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The Tata Iron and Steel Co. Ltd. Vs. R.N. Gupta - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtOrissa High Court
Decided On
Case NumberF.A. No. 66 of 1960
Judge
Reported inAIR1963Ori174
ActsCourt-fees Act, 1870 - Schedule - Article 1; Code of Civil Procedure (CPC) , 1908 - Order 8, Rule 6
AppellantThe Tata Iron and Steel Co. Ltd.
RespondentR.N. Gupta
Appellant AdvocateR.C. Misra and ;S.C. Mohapatra, Advs.
Respondent AdvocateB.K. Pal and ;K.N. Sharma, Advs.
DispositionAppeal partly allowed
Cases ReferredMangilal Lodha v. Misrilai
Excerpt:
- motor vehicles act, 1988 [c.a. no. 59/1988]section 173(1) proviso; [d. biswas, amitava roy & i.a.ansari, jj] appeal without statutory deposit but within limitation/or extended period of limitation maintainability - held, if the provision of a statute speaks of entertainment of appeal, it denotes that the appeal cannot be admitted to consideration unless other requirements are complied with. the provision of sub-section (1) of section 173 permits filing of an appeal against an award within 90 days with a rider in the first proviso that such appeal filed cannot be entertained unless the statutory deposit is made. the period of limitation is applicable only to the filing of the appeal and not to the deposit to be made. it, therefore, appears that an appeal filed under section 173 cannot.....barman, j.1. defendant is the appellant. this appeal arises out of a rice supplying contractor's suit for recovery of rs. 36,854/3/- consisting of four several sums, namely rs. 10,322/8/- as loss alleged to have been suffered by trie plaintiff as cost incurred in re-sale, at a loss of certain bags of rice after alleged wrongful rejection of the same by the defendant, rs. 13,566/13/- and rs. 11,217/6/- both sums (aggregating rs. 24,784/3/-) for alleged wrongful deduction from the plaintiff's bills and rs. 1,747/8/- as price of gunny bags payable by the defendant under the terms of the contract.2. the plaintiff's case is this : in december 1954, the plaintiff who is a grain merchant submitted to the defendant a tender for supply of rice for the period from januarys to june 1955. the said.....
Judgment:

Barman, J.

1. Defendant is the appellant. This appeal arises out of a rice supplying contractor's suit for recovery of Rs. 36,854/3/- consisting of four several sums, namely Rs. 10,322/8/- as loss alleged to have been suffered by trie plaintiff as cost incurred in re-sale, at a loss of certain bags of rice after alleged wrongful rejection of the same by the defendant, Rs. 13,566/13/- and Rs. 11,217/6/- both sums (aggregating Rs. 24,784/3/-) for alleged wrongful deduction from the plaintiff's bills and Rs. 1,747/8/- as price of gunny bags payable by the defendant under the terms of the contract.

2. The plaintiff's case is this : In December 1954, the plaintiff who is a grain merchant submitted to the defendant a tender for supply of rice for the period from Januarys to June 1955. The said tender was accepted by the defendant as per clauses in the tender notice for supply of rice to the defendant at four different places including manganese mines at Joda as per sample submitted by the plaintiff-and at rates tendered by the plaintiff.

In pursuance of the said contract the plaintiff supplied at the godown of the defendant at Joda seven wagon loads of rice weighing 3920 maunds of rice. The defendant wrongfully rejected the entire stock of rice supplied as aforesaid on the plea that it was not as per contract quality to sample. The plaintiff was asked to remove all the said rice stock from the deft.'s store-yard. The plaintiff had to take back the rice at his own cost and had to sell the rice at a loss. On this account the plaintiff is alleged to have suffered a loss of Rs. 10,322/8/- as per account stated in the plaint schedule. The plaintiff's claim is for the said amount for wrongful breach of the contract on the part of the defendant.

As for the subsequent monthly supplies up to April 1955, which were to be made by ths plaintiff to the defen-dant under the contract, the plaintiff was informed by the defendant by a letter dated May 9/10, 1955 that the defendant had to procure rice from elsewhere because the plaintiff failed to fulfill his commitment and as such the plaintiff is liable to pay the difference in the cost incurred by the defendant in procuring its requirements from other sources. The defendant accordingly forwarded a debit biff for Rs. 13,566/13/- being the difference in the cost incurred by the defendant which the defendant claimed to recover from the plaintiff's bills.

As to the period from May to June 1955 the defendant submitted a debit bill dated July 10, 1955 for Rs. 11,217/6/-(including a sum of Rs. 951/2/- under item 6 as 1 per cent driage losses on non-supplied quantity from January to June 1955) being the difference of value for rice supplied by plaintiff and rice obtained by defendant from other sources, to meet defendant's requirement for the period from May to June 1955 which the defendant claimed to recover from the plaintiff's bills.

The plaintiff's case is that the claim of defendant for debiting the said sum of Rs. 13,566/13/- and Rs. 11,217/6/-against the plaintiff is not sustainable. It is alleged that these sums were wrongfully deducted from the dues of the plaintiff's bills. On September 30, 1955 the plaintiff by letter objected to the same improper deduction made from the bills and requested the defendant to pay the same.

The plaintiff's further claim is for Rs. 1747/8/- as dues on account of gunny bags which under the contract the defendant was to supply. The defendant having not supplied the gunny bags the plaintiff had to purchase new gunny bags for which the defendant is liable to pay.

3. The defendant, while denying the plaintiffs allegations, stated that the stock supplied was not according to sample, and justified the defendant's refusal to accept the stock. The further defence plea is that the alleged claim, if any, is barred by limitation.

4. The Trial Court disallowed the plaintiff's claim of Rs. 10,322/8/- as barred by limitation and decreed the suit for the rest of the claim, namely Rs. 13.566/13/- and Rs. 11,217/6/-, aggregating Rs. 24,784/3/- for wrongful deduction from the plaintiff's bills and further sum 01 Rs. 1747/8/- for gu'nny bags the total amount decreed in favour of the plaintiff being Rs. 26,531/11/-. Hence this appeal by the defendant against the said decree in favour of the plaintiff. There is also a cross appeal filed by the plaintiff against the decision of the Trial Court disallowing the plaintiff's claim for the said sum of Rs. 10,322/8/-.

5. In the defendant's appeal the main points for consideration are : Firstly, was the rejection of the stock by the defendant justified? and. Secondly, was the defendant justified in deducting from the plaintiff's bill without claiming set-off?

6. The relevant clauses in the tender Ex. V dated December 2, 1954 for supply of rice are these :

'6. If the supply is not of the proper quality as tendered the Steel Company shall have the option to reject it.

7. Rates should be quoted f.o.r. godown of the Mine/Quarry separately for each month. They should also include unloading, weighing and stacking in the godown.

8. Empty bags will be supplied by the Mine/Quarry.

9. Suppliers will have to commence supplies from ..... and complete the monthly supplies for the Mine/ Quarry by the end of the third week of each month.

10. Party or parties whose tender would be accepted shall have to deposit at the rate of Re. 1/- per maund as security on the monthly requirements. If the supplier fails to fulfil his commitment, the Steel Company shall be free to procure their requirements from other sources and recover the difference in the cost incurred from the security deposit and any amounts due to the party from the Steel Company. The security deposit will be refunded as soon as final accounts are settled.

11. Bill will be submitted monthly by the Manager of the Mine/Quarry and payments made in usual course as soon as possible by the Controller of Accounts.'

The plaintiff's said tender was accepted by the defendant by their Letter Ex. 0 dated December 1954 in which particular attention was drawn to the following terms, which are relevant, namely,--

'2. If the rice supplied is not of the quality as per sample submitted by you and approved by us, the various Mine Managers shall have the option to reject it.

3. xx xx xx xx xx xx4. If you fail to supply the required quantity, we shall be free to procure our requirements from other sources and recover the difference in the costs incurred from the security deposit and/or any other amounts due to you from the Steel Company.'

The defendant claims to have deducted the said sums of Rs. 13,566/13/- and Rs. 11,217/6/- aggregating Rs. 24,784/3/-, in exercise of its right to reject, because, according to the defendant, the rice supplies were not of the quality as per sample submitted by the plaintiff and under the contract the defendant was free to procure their requirements from other sources and recover the difference in the cost incurred.

7. Now, with regard to the amount of Rs. 13,566/13/-the defendant claims to have deducted the said amount and sent a bill for the same dated May 5, 1955 (Ext. 6) as cost of difference of value for rice supplied by the plaintiff and rice obtained by the defendant from other sources to meet the defendant's requirement for the period from January 1955 to April 1955 as per statement attached with the bill (Ext. K). The rate under the contract for supply in January February and March, 1955 was Rs. 14/8/- per maund (Ext. 0). The rate at which the defendant is said to have obtained stock from other sources was Rs. 16/- per maund. One of the plaintiff's objections to the defendant's deduction bill is that the rate of Rs. 16/- per maund is too high. On this point the evidence of the Senior Accounts Supervisor, Keonjhar (D. W. 4) who had some experience and knowledge of the different rates said that from the office records he found the average rate of common rice was Rs. 15/8/- in Keonjhargarh in January, 1955; that there was no controlled rate of rice that year as the control order was not in force; that the rate at Joda is generally higher than the rate at Keonjhargarh. The distance between Keonjhar and Joda is about 52 miles which means transport charges.

Therefore, the rate of Rs. 16/- per maund as mentioned in the statement (Ext. K) attached with the bill (Ex. 6) appears to be correct and not high. The plaintiff has not produced any material to show that the rate mentioned in the statement (Ext. K) is high. That' apart, the plaintiff did not protest to the deduction from his bill at any material time. In fact, the correspondence between the plaintiff and the defendant which is on record in the suit shows that the plaintiff had accepted the deduction. Even as late as in the plaintiff's letter to the defendant (Ext. 32) dated September 30, 1955 the plaintiff did not say that the rejection of the goods and deduction from the bill were wrongful. Rather the plaintiff in the said letter offered to replace the stock and to give a fresh supply. Prior to that on July 22, 1955 the plaintiff appears to have received a sum of Rs. 17,900/5/- after adjusting the difference on the rice supply bill (Exts. 8 and 8(a)) dated April 27, 1955. It shows that the plaintiff never protested to the deduction from the plaintiff's bill and accepted the same.

8. Similarly, with regard to the amount Rs. 11,217/6/-it appears that the defendant had submitted a bill for the said sum dated July 10, 1955 (Ext. 4) being the difference of value for the rice supplied by the plaintiff and rice obtained by the defendant from other sources to meet defendant's requirement for the period from May to June 1955 as per statement attached to the Bill (Ext. R). The rate under the contract for supply during this period was Rs. 13/8/-per maund (Ext. 0), whereas the rate at which the defendant obtained the rice was Rs. 16/- per maund. As aforesaid, there is nothing to prove that the rate of Rs. 16/-per maund at Joda was high as alleged by the plaintiff, having regard to the rate at the time at Keonjhar as deposed by the Senior Account Supervisor, Supply Office, Keonjhar D. W. 4. There was also no protest to this deduction in course of the correspondence Between the parties, in this case also the plaintiff on July 23, 1955 received Rs. 11,416/10/- after adjusting the difference on the rice supply bill dated June 20, 1955 (Exts. 7 and 7(a)). There appears to be no objection to the deduction.

9. In fact, there was no challenge as to the figures of amounts deducted from the plaintiff's bill. The Trial' Court, while narrating the facts in the judgment, stated that the defendant finally deducted the said sums of Rs. 13,566/13/- and Rs. 11,217/6/- aggregating Rs. 24,784/3/- from the bills of the plaintiff on August 9, 1955 as stated in para. 15 of the plaint, which was not challenged in the written statement. While dealing with the issue whether the defendant has any right to deduct the amount as done from the plaintiff's bills, the learned Trial Court recorded that there is no evidence for the plaintiff to show as to the less rate of transport charges of rice and as to the rate of purchase as claimed by the defendant; that as such, the sum as claimed by the defendant has got to be accepted. Thus it is clear that it was the very liability that was under challenge and not the quantum. It was on that basis that the trial proceeded. The plaintiff in his deposition as P.W. 3 stated thus :

'I submitted my final bill on 22-6-1955. I received payment on the bill in July or August 1955. I claimed refund of the earnest money, but when I can't say. i informed the Company through my letters regarding heavy losses which I suffered due to the refusal of my rice. But I did not put forth my claim for the actual loss as they deducted some amount from my billed amount in August, 1955. Exts. 7 (a) and 8 (a) are the endorsements in my own hand. The mention of 'difference' under Exts. 7 (a) and 8(a) means difference due to the company, but on what account, I can-sot say exactiy. The company made no other claim except under Exts. K and R.'

This shows that the plaintiff received final payment on his final bill which has not been produced. Some final bills were prepared and submitted on June 22, 1955. The said final bill unfortunately is not before us. Unless the final bill, from which some amount was deducted from the billed amount in August 1955, is placed before us, the plaintiff's case that the deduction was wrongful is not acceptable. In the lawyer's notice dated July 16, 1958 just before the filing of the suit (Ext. 17) the plaintiff made a definite case that the said sum of Rs. 24784/3/- was wrongfully deducted out of the plaintiff's dues. The documents produced in this case are incomplete. It was also for the plaintiff to prove that the market rate of price of rice at the time and the transport charges were lower.

10. It was strenuously urged on behalf of the plaintiff that there is no proof that the defendant suffered any damage as alleged. The plaintiff's point is that it is not that the defendant had to purchase the goods from other sources by reason of the plaintiff's alleged breach but in fact the defendant had already purchased the stock before rejection, that is to say, as early as in December 1954 and not after the plaintiff's breach of contract to supply rice according to contract quality as per sample. There is no substance in this argument. It is in evidence that there were many other contracts for purchase of rice by defendant from contractors other than the plaintiff. The plaintiff certainly cannot claim to have been a monopolist. What presumably the defendant did was that it diverted the stock which was meant for its many other concerns at TISCO. N. 1 Mine and other places. It was the plaintiffs breach of the contract with the defendant which necessitated the diverting to Joda of the stock meant for the defendant's other mines. Mangturam Agarwalla D.W. 1's evidence is that he had stocked rice for defendant for usa in Rairang pur Mines in 1955; that the stock was purchased from Government at the rate of Rs. 16/- per maund; that he had supplied that rice to Joda Mines and charged for transport at the rate of Rs. 27107- per maund for 1200 maunds from January 1955 to April 1955 and at Rs. 2/- per maund for 1484 maunds and 27 seers of rice also for January 1955, and at Rs. 2/- per maund for 1387 maunds and 9 1/2- seers for May and June, 1955.

His evidence supports item No. B (ii) of the statement (Ext. K) annexed to the bill for Rs. 13,566/13/- dated May 5, 1955 (Ext. 6), and also supports item No. 2 of the statement (Ext. R) annexed to the bill for Rs. 11,217/6/-dated July 10, 1955 (Ext. 4). This shows that there were two distinct diversions from the same stock meant for some other mines. By reason of these diversions the defendant suffered damages due to inconvenience caused to the defendant's other mines. Thus, to the extent of the diversions mentioned in the statement (Ext. K and Ext. R) attached to the defendant's deduction bills, the defendant's other mines suffered.

11. The plaintiff relied on Explanation to Section 73 of the Contract Act which provides that in estimating the loss or damage arising from breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account. The Explanation to Section 73 is only for the purpose of mitigating of the damages. The plaintiff's point is that the defendant in fact did not suffer any inconvenience by reason of non-performance of the plaintiff's can-tract because, according to him, the defendant had other alternative means which existed of remedying the inconvenience thereby caused. This point is untenable.

There is no doubt documentary evidence which shows that in the month of December 1954 the defendant had contracts with other contractors for purchase of rice from Government meant for the defendant's other mines. The defendant had necessity for all these different stocks of rice meant for the workmen in the defendant's different other mines. It cannot be disputed that to the extent that the stock had to be diverted from other sources to Joda, the said other mines to such extent were put to inconvenience. There is no evidence that there was any surplus in stock (meant for the other mines) which was diverted. There is no substance in the plaintiff's contention that the defendant did not suffer any inconvenience or damage as alleged. The defendant was justified in deducting the said amounts from the plaintiff's bills.

12. There is however one item included in the statement (Ext. R) annexed to the defendant's deduction bill dated July 10, 1955 for Rs. 11,217/6/- under item 6 namely, 1 per cent driage losses on non-supplied quantity (Mds. 5759-4-0) that is on quantity obtained from other sources du'ring the period from January to June 1955 for which a sum of Rs. 951/2/ has been included in the said deduction bill. The learned counsel for the defendant fairly conceded that this sum of Rs. 951/2/- should not have been deducted on account of driage for goods not supplied, Indeed no question of driage deduction arises, when the rice was not supplied at all. The question of driage only arises when the rice is supplied and accepted by the purchaser subject to deduction for driage at a certain rate. Therefore the plaintiff is entitled to the said sum of Rs. 951/2A.

13. Much was argued on behalf of the plaintiff on the question whether the defendant was justified in making any deduction from the plaintiff's bills without claiming set-off. The plaintiffs point is that the defendant ought to have claimed a set-off in written statement and paid ad valorem court-fee on the amount claimed. In my opinion, there is no substance whatsoever in this point, on the facts of the case. The cause of action on which the plaintiff filed the suit is wrongful deduction from the bills. The basis on which the plaintiff's suit was filed is apparent from paragraphs 15 and 16 of the plaint which pleads thus :

'15. That the plaintiff submits that the claim of the defendant for debiting the above sums of Rs. 13566/13/-and Rs. 11217/6/- against the plaintiff is not sustainable at all. The defendant in its statement dated 9-8-1955 included, in the said claim of difference, the driage losses from January 1955 to June 1955 and wrongly deducted the sum of Rs. 24784/3/- from the dues of the plaintiff's bills.

16. That the plaintiff by his letter dated 30-9-1955 objected to the aforesaid deduction and requested the defendant to reconsider the improper deduction made from the bills and to pay the sum but the defendant remained silent till now.'

It is clear that it is on the basis of the alleged wrongful or improper deduction made from the plaintiff's bills that the plaintiff made the claim in the suit against the defendant. It is within the ambit of the pleadings that the suit is to be decided. I have not been able to appreciate the line of argument adduced on behalf of the piaintitt on set-off. It is purely academic in this particular case. The simple question in this suit was whether or not the deduction from the plaintiff's bills was wrongful.

14. In support of the plaintiff's contention on set off he relied on several letters of the defendant where the defendant intimated that the pending bills of the plaintiff were to be withheld until the matter of recovery of extra cost, incurred by the defendant in meeting its requirement, was finally decided. According to the plaintiff, these documents show that the defendant claimed the right to recover the du'es payable monthly as difference in the cost incurred by the defendant as aforesaid on the different monthly supply, and the defendant directed the Controller of Accounts to recover the amount from the plaintiff's rice bills.

This line of argument was based on a wrong conception. The contract does not provide that payment is to ba made monthly. Clause 11 of the tender (Ext. V) provides that bills will be submitted monthly. The contract does not guarantee monthly payment. It provides that payments will be made in the usual course as soon as possible by the Controller of Accounts. The plaintiff's contention overlooks that all the supplies to be made under the contract were a series of facts arising out of the same one transaction of contract for supply of rice. They are not different transactions. The du'es are not separate debts but one debt : payable as dues for the entire job under the contract. This is quite clear from the fact that admittedly the pla'ntiff submitted his final bill on June 22, 1955 and he received final payment in July or August 1955 as appears from the evidence of the plaintiff himself (P.W. 3) quoted above. Mr. B. K. Pal, learned counsel for the plaintiff, fairly conceded that if indeed it is one transaction then of course there is no point in his argument on set-off.

15. It was however strongly pressed on behalf of the plaintiff that they were different transactions and accordingly question of set-off arises. His further point is that even if it is quite equitable set-off the defendant has to pay court-fee. In support of his point the plaintiff relied on several decisions which in my opinion are distinguishable because in each of these cases cited by him there was a specific defence of set-off taken in the written statement, whereas in the present case the basis of the plaintiff's claim is wrongful deduction from his bills as appears from the relevant paragraphs of the plaint quoted above.

A plea of satisfaction or extinguishment of a debt or a claim set up merely by way of defence is very different. A plea of payment necessarily refers to a satisfaction or extinguishment of a debt effected prior to the stage of the defence, whereas a plea of set-off is in the nature of a cross claim and in effect it prays for a satisfaction, or extinguishment of a claim, to be made in the future 'after the date' when the plea has been set up. If it were held to be merely a plea regarding adjustment of accounts and no more, no court-fee would be payable on the amount, mentioned in such a plea.

In this context the difference between adjustment and : set-off is sometimes missed. This aspect of the position in law was directly in issue in a Lahore case where the plaintiff brought a suit against the defendant for certain amount; defendant inter alia pleaded that the plaintiff owed to him another amount which was adjusted with the claim in suit and only a little balance had remained due to him plaintiff contended that the defendant cannot claim the adjustment unless he pays court-fee on it. On these facts, it was held that it was an adjustment that was claimed and not a set-off; hence no coure-fee was necessary, Punjab. Electric Power Co. Ltd. v. Suraj Kishan, AIR 1937 Lah 62.

16. In the present case, it was clearly a case of adjustment, that is to say, the defendant instead of claiming the said amounts by way of set-off in their written statement deducted the same from the plaintiff's bills by way of adjustment of the defendant's claim against the plaintiff for loss incurred by the defendant as aforesaid as a consequence of the plaintiff's not supplying the rice as per sample according to the contract quality.

17. Then we come to the cross-appeal filed by the-plaintiff against the decision of the Trial Court who dismissed the plaintiff's claim for the said sum of Rs. 10,322/8/-as barred by limitation. The period of limitation for such, a suit is three years. After the rejection of the rice by the defendant by letter dated March 2, 1958 (Ext. 2), the plaintiff sold the same in open market by the plaintiff's agent Lallan Pandey P.W. 2. His evidence is that the rice was removed and sold at Joda; that he was on leave and) had gone home in between July 1955 to October 1955. Therefore, the sale must have taken place by June, 1955 at the latest before Lallan Pandey went on leave. The suit was not filed until July 21, 1958. Therefore, the suit is. clearly barred by limitation. Even accepting the plaintiff's contention that there can be no breach of contract unless damage has been actually suffered, this suit filed on July 21 1958 was clearly out of time because by June, 1955 after resale of the rejected rice the plaintiff ascertained the actual loss suffered in reselling the rejected bags of rice The plaintiff's cross appeal must therefore fail.

18. As regards the plaintiff's claim for Rs. 1747/8/-as dues on account of the gunny bags as aforesaid, the Trial Court allowed the plaintiff's claim on this count. Under Clause 8 of the tender (Ext. V) empty bags were to be supplied by the defendant. It is clear from the correspondence that the admitted position is that the plaintiff gave the defendant new gunny bags. The plaintiff in his letter dated September 28, 1955 (Ext. 13) intimated to the defen-dant that the now gunny bags supplied with rice by the plaintiff are still in the store of the Manganese Mines after being used and marked, which are not worth acceptable in lieu of the fresh bags used by the plaintiff, and further the bags were not returned even at the request of the plaintiff's representatives during the supply period. In my obi-nion the plaintiff is entitled to the said sum of Rs 1747/8/-due on account of the gunny bags supplied by the plaintiff which under the contract the defendant was to supply. The decree of the Trial Court allowing the plaintiffs claim for the gunny bags is upheld.

19. In the result, therefore, the plaintiff is entitled to a decree for Rs. 951/2/- wrongly deducted for driage on non-supplied quantity of rice as aforesaid and for the sum of Rs. 1747/8/- due on account of gunny bags aggregating Rs. 2698/10A. The rest of the plaintiff's alleged claim in the suit stands dismissed.

The defendant's appeal is accordingly to the extent as aforesaid allowed with costs throughout. The decision of the Trial Court is modified accordingly.

The plaintiff's cross appeal is dismissed without costs,

Narasimham, C. J.

20. I agree but wish to say a few words on the question of set-off argued at some length by Mr. Pal for the respondent.

21. In the contract between the parties (as shownin Exts. 5 and 0) there are express stipulation (see paragraph 10 of Ext. 5 and paragraph 4 of Ext. 0) to the effectthat if the plaintiff fails to supply rice of the quality andquantity contracted, the company defendant shall be freeto procure their requirements from other sources and recover the difference in cost incurred either from the security deposit of the plaintiff, or from any other amount dueto the plaintiff from the defendants. It is true that inparagraph 11 of Ex. 11 of Ext. 5 it is further stated thatthe bills should be submitted to the plaintiff monthly, butthere was no undertaking that payments would also bemade monthly.

On the other hand that paragraph expressly says that payments would be made in the usual course as soon as possible, by the Controller of Accounts. It was in pursuance of this stipulation that when the first supply was rejected the plaintiff was informed, by Ext. L dated 1st April 1955 that if the supply was not made in accordance with the terms of the contract the extra cost would be deducted to the plaintiff's account and a copy of that letter was also sent to the Controller of accounts with a request to withhold payment of any pending bills of the rice contractor until the matter was finally decided.

Again in Ext. F. dated 9/10th May 1955 the plaintiff was informed that the defendants were forwarding their debit bill being the difference in the cost incurred in pro-cu'ring their requirements of rice from other sources, to the Controller of Accounts and advising him to recover the amount from the balance of rice bills already submitted. It was the plaintiff's own case that the sums claimed were duly deducted from the total bills and that final payment was made to him sometime in July or August 1955. In paragraphs 15 and 18 of the plaint he categorically admitted that deductions were made from the total bill by the Company and the suit was brought mainly on the plea that the deductions were wrongful and unauthorised.

22. The distinction between 'set-off' on the one hand and 'payment' or 'adjustment' on the other has been pointed out in Halsbury's Laws of England, 3rd Edition, (sic) 34, page 395 (paragraphs 669 and 672). In a sot-off the plea of cross claim is made as a defence to an action by the plaintiff for enforcement of his claim. But, to quote Halsbury,

'Where there has been payment, the parly against whom the claim is brought pleads payment or accord and satisfaction which, in effect, alleges that the claim no longer exists. The plea of set-off on the other hand, in effect, admits payment of the claim and set up a cross-claim as being the ground on which the person agairwt whom the claim is brought is excused from payment and entitled to judgment on the plaintiff's claim. (page 396 ibid).

Here the simple question, in controversy was whetherthe adjustments and deductions already made at the timeof payment of the final bills of the plaintiff were wrongfulor unauthorised. No cross-claim is being made by thedefendants to an action brought by the plaintiff. This distinction has been brought out in AIR 1937 LaB 62 andreiterated in Mangilal Lodha v. Misrilai, AIR 1951 Ajnw -78(2). Mr. Pal's ingenious contention that even an adjustment of this type said to have been made prior is theinstitution of the suit would be in the nature of an equita-ble set-off for which the defendants would be liable to pay,court-fee is not supported by any authority. The provi-sions of Order 8, Rule 6, Civil Procedure Code do not apply,either in express terms or on the broader grounds of equitable relief. There can be no question of the defendantsbeing called upon to pay court-fee in respect of deductionsalready made. The Court was mainly concerned with thequestion as to whether such deductions were Justified bythe terms of the contract and whether they hava bees pro-perly made at the time of making the final payment of thebills.


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