Dismissed

Jindal Steel Tubes Limited v. The Tamilnadu Water Supply and Drainage Board

Telangana HC25 Apr 2013CCCA/3/1995

Case brief

AI extract

What is this about?

This appeal challenges the dismissal of a suit for recovery of amounts allegedly due under a supply contract. The appellant claimed reimbursement for sales tax, price escalation, unauthorized deductions, and deposit forfeiture. The appellate court dismissed the appeal, upholding the lower court's finding that the plaintiff failed to prove price escalation claims and that the defendant validly exer

What did the court decide?

Costs to defendant; appeal dismissed; pending miscellaneous petitions closed.

Jindal Steel Tubes Limited Vs The… — Contract and Commercial Disputes | Telangana HC (2013)

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THE HON'BLE SRI JUSTICE N.R.L. NAGESWARA RAO

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CITY CIVIL COURT APPEAL No.3 OF 1995

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JUDGMENT:

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The plaintiff in O.S.No.262 of 1989 on the file of the Court of the Additional Chief Judge-cum-II Additional Metropolitan Sessions Judge, Hyderabad, is the appellant herein.

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2. The suit was filed for recovery of a sum of Rs.2,23,165/-.

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3. According to the case of the plaintiff, the defendant called for a tender for supply of 50000 meteres of mild steel tubes and the plaintiff submitted a quotation on 10.11.1982 @ Rs.99.80 ps per metre exclusive of sales tax at 4% in State of Tamilnadu. Earnest money of Rs.59,750/- was paid and the tender was accepted on 11.01.1983. It was further pleaded that while accepting the order, the plaintiff requested the defendant to amend the order of acceptance to the effect that 4% Central Sales tax will be paid against ‘C’ forms instead of 4% sales tax of Tamilnadu in respect of goods that have to be moved from Hyderabad to Trichy, but no reply was received from the defendant. The goods are to be delivered within three months. While so, the plaintiff supplied 8400 metres by the end of February, 1983 and in March, 1983 due to labour strike in the Steel authorities of India, further raw material could not be lifted and the plaintiff conveyed the same to the defendant, which in turn wrote to Steel Authority of India Limited in March, 1983 requesting release of raw material to the plaintiff to cover the supply of balance 41,600 metres of pipes,

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which were needed urgently as there was drought in Tamilnadu. The defendant had also granted extension of time for delivery up to 19.05.1983 and again till 19.06.1983. Up to 05.05.1983 the plaintiff supplied a quantity of 21,755 metres of pipes. In respect of deliveries made direct to Trichy from Hyderabad, the plaintiff charged in the bills Central Sales tax at 4% under the bona fide belief that ‘C’ forms would be issued by the defendant as required by the Central Sales Tax Act. But, suddenly by its letter dated 23.03.1983, the defendant informed the plaintiff that ‘C’ forms will not be issued and directed the plaintiff to take up the matter with the Arbitrator as per the agreement. As a result of the refusal of the defendant to issue ‘C’ forms, the plaintiff is liable to pay the sales tax authorities of Andhra Pradesh a sum of Rs.50,661.82 towards differential 4% Central sales tax and the defendant is liable for the same.

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4. While so, there was escalation in prices of steel announced by the Joint Plant Committee on 31.03.1983 and the same was intimated to the defendant by letter dated 19.04.1983 furnishing documentary proof and requested to issue an amendment for an increase in rate of Rs.3.85 per metre for the supplies to be made from 01.04.1983. The defendant declined to pay the increased rate on the ground that extension of time for delivery of goods was granted without financial loss to the defendant. As a result of increase in the rates, the defendant is liable to pay Rs.32,278/- to the plaintiff. Further, the defendant also made un-authorised deductions in the measurements of the pipes supplied to it without concurrence of the plaintiff. Plaintiff brought the same to the notice of the defendant, but the defendant rejected the plaintiff’s

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claim and while making payment made deductions in the bills and the difference amount so deducted from the bills unauthorisedly came to Rs.25,354/- and the defendant is liable to pay the same.

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5. In the meanwhile, the defendant got issued a lawyer’s notice dated 19.06.1983 calling upon the plaintiff to fulfill the contract by compromising at the old rates and threatened to forfeit the Earnest Money Deposit and Security Deposit. The defendant simultaneously by its letter dated 20.06.1983 cancelled the contract for the balance of supplies and also forfeited the Earnest Money Deposit and Security Deposit and threatened to take legal action. Thus, the defendant had acted arbitrarily and illegally and committed breach of contract in violation of the agreement. Thereupon the plaintiff got issued a lawyer’s notice dated 30.06.1983 calling upon the defendant to revoke the illegal cancellation of the contract and forfeiture of E.M.D. and security deposit and also sort out the issue regarding the payment of Central Sales Tax and issue of ‘C’ forms. The defendant by its letter dated 17.07.1983 revoked the cancellation of the contract and forfeiture of Earnest Money Deposit and Security Deposit and requested the plaintiff to resume supplies and also stated in the letter that the issue of ‘C’ forms and payment at enhanced rates are being considered separately. But, as nothing has been heard from the defendant thereafter, and from 23.07.1983 as there has been a further increase in the price of steel notified by the Joint Plant Committee, the plaintiff gave one week time by its letter dated 30.07.1983 informing the defendant that the contract will be cancelled if the matter is not settled by then. But, even to this there has been no reply from the defendant, which has also not

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paid the amounts due to the plaintiff in spite of repeated reminders. On the other hand, the defendant has illegally and with intent to cause damage to the reputation of the plaintiff’s firm informed the plaintiff by its letter dated 12.10.1983 to the effect that the contract is terminated and that the plaintiff firm is being blacklisted. Against this arbitrary action of the defendant, the plaintiff is taking separate action.

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6. The plaintiff got issued a notice and no reply was given with untenable allegations. The substance of the claim of the plaintiff is as follows:

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1) Earnest Money Deposit Rs.59,750-00
2) Security Deposit Rs.40,050-00
3) Differential Central Sales Tax payable As the result of failure to furnish ‘C’ Forms declarations forms for supplies Already made (vide Annex-I) Rs.50,661-82
4)Price escalation amount for supplies Made after increase in raw material (vide Annex-II) Rs.32,278-87
5)Un-authorised deductions made from Bills without the concurrence for Alleged measurements differences (Vide Annex-III) Rs.25,354-00
6)Interest at 18% per annum from 19.09.1983 to 12.02.1984 i.e., from The date of receipt of the 1^stnotice Dated 09.09.1983 to till the date of filing The suit Rs.14,820-00
7) Notice charges Rs. 250-00
---------------- Total : Rs.2,23,165-00

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

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7. The defendant has filed a written statement denying the contention of the plaintiff. According to the defendant, there was no agreement to pay the Central Sales tax or to pay the escalation charges. In fact, according to the case of the defendant, the deductions were made as the length of the pipe supplied by the plaintiff is less and there is no illegality. Further-more, though the Board has directed the restoration of the contract and to restore the security deposit and E.M.D and gave an opportunity to the plaintiff to perform the contract, the plaintiff has committed default and consequently, the plaintiff is not entitled for the said amount as the contract has been cancelled and the amount has been forfeited. Therefore, the defendant pleaded for dismissal of the suit.

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8. On the basis of the above pleadings, necessary issues have been framed and the Court below after considering the evidence on record dismissed the suit. Aggrieved by the said judgment the present appeal is filed.

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9. The points that arise for consideration are:

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1) Whether the plaintiff is entitled for the suit claim?

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2) Whether the judgment and decree passed by the Court below is legal and sustainable?

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10. POINTS:

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As mentioned earlier, the claim of the plaintiff relates to five items. Items 1 and 2 are with regard to the forfeiture of the earnest money and security deposit. So far as item No.3 is

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concerned, the claim is for a sum of Rs.50,661.82 ps., on the ground that the Central Sales Tax was paid and the said amount has to be reimbursed as the defendant failed to furnish C-form declarations. The claim of the plaintiff is based on the ground that he made a representation for the amendment of the original agreement to the effect that the Central Sales Tax shall be reimbursed instead of this State sales tax. Evidently, the allegations in the plaint itself disclose that the defendant has not agreed for any such thing and consequently when there is no agreement for furnishing C-forms towards the Central Sales Tax, the plaintiff cannot claim the same.

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11. The other item of the claim under claim No.3 is with regard to escalation of the prices. The Court below has found that the plaintiff has not adduced any evidence to give the comparative material about the escalation of the prices though the contract provides for the same. Evidently, the burden is on the plaintiff to prove the existing prices and the escalated prices. The Court felt that the material evidence on record is not sufficient to accept the claim as there is no proof and in fact the learned counsel for the appellant also could not substantiate this claim.

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12. The plaintiff agitates that there is an unauthorized deduction of amount from the bills and in fact the evidence on record as proved by the defendant clearly goes to show that the measurements were taken and as per the measurements the amounts were paid. There is no contrary evidence on the side of the plaintiff and therefore, it has to be held that the amount paid by the plaintiff was towards the actual quantity of the pipes that has

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been supplied.

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13. So far as the forfeiture of the earnest money and security deposit are concerned, no doubt under Exs.A.69 and A.70, the Government has passed an order for restoration of the said deposits. Evidently, the said deposits were forfeited as the plaintiff has not complied with the contractual obligation. But, the explanation given by the appellant has been considered and consequently, the orders were passed and time was given for the plaintiff for performance of the contract. Stay was initially granted by the Government but it was vacated. Evidently, the plaintiff has discharged his obligation under the contract by supplying the deficit goods and consequently the deposits were forfeited after cancellation of the contract. In fact, the suit is not filed questioning the cancellation of the contract as being illegal. The contract provides that in case of cancellation and default, the amounts of earnest money and security deposit can be forfeited by the defendant. The defendant has exercised the right as per the contract and it cannot be faulted. Therefore, on this account there are no grounds to interfere with the judgment of the Court below. All the points are answered accordingly.

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14. In the result, the City Civil Court Appeal is dismissed. No costs. Miscellaneous Petitions, if any, pending in this appeal shall stand closed.

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_______________________________ JUSTICE N.R.L. NAGESWARA RAO

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Date: 25.04.2013 INL

Jindal Steel Tubes Limited v. The Tamilnadu Water Supply and Drainage Board

Case brief

What is this about?

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Jindal Steel Tubes Limited v. The Tamilnadu Water Supply and Drainage Board

Case brief

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