The Cotton Corporation of India Ltd.Bm Vs Balaji Cotton Industries and Others

Appeal under section 96 of C.P,C against the Judgment and Decree Dated 24-07-1996 made in O.S.No.9 of 1996 on the file of the Court of the Subordinate Judge, Adilabad.

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Between:

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The Cotton Corporation of lndia Ltd rep. by its Branch Manager, Sri P.V. Dikshitulu, Adilabad Branch.

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...Appellant

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AND

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'1. Balaji Cotton lndustries, palsi, Tos Mudhole, rep.by its Propreitor, Mr.C.Narayana Rao, Rl/o Palsi (V), R/M Kubee r, Br.Adilabad.

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Sri G.Pradeep Kumar Sio Narayana Rao, aged about 30 years, Occ: Business, R/o Palsi.

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Sri G. Vijay Kumar S/o G. Narayana Rao, aged about 28 years, Occ: Business, Rio Palsi.

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Sri Sarvasidhi Sambamurthy S/o Laxmanaswamy, aged 48 )ears, occs Employee in Cotton Corporation of lndia Ltd., Centre lncharge Palsi, presently residing at C/o B.V. Ramanaiah, 14th line, Cross Bharathp,et, Guntur.

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Appeal is dismissed as abated against R -1 as per court order dated 26-07-2017.

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R 4 is dismised for default vide court order dated 2544-2016

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...Respondents

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,/

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l.A. No : 1 oF 20 1 2(AsI4 P..-N_E l_339_oE_?0'!21

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Petition under S ection 151 of CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court nray be pleased to restore AS.No.235 ot 1997 to its file by setting aside the order dt 2010612012.

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l.A. No: 1 oF 201(AS!4P._No:_21_98_9E20'!ZI

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Petition under Order 41 Rule t9 R/w Section 151 of CI'C praying that in the circumstances stated in the affidavit filed in support of the pe:ition, the High Court may be pleased set aside the order dated 26.07.2017 dismis:;ing the appeal against Respondent N:.1 in the appeal in the interest of .iustice.

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Counsel for the Appe lant :SRl A K JAYAPRAKASH RAO

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Counsel for the Resp,rndent Nos.2 & 3 : SRI SOURABH AGARWA,L

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The Court delivered the following: Judgment

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: I i II I I II I i I I : I I I

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THE HONOURABLE SRIJUSTICE N. TUKARAMJI

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APPEAL SUIT No.235 of 1997

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JUDGMENT:

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Heard Sri Sourabh Agarwal, learned counsel for the respondent Nos.2 and 3.

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This appeal has been filed assailing the decree and judgment daled 24.07.1996 in O.S.No.9 of 1996 on the file of Subordinate Judge, Adilabad

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The appellanVplaintiff (hereinafter^'the plaintiff) filed suit vlde O.S.No.9 of 1996 for recovery of Rs.6,31,723-50 ps with interest at 18% per annum as damages from the respondents/defendant Nos.'l to 3 (hereinafter the 'defendant Nos.1 to 3).

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Briefly stated the relevant facts are that on 08.11.1990, th€ plaintiff entered into an agreement with defendant No.1 for ginning work of the cotton purchased and supplied by the plaintiff during the cotton season of the year 1990-91.

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As per the terms of the contract, the defendant No. l has to ensure that the cotton seed belonging to the plaintiff shall be kept in safe custody and shall not be allowed to go out of the premises of the factory without proper gate pass and signature of \

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2

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authorized representative/employee of the corporation and to maintain l6,gisters for recording of movements of goods and accounts th ereof

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On 2,1.07.1991 , the defendant No.3/proprietor of the factory addressed ir letter about removing cotton seed from the factory. Whereupon the plaintiff got issued a notice dated^{'16.09.'1991,} demanding the defendant No.'t to reimburse the loss. Upon such reply, the dr-.fendant Nos.1 to 3 contended that th,-- cctton seed was moved out, with gate passes or forged signatures of the representati,/e of the plaintiff.

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Declining such claims and alleging that the clefendants beyond the contractual terms removed their cotton seed. for breach of co rtract, filed the suit for damages

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The D,-.fendant No.3 filed written statement adopted by the other defendants, wherein they had taken stand that c()tton seed was not removed from the factory. However, admitted that as per the letter dated 24.07.1991 , the cotton seed was thrown out after showing the same to the vigilance and Assistant Manaqer of the plaintiff and lhe defendant No.4 who was the centre in-charge requested to address a letter in such manner to ther plaintiff Further pleacled that there was no fabrication of docr.rment by them. The Defendant No.4 had indeed issued gate^passes and

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3

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1

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the cotton seed was sent out at his instance. ln addition, claimed that the defendant No.4 had directly^purchased 3000^quintals of cotton seed and sold the same to the third parties and tlrcre was no default on their part. Furthermore, referred to the letters addressed by Superintendent of Police, C.B.l., S.P,E., Hyderabad and filing of criminal case against defendant No.4 for the missing cotton seed. Thus, they are not liable for the loss, if any and they did not commit any breach of contract

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The trial Court on considering the rival claims settled following issues of consideration

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i) Whether the defendants 1 to 3 have committed breach of contract by removing the cotton seed stock belonging to the plaintiff trom the defendant No.1's factory without informing the plaintiff?

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ii) Whether the defendant tVo.3 r,vas bound to preserve the cofton and cotton seed stocks of plaintiff against fire, theft, missing and damage of any kind and liable to make good /oss fo fhe^plaintiff corporation?

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iii) Whether there should be a stock of 1368-70 quintals of cofton seed on 24.07.1991 as per the records of the plaintiff?

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iv) Whether the defendants 1 to 3 are absolved from their liability by alleging that defendant No.4 has taken out some stocks from the defendants No.1 factory? -/

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4

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v) Whether^"Balaji Cofton lndustries Palsi" and Mis. Vijaya and Brcthers Palsi" are sister concems?

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vi) Whether the plaintiff entitled to recover any /ol;s. /f so which o', the defendants arc liable?

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vii) To w'hat relief?

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After rlue consideration, the Court below dismissed the suit. Aggrieved tl'ereby, the present appeal has been filed.

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The c,rntention of the plaintiff is that the Court below had erred in assessing the materials and the issues ,:n^proper perspective. Learned counsel further submits that the defendants in their first letter had explained that the cotton seerds would thrown away by showing to the vigilance, subsequently, they came up with a plea that the defendant No.4 had removed stocks and misappropriated basing on the fabricated passes and thereafter claimed that the material was never removed without proper authorization. This shift in stand itself is making out the default comrrifted in maintaining the contractual cbligation. Further, pointr:d to the terms of contract particularly clauses 5 and

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16 pleaded th at the defendants are obligated to maintain safety of the goods frorn fire threat or damage and they shall ensure^that materials would be moved only on^{propergate pass. llowever,} defendants except^pleading innocence and^{without placing} .^{supporting material eliciting maintenance of the records/registers}

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5

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1 I

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declining their responsibility would be against the contractual terms. Thus, the trial Court ought to have granted the damages as prayed for.

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Learned counsel for the defendants would submit that the trial Court had considered the case of the plaintiff and materials on record and on threadbare discussion rightly dismissed the suit. He asserted that the defendant Nos.1 to 3 properly conducted themselves in abiding the conditions of the contract and the misappropriation by the center incharge/defendant No.4 has been concluded by the criminal court in C.B.l case under Ex.B1 judgment. ln that position, making the defendants responsible for the loss would be improper. Therefore, prayed for sustaining the impugned Judgment.

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I have perused the material on record and considered the rival contentions.

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ln the given pleas, the aspect that arises for determination is, whether the Court below had properly assessed the material in determining the liability of the defendants and claim for damages of the plaintiff?

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The facts of contract between the plaintiff and defendants and as per the terms the defendants are obliged to maintain the . stocks and move the^{materials only upon} authorization of the

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plaintiff is 'rot in dispute. By the plaintiffs contentiorr 1368/1 370 quintals belonging to the plaintiff was removed from the factory premises, rvithout authorization.

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To f;rsten the liability of defendants to pay damages, the plaintiff is c enoting missing quantity of the stocks and clauses 5 and 16 of tl-e agreement.

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The zrdmitted procedure is after the process of cotton and the seeds, lhe center in-charge/authorized agent of the plaintiff will issue gzrte pass and upon such receipUpass, the rlefendants would allow the stock out of their premises.

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1B ln this regard, the defendants had placed the^judgment in CC.No 10 c,f 1993 passed by Special Judge for C.B.l, cases Hyderabad, cefore the trial Court wherein at the instance of the plaintiff had orosecuted the defendant No.4 for misappropriating 1368/1370 q.rintals of cotton seed which was in the premises of defendant The criminal Court after elaborate enquiry in trial concluded that the defendant No.4 herein/accused tht-'rein^was lrable and co rvicted him for the offences under Sections 409 of IPC and Sect ons 13 (1) (c) r/w Section 13(2) of the Prevention of Corruption r\ct, 1988 and sentenced him lor^rigorous imprisonment for three years and to pay fine of Rs.5,0001-.

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This factual^position is making out that the defendant No.4 is the^person at^{whoseinstancethe cotton seed was removed} and caused loss to the^plaintiff. lt is^pertinent to note that criminal case was initiated upon the report of the plaintiff against defendant No.4. As^per his submissions, this^judgment in the criminal Court had attained finality.

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That being the position that the plaintiff claiming damages against the defeMants would be unfair on the ground that the registers are not maintained as no material showing the registers have been placed in the suit. At this^juncture, the fact that, for prosecution of defendant No.4 the investigating agencyiCBl had seized the registers and records is prima facie making out that there are registers and record. That apart, the plaintiff in approbation having pleaded that the misappropriation was at the instance of its own employee/center in-charge for the criminal liability, in reprobation claiming damages for the defendants on the stand of improper maintenance of the registers and it would be breach of contract is found unreasonable, particularly as the relevant record has been placed before the criminal Court by the investigating agency either by collecting from the plaintiff or the defendants. ln that position, expecting the defendants to place the seized record in the suit to establish compliance of clauses 5 .^{and 16 wouldbe improper. The} finding of the criminal court that

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the material was removed by the defendant No.4 under fabricated documents thereby committed criminal misappropriation is equally affer;ting the root of the plaintiffs suit claim. Therefore, the conclusion drawn by the trial Court in the impugnecl^judgment is found iusl and reasonable and in the absence of any other aspect for consideration, the impugned^judgment is liable to be and is accoroingly affirmed.

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21 . ln the n:sult, appeal is dismissed. No costs.

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As a s-.quel, miscellaneous applications, pending if any,

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shall stand clc sed

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-..< SD}l r(. siRlNlvAsA^RAO I .JOINT REGISTRAR

//TRUE COPY// N

ION OFFICER

To,

The Subordina.e^{Judge, Adilabad(Withrecords, if any)}

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One CC to^{SRI A K JAYAPRAKASHRAO, Advocate [OPUC]}

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One CC to SRI SOURABH^{AGARWAL, Advocate{OPUCI}

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Two CD CoPies

ADK/gh

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HIGH COURT

DATED:03n2t2025

JUDGMENT+DECREE

AS.No.235 of 1997

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DISMISSING THE APPEAL SUIT WITHOUT COSiTS

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v .i

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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MONDAY, THE THIRD DAY OF FEBRUARY TWO THOUSAND AND TWENry FIVE

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PRESENT

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THE HONOURABLE SRI JUSTICE N.TUKARAMJI

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APPEAL SUIT NO: 235 OF 1997

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Between:

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The Cofton Corporation of lndia Ltd rep. by its Branch Manager, Sri P.V.Dikshitulu, Adilabad Branch.

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...Appellant

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AND

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Balaji Cotton lndustries, palsi, Tos Mudhole, rep.by its Propreitor, Mr.C.Narayana Rao, R/o Palsi (V), R/M Kubee r, Br.Adilabad.

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Sri G. Pradeep Kumar S/o Narayana Rao, aged about 30 years, Occ: Business, R/o Palsi.

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Sri G. Vi.jay Kumar S/o G. Narayana Rao, aged about 28 years, Occ: Business. Rio Palsi.

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Sri Sarvasidhi Sambamurthy S/o Laxmanaswamy, aged 48 years, occs Employee in Cotton Corporation of lndia Ltd., Centre lncharge Palsi, presently residing at C/o B.V. Ramanaiah, 14th line, Cross Bharathpet, Guntur.

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Appeal is dismissed as abated against R -1 as per court order dated 2647-2017.

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R 4 is dismised for default vide court order dated 25{4-2016

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...Respondents

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Appeal under section 96 of C.P.C against the Judgment and Decree Dated 24-07 -1996 made in O.S.No.9 of 1996 on the file of the Court of the Subordinate Judge, Adilabad.

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This appeal coming on for hearing and upon perusing the grounds of appeal, the Judgment and Decree of the Lower Court and the material papers in the Suit and upon hearing the arguments of SRI A K JAYAPRAKASH RAO, Advocate for the Appellant and of SRI SOURABH AGARWAL, Advocate for the Respondent Nos,2 & 3 and none appeared for the respondent No.1 .

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This Court doth Order and Decree as follows:

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