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Bihar State Agro-industries Development Corporation Ltd. Vs. Ram Chand Khosla and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberAppeal No. 346 of 1979 in Suit No. 906 of 1978
Judge
Reported inAIR1982Cal537
ActsCode of Civil Procedure (CPC) , 1908 - Section 20
AppellantBihar State Agro-industries Development Corporation Ltd.
RespondentRam Chand Khosla and anr.
DispositionAppeal allowed
Cases Referred(Ram Chand Khosla v. State of Bihar
Excerpt:
- .....to the deputy secretary, department of agricultural and animal husbandry (agriculture) govt. of bihar, patna, relating to the transaction it is stated 'subject to patna jurisdiction'.3. it was alleged that the defendants in the said suit though expressly admitted and acknowledged the amount due and payable to the said firm of premier traders yet withheld the payment of the sum of rupees 4,46,576.50 p. to the plaintiff in the said suit. further, at a meeting of the receiver appointed by an order dated january 3, 1974 passed in the said suit no. 587 of 1973 held at bar library club, calcutta on jan. 24, 1974 one mr. d. p. srivastava the authorised agent and representative of the defendant no. 2 (i. e., appellant herein) acknowledged for and on behalf of the defendant no. 2 the liability.....
Judgment:

R.N. Pyne, J.

1. This appeal is directed against an order dated 27th Aug., 1979 of Mrs. Khastgir, J. dismissing the appellant's application for revocation of leave granted under Clause 12 of the Letters Patent to institute the Suit No. 906 of 1978 (Ram Chand Khosla v. State of Bihar). The facts out of which the said application in the Court of the first instance arose are briefly as follows :

Ram Chand Khosla, the plaintiff in Suit No. 906 of 1979 (1978?) was appointed as Receiver by and under a consent decree dated 5th April, 1977 passed in Suit No. 587 of 1973 (Universal Engineers and Traders v. Premier Traders) by this Court for the purpose of collecting and realising the dues payable to Premier Traders and was empowered to bring suit for that purpose.

2. Pursuant to the power conferred under the said decree Ramchand Khosla as plaintiff filed the said suit being Suit No. 906 of 1978 against State of Bihar and the appellant, inter alia, for recovery of Rupees 4,46,576.40 p. and other reliefs. The plaintiff's case in the plaint is as follows :

Pursuant to an order dated 21st April, 1973 placed by the defendant No. 1, State of Bihar with the said Messrs. Premier Traders, Exhibition Road, Patna 300 pumping sets were sold by the said Premier Traders (hereinafter referred to as 'the said firm') to the defendant No. 1 and out of the same, 200 pumping sets were supplied to District Agricultural Officer at Muzaffarpur and 100 Pumping sets were supplied to the Sub-Divisional Officer at Sitamari as instructed by the State of Bihar. In the said order it is mentioned that the appellant is the consignee and payment is to be made by it. The appellantat the instance of the State of Bihar (respondent No. 2 herein) from time to time made part payments to the said firm of Messrs. Premier Traders aggregating to Rs. 5,93,249.75. p. leaving a balance of Rupees 2,54,250.25 p. on account of price of the said goods. Tn terms of the said order the said firm deposited with the respondent No. 2 a sum of Rs. 16,950/- as and by way of security. According to the plaintiff in Suit No, 906 of 1979 (1978?) as Receiver he was authorised to collect the dues of the said firm of Premier Traders and as a result thereof there was due and owing by the defendants in the said suit a sum of Rs. 4,46,576.50 p. including the sum of Rs. 16,950/- the amount of security deposit and the sum of Rupees 1,75,376.15 p. being the amount of interest at the rate of 12% from 10th July, 1973 to 30th Nov., 1978. Here it may be mentioned that in the letter dated 24th May, 1973 addressed by the said firm to the Deputy Secretary, Department of Agricultural and Animal Husbandry (Agriculture) Govt. of Bihar, Patna, relating to the transaction it is stated 'Subject to Patna Jurisdiction'.

3. It was alleged that the defendants in the said suit though expressly admitted and acknowledged the amount due and payable to the said firm of Premier Traders yet withheld the payment of the sum of Rupees 4,46,576.50 p. to the plaintiff in the said suit. Further, at a meeting of the Receiver appointed by an order dated January 3, 1974 passed in the said Suit No. 587 of 1973 held at Bar Library Club, Calcutta on Jan. 24, 1974 one Mr. D. P. Srivastava the authorised agent and representative of the defendant No. 2 (i. e., appellant herein) acknowledged for and on behalf of the defendant No. 2 the liability of the defendant No. 2 and the dues of the said Premier Traders and promised to pay the said amount to the said Receiver appointed in the said suit after observing all rules and regulations of the orders placed on the said firm. It was further alleged that by letters the defendants in the said Suit No. 906 of 1979 (1978 ?) admitted and acknowledged their liability in respect of the plaintiff's dues.

4. The appellant's case as stated in its petition filed in the Court of the first instance was that State of Bihar defendant No. 1 in the said Suit No. 906 of 1979 (1978?) placed an order dated 21st April, 1973 upon Messrs. Premier Traders at Patna for 300 pumping sets as fully mentioned in the said petition on various terms and conditions contained in the said order. It appears that ap-pellant was the consignee of said pumps and would make payment for the same as mentioned in the said order. It is further s'ated that 200 pump sets were delivered to the District Agricultural Officer at Muzaffarpur and 100 pump sets were delivered to the Sub-Divisional Officer at Sitamari. It is stated that 50 pump sets out of the 200 sets supplied to Muzaffarpur and 52 sets out of 100 sets supplied at Sitamari were found fitted with duplicate pumps in place of Kirloskar pumps and in spite of the request of the appellant Premier Traders did not replace the said duplicate pumps. It is further stated that several pumps supplied by Premier Traders were found to be defective. The said firm was directed to remove the same but it failed and neglected to remove the same and thereby committed breach of the contract. Further, in breach of the terms of the said order the said firm did not open service station. Due to the said fact the appellant suffered loss and damages. The said fact was duly brought to the notice of the said firm by several letters addressed by the appellant to the said firm. It is also stated that the said firm was paid an aggregate sura of Rs. 5,93,249.75 on account of the price of the pump sets supplied by it. It is further stated that as the said firm failed and neglected to replace their 102 defective pumps, 41 pumps were disposed of by the defendant on account of the said firm and appellant directed the said firm to take back the remaining 61 pumps rejected by the appellant. The said firm, however, failed and neglected to replace the said defective pumps. In the petition at pages 16 and 17 of the paper book it appears that the appellant has stated the amount of loss and/or damages suffered by it and according to the appellant, a sum of Rs. 38,896.75 became due and payable to the said firm. The appellant received a notice dated 3rd July, 1976 under Section 21 of the Bihar Sales Tax Act from the Sales Tax Authorities claiming a sum of Rs. 34,438.85 p. which became due on account of sales tax payable by the said firm for the period 1968-1969 and 1973-1974. The appellant stated that after deducting the said sum of Rs. 34,438.85 p. only a sum of Rupees 4,457.90 p. was due and payable by the appellant to the said firm. According to the appellant, a notice dated 8th Feb., 1977 was received by the appellant from Messrs. T. Banerji and Company, Solicitors of the respondent No. 1 demanding payment on behalf of the said firm. The appellant throughits advocate's letter dated 21st April, 1973 informed the Solicitor of the respondentNo. 1 about the amount recoverable by the appellant from the said firm.

5. From the judgment appealed against it appears that before the learned Judge of the Court of the first instance three grounds were urged by the appellant for revocation of leave under Clause 12 of the Letters Patent viz., (i) no part of the cause of action had arisen within the jurisdiction of this Court; (ii) balance of convenience was in favour of the trial of the suit at a convenient forum in Bihar and (Hi) parties had particularly chosen a forum, j. e, High Court at Patna before which all disputes arising in respect of the agreement entered into by and between the parties should be referred to.

6. On the first point the learned Judge of the Court of the first instance held that the plaintiff (respondent No. 1 herein) was appointed as Receiver by this Court); goods were supplied from Calcutta within the jurisdiction of this Court and that at the meeting held by the Receiver in Suit No. 587 of 1973 one Mr. Srivastava appearing on behalf of the appellant acknowledged the liability of the appellant and a letter dated 3rd Nov., 1978 written by the appellant's Accounts Officer acknowledging liability was received by the Receiver in the said Suit No. 587 of1973 within the jurisdiction of this Court. On the second point the learned Judge of the Court of the first instance was of the opinion that in view of the admission and acknowledgement made on behalf of the appellant it was not necessary for the defendants in Suit No. 906 of 1979 (1978?) to bring any witness to Calcutta at the time of hearing of the suit. Regarding the third contention it was held that the agreement regarding choice of forum was between Premier Traders and the State of Bihar but sofar as the appellant is concerned there was no such agreement. Therefore, instead of bringing the suit piecemeal it should be decided by one Court.

7. On the question of whether any part of the cause of action has arisen within the jurisdiction of the Court. Counsel for the appellant has submitted that appointment of the plaintiff as Receiver by this Court is no part of the cause of action. In this connection counsel relied on. the case of Muthur chellappa Chettiar v. Paliniappa, : AIR1955Mad526 . It has been further submitted that the place wherefrom goods are sent is ao part of the cause of action and in this connection reliance has been placed on the case of Yeluchuri Venkatachannaya v. Emperor, (1920) 56 Ind Cas 50 : (AIR 1920 Cal 337)(FB). It was further submitted that there was in fact no admission of liability in the Receiver's meeting held at Calcutta because admission, if any, was qualified and conditional and Srivastava who attended the Receiver's meeting for the appellant had no authority to make any admission and therefore there was no valid admission. Regarding the question of acknowledgement by letter dated 3-11-1978 it was submitted that such letter was sent to Patna Office of the Premier Traders. Therefore, according to counsel, no part of the cause of action in Suit No. 906 of 1979 (1978?) had arisen within the original side of this Court.

8. Counsel for the respondent No. 1 in his argument supported the decision appealed against on the grounds mentioned by the learned Judge of the Court of the first instance.

9. The question whether the appointment of a Receiver by an order made by this Court with power to realise debts and claims is a part of the cause of action in a suit filed by such Receiver or not has been decided by an unreported judgment of a Division Bench of this Court in Appeal No. 143 of 1954 (Satya Narain Mundra v. Rai Bahadur Kishore Chand) dated 12th March, 1956. It was held that where a Receiver appointed by this Court in a suit files suit against a third party for realisation of claims or dues the fact of appointment of the Receiver by the Court is a part of the cause of action. Therefore, the fact of appointment of the plaintiff as Receiver in Suit No. 587 of 1979 (1978 ?) by this Court in our view is a part of the cause of action in Suit No. 906 of 1979 (1978?).

10. The next point is in favour of which Court lies the balance of convenience. In the petition and in paragraph 15 of the affidavit-in-reply the appellant has stated in details the facts as to why the balance of convenience lies in favour of trial by a Court, at Patna. It is stated that the balance of convenience is overwhelmingly in favour of the suit being heard by the Court at Patna than this Hon'ble Court. It wilt be tremendously costly to call all the witnesses (a list containing the names of 30 witnesses is annexed to affidavit-in-reply) to Calcutta from Patna, Muzaffarpur and Sitamari and to produce the voluminous records relating to the said contract, delivery of the pumping sets, the inspection reports of the competent Engineers of the Government of Bihar, the then Sub-Divisional Officers of Muzaffarpur and Sitamari and the inspector who visited the installations of the said pumps which weresent to the diverse places in the said Districts for operation and those pumps which were rejected as defective and not in accordance with the specification under the terms of the contract. According to the appellant almost whole of the cause of action has arisen in Patna and great hardships amounting to injustice will be caused to the appellant if the suit is allowed to be tried by this Hon'ble Court inasmuch as the competent Engineers and Officers of the defendants in the suit who would be more than thirty in number would be required to appear and give evidence as witnesses and all of them are at Patna, Muzaffarpur and Sitamari. The competent Officer of the Commercial Taxes Government of Bihar will be also required to appear and give evidence and also to produce records relating to the Sales Tax in respect of the said sale and the statutory -demand notices that have been forwarded to the defendant No. 2 for non-payment of sales tax by the said M/s. Premier Traders to the Sales Tax Authorities. The entire records relating to the dealings and transactions with M/s. Premier Traders are at Patna and their representatives are also at Patna who are also necessary witnesses with regard to the disputes and differences as to the alleged claim of the plaintiff in the said suit. On the contrary the plaintiff is not required to produce any other records except the certified copy of the decree by which he has been appointed as Receiver and has been authorised to collect debts of the said M/s. Premier Traders as also the records of the meeting of the Receiver in which admission was made by the appellants representative. Further, according to the appellant, there is no scope for any oral evidence by the plaintiff or by Mrs. Indrani Chatterjee (previous receiver) in this suit and the records relating to the contract between the defendants and the said Premier Traders are all with the defendants and ihe said Premier Traders at Patna.

11. Counsel for the appellant in his argument reiterated the facts stated hereinbefore in support of his contention that balance of convenience lies in favour of the suit being tried at Patna. He has further submitted that the admission or acknowledgement of liability upon which the learned Judge of the Court of the first instance has relied upon are qualified and conditional. In support of his contention reliance has been placed on : AIR1972Cal82 and : AIR1970Cal394 .

12. Counsel for the respondent No. 1 has submitted that in view of the admissionmade before the Receiver as stated hereinafter and the letters dated 3rd Oct., 1970 and 3rd Nov. 1978 containing acknowledgement of liability it is not necessary to call witnesses as stated by the appellant. Further, in view of the admission and acknowledgement of liability it is not necessary to prove the plaintiff's claim. It is the submission of the counsel that admission unless explained is decisive. Further, in view of the admission and acknowledgement the suit cannot be converted into a witness action. Counsel has relied on : [1960]1SCR773 and AIR 1953 (sic) SC 758 at p. 765.

13. On the question of balance of convenience learned Judge has relied on the admission made before the previous Receiver and the letters dated 30th Oct., 1977 and 3rd Nov., 1978. In view of such admission and acknowledgement according to the learned Judge defendants need not come to Calcutta with their witnesses.

14. Admission of the liability according to the plaintiff was made by the appellant's representative in the Receivers meeting held on 24th Jan., 1974 at Calcutta. Relevant portion of the minutes of the Receiver's meeting is set out hereunder.

'Regarding Agenda No. (2): Statement of Mr. D. P. Srivastava authorised representative of the Corporation. Mr. D. P. Srivastava has received the letter dated 12th January, 1974 on behalf of the Corporation and states that the security deposit and other amount lying with the Bihar State Agro-Industries Development Corporation Ltd. on account of Messrs. Premier Traders will be paid to the Id. Receiver after observing all rules and regulations of the orders placed on Messrs. Premier Traders, Patna, by the Govt. of Bihar. The payment is subject to detailed checking of their pumping sets by the concerned authorities and clearance from Govt. of Bihar Agriculture and Animal Husbandry Deptt. as well as legal section of the Corporation (Books of account were produced by the authorised representative of the Corporation).'

Letters dated 30th October, 1977 and 3rd November, 1978 are set out hereunder.

'Annexure 'C

Bihar Government

Agriculture Department.

From

Shri S.P.N. Sharma,

Joint Secretary,

Govt. of Bihar.

To:

Chairman,

Bihar State Agro-Industries Development

Corpn. Ltd., Sinha Library Road.

Patna.

Sub.: Payment of Diesel Engine Pumping Sets supplied by M/s. Premier Traders, Exhibition Road, Patna.

No.: Corporation Letter No. 440 D/- 5-2-1977, Letter No. 5540 dated 25-7-1976, Letter No. 1516 dated 28-6-1977.

Dear Sir,

According to the direction by the Agricultural Office Order No. 17503 dated 30-10-1973 in connection with the above subject and according to the judgment of Honourable High Court of Calcutta, you are requested to make the payment against the supply and against the security money to Shri Ram Chand Khosla receiver appointed by Honourable Calcutta High Court,

2. At the time of making payment the dues of Sales Tax Department should be also considered. The information in this connection is being sent to Sales Tax Office or to Sri Khosla.

3. Copies of the report in connection with the pumping sets received from District Agricultural Officer. Muzaffarpur Divisional Agricultural Officer, Sitamari, are enclosed herewith.

4. How much payment is due, it is to be considered by the Corporation.

Action taken in this respect should be made known to the Government.

Yours faithfully

S.P.N. Sharma,

Joint Secretary.'

'Bihar State Agro-Industries DevelopmentCorporation Ltd.

(Government Undertaking)

Regd. Office Krishi Udyog Bhawan SinhaLibrary Road, Patna-800001.

Ref. 7300 D/- 3-11-1978.

To

M/s. Premier Traders,

Exhibition Road.

Patna.

Sub.: Confirmation of Balance.

Dear Sir,

As per our annual accounts for the year ending 31st March, 1976, a credit balance of Rs. 2,54,250.25 (two lakhs fifty four thousand two hundred fifty and paise twentyfive only)stands in your name. This may kindiy be confirmed.

As the confirmation certificate in respect of the aforesaid balance is required by our Auditors, an early reply will be highly appreciated.

Yours faithfully,

for B.S.A.I.D.C. Ltd.

A. K. Sinha

Accounts Oiiicer-II

21-10-1978.'

15. In the facts and circumstances of this case we are unable to uphold the finding of the learned Judge of the Court of the first instance that in view of the admission and acknowledgement of liability made by or on behalf of the appellant it will not be necessary for the plaintiff (i. e. respondent No. 1) to prove his claim or no witness need be called at the hearing of the suit.

16. The statements made by Srivastava at the Receiver's meeting as stated hereinbefore upon which the respondent No. 1 relies as admission of liability is a qualified statement. It is made clear that payment would be made after observing all rules and regulations of the orders placed upon the said firm and subject to detailed' checking of the pump sets by concerned authorities and clearance from the Government of Bihar, Agriculture and Animal Husbandry Department as well as legal section of the appellant. Thus the admission of liability, if any, by Srivastava is qualified and/or conditional. Further, the authority of Srivastava to make such statement is also challenged by the appellant. Similarly, paragraphs 2 and 4 of the letter dated 30th Oct., 1977 makes it clear that at the time of making payment dues of Sales Tax Authorities is to be considered and further how much is due to the firm is to be considered by the appellant. In the premises it cannot be said that there is unconditional acknowledgement of liability by this letter.

17. On the letter dated 3rd Nov., 1978 strong reliance was placed by the respondent No. 1. It is to be noted that it is stated in this letter credit balance standing in the name of the firm was up to 31st March, 1976 and confirmation thereof was asked for from the said firm. This letter only shows the amount lying to the credit of the firm on the basis of the pump sets delivered by the firm to the appellant. But as stated hereinbefore the appellant has various claims against the said firm as was fully stated in its Advocate's letter dated 21st Sept., 1977 (p. 44 of the Paper Book). Those claims might have arisen after 31st March, 1976. If this letteris read along with other letters mentioned above it cannot, in our view, be said that there is unconditional acknowledgment of the respondent No. 1's claim in the suit for which it will not be necessary to call any witness at the trial. In our view, the appellant is entitled to claim loss and damages in respect of the defective pump sets as well as for breach of the contract. Of course such claim will have to be proved by the appellant. Accordingly it cannot be said that in view of the above letter no evidence is necessary in this suit. Considering the facts and circumstances of this case, in our view, balance of convenience lies in favour of this suit being tried by the Court at Patna. The transaction out of which the claim arises took place at Patna. The place of business of the said firm who supplied the pump sets is at Patna and the relevant document relating to the contract and the transaction are at Patna. Both the defendants are at Patna. AH the relevant documents of the defendants are at Patna, Muzaffarpur and Sitamari. To prove the defects in the pump sets supplied by the said firm and the loss and damages suffered by the appellant for breach of contract various witnesses will have to be called and various documents will have to be produced by the appellant. Further, the appellant will have to prove he circumstances in which the said letter dated 3rd Nov., 1978 was written. This etter was sent to the Patna Office of the said firm. All the documents and witnesses of the appellant are either at Patna or Muzaffarpur or Sitamari, Excepting that the respondent No. 1 was appointed by this Court and admission, if any, was made in the Receiver's meeting no part of the cause of action had arisen within the jurisdiction of this Court. If ihe suit is tried in this Court, all the said documents and witnesses will have to be produced before this Court, Apart from the great inconvenience that will be caused to the appellant it will have to incur enormous expenses. Whereas the plaintiff will have to produce the certified copy of the decree and the minutes of the Receiver's meeting entitling him to realise the claim of the said firm. The office of the said firm being at Patna all the documents relating to the transaction will be at Patna. If any witness is to be called by the plaintiff regarding the transaction they are at Patna. In the above circumstances if the appellant is compelled to contest this suit in this Court it will have to bring all the documents and witnesses at Calcutta and apart from great inconvenience and hardship that would causeserious prejudice amounting to injustice to, the appellant. If the suit is tried in the Court at Patna ihe respondent No. 1 will not be required to take many documents or witnesses to Patna. Considering the respective advantages and disadvantages of the parties it appears to us that in the facts and circumstances of this case the balance of convenience is in favour of this suit being tried by a Court at Patna. In this connection the fact that in the letter dated 24th May, 1973 the firm stated 'subject to Patna jurisdiction' should also be taken into consideration.

18. For reasons stated above, in our view, the appeal should succeed and the same is allowed. Leave under clause 12 of the Letters Patent is revoked and all further proceedings in the Suit No. 906 of 1978 (Ram Chand Khosla v. State of Bihar) are Stayed, In the facts and circumstances of this case there will be no order as to costs.

S.C. Ghose, C.J.

19. I agree.


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