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State Bank of Bikaner and Jaipur Vs. Firm Ballabh Das and Sons - Court Judgment

LegalCrystal Citation
SubjectContract
CourtRajasthan High Court
Decided On
Case NumberCivil Revn. Petn. No. 52/84
Judge
Reported inAIR1984Raj107; 1984()WLN141
ActsSpecific Relief Act, 1963 - Sections 38; Contract Act, 1872 - Sections 176; Rajasthan Court Fees and Suits Valuation Act, 1961 - Sections 23(1) and 26
AppellantState Bank of Bikaner and Jaipur
RespondentFirm Ballabh Das and Sons
Appellant Advocate D.K. Soral and; P.D. Mathur, Advs.
Respondent Advocate P. Mridul,; B.P. Agrawal and; A. Gupta, Advs.
DispositionPetition allowed
Excerpt:
.....of temporary injunction is without jurisdiction.;this is, in substance, a suit for recovery of the pledged goods, in as much as the firm is seeking a decree against the bank directing it to deliver the goods to the firm against the payment of price calculated at the rate of rs. 6,350/- per tonne. the plaint which is in reality covered by section 23(1)(a) rajasthan court fees and suits valuation act, 1961, has been sought to be veiled to give the appearance of being a plaint in a suit for injunction covered by section 26 of the said act. the court must look to the substance rather than the form of the relief in order to adjudge the question of court fees and jurisdiction. obviously, the market value of goods in dispute runs into lacs of rupees. the additional munsif in whose court the..........said letter. the firm signed the said letter accepting ail the terms and conditions therein. the firm pledged the bills of lading and the imported goods as collateral and security for the loans granted. it also undertook to deposit rs. 12.50 lacs in addition to the earlier deposit of rs. 7.50 lacs, by way of margin money. the firm also agreed to deposit additional amount, over and above the agreed minimum of rs. 20 lacs by way of margin, in the event of variation in the exchange rate. another important condition. accepted by the firm as a part and parcel of the cash credit pledge contract, reads as under:you will also be required to deposit in advance with our d. n. road bombay branch the custom duty, auxiliary duty, ad valorem charges, warehouse charges, clearing agent's commission.....
Judgment:
ORDER

K.S. Sidhu, J.

Note:- The revision petition listed above was allowed on March 8, 1984, with the remarks that reasons for the acceptance will be given later Reasons are given as follows:

Reasons.

1. This petition of revision under Section 115 of the Civil P. C. by the defendant in a suit. pending before the Additional Munsif. Jaipur City, is directed against the appellate order of the Additional Civil Judge. Jaipur city, affirming the order of the Additional Munsif, whereby the latter had granted a temporary injunction in favour of the plaintiff in the suit restraining the defendant from selling the goods pledged by the plaintiff with the defendant to a third party and further mandating the defendant in effect to deliver the goods to the plaintiff at the rate of Rs. 6350/- per metric tonne.

2. The suit in which the extraordinary order of temporary injunction as aforementioned, was passed by the trial court and affirmed by the lower appellate court, has been filed by M/s. Bal-labhdas and Sons, hereinafter called the firm, against the State Bank of Bikaner and Jaipur, hereinafter called the Bank, for perpetual injunction restraining the Bank from selling the pledged floods to a third party, and. as the relief clause further proceeds, 'from refusing to give delivery of the goods to the plaintiff at the rate of Rs. 6350/- per metric tonne including import duty and miscellaneous charges', and from committing breach of contract in any other manner, Ignoring the diversionary verbiage, snarl words and irrelevant 'facts which constitute the bulk of the 60 pages of the plaint, the material facts, as gathered from the record, are as follows. The firm applied for and obtained from the Bank a letter of credit, dated Feb. 27, 1981, for the purpose of importing prime quality CR 'steel sheets and other similar goods specified in the said letter from M/s. Mercantile Trading Co. of Hong Kong. The letter of credit issued by the Bank authorised M/s. Mercantile Trading Co. to draw on the firm bills for a sum not exceeding 11.95 lacs U. S. dollars, and the Bank undertook to honour the documents on presentation. The goods valuing 11.78,839.96 lacs U. S. dollars were shipped by the suppliers on Feb. 10, 1982. i. e. within the stipulated period of shipment. The goods were expected to be landed in India by the middle of April 1982. It appears that the firm which was originally confident of raising its own funds for retiring the documents, paying import duty and meeting other expenses for getting the delivery of the goods on landing was unable to do so. The firm therefore once again approached the Bank for help. Much against its earlier assurances in writing to the Bank that it would not be needing any cash credit facility for getting the goods cleared and obtaining their delivery, the firm wrote to the Bank on March 3. 1982. requesting for a cash credit pledge limit of Rs. 115 lacs. By its letter, dated. April 1. 1982, the Bank sanctioned an ad hoc cash credit pledge limit of Rs. 115 lacs for a period of three months from the date of the landing of the goods on the terms and conditions as specified in the said letter. The firm signed the said letter accepting ail the terms and conditions therein. The firm pledged the bills of lading and the imported goods as collateral and security for the loans granted. It also undertook to deposit Rs. 12.50 lacs in addition to the earlier deposit of Rs. 7.50 lacs, by way of margin money. The firm also agreed to deposit additional amount, over and above the agreed minimum of Rs. 20 lacs by way of margin, in the event of variation in the exchange rate. Another important condition. accepted by the firm as a part and parcel of the cash credit pledge contract, reads as under:

YOU will also be required to deposit in advance with our D. N. Road Bombay branch the custom duty, auxiliary duty, ad valorem charges, warehouse charges, clearing agent's commission and all other miscellaneous charges in connection with taking delivery of the goods from Bonded Warehouse for storage with the Bank's approved clearing Agent. Thereafter the floods will be delivered to you only against full payment for ultimate sale to the actual users.

3. The Bank retired the documents, took delivery of the floods and arranged for their storage in the bonded were-house on April 16. 1982. Instead of paying the debt, which the firm was thus owing to the Bank, and redeeming the pledged goods, the firm began to question the very basis of the agreement of cash credit pledge limit. It addressed a letter. dated. July 14, 1982. to the Bank complaining that it could not properly negotiate the terms of the cash credit pledge agreement and that it had been compelled to sign on the dotted line because it was anxious to clear the goods without any further loss. This letter was followed by similar other letters in which the firm accused the Bank of many acts of omission and commission, causing heavy losses to the firm. Finding that these baseless allegations against the Bank were counter- productive, the firm changed its stance and requested the Bank in Oct. 1982 for the accommodation of redeeming the goods in instalments on payment at the rate of Rs. 3605/- per metric tonne. The Bank did not agree and instead, insisted on the firm offering a definite and time bound programme for repayment of the entire amount of debt along with interest due under the cash credit pledge' account. The firm did not come out with any viable proposal, thus compelling the Bank to give notice to the firm of its intention to sell the pledged goods to realise the amount due from the firm. The firm replied that it had customers in view who were willing to purchase the goods at the rate of Rs. 7500/- per metric tonne and that the Bank would be selling the goods at a lower price at its own risk. The Bank wrote back on Nov. 16. 1982. that the firm may cite firm offers in that behalf within a period of one week from the date of receipt of the said letter failing which the Bank would be at liberty to sell the goods at the best available price without any further reference to the firm. This led the firm to file the suit, out of which this revision petition has arisen, in the court of the Additional Munsif and obtain the temporary injunction from him restraining the Bank from selling the goods and mandating the Bank to deliver the goods to the firm at the rate of Rs. 635Q/- per metric tonne.

4. It will be seen from the above narration of facts that if the courts below had bestowed proper care and attention to the sifting, so to say, of grain from the chaff of the plaint in the instant case, it would have become at once clear to them that the firm had no prima facie case at all, and that it was trying to both approbate and reprobate, and had filed the present suit in an attempt to abuse the process of a court which had no pecuniary jurisdiction in the matter, It is a matter of regret that both the courts below were unable to discover these plain facts which become so apparent on a bare perusal of the plaint.

5. As for approbation and reprobation, let us take up the agreement of cash credit pledge limit, dated. April 1, 1982. It is on the basis of this agreement that the firm has averred in the plaint that the transaction between it and the Bank is a pledge and that it is entitled to the delivery of goods to it by the Bank on payment of the debt of the Bank calculated at the rate of Rs. 6350/- per metric tonne. In paragraph 28, of the selfsame Plaint, the firm challenged this agreement as null and void ob initio on the ground that its consent to it had been caused by coercion and undue influence. The firm is then seeking to specifically enforce what counsel describes as a variation in the terms of the original contract. It is alleged, that in the course of mutual discussion between the parties and their solicitors on Oct. 29, 1982, the representatives of the Bank proposed that the firm could take delivery of the goods on payment at the rate of Rs. 6350/- inclusive of import duty and other charges, and that the representatives of the firm accepted this offer. A little later, in the plaint, the firm however pleaded that subsequently on its request for a written confirmation of the so-called oral contract dated Oct. 29. 1982, the Bank did not confirm it as required by the firm and instead notified the firm of its intention to sell the pledged goods to realise the debt which the firm was owing to the Bank.

6. It will then be seen that the plaint discloses no cause of action either for the grant of the relief of perpetual injunction against the Bank or for the specific performance of any contract. Section 38. Specific Relief Act. 1963, lays down, inter alia, that perpetual injunction may be granted to prevent the breach of an obligation existing in favour of the plaintiff. 'Obligation' as defined in Section 2 of the same Act means a duty enforceable by law, nOW the plaint does not contain facts which, if proved, would impose on the Bank an obligation to refrain from selling the pledged Hoods, On the contrary, the averments made in the plaint would show that the firm is suing the Bank as a pawnee, requiring the latter to refrain from selling the goods. Let alone the firm having any right and the Bank being subject to any corresponding obligation not to sell the goods. Section 176. Contract Act confers a right on the Bank as a pawnee, to sell the pledged goods after giving notice to the pawnor. It is admitted in the plaint that notice as contemplated by Section 176 Contract Act had already been served by the Bank on the firm before the institution of this suit. Thus the plaint does not disclose any cause of action for the grant of the relief of perpetnal injunction as prayed.

7. Similarly, it does not disclose any cause of action for specific performance of any contract requiring the Bank to deliver to the firm the pledged goods against payment by the firm of an amount calculated at the rate of Rs. 6350 per metric tonne. As already indicated, the firm has not pleaded facts which, if proved, would establish its case that a new contract had come into being between the parties on Oct. 29. 1982, whereby the Bank had agreed to redeem the goods on payment at the rate of Rs. 6350 per metric tonne.

8. On a proper construction of the plaint and the relief claimed therein, it is obvious that this is in substance, a suit for recovery of the pledged goods, inasmuch as the firm is seeking a decree against the Bank directing it to deliver the goods to the firm against the payment of price calculated at the rate of Rs. 6350/- per tonne. The plaint which is in reality covered by Section 23(1)(a) Rajasthan Court Fees and Suits Valuation Act. 1961, has been sought to beveiled to give the appearance of being a plaint in a suit for injunction covered by Section 26 of the said Act. The court must look to the substance rather than the form of the relief in order to adiudge the question of court fees and Jurisdiction. Obviously, the market value of the goods in dispute runs into lacs of rupees. The Additional Munsif in whose court the suit has been filed and who passed the impugned order of temporary injunction can entertain suits of a value not exceeding five thousand rupees. I must therefore hold that the impugned order is liable to be set aside on the ground of jurisdiction as well

9. For all these resons, the revision petition is allowed and the impugned order dated Jan. 27. 1084. of the Additional Civil Judge Jaipur City affirming the order dated Jan. 13. 1984. by the Additional Munsjf Jaipur City, is set aside. Instead, the firm's application for temporary injunction under Order 39, Rules 1 and 2 C.P.C. is dismissed.


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