended 31^st March of the years 1975 to 1979. The suit was filed on 9.4.1979. The Plaintiff's witness has deposed that as on the date of the suit a sum of Rs.7,30,795.27 was due and payable by the Defendant.

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The Plaintiff's witness has deposed that the said accounts were maintained by one P.M. Trivedi, the Chief

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Accountant of the Plaintiff, under his instructions and supervision. The witness has further stated that the books of accounts were kept in the Plaintiffs office at Indabrater building. In 1973 the same were shifted to the textile building. In the year 1991 when the affidavit of documents was filed, the books of account were available and were accordingly disclosed in the affidavit of documents. Thereafter, the books of account and other records were shifted. In 1999, the books of accounts were shifted to the Foundry building and thereafter to the MFED Division building.

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When the suit reached hearing in September, 2003 the Plaintiff was unable to locate the books of account. The Plaintiff has to-date been unable to locate the books of accounts despite due and diligent search made under the supervision of the Plaintiff's witness. The Plaintiff's witness further states that at the time of filing the suit the ledger extract of the accounts was prepared under his supervision from the books of account and that the same are true and correct.

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In the affidavit in lieu of examination-in-chief, the witness stated that a sum of Rs.7,30,795.27 is due and payable by the Defendant at the foot of the said supply account. The entire quantity of ingot moulds had been delivered to the Defendant

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within the time stipulated and/or within the time extended as agreed. There is no dispute as to the quantity or quality of the goods. The bills had also been accepted without raising any objection thereto. The witness therefore deposed that the Defendant is bound and liable to pay to the Plaintiff the full amounts of their bills sent in that behalf. In the circumstances, it is contended that the said amount of Rs.7,30,795.27 is due at the foot of the Plaintiff's said account.

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The Plaintiff's claim on account of the alleged escalation is as follows :-

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(A). On 1.6.1965 certain demands were served by the Plaintiff's workmen for revision of the wage structure of the workmen.

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By an order dated 9.8.1966 made by the Industrial & Labour Department of the State of Maharashtra, the demands were referred to the Industrial Tribunal for adjudication. The Industrial Tribunal by an award dated 29.11.1972 revised the wage structure with retrospective effect from 1.1.1968. The award came into effect on 21.12.1972 being the date of its publication in the Official Gazette.

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(B). The Plaintiff challenged the award by filing Special Civil

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Application No.335 of 1973 in this Court. By an order dated 3.3.1973 this Court granted a conditional order of stay of execution of the award. On 30.7.1973 the Plaintiff and one of the unions viz. Bharatiya Kamgar Sena of the Plaintiff's workers arrived at a settlement with an intent that the same be binding on both the parties in terms of Section 18 of the Industrial Disputes Act. On 31.7.1973 an application for adjournment of the Special Civil Application was made on the ground that the parties were negotiating a settlement. The adjournment was refused and the settlement was not accepted by this Court. By an order and judgment dated 31.3.1973, this Court confirmed the award and rejected the Special Civil Application.

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(C)(i). The Plaintiff challenged the judgment by filing Special Leave Petition No.1749 of 1973. The Supreme Court granted leave and interim stay of enforcement of the award on condition that the Plaintiff paid its workmen in accordance with the terms of the said settlement dated 31.7.1973. The Special Leave Petition was subsequently numbered as Civil Appeal No.1177 of 1973. (ii). By an order dated 29.9.1973 the Supreme Court directed the Industrial Tribunal to determine two issues viz. whether the settlement was one under section 2(p) of the Industrial Disputes

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Act and whether the same was validly entered into and was just and fair.

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(iii). By an order dated 28.12.1978 the Industrial Tribunal answered both the questions in the affirmative. It was noted that 995 workers had accepted the settlement.

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(iv). By an order and judgment dated 2.2.1978 reported as New Standard Engineering Co. Ltd. v. N. L. Abhyankar & Anr., in AIR 1978 Supreme Court, 982 the Supreme Court accepted the findings of the Industrial Tribunal. The Supreme Court ultimately ordered

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as under :-

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“14. The appeal is allowed, the impugned judgment of the High Court dated 31-71973/1-8-1973 is set aside and it is ordered that the award of the Tribunal shall be substituted by the settlement dated July 31, 1973, so that that settlement shall be the substituted award. In the circumstances of the case, however, we leave the parties to bear their own costs.”

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(D). It must be noted that the settlement made the revision applicable with effect from 1.1.1973 whereas the award had made the revision applicable from 1.1.1968. Thus, in view of the judgment of the Supreme Court the wage structure was as per the settlement and the same was with effect from 1.1.1973.

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The Plaintiff contends that it paid its workmen as per the

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interim order of the Supreme Court dated 10.8.1973 in terms of the said settlement. It therefore became entitled to claim escalation of price on account of variation in the wage structure varying from the base date i.e. 6.8.1973.

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Accordingly, under cover of its letter dated 7.9.1975 the Plaintiff forwarded to the Defendant a bill of that date for an amount of Rs.8,87,715/- being on account of escalation in wages in respect of 297 ingot moulds dispatched during the period July, 1974 to July, 1975. The Plaintiff had deducted a sum of Rs.86,112/- being the 10% of the amount of the said bill payable later. The deduction however was subject to the clarification that the amount would be claimed later. The bill was prepared taking as the effective date, the date of the award i.e. 29.11.1972. The Plaintiff claims to have sent alongwith the bills, the necessary statements explaining the computation. The Plaintiff's witness has deposed that the bill has been signed by one A.V. Patel, Vice President/Director of the Plaintiff with whose handwriting he is familiar. He identified the handwriting. He has also indentified the said Patel's signature (see paragraphs 23 and 40 of the affidavit in lieu of examination-in-chief). The statement, the witness stated, was prepared as per the instructions and under his supervision.

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Correspondence ensued between the parties in the course of which the Defendant sought certain clarifications which the Plaintiff furnished. The Defendant ultimately rejected the Plaintiff's demand for payment of escalation.

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Under cover of its letter dated 4.2.1978 the Plaintiff forwarded a further bill dated 2.2.1978 towards wage escalation for the balance 193 ingot moulds. The bill contained the details and particulars which the witness deposed, were prepared by the said A.V. Patel, and are correct. The Defendant rejected the claim made under this bill as well.

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By a letter dated 29.6.1978 the Plaintiff forwarded to the Defendant a consolidated bill dated 28.6.1978 in the sum of Rs.11,83,418.80 towards wage escalation for the supply of 400 ingot moulds. The detailed particulars in support of the claim were also forwarded. The Plaintiff therefore claims that on a true and proper interpretation of the contract, it is entitled to claim from the Defendant an aggregate of a sum of Rs.29,68,467.60 being the amount of the said three bills dated 7.9.1975, 2.2.1978 and 28.6.1978 in the sum of Rs.8,87,715.20, Rs.8,97,353.60 and Rs.11,83,418.80 respectively. The amount is claimed on account of escalation, the wage structure having been allegedly varied from

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the base date viz. 6.8.1973 as a result of the Governmental action.

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15(A). The Plaintiff by its Advocate's letter dated 7.6.1978 addressed to the Defendant, stated that on account of the Defendant's refusal to pay the amounts under the bills for escalation, disputes and/or differences had arisen between the parties upon or in relation to or in connection with the said contract and that the same were required to be referred to arbitration in terms of Article 33 of the general conditions of contract. The Plaintiff nominated its arbitrator and called upon the Defendant to appoint its arbitrator.

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(B). The Defendant by a letter dated 25.7.1978 contended that the claim for escalation was outside the purview of the escalation clause, premature and not referable to arbitration. However, without prejudice to its contention regarding the maintainability and validity of the reference to arbitration and the appointment of the arbitrator by the Plaintiff, the Defendant appointed an arbitrator.

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The Defendant's case :

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The Defendant had filed a written statement dated 29.9.1983. The Defendant contends that the suit is barred by

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limitation. The Defendant further contends that the Plaintiff having made a purported reference to arbitration, as aforesaid, and the parties having appointed their arbitrators and the authority of the arbitrators not having been revoked under Section 5 of the Indian Arbitration Act, the suit is liable to be dismissed and/or stayed.

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The Defendant has also denied the claim for escalation as well as the maintainability of the claim on various grounds which I will deal with while considering the relevant issues in this regard.

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The Defendant has expressly contended that there was no escalation subsequent to the base date i.e. 6.8.1973 and that the Plaintiff is therefore not entitled to make any claim on account of wage escalation.

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The Defendant has denied that the Plaintiff completed the order or that the Plaintiff has not received the full amount in respect thereof. It is contended that the moulds supplied against the original order dated 6.4.1972 failed to achieve the required heat as per the specifications and that the Plaintiff is therefore liable to refund to the Defendant the price of the said 55 defective moulds.

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In the written statement, it is averred that the Defendant gave notice of failure dated 8.2.1979 to the Plaintiff but that the exact amount was yet to be assessed. The Defendant reserved

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their right to file the same before the hearing. The Defendant has not however done so.

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The Defendant has not admitted that the Plaintiff opened and maintained the said advance account and the said supply account and has put the Plaintiff to the strict proof thereof. It is pertinent to note however that the Defendant has contended that the agreement between the parties never stated a settlement or settling of accounts. The Defendant has however, as I will demonstrate in detail later, admitted having withheld the balance purchase price.

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On 23.8.2000 the following issues were framed by D.G. Deshpande, J. :-

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Whether the suit is barred by law of limitation, acquiescence or waiver as alleged in para 1 of the written statement ?

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Whether the suit is liable to be dismissed as the authority of Arbitrators was not revoked before filing the suit as alleged in para 2 of the written statement ?

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Whether the formula stipulated for variation was not operative for the reasons alleged in para 1(c)(i) of the

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written statement ?

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Whether the plaintiffs are not entitled to claim escalation for the reasons alleged in paras 1(c)(ii), 1 (c)(iii), 1(c)(iv), 3 and 5 to 8 of the written statement ?

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Whether as on the date of the suit a sum of Rs.7,30,795.25 was due and payable by the defendants to the plaintiffs at the foot of the supply account as alleged in para 10 of the plaint ?

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Whether the plaintiffs are entitled to claim from the defendants a sum of Rs.29,68,467.60 being the amount of plaintiffs' three Bills on account of the wage escalation as provided in the contract between the plaintiffs and the defendants as alleged in paras 34 to 40 of the plaint ?

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Whether the plaintiffs are entitled to claim from the defendants an aggregate sum of Rs.36,99,282.87 together with interest thereon from the date of the suit as per particulars Exh. “P” to the plaint as alleged in para 42 of the plaint ?

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To what relief, if any, are the plaintiffs entitled ?

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What order and decree ?

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Re. Issue No.2 : Whether the suit is liable to be dismissed as the authority of Arbitrators was not revoked before filing the suit as alleged in para 2 of the written statement ?

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Clause 12 of the agreement reproduced above, pertains

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to arbitration and states that arbitration would be as per the Defendant's standard clause i.e. Article 33 of the General Conditions of Contract. Article 33 has not been produced by either of the parties. I have, as requested by both counsels, proceeded on the basis that it contains an arbitration clause wide enough to cover the disputes between the parties in the present suit.

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Mr. Desai submitted that the arbitration agreement having been invoked and not having been superceded under Section 5 of the Indian Arbitration Act, 1940, the suit is not maintainable and is liable to be dismissed on that ground alone. The submission is not well founded. Sections 5, 34 and 35 of the Indian Arbitration Act, 1940 read as under :-

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“5. Authority of appointed arbitrator or umpire irrevocable except by leave of court . — The authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement.

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34. Power to stay legal proceedings where there is an arbitration agreement. —Where any party to an arbitration agreement or any

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person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings.

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35. Effect of legal proceedings on arbitration. —(1) No reference nor award shall be rendered invalid by reason only of the commencement of legal proceedings upon the subject-matter of the reference, but when legal proceedings upon the whole of the subject-matter of the reference have been commenced between all the parties to the reference and a notice thereof has been given to the arbitrators or umpire, all further proceedings in a pending reference shall, unless a stay of proceedings is granted under Section 34, be invalid.

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(2) In this section the expression ‘‘parties to the reference’’ includes any persons claiming under any of the parties and litigating under the same title.”

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The Plaintiff by its Advocate's letter dated 5.7.1978 set

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out the disputes between the parties and stated that the same were required to be referred to arbitration in accordance with the said arbitration clause. The Plaintiff nominated an arbitrator and called upon the Defendant to nominate an arbitrator stating further that in the event of the Defendant failing to nominate an arbitrator, the

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arbitrator appointed by it would act as the sole arbitrator in the reference.

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The Defendant by its reply dated 20.7.1978 contended that the purported appointment of the arbitrator by the Plaintiff was pre-mature, illegal and bad; that the matters purported to be referred to arbitration are not arbitrable, were de-hors the contract and not covered by the relevant arbitration clause. The Defendant however, without prejudice to the maintainability, tenability and validity of the reference, nominated an arbitrator.

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On the basis of these facts alone, Mr. Desai submitted that the suit which was filed on 9.3.1979 was not maintainable. This contention is reiterated in the written statement filed by the Defendant 4 ½ years later on 21.9.1983.

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It is admitted that the two arbitrators did not appoint an umpire as required. It is also admitted that the arbitrators never entered upon the reference. It is further admitted that the period stipulated in the schedule to the Arbitration Act had expired and neither party had done anything further in the matter. These facts establish beyond any doubt that the parties had abandoned the arbitration agreement.

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It is the Defendant who alleged that the disputes were

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not covered by the arbitration clause and that the arbitration was illegal. Having taken that stand, it is impossible for it to sustain the present ground in any event. Even today the Defendants have not asserted a right or even an intention to have the disputes referred to arbitration.

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It is further important to note that the Defendant never filed an application under Section 34 of the Arbitration Act, 1940 for a stay of the suit. Indeed, in these facts, it is highly doubtful if the Defendant could ever have succeeded in obtaining a stay under Section 34. There is nothing in the Arbitration Act which prohibits a suit being proceeded with in the absence of a stay thereof under Section 34. Indeed, under Section 35, the converse is the case.

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The result would be no different under the Arbitration and Conciliation Act, 1996. Mr. Desai did not seriously dispute the fact that the parties may, by consent, put an end to or abandon or waive their right under or in respect of an arbitration agreement even under the provisions of the Arbitration and Conciliation Act, 1996.

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In my view, even under the 1996 Act it is also open to the parties to abandon an arbitration agreement or waive their rights in respect thereof. I have already indicated the reasons why,

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according to me, the parties in fact abandoned the arbitration agreement.

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In the circumstances, Issue No.2 is decided in the negative and against the Defendant.

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Re. Issue No.4 : Whether the plaintiffs are not entitled to claim escalation for the reasons alleged in paras 1(c)(ii), 1(c)(iii), 1(c) (iv), 3 and 5 to 8 of the written statement ?

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Issue nos.3, 4 and 6 pertained to the Plaintiff's claim for escalation. It is however convenient to deal with them separately. It is further convenient to deal with Issue nos. 4, 3 and 6 in that order.

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I have earlier set out Clause 8 of the terms and conditions which is the relevant clause for the purpose of these issues. It is not necessary to consider the effect of the wage structure arrived at as a result of the disputes raised by the Plaintiff's workmen culminating in the order of the Supreme Court, reported in AIR 1978, Supreme Court, 982 in the case of New Standard Engineering Co. Ltd. v. N. L. Abhyankar & Anr. In other words, it is not necessary to consider whether the wage structure arrived at is, as required by Clause 8, a result of Government

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action, arbitration or adjudication or whether it was a purely consensual arrangement in view of the settlement dated 31.3.1973 which was approved by the Supreme Court. If it was a result of Government action, arbitration or adjudication, it would be covered by Clause 8. If not, it would not be covered by Clause 8. It is not necessary to consider this aspect as the wage structure stipulated in the settlement dated 31.7.1973 was by virtue of the order of settlement and the order of the Supreme Court effective as of 1.1.1973.

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Mr. Makhija clarified that it was not the Plaintiff's case that there was any change in this regard between 1.1.1973 and the base date stipulated in the agreement viz. 6.8.1973. The only question therefore is whether there was any variation entitling the Plaintiff to claim escalation on and after 6.8.1973. This then is a pure question of fact which I will deal with while considering Issue nos. 3 and 6.

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The present issue viz. Issue no.4 requires a consideration of the points raised in paragraphs 1, 1(c)(ii), 1(c)(iii), 1(c)(iv) and paragraphs 3, 5 and 8 of the written statement. It is contended therein that the claim is vague, unintelligibly, selfcontradictory and has been made by suppressing material facts. It

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is contended that the Plaintiff suppressed and/or misrepresented the facts regarding the dispute having been raised, the award, the settlement and the other proceedings in relation thereto, though the same were known to the Plaintiff prior to the finalization of the contract. Paragraphs 5 to 8 of the written statement also raised a contention regarding the maintainability of the claim for escalation on merits. I will deal with these submissions while considering Issue Nos. 3 and 6. Paragraph 8, also raises the question of limitation, which I will deal with while considering Issue No.1.

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I do not find anything on record which suggests any misrepresentation or suppression on the part of the Defendant. Questions 131 and 132 and the answers thereto, are as follows :-

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“Q.131 Whether the effect of settlement as arrived by the company with its workers earlier was brought to the notice of defendant by the company ?

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Ans.

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As the matter was under dispute and as the settlement was rejected by the High Court it was not brought to the notice of defendant. However, the proceedings of the High court and the Supreme Court were available to the public.

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Q.132

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Therefore is it correct to say that at the time of fixing of price structure defendants were not informed about the disputes and the settlement by the company with its workers ?

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Ans.

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We felt the same was not necessary as it was

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disputed matter.”

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It is a known fact that disputes arise between concerns

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such as the Plaintiff and its workmen especially in respect of wages. There is nothing in the cross-examination which suggests that these facts were deliberately withheld from the Defendant. Further, there is nothing to suggest that the contractual price was determined on the basis of any particular wage structure. When the agreement was entered into, the settlement was nowhere near finalized. In fact, when the agreement was entered into the position was that the settlement was rejected by this Court and the SLP had been admitted in the Supreme Court.

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The Defendant's case on misrepresentation is not merely unfounded but indeed, the increase in the wage structure by virtue of the above proceedings including the settlement of 31.7.1973 was to the Defendant's benefit. This is for the obvious reason that had the wage structure not increased prior to or even on the base date of 6.8.1973, the variation which would have been payable by the Defendant to the Plaintiff, if any, would have been higher. The amount payable for supply of each ingot mould was fixed at Rs.45,000/-. Clause 8 entitled the Plaintiff to claim a variation on

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account of an increase in the wage structure after the base date of

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6.8.1973. Thus, any increase in the wage structure prior to the base date would obviously be to the Defendant's advantage. The case of misrepresentation and suppression is therefore not only unfounded but totally illogical.

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In the circumstances, Issue no.4 is answered in the negative.

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Re. Issue No.3 : Whether the formula stipulated for variation was not operative for the reasons alleged in para 1(c)(i) of the written statement ?

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It is established that at the time when the contract was

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entered into, the Minimum Wages Act did not apply to engineering industries in Maharashtra. The Plaintiff is an engineering industry. The Minimum Wages Act was made applicable to engineering industries with effect from 1.12.1974. It is therefore contended that in view of the same and in view of the fact that no mention had been made in the tender document as to what was the minimum wage structure prevalent on the base date i.e. 6.8.1973 clause 8(ii) became inoperative or ineffective as no minimum wage as per the Minimum Wages Act was fixed in the area for engineering industries. The Minimum Wages Act was applicable to the Plaintiff

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only with effect from 1.12.1974 i.e. eight months after the suit agreement dated 26.4.1974.

¶170

Mr. Makhija however submitted that clause 8 must be interpreted reasonably. According to him, even though the Minimum Wages Act was not in enforce when the agreement was entered into, the very insertion of clause 8 indicated that the minimum wages to be the wages which were in fact being paid to the Plaintiff's unskilled labour. Otherwise, he submitted clause 8 would be rendered otious.

¶171

He further submitted that Clause 8, correctly interpreted, provided that where the Minimum Wages Act is in force, then irrespective of what the actual wages paid were, the calculation for the purpose of Clause 8 would be on the basis of the Minimum Wages Act but where the Minimum Wages Act was not in face, the minimum wages must be taken to be those paid by the Plaintiff to its workers.

¶172

I am unable to accept Mr. Makhija's submission. Clause 8(ii) specifies the wage structure of the minimum rated unskilled worker to be that as provided in the Gazette Notification for minimum wages applicable to the area where the equipment is being manufactured. Mr. Makhija's interpretation of Clause 8 is

¶173

¶174

unworkable. Clause 8 has a reference point/base qua the wage structure viz. as provided in the Gazette Notification. To accept Mr. Makhija's interpretation would require re-writing clause 8.

¶175

Thus, the clause refers to unskilled workers of the Plaintiff company. The wages are not necessarily uniform for all workers of all companies. Nor are they necessarily the same for all workers of a given company. The minimum wages applicable to workers of the same company in one area may not be the same as the minimum wages applicable to the workers of the same company in another area.

¶176

I must proceed on the basis that the Plaintiff did employ unskilled workers. That I think cannot be disputed. The award of the Industrial Tribunal itself fixes the wages for unskilled workers. The further proceedings deal with the wages of the unskilled workers as well. It would be absurd to suggest that there is no proof that the Plaintiff employed unskilled workers.

¶177

Further, it also follows that the number of unskilled workers employed by the Plaintiff is not relevant. The increase is to be calculated in the manner provided by Clause 8 which does not depend on the number of unskilled workers. In other words,

¶178

the increase/escalation is not related to or in proportion to the

¶179

¶180

number of unskilled workers. It has a correlation to the price variation and bares a correlation to the increase in wages.

¶181

In the circumstances, it must be held that the Minimum Wages Act having been made applicable to the engineering industry and the Plaintiff being an engineering industry, Clause 8 would come into operation only with effect from 1.12.1974 and not prior thereto. In my opinion, Clause 8 would apply and come into operation with respect to supplies made on and after 1.12.1974.

¶182

In the circumstances, in respect of Issue no. 3, it is held that Clause 8 would be operative with effect from 1.12.1974 and that the Plaintiff would not be entitled to the benefit thereof from the time the contract was entered into i.e. 26.4.1974 till 31.11.1974.

¶183

The question therefore is whether there was any price variation on and after 1.12.1974.

¶184

Re. Issue No.6 : Whether the plaintiffs are entitled to claim from the defendants a sum of Rs.29,68,467.60 being the amount of plaintiffs' three Bills on account of the wage escalation as provided in the contract between the plaintiffs and the defendants as alleged in paras 34 to 40 of the plaint ?

¶185

As stated earlier, the Plaintiff had forwarded its bill, also

¶186

¶187

dated 7.9.1975 for a sum of Rs.8,87,715 on account of escalation in wages in respect of 297 ingot moulds from July 1974 to July 1975. From the bill, the Plaintiff had deducted a sum of Rs.86,112/- being the last instalment of 10%. Even if the Plaintiff has to succeed in respect of this claim, a part thereof must be disallowed in view of my finding that the Plaintiff would not be entitled to escalation from the date of the contract till 11.2.1974. Thus, even in respect of this bill, the Plaintiff would be entitled to the price escalation only for the period 11.2.1974 to July, 1975.

¶188

The letter dated 7.9.1975 is Exhibited as Exhibit “P-14”.

¶189

The bill however of the same date was objected to being produced in evidence. The objection cannot be sustained for more than one

¶190

reason. The bill has been proved. The witness has expressly stated in his affidavit in lieu of examination-in-chief that the bill had been signed by one A.V. Patel, the Vice President/Director of the Plaintiff and that he was familiar with his handwriting. In paragraph 40 of the said affidavit, the witness has also identified the said A.V. Patel's signature on the bill. He has deposed that he is familiar with the said A.V. Patel's signature. Further, the said A.V. Patel had expired before the evidence commenced. It was not possible therefore in any event for the Plaintiff to have him prove the

¶191

¶192

documents. The Defendant has in fact not even denied the existence of the said bill. The letter dated 7.9.1975 is admitted. In its reply dated 24.12.1975, which is also exhibited as Exhibit “P15”, the Defendant referred to the bill and returned the same to the Plaintiff. Further, under cover of a letter dated 2.9.1978 (Exhibit “P37”) the Plaintiff expressly referred to the said bill.

¶193

The objection is overruled and the document viz. bill dated 7.9.1978 which is item no.4 of the additional compilation of documents, is taken on record and marked Exhibit “P-42”.

¶194

This however is with a clarification that it is subject to the proof of its correctness.

¶195

I have also referred to the Plaintiff having under cover of its letter dated 4.12.1978 forwarded a bill dated 2.2.1978 towards wage escalation in the sum of Rs.8,97,353.60 for the balance 193 ingot moulds.

¶196

However, in this case, even the letter has not been

¶197

marked in evidence.

¶198

In my opinion, the letter dated 4.2.1978 and the annexure thereto viz. the bill dated 2.2.1978 have both been proved. The Plaintiff has deposed to the correctness of the contents of the letter and the bill and their having been signed by

¶199

¶200

the said A.V. Patel, who is now not alive. The letter dated 4.2.1978 is marked as Exhibit “P-43” and the bill dated 2.2.1978 which is item no.5 of the additional compilation, is marked Exhibit “P-44”.

¶201

Under cover of its letter dated 29.6.1978 the Plaintiff forwarded to the Defendant a third bill dated 28.6.1978 in the sum of Rs.11,83,418.80 towards escalation. The letter alongwith the bill and the statement enclosed therewith, have been marked as Exhibit “P-33”. The bill includes the sums under the said bills dated 7.9.1975 and 2.2.1978. The statement furnishes details of the quantity and the period during which the said 400 nos. ingot moulds were supplied.

¶202

It is however not possible to grant any part of the Plaintiff's claim for escalation/price variation for more than just one reason. The statement enclosed alongwith Exhibit “P-33” is not clear enough to either compute the claim or ascertain the same. It refers to a lump sum amount for each year without specifying the amount attributable to the components that constitute the wage structure and the variation on account thereof.

¶203

I am unable to accept Mr. Makhija's contention that the quantification is not denied. In paragraphs 14, 15 and 24 of the written statement, the quantification is denied. Even assuming that

¶204

¶205

in the correspondence the quantification was not denied and only the basis for the claim for escalation was denied, it would not relieve the Plaintiff of the necessity of proving the claim and the correctness thereof. It is true that the witness has not been crossexamined as to the correctness of the quantification in the bills.

¶206

That too does not assist the Plaintiff for I find that the documents themselves do not establish the same.

¶207

Clause 8, as I have already observed, specifies the manner in which the wage structure of the minimum rated unskilled worker is to be computed. It is to be computed as provided in the Gazette Notification for minimum wages applicable to the area where the equipment is being manufactured. The Gazette Notification has not been proved. It cannot be presumed that the minimum wages fixed in the Gazette Notification would be higher or lower than the wages fixed as per the said settlement as endorsed by the order and judgment of the Supreme Court. This is purely a question of fact and ought to have been proved. There is no evidence of the amount fixed by any Gazette Notification from time to time in respect of the minimum wages.

¶208

Under Section 3 of the Minimum Wages Act, the minimum wage differs from place to place. Therefore, it was

¶209

¶210

obligatory on the part of the Plaintiff to prove the relevant Gazette Notifications pertaining to the engineering industry and to the place/location where the suit goods were manufactured. Without such evidence, any inference would be pure conjuncture on the part of the Court which is not permissible. There was also no evidence to suggest any increase on account of Governmental action, arbitration or adjudication. The variation in the wage structure per-se does not trigger Clause 8. It is only if the wage structure varies as a result of Governmental action, arbitration or adjudication from that of the base month that the price variation clause comes into effect.

¶211

Indeed, the evidence on record suggests the contrary. For instance, Exhibit “P-15” which is a letter dated 4.2.1975 addressed by the Defendant to the Plaintiff, indicates that the increase in the wage structure at one stage was on account of the wage declared by the Mill Owner's Association. The Plaintiff by its letter dated 20.8.1976 (Exhibit “P-21”) admitted that the dearness allowance was as declared by the Mill Owner's Association and that therefore it is the legal dearness allowance as awarded by the Industrial Tribunal. But, there is nothing to establish that the increase was after the base date i.e. 6.8.1973 and that the same

¶212

¶213

was on the basis of Governmental instructions. The Chartered Accountant's certificate sought to be produced by the Plaintiff cannot establish these facts. Exhibits “P-21” to “P-29” relied upon by Mr. Makhija in support of his contention does not establish the ingredients of Clause 8.

¶214

Further, under Clause 10 of the agreement, the delivery of the goods was to be completed by September, 1975. Clause 8 (ii) expressly limits the operation of the price variation clause in respect of deliveries effected one month after the date of variation and “to the contract period”. In other words, the clause would not operate for deliveries made beyond the contract period. Thus, the clause would not operate in respect of deliveries made after September, 1975.

¶215

Admittedly, some of the ingot moulds were supplied after September 1975. By a letter dated 3.3.1976 the Defendant informed the Plaintiff that it had no objection to the Plaintiff completing the order by March, 1976 “subject to the conditions that any escalation accrued on material, wages, taxes & duties and freight during the period 1.10.75 to 31.3.76 will be subject to your (i.e. Plaintiff's) account”. The Defendant also reserved the right to recover liquidated damages for the delay in supply. Thus, in any

¶216

¶217

event, the Plaintiff would not be entitled to escalation in respect of the goods supplied on and after 1.10.1975.

¶218

Even on the basis of the statement annexed to the final

¶219

bill for escalation (Exhibit “P-33”) an amount of Rs.10,11,480/would have to be deducted for this reason.

¶220

It is important to note that the award dated 29.11.1972 fixed the wages for a period of 10 years. Thus, even assuming 29.11.1972 to be the starting date, the wages remained the same during the period of the contract which expired in September, 1975 as per Clause 10 thereof. There was no change in the wages during the subsistence of the agreement. In answer to Question No.133, the witness stated that he did not believe that there was any increase in the wages due to legislation. The witness however, in answer to Question No.133, for instance, denied that there had been no increase in the wage structure of the companies workers at any time and contended that there had been continuous increase in the workers wages till the supplies were completed. I will presume that what was contended is that the term “wage structure” refers not merely to the basic wages but also the Dearness Allowance, leave with pay, provident fund and Employees Estate Insurance Contribution as provided in clause 8.

¶221

¶222

These ingredients however have not been proved by or on behalf of the Plaintiff. In fact, not only has no Gazette Notification been produced but there is no bifurcation of the total claim of escalation in respect of each of these ingredients.

¶223

In the circumstances, it must be held that the Plaintiff has

¶224

not proved its claim for wage escalation and the same is therefore rejected.

¶225

Issue no.6 is therefore answered in the negative.

¶226

Re. Issue No.5 : Whether as on the date of the suit a sum of Rs.7,30,795.25 was due and payable by the defendants to the plaintiffs at the foot of the supply account as alleged in para 10 of the plaint ?

¶227

Re. Issue No.7 : Whether the plaintiffs are entitled to claim from the defendants an aggregate sum of Rs.36,99,282.87 together with interest thereon from the date of the suit as per particulars Exh. “P” to the plaint as alleged in para 42 of the plaint ?

¶228

The claim for the balance price of the said goods sold

¶229

and delivered by the Plaintiff to the Defendant is sought to be

¶230

supported on the basis of invoices/supplies per-se. This claim is

¶231

also sought to be proved on the basis of the amounts due at the

¶232

¶233

foot of the supply account. A fair and proper as opposed to a technical and narrow reading of the plaint, indicates that the suit is not one on accounts but for the balance price of goods sold and delivered sought to be evidenced by an account. The mere use of the expression “at the foot of the account” in the plaint does not change the nature and the basis of the claim/cause of action.

¶234

I have set out earlier the manner in which the Plaintiff alleges it maintained the advance account and the supply account and the manner in which the amounts reflected in the advance account were transferred to the supply account. I have also set out the Plaintiff's case regarding the Plaintiff having been unable to trace the books of account since the year 2003 and the reliance therefore by the Plaintiff upon the extracts thereof.

¶235

I do not think that the Plaintiff can possibly establish its claim on the basis of the books of account.

¶236

In fact a bare reading of the plaint and in particular paragraphs 8 to 11 thereof, do not indicate the Plaintiff having made any claim on the basis of an open, mutual and current account. The Plaintiff's books of account would reflect the receipt of the money by it by way of advance or otherwise from the Defendant as well as the amounts due to the Plaintiff from the

¶237

¶238

Defendant on account of supply of the said goods. Such accounts would necessarily be maintained in the normal course of the business of any organization. That by itself would not constitute such an account to be a open, mutual and current account.

¶239

Further, there is nothing on record which suggests that such accounts were forwarded by the Plaintiff to the Defendant from time to time or that the Defendant acknowledged the correctness thereof. It certainly is not the Plaintiff's case that the claim is founded upon an account stated and settled. Nor is it the Plaintiff's case that an open, mutual and current account was maintained and/or was agreed to be maintained by any conduct of the parties.

¶240

In his affidavit in lieu of examination in chief the witness stated that in 1991 when the affidavit of documents was filed in the suit all account books of the Plaintiff were available and accordingly the same were disclosed in the affidavit of documents. The affidavit of documents it was agreed did disclose the books of accounts at item no.55. On a balance of probability, I am inclined to accept this evidence. There is nothing on record produced by the Defendant to suggest that the disclosure in the affidavit of documents was false. It is not as if the Defendant asked for

¶241

¶242

inspection of the books of accounts soon thereafter and the same were not produced.

¶243

In answer to question 33 the witness stated that it was correct that as on 18.6.1991 i.e. the date of the affidavit of documents the books of accounts were available and the same were disclosed in the said affidavit.

¶244

By question 33, the witness was asked whether after the mid 1980's the books of account were misplaced or not available. In answer the witness stated that it was difficult to indicate the precise period from which the books of accounts were not available as the events pertain to a period thirty years ago. In the further cross-examination, the witness stated that the books of accounts were available for the purpose of filing the income tax returns and they were kept as required by statutory provisions and till all income tax assessments were completed. I do not think that the Plaintiff not having filed a police complaint in respect of the loss of the books is of any consequence.

¶245

That however does not assist the Plaintiff by itself as the accounts have not been proved. I will presume, as alleged by the Plaintiff that the Plaintiff was in fact unable to trace the accounts

¶246

after the suit was filed despite due and diligent search. There is no

¶247

¶248

satisfactory secondary evidence to establish the accounts either. In my opinion, the Plaintiff cannot prove its claim for balance consideration on the basis of the said books of accounts as the contents thereof have not been proved even by satisfactory secondary evidence. Even the alleged extracts of the books of account have not been proved.

¶249

I am however of the opinion that the claim is not based only on the basis of the account merely because the plaint and the particulars of claim stated that the amount claimed is at the foot of the account. A bare reading of the plaint and the affidavit in lieu of the examination in chief indicates that the claim is for the balance consideration of the price of the said ingot moulds sold and delivered by the Plaintiff to the Defendant per-se. The details, submissions and the averments regarding the books of accounts only pertain to the manner in which the Plaintiff recorded the transactions/supplies in its books. I do not read the plaint as not having made a claim on the basis of the balance price of the goods sold and delivered. The suit is not one on accounts. Nor has the Plaintiff restricted the proof of its claim only on the basis of the accounts.

¶250

Paragraphs 8 to 11 of the plaint read as under :-

¶251

¶252

“8. The Plaintiffs say that the plaintiffs from time to time manufactured the said ingot moulds, which were duly inspected by the Chief Inspecting officer of the BSL. Between August 1974 and July 1975 the plaintiffs dispatched to the BSL 207 Nos. of said ingot moulds, which were duly accepted by the BSL. The Plaintiffs further say that between August 1975 and January 1977 the plaintiffs dispatched further 193 Nos. of ingot moulds which were duly accepted by BSL. Hereto annexed and marked Ex.`C' (Collectively) are the statements showing particulars of the supply of the said 400 Nos. ingot moulds. The plaintiffs crave leave to refer to and rely upon the relevant documents in this behalf, when produced.

¶253

In respect of the said supplies the plaintiffs opened an account of the BSL in their books called M/s.Bokaro Steel Order No.Pur/B3-90672-NSE/32186 dt. 28.2.74 Advance Account (hereinafter referred to as the `Advance Account') wherein all advances received, from time to time from, BSL as per the said contract were duly credited in the said account. On 24^th April 1974 and 31^st May 1974, BSL paid sums aggregating to Rs.18,00,000/- as advance to the plaintiffs which were duly credited in the said account. As agreed the plaintiffs from time to time debited to BSL the amounts of advance receivable from them and/or transferred to the BSL's supply Account as hereinafter stated. On 31^st March 1975 a sum of Rs.11,34,000/was the amount due and payable to and/or lying in credit of BSL. The plaintiffs thereafter made further debits in the said account. As on 31^st March 1976 a sum of Rs.1,17,000/remained as due and payable, by the plaintiffs to BSL in the said advance account. For the

¶254

¶255

year 1976-77 the plaintiffs made further debits in the said advance account. On 31^st January 1977 the said advance account was squared up. Hereto annexed and marked Ex.`D' (Collectively) are the copies of the said Advanced Account.

¶256

The Plaintiffs say that in respect of the said contract the plaintiffs opened another account of BSL in their books called “M/s.Bokaro Steel Ltd. Order No. Pur-B390627-NSE-32186 dated 28.2.74”. For supply of 400 Nos. ingot moulds (hereinafter called the `supply Account') wherein the plaintiffs duly debited the amounts of plaintiffs' invoices for the value of the ingot moulds supplied from time to time and/or for the price of material escalation. The amounts paid by BSL as advance (lying credited in the said Advance A/C) and towards the said invoices were transferred and duly credited by the plaintiffs in the said account. Between 20^th August 1974 and 31^st March 1975 the plaintiffs debited in the said supply account an aggregate sum of Rs.84,57,330/- against which BSL paid to the plaintiffs an aggregate amount of Rs.62,12,560/-. As on 31^st March 1975 a sum of Rs.22,44,780/- remained due and payable by BSL to the plaintiffs at the foot of the said supply account which was the debit balance brought forward for the year 1975-76. Between 30^th April 1975 and 31^st March, 1976 the plaintiffs debited in the said account amounts aggregating to Rs.1,17,26,685/-, BSL paid from time to time during the said year amounts aggregating to Rs.1,20,71,926.90 As on 31^st March 1976 a sum of Rs.18,99,538.70 remained due and payable by BSL to plaintiffs at the foot of the said account, which was the debit balance brought forward for the year 1976-77.

¶257

¶258

Between 8^th April 1976d and 29^th January 1977 the plaintiffs debited in the said Supply Account amounts aggregating to Rs.13,73,736/-. During the year 1976-77 BSL paid to the plaintiffs in the said Supply Account an amount aggregating to Rs.22,35,696.22. As on 31^st March 1977 a sum of Rs.10,37,578.48 was the amount due and payable by BSL to the plaintiffs at the foot of the said Supply Account, which amount was the debit balance brought forward for the year 1977-78. Between 30^th June 1977d and 31^st March 1978 BSL paid to the plaintiffs in the said Supply Account amounts aggregating to Rs.5,63,999.86. On 31^st March 1978, plaintiffs debited in the said account amounts of their various bills, aggregating to Rs.3,87,436.80. As on 31^st March 1978 a sum of Rs.8,61,015.32 remained due and payable by BSL to the plaintiffs at the foot of the said Supply Account which was the debit balance carried forward to the year 1978-79. Between 29^th April 1978 and 31^st March 1979 BSL paid to the plaintiffs aggregating to Rs,1,30,220.05. As on the date of the suit a sum of Rs.7,30,795.27 is the amount due and payable by BSL and/or the defendants at the foot of the said Supply Account.

¶259

Hereto annexed and marked Ex.`E' (Collectively) are copies of the said supply account of BSL in the plaintiffs books.

¶260

The plaintiffs say that after adjusting all the amounts paid by BSL in the said Advance Account, as aforesaid a sum of Rs.7,30,795.27 is the amount due and payable by BSL to the plaintiffs in respect of the supply of said 400 Nos. ingot at the foot of the said supply account, together with interest

¶261

¶262

thereon at 15% p.a. From the date of the suit till payment and realization. The particulars of the said claim are annexed hereto and marked Ex.`F'.”

¶263

The mere use of expression “at the foot of the said supply account” does not limit the basis of the claim as being only on the account or evidenced only by the account.

¶264

The question then is whether the Plaintiff has proved its claim for the balance purchase price. I think it has. The Defendant has not denied the receipt of the goods. It is crucial to note that the Defendant has not only not denied but admitted that it has made deductions from the amounts due and payable by it to the Plaintiff. This is clear from the written statement. It is pertinent to note that in paragraph 10 of the written statement the Defendant has alleged it had paid the advance payment of 10% and the further payment of 80% on proof of dispatch and that in respect of the balance 10%, only an amount of Rs.20,59,749 was made against the purchase order in question i.e. the suit purchase order.

¶265

Thereafter, it is averred as follows :-

¶266

“10...................................................................

¶267

The defendants are entitled to recover and or set off and or adjust of the price of the mould, which failed the basis and details of which will be produced at the time of hearing. The Defendants deny that the Plaintiffs are

¶268

¶269

entitled to any payment whatsoever is alleged or at all.

¶270

With reference to paragraph 11 of the Plaint, the Defendants deny that a sum of Rs.7,30,795.27 or any other amount is due or payable by the BSL or by the Defendants to the Plaintiffs in respect of the supply of the said 400 Nos. of ingots with or without interest at the rate alleged or at any other rate, for the period alleged or for any other period, as alleged or at all. The Defendants deny the correctness of the Plaintiffs' claim annexed as Exhibit “F” to the Plaint. The Defendants state that as more particularly set out hereinafter the Defendants have deducted various amounts from the bills of the Plaintiffs and no amount is due and payable by the Defendants to the Plaintiffs.”

¶271

Thus, though the Defendant has denied the correctness of the supply account and the advance account maintained by the Plaintiff in the above paragraphs and in paragraph 27 of the written statement, the Defendant admits having deducted or withheld an amount of Rs.8,36,085 but only denies that the withholding thereof was false or untenable or that the Defendant was not entitled to withhold the same.

¶272

Moreover, once it is proved by a party that the goods have been sold and delivered, the onus would shift to the purchaser to establish that it has made the payment for the same

¶273

as per the agreement between the parties. This is for the obvious

¶274

¶275

reason that the Plaintiff is not expected to prove the negative. Indeed as in the present case, the admission by the seller of the receipt of any amount is sufficient to discharge this burden on the purchaser to the extent of such admission. In the present case the Plaintiff has admitted the receipt of the price of the goods sold and delivered to the Defendant except to the extent of the amount claimed. Further, the Defendant has not only not proved payment of the earlier sum but has admitted not having done so.

¶276

Issue nos. 5 and 7 are therefore answered by holding that the Plaintiff's claim for escalation is rejected and that the Plaintiff has proved its claim for the balance purchase price subject to the deductions to be made on account of a part thereof being barred by limitation. I will deal with this aspect next.

¶277

Re. Issue No.1 : Whether the suit is barred by law of limitation, acquiescence or waiver as alleged in para 1 of the written statement ?

¶278

In clause 7 of the agreement the balance 10% was to be

¶279

paid within six months from the date of receipt of the moulds. The suit was filed on 9.4.1979. Normally the period of limitation to recover the amounts due in respect of the goods sold and

¶280

¶281

delivered would be barred in respect of the supplies made earlier than three years prior to 9.4.1979. However, as clause 7 requires payment not on delivery but within six months from the date of receipt of the moulds, the Plaintiff would be entitled to recover the price of the goods sold and delivered six months prior to 9.4.1979 i.e. the Plaintiff would be entitled to recover the balance purchase price in respect of the said goods sold after 9.10.1975.

¶282

Only 10% of the component under clause 7 was to be paid in respect of the said supplies. If the goods supplied after 9.10.1975 are worth more than Rs.73,00,000/- then the entire claim would be within time. In that event it would not be necessary to even plead the saving of the bar of limitation. After October, 1975, 143 ingot moulds were supplied. The value of these moulds at Rs.45,000/- per mould was Rs.64,35,000/-. The amount retained would be 10% thereof i.e. Rs.6,43,500/-. The applicable taxes have not been proved. The remaining part of the claim would be barred by limitation.

¶283

In the circumstances, issue No.1 is answered by holding that the claim for supply of goods is within limitation to the extent of Rs.6,43,500/- and the rest of the claim for supply is barred by limitation.

¶284

¶285

Re. Issue No.8 : To what relief, if any, are the plaintiffs entitled ? Re. Issue No.9 : What order and decree ?

¶286

The suit is dismissed in respect of the claim for escalation. The suit as regards the balance price of the ingot moulds sold and delivered by the Plaintiff to the Defendant is decreed in the sum of Rs.6,43,500/-.

¶287

The suit is decreed in the sum of Rs.6,43,500/- together with interest at 12% per annum from the date of the filing of the suit

¶288

till payment and/or realization.

¶289

There shall be no order as to costs.

M/S. Nesco Limited v. M/S.Steel Authority of India Ltd.

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M/S. Nesco Limited v. M/S.Steel Authority of India Ltd.

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