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The State of Madras Represented by the Director of Industries and Commerce Vs. M.A.S. Mehta - Court Judgment

LegalCrystal Citation
SubjectContract;Constitution
CourtChennai High Court
Decided On
Case NumberC.S. No. 87 of 1962
Judge
Reported inAIR1964Mad508
ActsSale of Goods Act, 1930 - Sections 57 and 61(2); Constitution of India - Article 299; Contract Act, 1872 - Sections 73
AppellantThe State of Madras Represented by the Director of Industries and Commerce
RespondentM.A.S. Mehta
Appellant AdvocateC. Rangaswami Iyangar, Adv. for ;Govt. Pleader
Respondent AdvocateE.R. Krishnan, Adv.
Cases ReferredKurapati Venkata Mallayya v. T. Ramaswami and Co.
Excerpt:
contract - recovery - section 57 and 61 (2) of sale of goods act, 1930, article 299 of constitution of india and section 73 of contract act, 1872 - suit for recovery of due sale amount - purchaser of goods like defendant who commits default in his obligation to pay for goods within 15 days of delivery cannot be heard to 'complain that plaintiff committed breach in withholding supply - plaintiff-seller not bound to go on supplying goods without having payment - held, plaintiff entitled to suit amount. - - a purchaser of goods like the defendant who commits default in his obligation to pay for the goods within 15 days of the delivery thereof cannot be heard to 'complain that the plaintiff committed breach in withholding supply. on this ground also the counter claim must fail......court-fee therefore. the issues framed in the suit are these :1. is the plaintiff entitled to the suit claim?2. was the agency cancelled by the plaintiff and communicated to the defendant?3. is the defendant entitled to set off or adjustment pleaded in paragraph 6 of the written statement?4. is not the defendant liable to pay a sum of rs. 706.59 for the reasons stated in paragraph 8 of the written statement?5. whether the plaintiff is bound to give credit for rs. 500 paid as advance deposit?6. is not the defendant liable to pay interest in respect of the amount due from him to the plaintiff?7. to what other relief's is the plaintiff entitled?5. when the documents were marked today, the plaintiff produced the acknowledgment dated 20-11-1957 signed by the defendant for receipt of the.....
Judgment:

Venkataraman, J.

1. This is a suit by the State of Madras against the defendant, M. A. S. Mehta, for recovery of a sum of Rs. 22,000, and odd, for sale of matches which were supplied by the plaintiffs to the defendant. Under Ex. P-l dated 31-10-1957 a contract was entered into between the plaintiff and the defendant by which the defendant was constituted the sole selling agents in Chingleput district for the sale of matches manufactured at the Government Match Works at Perambur. The prices at which the goods were supplied by the match factory to the defendant were fixed and the defendant was free to put his own price on the goods when sold by him. Thus though the defendant was described as selling agent the relationship between the plaintiff and the defendant was not that of principal and agent, and the defendant was really a purchaser of the goods from the plaintiff.

2. The contract provided for payment of the price to the plaintiff by the defendant within 15 days of the delivery of the goods. The defendant was not regular in the payments but by the end of December 1957, he cleared off the arrears leaving only a sum of Rs. 706-59 which was in dispute, the defendant not admitting at that stage receipt of a consignment sent on 20-11-1957.

3. At his request the contract was proposed to be renewed for another year from 17-12-1957 to 17-12-1953. But no formal contract was entered into between the plaintiff and the defendant as required by Article 299 of the Constitution which runs thus :

'(1) All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise.'

What actually happened was that the Director of Industries and Commerce sent a letter Ex. D-l dated 7-2-1958, to the defendant stating that the agency had been renewed for one year from 18-12-1957 to 17-12-1958, and adding 'Please send me the agreement duly executed on a stamped paper (two copies) leaving the date in the first line unfilled for execution'. The defendant says that he signed the contract in the two copies and sent it on to the Director of Industries. That, much is conceded. At that stage the agreement had not yet been signed on behalf of the plaintiff. They added a new clause providing for interest at 6 per cent per annum for price not paid on the due date.

The Director of Industries sent Ex. P-6, dated 22-3-1958, to the defendant drawing his attention to this addition and asking him to embody it in the agreement and send it. The agreement already signed by the defendant was sent to him for this purpose. The defendant states that ha did not agree to this new clause and sent back the agreement. But on behalf of the plaintiff it is stated that the agreement was not received back. Anyhow, goods were supplied till July 1958 to the defendant. The defendant was in arrears to a considerable extent but goods were supplied to him on credit till July 1958. At that stage, however, since he was in arrears for an amount over Rs. 20,000 the Director of Industries decided not to supply goods to him any further on credit.

In August and September 1958, the defendant purchased goods by paying cash. Thereafter, he was not prepared to pay cash and the supply of the goods to him was stopped. Demand was made on him by the plaintiff for the amounts due from him. For his part the defendant sent the notice, Ex. P-15, dated 3-4-1959, charging the Government-plaintiff with breach of the agreement by not supplying the goods from and after October 1958. He claimed damages in the tune of Rs. 10,000. After some correspondence, the plaintiff laid the present suit for recovery of the sale price with interest at 6 per cent. In claiming interest, however, they did not allow for the 15 days period and claimed interest from the dates of the supply of the goods.

4. The defendant in his written statement denies receipt of the consignment of 20-11-1957 valued at Rs. 706.59. He denies also his liability to interest. Ha has claimed a sum of Rs. 10,000, as damages, paying court-fee therefore. The issues framed in the suit are these :

1. Is the plaintiff entitled to the suit claim?

2. Was the agency cancelled by the plaintiff and communicated to the defendant?

3. Is the defendant entitled to set off or adjustment pleaded in paragraph 6 of the written statement?

4. Is not the defendant liable to pay a sum of Rs. 706.59 for the reasons stated in paragraph 8 of the written statement?

5. Whether the plaintiff is bound to give credit for Rs. 500 paid as advance deposit?

6. Is not the defendant liable to pay interest in respect of the amount due from him to the plaintiff?

7. To what other relief's is the plaintiff entitled?

5. When the documents were marked today, the plaintiff produced the acknowledgment dated 20-11-1957 signed by the defendant for receipt of the goods supplied to him on that date, Ex. P-18. In view of this Sri E. R. Krishnan, learned counsel for the defendant admitted receipt of the consignment In question. Hence issue 4 is found in favour of the plaintiff and against the defendant.

6. Regarding interest, to sustain the claim of the plaintiff, it is sufficient to refer to Section 61(2) of the Sale of Goods Act, which is as follows:

'In the absence of a contract to the contrary, the Court may award interest at such rate as it thinks fit on. the amount of the price -

(a) to the seller in a suit by him for the amount of the price - from the date of the tender of the goods or from the date on which the price was payable;

(b) to the buyer in a suit by him for the refund of the price in a case of a breach of the contract on the part of the seller - from the date on which the payment was made.'

The Supreme Court has held in Kurapati Venkata Mallayya v. T. Ramaswami and Co., : AIR1964SC818 , that Under Section 61 of the Sale of Goods Act, the seller is entitled to interest at 6 per cent per annum from the date of the transaction to the date of suit. But, as far as this case is concerned, there will have to be a modification charging interest only after the expiry of 15 days from the date of the transaction. The plaint claim will be revised accordingly. Issue 6 is answered accordingly.

7. So far as the counter claim is concerned. It proceeds on the footing that there is a valid contract between the plaintiff and the defendant, and that the plaintiff committed a breach thereof. But in view of Article 299 of the Constitution, it has to be held that there was no valid contract at all between the plaintiff and the defendant. This apart, even assuming that there was a valid contract, it will be seen that the defendant himself was in breach, not having paid for the pries of the goods within the stipulated time. In fact, he was in arrears to a considerable extent. A purchaser of goods like the defendant who commits default in his obligation to pay for the goods within 15 days of the delivery thereof cannot be heard to 'complain that the plaintiff committed breach in withholding supply. The plaintiff, the seller, is not bound to go on supplying goods without having payment. That will not be business. On this ground also the counter claim must fail.

8. Accordingly, on issues 1, 6 and 7, I find that the plaintiff will be entitled to the suit amount, calculating interest as indicated in this judgment and under issue 5 he will 'be bound to give credit for Rs. 500, the initial deposit, in final adjustment. The plaintiff will have the costs on the amount decreed after lessening it by the sum of Rs. 500. The counter claim is dismissed, without costs. The defendant is given four months time for payment. But the amount decreed will carry interest from the date of the suit.


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