Allowed

Kerala State Civil Supplies Corporation v. M/S.Appanna Pawadeppa Jalihal

Kerala HC11 Jul 2017AS/10/2002

Case brief

AI extract

What is this about?

The High Court allowed an appeal by the Kerala State Civil Supplies Corporation against the dismissal of its suit for recovery. The court found the respondents liable for breach of contract due to non-supply and rejection of inferior quality goods, granting a decree for damages.

What did the court decide?

Decree granted for the realization of Rs. 1,74,635/- with interest at 6% per annum.

Kerala State Civil Supplies Corporation Vs… — Contract and Commercial Disputes | Kerala HC (2017)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE V.CHITAMBARESH & THE HONOURABLE MR. JUSTICE SATHISH NINAN

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TUESDAY, THE 11TH DAY OF JULY 2017/20TH ASHADHA, 1939

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AS.No. 10 of 2002 (B)

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AGAINST THE JUDGMENT IN OS.183/1999 of II ADDL.SUB COURT,ERNAKULAM DATED 28-02-2001

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APPELLANT/PLAINTIFF:

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--------------------

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KERALA STATE CIVIL SUPPLIES CORPORATION LTD., MAVELI BHAVAN, GANDHI NAGAR KOCHI-682 020, REPRESENTED BY ITS MANAGING DIRECTOR.

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BY ADV.SRI N.D.PREMACHANDRAN,SC,SUPPLYCO

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RESPONDENTS/DEFENDANTS:

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------------------------

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1. M/S.APPANNA PAWADEPPA JALIHAL, GENERAL MERCHANT AND COMMISSIONER AGENT, MARKET YARD, BELGAUM KARNATAKA STATE, REPRESENTED BY ITS PARTNERS DEFEDNATS 1 & 2.

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2. GAJANAN APPANNA JALIHAL, PLOT NO.60, HINDWADI, BELGAUM KARNATAKA STATE.

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3. SUBASH APPANA JALIHAL, PLOT NO.60, HINDWADI, BELGAUM, KARNATAKA STATE.

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THIS APPEAL SUIT HAVING BEEN FINALLY HEARD ON 07-07-2017, THE COURT ON 11.07.2017 DELIVERED THE FOLLOWING:

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vdv

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V.Chitambaresh & Sathish Ninan, JJ. ============================== A.S No.10 of 2002

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========================== Dated this the 11 th day of July, 2017

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JUDGMENT

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Sathish Ninan, J

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The dismissal of a suit for recovery of money is

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under challenge by the plaintiff Kerala State Civil Supplies Corporation.

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Damages is claimed for realisation of the loss

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suffered by the plaintiff on the retendering of the work for supply of dry red chillies consequent on the default on the part of the respondents to supply in terms of their agreement.

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Tenders were invited by the plaintiff for the supply of 750 metric tonnes of dry red chillies. The defendants submitted Ext.A1 tender. As per

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A.S No.10/2002

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Ext.A1 tender, the defendants offered to supply the commodity of the prescribed quality and standard at the rate of 2,245/- per quintal. The defendants' tender was accepted. They furnished security deposit of 1,12,125/- and earnest money deposit of

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`75,000/-. However, as per Ext.A3 letter dated 4.8.97, the defendants expressed their inability to supply 750 metric tonnes and required reduction in quantity to 54 metric tonnes. The same was accepted by the plaintiff and Ext.A2 purchase order was issued for supply of 54 metric tonnes of dried red chilly. The quantity was to be delivered within specified dates at Kozhikode and Kannur, the last of the stipulated date being 18.9.1997. The defendants supplied three loads totalling to 26 metric tonnes. But it was found that the chilly supplied was of very poor quality, and were rejected outright. On the delivery of the commodity, the plaintiff is to

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A.S No.10/2002

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issue a Goods Receipt sheet(GRS), which is to be presented along with the bill for payment. Since the 26 metric tonnes supplied by the defendants were found to be of inferior quality, the plaintiff rejected the goods and GRS was not issued. The defendants failed to replace the stock and also make supply in terms of Ext.A2. Thereupon the plaintiff had to make alternate arrangements and purchase the same at an enhanced rate of `2,988/-. Ext.A6 is the purchase order consequent on the re-tender. Clause 16 of Ext.A1 tender is of significance and is extracted hereunder.

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“LIQUIDATED DAMAGES:In the case

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the supplier fails to supply the ordered quantity within the stipulated period or the extended period, this Corporation reserves the right to purchase stocks at the risk and cost of the defaulted supplier from any source and recover

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A.S No.10/2002

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the damages caused thereby from the defaulted supplier.”

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As provided therein, in case of default on the

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part of the supplier to supply the agreed quantity, the Corporation has the right to re-tender at the risk and cost of the supplier. Further clause 8 of Ext.A1 provides for the right of the plaintiff to reject the stock if the quality of the goods supplied is not in accordance with the approved sample and in such an event, the supplier shall be deemed to have wilfully failed to have supplied the goods in terms of the contract. The relevant portion of clause 8 of Ext.A1 is as hereunder.

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“If the quality is not according to the approved sample(for variety identification only) or deviated from the specification stipulated this Corporation reserves the right to reject the stock and the seller shall be deemed to have wilfully to

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A.S No.10/2002

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delivery the goods according to the contract.”

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The defendants are not consistent in their stand

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as to the reason for non-supply of the commodity in

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terms of Ext.A1. The reasons as projected in Exts.A9, A11 and B2 are at variance. As pointed out by the learned counsel for the appellant/plaintiff, we could not find any plea of malafides against the plaintiff. It has come out in evidence that though tender was invited for supply of 750 metric tonnes and the defendants submitted their tender, on the basis of Ext.A3 letter issued by defendants the quantity was reduced to 54 metric tonnes which also could not be supplied by the defendants. Only 26 metric tonnes were supplied and that was found to be

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of inferior quality and was rejected. In terms of clause 8 of Ext.A1 tender referred to supra the plaintiff is entitled to treat the contract as

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A.S No.10/2002

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violated by the defendnats. So also in terms of Ext.A2 purchase order the 54 metric tonnes were to be delivered before 18.9.1997. The same was not done. We do not think that the reasoning by the court below for rejecting the plaintiff's claim is sustainable. There is no reason to infer that Ext.A7 the intimation regarding rejection of the consignment was not intimated to the defendants. After having prepared Ext.A7 series there is no reason to withhold the same from teh defendants. It doesnt stand to reason to think that the defendants were unaware of the rejection of the supply. So also, the non-placing of purchase order for 750 metric tonnes by the plaintiff as invited as per Ext.A1 tender could not be found fault with in view of Ext.A3 letter issued by the defendants informing the plaintiff that they could supply only upto 54 metric tonnes. This aspect was over looked by the

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A.S No.10/2002

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court below. As regards the non issue of Goods Receipt Sheet (GRS), since the goods delivered were rejected being of inferior quality, the defendants were not entitled for issuance of GRS. The court below was not justified in rejecting the claim of the plaintiff. The rate for dry chillies as agreed to by the defendants under Ext.A1 tender was ` 2,245/- per quintal whereas consequent to the breach committed by the defendants the plaintiff had

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to made purchase at the rate of 2,988/- per quintal, thus causing a total loss of 4,01,220/-. The security deposit and earnest money deposit totalling to 87,125/- was adjusted by the plaintiff towards damages. Further, out of the three loads supplied by the defendants to the plaintiff, one load which was kept at the plaintiff's godown was sold by the plaintiff and 1,39,460/- was realised. The other two loads were lying at Kerala State

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A.S No.10/2002

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Warehousing Corporation, Kannur and were not released to the plaintiff in the absence of the consent of the defendants. Hence the same could not be sold. Deducting the security deposit, eranest money deposit and the value obtained by disposal of one load of the rejected goods, the plaintiff could realise 2,26,585/- (1,39,460/- plus 87,125/-. Therefore, the balance amount due to the plaintiff is 1,74,635/-. The plaintiff is entitled to realise the said amount from the defendants.

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Though interest has been claimed at the rate of 18 % p.a, considering the interest component that would accrue on the amount from the date of suit, the suit being of the year 1999, we feel that justice would be met if interest is granted at 6% per annum on `1,74,635/- from the date of suit till realisation.

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A.S No.10/2002

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In the result, the appeal is allowed. The

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judgment and decree of the court below are set aside. The plaintiff is granted a decree for realisation of `1,74,635/- with interest at the rate of 6 % per annum from the date of suit till realisation, and from the defendants jointly and severally. The plaintiff will be entitled to proportionate costs also.

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V.Chitambaresh, Judge

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Sathish Ninan, Judge

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vdv

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//True Copy//

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P.A to Judge

Kerala State Civil Supplies Corporation v. M/S.Appanna Pawadeppa Jalihal

Case brief

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Kerala State Civil Supplies Corporation v. M/S.Appanna Pawadeppa Jalihal

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