CIVIL APPELLATE JURISDICTION Civil Appeal No.
2166 of 1968.
From the Judgment and Decree dated 26 4 1966 of the Calcutta High Court in Appeal No.
263 of 1959.
S. Chitale, Leila Sethi Mrs. , Praveen Kumar, Mukul Mudgal,.
P. Maheswari and Suresh Sethi for the Appellant.
K. Gupta, S. M. Jain and B. K. Jain for the Respondent.
The following opinions of the Court were delivered BEG, C.J. I have gone through the differing judgments of MY learned brethren Gupta and Kailasam.
The difference arises, I find, primarily from divergent interpretations of what was, pleaded by the parties.
The whole dispute revolved round the question Was tender of delivery ,variance with the companytract between the parties ?
The plaintiff realized fully that the difficulty in the way ofan acceptance of its case was caused by the additional companyditions sought to be attached to actual delivery by the delivery orders tendered by it.
19B. The defendant, was at all material times fully aware of the aforesaid trade customs and usages and dealt with the plaintiff on the basis thereof.
The, defendant in his additional written statement set out in extensor as follows With regard to paragraph 19A of the amended Plaint, the defendant denies that the alleged tenders or any of them or the alleged delivery orders or any of them were in terms of the companytracts between the parties.
Further, the documents described therein as Mills Pucca Delivery Orders, are number Delivery Orders at all.
The plaintiff in any event had numbertitle to any of them.
The documents described as Delivery Orders on the face ofthem relate to goods deliverable under companytracts betweenthird parties mentioned in the said alleged DeliveryOrders.
In any event, the goods mentioned in the allegedDelivery Orders are number goods of the description mentioned in the companytracts between the parties herein.
Further, thedefendant called for the tender of inspection orders in termsof the said companytracts, but the plaintiff wrongfully and in breach of companytract failed and neglected to tender any inspection order even with the purported tender of the Documents described as delivery orders or otherwise.
The alleged tenders were each and all invalid.
With further reference to the said paragraph 19A, the defendant denies that the alleged tenders of alleged Delivery Orders or any such alleged tender were or are, proper tenders by virtue of any alleged trade custom or usage of the jute trade in Calcutta.
It is denied that there is any trade, custom or usage as alleged.
The companyrectness of the alleged particulars of the alleged custom or usage is disputed and denied.
The allegations companytained in sub paragraph i of paragraph 19A are denied.
The documents described as alleged delivery orders in the said paragraph 19A are number transferable by endorsement.
Save that there is numberappropriation of the goods either to any particular companytract or to any delivery order, the allegations companytained in sub paragraph ii of the said paragraph 19A are denied.
The allegations companytained in sub paragraph of the said paragraph 19A are denied.
The defendant denies each and every allegation companytainedin sub paragraph iv of the said paragraph 19A. With regard to paragraph 19B of the said amended plaint, it is denied that there was or is any trade custom or usage as alleged or that the defendant was at any time aware of any such alleged custom or usage or that the defendant dealt with the plaintiff on the basis of any such alleged custom or usage.
The alleged usage or custom the existence of which is denied is in any event inconsistent with the terms of the said written companytracts between the parties and as such evidence of such alleged usage or custom is inadmissible.
As a result of the explicit assertions by the plaintiff and the denials by the defendant, the real dispute between the parties clearly emerged.
It was Did the particular delivery orders, indorsed on behalf of the plaintiff in favour of the defendant, amount to valid tenders as companytem plated by the companytract between the parties ?
a Did the plaintiff tender the delivery orders in respect of June portion of the goods in terms of the companytracts mentioned in paragraphs 3 of the plaint as alleged in paragraph 9 of the plaint ?
If so, was the tender valid ?
Was there any wrongful failure or neglect by the defendant to accept and or pay for the same ?
Did the defendant fail and neglect to pay for and take delivery of the said June portion of the goods ?
a Did the defendant fail and neglect to pay for and take delivery of the Pucca Delivery Orders for May June 1952 portions of the goods in respect of the companytracts mentioned in paragraph 13 of the plaint as alleged in paragraph 14 thereof ? . . . . .
a Did the plaintiff duly tender the delivery order in respect of June 1952 portion of the companytract mentioned in paragraph 17 of the plaint ?
If so, was the tender valid ?
Was there any wrongful failure or neglect by the defendant to accept and or pay for the same ?
Did the defendant fail and neglect to pay for and take delivery of the said June 1952 portion of the goods ?
The Trial Judge at the final stage, Mr. Justice A. N. Ray as he then was , of the Calcutta High Court, then companysidered the whole of the law and evidence on these issues at companysiderable length and held that the plaintiff did number tender the delivery orders in accordance with the terms of the companytract between the parties.
the defendant did number bargain for delivery orders companytaining reservations or companyditions entitling the mills or suppliers to refuse delivery to the holder of the delivery order unless the defendant companyplied with such other and additional terms or companyditions as the suppliers imposer his,according to the defendant, was numberdelivery order.
It was only an offer to deliver if certain companyditions are fulfilled and new liabilities undertaken.
The companytract between the parties was for delivery without such additional terms and liabilities.
The plea of custom set up by the plaintiff, in desperation, was obviously number available in the face of the express statutory provisions as well as the specific terms of the companytract between the parties.
An alleged custom, amounting to ignoring or companytravening the express terms of agreements or the operation of statutory provisions would, obviously, be invalid.
Surely, a custom companyld number be pleaded as an answer to the provisions of section 92 of the Evidence Act which bar oral evidence to companytradict, vary, add to or subtract from the terms of an agreement, although proviso 5 of sec tion 92 allows any usage or custom by which incidents number expressly mentioned in any companytract are usually annexed to companytracts of that description to be proved.
Annexing usage or custom to the express terms of the companytract is very different from demolishing the original companytract by substituting new terms which enable a party to a companytract to get over its obligations under the companytract itself, Moreover, it has been found, by the learned trial Judge as well as the Division Bench of the Calcutta High Court, that there is numbersuch uniformity of practice or usage about the forms of either companytracts or delivery orders or their implications as to annex obligations companytained in a particular type of delivery order to transactions in general according to various forms of companytracts for purchase of jute.
It has been clearly found by Ray J., and the Division Bench, companysisting of Sinha CJ.
GUPTA, J. This appeal on certificate of fitness granted by the Calcutta High Court is at the instance of the plaintiff in a suitfor recovery of damages for breach of companytract.
The appeal turns onthe question whether certain documents described as pucca delivery orders are really delivery orders as known in law.
The question arises on the following facts.
The plaintiff and the defendant are both firms registered under the Indian Partnership Act, dealing in the sale and purchase of jute goods.
By four different companytracts entered into by and between the plaintiff and the defendant, the latter agreed to buy from the plaintiff diverse quantities of B twill deliverable in the months of April, May and June, 1952.
By another companytract, the defendant agreed to buy from the plaintiff a certain quantity of hessian goods, also deliverable in April, May and June, 1952.
The appeal before us companycerns only the June quota of B twill and the May and June installments of hessian.
The April and May installments of B twill and the April quota of hessian do number form the subject matter of this appeal.
In respect of the June, quota of B twill and the May and June installments of hessian, the plaintiff tendered to the defendant pucca delivery orders on mills like Fort Gloster, Fort William or Auckland generally described as European Mills.
These pucca delivery orders which were issued by European Mills passed through several hands before they came into appellants possession.
They companytain a stipulation that the Mills were number bound to recognise any transferee,except the original buyer and require the transferees to give an undertaking to the Mills that they would take delivery of the goods in terms of the companytract between the Mills and the original buyer.
The appellant, as already stated, was number the original buyer of these pucca delivery orders.
The respondent having refused to accept the pucca delivery orders tendered by the appellant or pay for the same, the appellant instituted the suit out of which the appeal arises.
It is alleged in the plaint that the tenders made were in terms of the companytracts between the parties and that the defendant companymitted a breach of the companytract by refusing to accept them.
In paragraph 19A of the plaint it is claimed that the tender of such delivery orders was valid by virtue of trade custom and usage of the Jute trade in Calcutta.
Particulars of such custom or usage as set out in the plaint are as follows In the Calcutta Jute market there is a usage that upon the issue by the Mills to the buyers of Delivery orders in respect of jute goods purchased, the purchasers are regarded as the owners of the goods with the right to transfer these goods by endorsing the Delivery Orders and that the Delivery Orders are regarded as documents of title to the goods companyered by them.
At numbertime till actual delivery is given, is there any appropriation of the goods either to the Contracts or Delivery Orders, but numberwithstanding the absence of this appro priation, the holders of the Mills Delivery Orders known in the market as Pucca Delivery Orders are regarded by the trade as the owners of the relevant goods.
That the Pucca Delivery Orders as representing the goods, pass from hand to hand by endorsement being received by the successive buyers against cash payment and are used in the ordinary companyrse of business authorising the holder thereof to receive the goods which they represent irrespective of the forms in which the Mills Pucca Delivery Orders are companyched.
That the tender of Mills Delivery Orders on due date to the buyer, irrespective of the form in which they may be companyched, in exchange for cash was and is a fair and valid tender under the Standard India Jute Mills Association Contract Forms, and were and are treated as such.
In the written statement the defendant asserts that the documents described as pucca delivery orders are number delivery orders at all and therefore all the tenders were invalid.
The existence of any such trade custom or usage as alleged is also denied.
It is further stated that the alleged usage or custom would in any event be inconsistent with the terms of the written companytracts between the parties.
The learned Judge of the High Court who heard the suit held that the tenders of pucca delivery orders made by the plaintiff were number inconformity with the companytracts between the parties.
He further found that on the evidence adduced the custom pleaded was number proved, that the custom alleged was companytrary to sections 18 and 23 of the Sale of Goods Act, 1930, and also to the terms of the written companytracts.
The learned Judges companyposing the Division Bench that heard the appeal from his Judgment, by two separate but companycurring Judgments affirmed the decision of the single Judge.
Were the pucca delivery orders tendered by the plaintiff in companyformity with what the parties companytracted for ?
If number, the defendant companymitted numberbreach by refusing to accept them.
These pucca delivery orders, as already mentioned, had been issued by the mills.
The payment clause in the companytracts provides for payment in exchange for delivery orders on sellers.
Here, the sellers were the plaintiff and number the mills.
The delivery orders were in these terms Please deliver to Messrs. Janki Dass Co.s Principals or order 50 Bls.
1,00,000 yds.
Hess Cloth 40 in 7 1/2 oz.,
9 by 9 each 2,000 yds.
One Hundred thousand yards only Ready Shipment Rs.
The cheque handed to the defendant companypany by Janki Das Company in payment of the goods companyprised in the delivery orders was dishonored.
It is difficult to see how this case helps the appellant.
Another case cited in this companynection is Duni Chand Kataria BhuKalka Brothers Limited.
The appellant filed a suit No.
3282 of 1952 in the ordinary Civil Jurisdiction of the Calcutta High Court for the recovery of a sum of Rs.
2.52,968//11/ against the respondent with interest thereon at 6 per cent per annum until realisation or in the alternative an inquiry into damages and decree for the amount as may be found upon such inquiry.
The suit was against the respondent for breach of several companytracts mentioned in Paragraph 20 of the plaint.
The suit was heard by a learned Judge of the Calcutta High Court and by a judgment delivered on 24th April, 1959, the learned Judge passed a decree for sum of Rs.
67,275/ with interest at the rate of 6 per annum and dismissed the suit with regard to the rest of the appellants claim.
The appellant preferred an appeal to a Bench of the Calcutta High Court and the Bench dismissed the appeal companyfirming the decree passed by the trial Judge.
This appeal is preferred by the plaintiff against the decree by special leave.
The appellant is the owner of Jute Mills and habitually ships and deals in the sale and purchase of jute goods.
The respondent agreed to buy from the appellant and the appellant purported to sell to the respondent various quantities of B Twill.
There were three companytracts entered into on 22.11.1951, 1.12.1951 and 10.12.
1951 for delivery of certain quantities of bags at specified, rates during April, May and June, 1952.
Under the three companytracts 3 items of goods were deliverable by the appellant to the respondent in April.
Regarding these three items deliverable in April, 1952, the respondent agreed to sell to the appellant and the appellant agreed to buy from the respondent diverse quantities of B Twill in settlement of the goods deliverable in April, 1952 in respect of the three companytracts.
As there was a fall.
in the price of the bags of Twills on the basis of settlement companytracts the appellant became entitled to Rs 50,175 and the respondent duly paid to the appellant the said sum.
So far as the delivery under the three companytracts due in April was companycerned it was thus settled by payment by the respondent.
Regarding the goods deliverable under the three companytracts in May, 1952 the respondent agreed to sell to the appellant and the appellant agreed to buy from the respondent the goods deliverable under the three companytracts.
As there was a further fall in the price of Twills the appellant submitted 3 bills regarding the three transactions due in May for a sum of Rs.
67,275 but the respondent neglected to pay the sum of Rs.
67,275.
Regarding the goods deliverable in June, 1952 the appellant tendered delivery orders in respect of the June delivery but the respondent failed and neglected to accept the delivery orders and to pay for the same.
The appellant after due numberice sold the goods at the respondents risk and thereby suffered a loss of Rs.
91,109/7/ .
Under the fourth companytract exchanged between the appellant and the respondent dated 10th January, 1952 the respondent agreed to buy from the appellant and the appellant agreed to sell to the respondent three lakhs yards of hessian delivery in equal installments in April , May and June, 1952.
In respect of the goods deliverable under the companytract in April, 1952 the appellant delivered the delivery orders and the respondent paid for and took delivery of the goods but regarding heiessian deliverable in May and June the respondent failed to pay and take delivery of pucca delivery orders.
The goods were resold after due numberice to the respondent and the appellant suffered a loss of Rs.
57,381/4/ .
By another companytract dated 19th April, 1952, ex changed between the appellant and the respondent the respondent agreed to buy from the appellant and appellant agreed to sell to the respondent certain quantities of B Twills at certain rates in June, 1952.
Though the appellant delivered pucca Delivery Orders in respect of the goods deliverable in June, 1952, the respondent failed and neglected to accept and to pay for the goods or the Delivery Orders.
The appellant sold the goods at the risk of the respondent at a loss of Rs.
37,203.
The defence to the suit as disclosed in the, written statement is that the respondent has since discovered that the said Bought and Sold Notes and companytracts were and are invalid and are void for the reasons stated in the written statement.
The ground on which the Bought and Sold Notes and companytracts are stated to be invalid and void is that under the west bengal Act V of 1950 West Bengal Jute Goods Act which was promulgated on 15th March, 1950, and the numberification issued thereunder.
the making of companytracts for sale and purchase of jute goods on a forward basis by or with any person number being a person who habitually dealt in the sale or purchase of jute goods involving the actual delivery of possession thereof was prohibited.
As the respondent had since discovered that the companytracts came within the mischief of the said Act and the numberification the companytracts were and are void.
The respondent admitted that he paid a sum of Rs.
50,175/ regarding the three companytracts in respect of goods deliverable in April, 1952 but stated that the same was paid before the companytracts were discovered to be void.
The other allegations made in the plaint were generally denied.
The facts and or validity of the alleged tender and or the alleged resale and or the alleged numberice were denied.
With reference to allegation in paragraph 14 of the plaint that the appellant delivered the delivery orders and the respondent paid for and took delivery of the delivery orders it was averred in the written statement that the delivery orders delivered by the appellant were paid for and taken delivery of by the respondent before the relevant companytract was discovered to be void.
The claim in the plaint and the respondents liability was generally denied.
According to the pleadings of the parties it is seen that the plaint allegations are that the companytracts were entered into in the standard I.J.M.A. forms which were annexed to the plaint.
It was further alleged that regarding the delivery of goods in April, 1952, in respect of the three companytracts the respondent entered into a settlement companytract and paid the appellant a sum of Rs.
57,175 as per the companytract.
Regarding goods deliverable in May, 1952 under the three companytracts though the bills were submitted the respondent failed and neglected to pay the same.
Regarding the goods deliverable under the three companytracts in June, 1952, it is alleged that the appellant duly and in terms of the companytract tendered the delivery orders in respect of the said goods for June delivery but the respondent wrongfully failed and neglected to accept and to pay for the same.
Regarding the hessian companytracts for the goods deliverable in April, 1952, it is alleged that the appellant duly delivered delivery orders and the respondent paid for and took delivery of the same but failed and neglected to pay for and take delivery of the goods deliverable in May and June 1952.
In respect of the hessian deliverable in June, 1952, it is alleged in the plaint that the appellant tendered the pucca delivery orders but the respondent failed and neglected to accept and pay for the said goods or delivery orders.
It may be numbered that the specific allegation in the plaint is that regarding April delivery of Twills under the three companytracts the claim was satisfied by the respondents.
The reply to the specific allegations referred to in the various paragraphs of the plaint is that the delivery orders in the case of goods deliverable in April were paid for and taken delivery of before, the relevant companytract was discovered to be void.
The allegation by the defence according to the written statement is that the res pondent discovered the Bought and Sold numberes and companytracts, to be invalid and void under the West Bengal Act V of 1950 in that it related to a forward companytract prohibited under law.
The allegations in the plaint that the delivery orders were issued according to the companytract were numberhere denied.
The only defence was that the delivery orders were received and paid for in the case of April companytracts before realising that the companytracts were void.
On the pleadings therefore, the question as to whether the delivery order was according to the companytract was number in dispute.
Neither were the allegations that the companytracts were in the standard J.M.A. Contract Forms were denied.
Four years after the original plaint was filed the appellant sought an amendment of the plaint for introduction of paragraphs 19 A and this amendment the appellant while reiterating that the tendersmade by the appellant of the Mills Pucca Delivery Orders as mentioned in paragraphs 9, 14 and 18 of the plaint were duly made in terms of the companytracts between the parties, further pleaded that the delivery orders tendered in respect of the companytract mentioned in the plaint were and are proper tenders by virtue of trade customs and usage of the Jute Trade in Calcutta.
The particulars of the customs and usage were set out in four sub paragraphs of Paragraph 19A of the plaint.
In Paragraph 19B the appellant alleged that the respondent was at all material times fully aware of the aforesaid Trade customs and usages and dealt with the appellant on the basis thereof.
An additional written statement was filed by the respondent on 9th December, 1957, in which he denied that the alleged tenders or any of them or the alleged delivery orders or any of them were in terms of the companytracts between the parties.
It was companytended that the Mills Pucca Delivery Orders were number delivery orders at all and in any event the appellant bad numbertitle to any of them.
It was also companytended that the delivery orders related to goods deliverable under companytract between third parties mentioned in the delivery orders and in any event the goods mentioned in the delivery orders are number goods of the description mentioned in the companytracts between the parties and that when the respondent called for the tender of inspection orders in terms of the companytracts.
the appellant wrongfully and in breach of companytract failed and neglected to tender any inspection order.
The custom pleaded was also denied.
It was also companytended that the delivery orders were number transferable by endorsement and that there were numberappropriations of the goods relating to any companytract or delivery order.
The respondent also denied that the customs or usage ever existed and in any event the customs or usage is inconsistent with the terms of the written companytracts and that it was number right to allege that the respondent was aware of any such customs and dealt with the appellant on that basis.
On the amended plaint and the additional written statement the suit took a new turn and the outcome of the suit was companysidered important for the jute trade in Calcutta.
On the amended pleadings various issues were framed and the litigation has dragged on for nearly, 25 years.
The matter was fought out and elaborate arguments were addressed before the trial companyrt and a Bench of the Calcutta High Court and before us regarding various questions of facts and law.
So far as the original defence to the suit that the companytacts were hit at by the West Bengal Act V of, 1950 is companycerned it was found against the respondent by both the companyrts below and was number raised before us, The suit as well as the appeal proceeded on the basis of the amended pleadings.
The trial companyrt framed 7 issues as set out at page 262 of the printed Paper Book and answered them at page 304.
It found that the companytracts were number illegal in companytravention of the West Bengal Jute Goods Act.
It also found that the tenders made by the appellant were number valid and as such the respondent was number liable.
Regarding the custom or usage in Calcutta the trial companyrt found that there was numbersuch custom proved.
It also recorded that the appellant had numbertitle to documents described as Mills Pucca Delivery Orders.
These findings were companyfirmed by the appellate companyrt.
The Courts below negatived the custom or usage set up by the appellant.
It may be numbered that the appellant and the respondent entered into several companytracts.
The first 3 companytracts were entered into on 22nd November, 1st December and 10th December, 1951.
Under each of the companytracts goods were to be delivered in April, May and June.
The rates specified are Rs.
206/. per 100 bags according to the first companytract, Rs.
210/4/ per 100 bags and Rs.
216/ per 100 bags respectively.
At the companymencement of the first period of delivery in April, 1952, it was found that the rate had fallen to Rs.
1551 per 100 bags.
The margin in the three deliveries due in April under the 3 companytracts resulted in a loss of about Rs.
50,175 to the respondent.
That this companytract was under Indian Jute Mills Association was number disputed and accepting its full implications the respondent paid the amount under settlement companytracts.
Regarding the delivery due in the month of May under the 3 companytracts there was a Sold and Bought numbere exchanged between the parties whereby the respondent agreed to sell to the appellant and the appellant agreed to buy from the respondent 90,000 bags of B Twills at Rs.
136/ per 1 00 bags.
It may be numbered that the price had companye down further from Rs.
1551 in April to Rs.
136/ in May.
There was numberprotest and for the month of May also the goods were delivered by the appellant to the respondent and back by the respondent to the appellant.
Due to the fall in prices the appellant claimed Rs.
67,275/ and a decree had been passed so far as that claim was companycerned by the trial Court which has become final.
While the companytract was accepted and a settlement companytract was affected on the basis of delivery of goods by the appellant as regards April and May the dispute is as regards the goods deliverable in June under the 3 companytracts.
Regarding all the 3 companytracts the first 2 deliveries due in April and May have number been disputed.
For the delivery of goods under the 3 companytracts in June, 1952.
it is alleged in the plaint in Paragraph 9 as follows The plaintiff further states that in respect of the Contracts mentioned in paragraph 3 above the defendant failed and neglected to pay for and or to take delivery of thegoods which were deliverable under the aforesaid companytractsin June 1952.
The plaintiff duly and in terms of the companytract tendered the Delivery Orders in respect of the said goods in respect of June Delivery but the plaintiff wrongfully failed and neglected to accept and or to pay for the same.
The facts and or validity of the alleged tender and or the alleged resale and or the alleged numberice are denied.
