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State Trading Corporation of India Vs. Tara Jewellers and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKolkata High Court
Decided On
Case NumberSuit No. 454 of 1981
Judge
Reported inAIR1986Cal263
ActsSale of Goods Act, 1930 - Section 61; ;Code of Civil Procedure (CPC) , 1908 - Section 34
AppellantState Trading Corporation of India
RespondentTara Jewellers and ors.
Excerpt:
- .....for export silver on account of the plaintiff, whereunder it was agreed that the property in the goods exported would pass to the plaintiff. on 7th february, 1979 the plaintiff entered into a contract with the defendant no. 5 jhonson matthoy bankers ltd., a company incorporated under the appropriate laws of united kingdom and carrying the business at no. 5, lloyds avenue, london, for 9597.63 troy oz. of silver at 730.70 c & f per troy oz. of the total value of s69854.88 equivalent to rs. 5,71,094/-. to fulfil such contract with the defendant no. 5 the plaintiff duly accepted the offer dated 6th february. 1979 for 300 kilos of silver from the defendant no. 1 for export of the said goods. the said goods were to be exported by the defendant no. 1 on account of the plaintiff. according to.....
Judgment:
ORDER

1. State Trading Corporation ofIndia filed this suit against Tara Jewellers and its partners for recovery of a sum of Rs. 5.71.094/- together with interest and cost.

2. It was the plaintiff's case that under a contract dated 13th July. 1977 made between (he plaintiff and defendant as the suppliers, the defendants agreed to sell as dealer of silver and bullions on various terms and conditions, to sell for export silver on account of the plaintiff, whereunder it was agreed that the property in the goods exported would pass to the plaintiff. On 7th February, 1979 the plaintiff entered into a contract with the defendant No. 5 Jhonson Matthoy Bankers Ltd., a company incorporated under the appropriate laws of United Kingdom and carrying the business at No. 5, Lloyds Avenue, London, for 9597.63 troy oz. of silver at 730.70 C & F per troy oz. of the total value of S69854.88 equivalent to Rs. 5,71,094/-. To fulfil such contract with the defendant No. 5 the plaintiff duly accepted the offer dated 6th February. 1979 for 300 kilos of silver from the defendant No. 1 for export of the said goods. The said goods were to be exported by the defendant No. 1 on account of the plaintiff. According to the plaintiff under the deal No. 1822 dated 7th February, 1979 the defendant No. 1 sold to the plaintiff overseas buyers through the plaintiff silver of the total value of Rs. 5,71,094/-and received payments from the buyers, but before the goods could be exported to the defendant No. 5, by an amendment of the Export Control Order dated 20th February, 1979 the Government of India banned all silver exports including by and on behalf of the plaintiff with effect from 21st of February, 1979. Under the circumstances export of the silver became impossible by theplaintiff as also for and on account of the plaintiff. In the premises according to the plaintiff the consideration for the said payment being the price of the goods had wholly failed and the plaintiff was entitled to and claim refund of the said sum of Rs. 5,71,094/- with interest under the Sale of Goods Act from the defendant. In paragraph 10 of the plaint, the plaintiff pleaded that the plaintiff was entitled to claim interest at the rate of 21% under the Sale of Goods Act from February 26, 1979 till the date of payment. The said money was refundable inasmuch as the contract became impossible of performance. The defendant admitted and/or acknowledged its liability to refund the said sum of Rs. 5,71,094/- but denied and disputed its liability to pay interest at the rate of 21% or at any rate at all from 26th February, 1979. The plaintiff also claimed interest under the Interest Act at the rate of 21% as it had been claimed by the advocate-on-record 'M/s. Fox & Mondal by their letter dated 26th February, 1980 wherein the advocate-on-record of the plaintiff called upon the defendant to return the quantity of silver sold by the defendant No. 1 to the plaintiff or in the alternative to pay the sum of Rs. 5,71,094/-together with interest at the rate of 21% p.a. from 26th February, 1979 until realisation. From the said letter dated 26th February, 1980 it appeared that the demand for interest had been made retrospectively from 26th February, 1979. The plaintiff did not plead any agreement in the plaint for payment of interest but claimed interest under the Sale of Goods Act at the rate of 21 % p.a.

3. The plaintiff examined one ByomkeshBhattacharjee on its behalf whose examination in chief consisted of 27 questions. He stated that he was working with State Trading Corporation as Supervising Officer. According to his evidence there was a consignment of silver for export on behalf of the defendant but in view of the ban imposed by the Central Government on 19th/20th February. 1979, the silver could not be shipped as a result the plaintiff claimed for refund of the sum of Rs. 5,71,094/-. As a result the present suit had been filed by the plaintiff against the defendant. This suit was decreed by this Court on 8th March. 1982 in favour of the plaintiff for a sum of Rs. 5.71.094/- together with interest. Thereafter, an application was taken out forsetting aside the ex parte decree and on 27th July, 1982 by consent of the parties an order was passed by giving leave to the defendants to enter appearance and file their written statement and contest the suit so far the plaintiff's claim in respect of the interest was concerned. The defendants through Mr. Section Tibrewal instructed by the advocate-on-record submitted to a decree for the principal amount of Rs. 5,71,000/- which they agreed to pay within one month from the date of the order. In default of such payment the application was directed to stand dismissed with costs. The defendants had duly complied with the said order and paid the entire principal amount of Rs. 5,71.000/-. Mr. Byomkesh Bhattacharjee examined on behalf of the plaintiff could not give any evidence regarding agreement to pay interest. He admitted that the full payment for the value of the goods was received by the plaintiff. He had spoken of the correspondences that passed by and between the parties regarding refund of the amount before the filing of the suit but none of the said correspondences had been tendered in evidence by the plaintiff not even the letter dated 26th February, 1980 whereunder M/s. Fox & Mondal demanded refund of the principal amount together with interest at the rate of 21% but retrospectively from 26th of February, 1979. Such letter was not tendered in evidence as a result this Court could not rely on the oral evidence of the witness given about the contents of the letter which was not tendered at the time of the hearing of the suit. In answer to Q. 17 the witness admitted that apart from the said demand letter the defendant actually was liable to pay interest at the rate of 12%. The said Mr. Byomkesh Bhattacharjee gave oral evidence of the commercial rate of interest charged usually by the bank at the rate of 21% in February, 1979. He aiso gave the rate at 21/22 1/2% in February, 1980. That was his guess work as he did not rely for the purpose of proving the bank rate on any circular or the documentary evidence. In his cross-examination he admitted that his knowledge towards bank rate on interest in the year 1979-80 or 1981 was based on information from the Finance Department but he could not rely on any particular document of the Finance Department. He admitted that he did not himself deal withmonetary matters but it was the duty of the Finance Department to consider the rate of interest. He admitted that Tara Jewellers were the sellers of the goods to the State Trading Corporation and State Trading Corporation in their turn to export the same to foreign buyers. The money that had been paid to Tara Jewellers had been paid by the foreign buyer. He further admitted that although the plaintiff became aware of the ban on export of silver on 24th February. 1979, they did not write to the defendants but it is only on 29th of February, they wrote to Tara Jewellers the defendants that they did not require any export in view of the imposition of the ban by the Govt. of India. Nor did they instruct earlier the defendant to dispose of the silver inasmuch as the plaintiff did not require the same for export purpose. The witness's evidence was vague. He did not rely on any particular document or correspondent but gave his evidence from memory. The defendants referred to two documents in cross examination which were tendered in evidence being a Telegram dated 21st of December. 1979 sent by the Deputy Marketing Manager of the plaintiff to the defendants requesting the defendant to pay the amount with --interest as advised in their letters dated 9th November. 1979 and 6th December. 1979. From the said copy telegram it appeared that although the plaintiff claimed refund of the amount together with interest no rate of interest was specified therein. The plaintiff did not rely on the letters mentioned therein, nor they were tendered in evidence. From the letter dated 26th December. 1979 written by the Deputy Marketing Manager to the defendant No. 1 which was exhibited in evidence it appeared that the plaintiff claimed refund of the amount together with due interest within a week from the date of the receipt of the letter thereto no rate of interest was specified by the plaintiff. He admitted that no rate of interest was mentioned in the said letters. The contract which was lendered by consent of the parties and marked exhibit '3' did not mention any rate of interest payable by the supplier in the event the supplier was precluded from supplying due to imposition of ban or for any other reasons. Thereunder the supplier undertook to pay interest as demanded by the State Trading Corporation at the rate of 11.5% on the amount advanced far the period duringwhich State Trading Corporation did not receive payment from the foreign buyer. In the instant case the money had been received from the foreign buyer and no sum had been advanced by the State Trading Corporation to the defendants. There was no agreement for payment of interest under the agreement in a situation that had arisen in the instant case, Under those circumstances the plaintiff had to fall back on Section 61 of the Sale of Goods Act for realisation of interest. The witness on behalf of the plaintiff admitted in answer to question 68 that the money that had been received by Tara Jewellers was paid by the foreign buyer and not by the Slate Trading Corporation.

4. Section 61 of the Sale of Goods Act provides as follows : --

'61(1) Nothing in this Act shall affect the right of the seller or the buyer to recover interest or special damages in any case where by law interest or special damages may be recoverable, or to recover the money paid where the consideration for the payment of it has failed.'

(2) 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 lender 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 '

5. The defendant's contention was that as there had been no breach of the contract on the part of the seller, the seller was under no obligation under Section 61(2)(b) to pay interest. As there had been a frustration of contract due to imposition of ban on silver whereunder the plaintiff was unable to accept delivery of the goods which the defendant was ready and willing and in a position to deliver. The plaintiff as indicated earlier did not tender in evidence the letter dated 26th February, 1980 claiming interest at the rate of 21%.

6. Hence this Court passes a decree for interim interest at the rate of 6% from the dateof filing of the suit till date when the principal sum was repaid by the defendants and further interest at the same rate and cost.


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