Citation Codes

Equivalent Citations

citation codes

Case Number

Regular Second Appeal No. 1413 of 1984

Attorney(S)

G. C. Garg
R. S. Cheema

Judges

Hon'ble Mr. Justice Gurbax Rai Majithia

Acts

S. 18 of the Limitation Act.

See more information ...

Smart Summary

Summary of Legal Opinion — Regular Second Appeal (Karnal)

Factual and Procedural Background

This Regular Second Appeal challenges the judgment of the District Judge, Karnal, who on appeal had affirmed the trial court's judgment and decree dismissing the plaintiff's suit for recovery of certain articles and, alternatively, recovery of Rs. 2,67,270.90.

The plaintiff alleged that it appointed defendant No. 1 as a commission agent by letter dated 27 October 1969. The plaintiff placed gunny bags at the defendant's disposal for filling foodgrains and delivered two tarpaulins (valued at Rs. 1,000 each) to the defendant for protection against rain. The plaintiff alleged that the defendant failed to account for the materials supplied and made a short supply of foodgrains amounting to 441 quintals 52 kgs 800 grams, valued at Rs. 34,517.20. The total claim was Rs. 2,67,270.90.

The defendant denied being appointed as an agent, described any appointment as unilateral, denied the short supply, admitted receipt of tarpaulins but asserted a lower value (Rs. 100), admitted receipt of some gunny bags, and alleged that the plaintiff had removed 937 gunny bags from the defendant's godown and failed to account for them. The defendant challenged the authority of the District Manager to file the suit and pleaded limitation. The defendant also made a counter-claim for Rs. 92,554.20 and asserted a lien over the plaintiff's gunny bags for recovery of outstanding dues.

The trial court and the first appellate court made a number of factual and legal findings (summarised below in Court's Reasoning and Analysis). The trial court had found certain categories of gunny bags and two tarpaulins were held by the defendant as trustee and made mixed findings on short supply, limitation and lien. The first appellate court affirmed most findings but held the plaintiff's claim for short supply (Rs. 34,517.20) to be barred by limitation, concluding that a letter dated 11-4-1975 did not amount to an acknowledgement under S. 18 of the Limitation Act. The present court (the appeal court) reviews those conclusions and the handling of the counter-claim and lien, and delivers the final decision described below.

Legal Issues Presented

Whether the suit was filed through a duly authorised person by the plaintiff? (Issue No. 1)
Whether the gunny bags and two tarpaulins were held by the defendant as trustees on behalf of the plaintiff? (Issue No. 2)
Whether defendant No. 1 had not delivered 334 bags weighing 441 quintals 52 kgs and 800 grams of foodgrains to the plaintiff and whether the value of the undelivered foodgrains was Rs. 34,517.20? (Issue No. 3)
Whether the value of the articles (as referred to in the plaint) including shortages amounted to Rs. 2,67,270.00? (Issue No. 4)
Whether the suit was within time (limitation)? (Issue No. 5)
Whether the letter dated 11-4-1975 of the Joint Registrar Co-operative Societies amounted to an acknowledgement by defendant No. 1? (Issue No. 6)
Whether the plaintiff was entitled to recovery of the articles mentioned in the plaint? (Issue No. 7)
Whether, alternatively, the plaintiff was entitled to recovery of Rs. 2,67,270.90? (Issue No. 8)
Whether the plaint disclosed accrual of cause of action? (Issue No. 9)
Whether the suit was bad for misjoinder of parties and causes of action? (Issue No. 10)
Whether the bags placed in the defendant's premises remained under the control of the plaintiff? (Issue No. 11)
Whether the defendant was entitled to adjustment of any amount due from the plaintiff (per additional pleas)? (Issue No. 12)
Relief (Issue No. 13)

Arguments of the Parties

Plaintiff's Arguments

The plaintiff appointed defendant No. 1 as commission agent by letter dated 27-10-1969 and placed gunny bags and two tarpaulins at the defendant's disposal for filling and protecting foodgrains.
The defendant failed to account for the materials and short-supplied foodgrains totalling 441 quintals 52 kgs 800 grams valued at Rs. 34,517.20, contributing to a total claim of Rs. 2,67,270.90.
The plaintiff asserted entitlement to recovery of the articles and, alternatively, the claimed monetary relief; the plaintiff relied on evidence and the alleged admissions by the defendant (including a letter, Ex. PW8/C) to show the goods remained in the defendant's possession.

Defendant's Arguments

The defendant denied appointment as an agent and characterized any such appointment as unilateral on the plaintiff's part.
The defendant denied making short supply of foodgrains and admitted only limited receipt of tarpaulins (valued at Rs. 100) and some gunny bags; it alleged the plaintiff removed 937 gunny bags from the defendant's godown and failed to account for them.
The defendant challenged the authority of the District Manager to institute the suit and pleaded that the suit (or parts of it) were barred by limitation.
The defendant pleaded a counter-claim for Rs. 92,554.20 for supply of wheat, market fee, commission and labour charges, and asserted a lien over the plaintiff's gunny bags for recovery of outstanding dues.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court analysed the findings of the trial court and the first appellate court issue by issue and reached the following points (based solely on the reasoning contained in the opinion):

Authority to sue: The trial judge's finding that the District Manager was validly authorised to file the suit was upheld by the present court.
Possession/trusteeship of goods: The trial court had found (and both lower courts accepted, on evidence and concessions by the defendant's counsel) that substantial categories of A, B and C class gunny bags (51035 A-class, 153 B-class, 240 C-class) and two tarpaulins were held by the defendant on behalf of the plaintiff as trustees. Both courts below recorded a firm factual finding to that effect and the present court accepted that factual record.
Short supply claim and limitation (issues 3 and 5): The trial court found the plaintiff failed to prove short supply; the first appellate court nonetheless upheld the finding of short supply but held the plaintiff's suit for the short supply amount (Rs. 34,517.20) to be barred by limitation, concluding that letter Ex. PW8/C (dated 11-4-1975, from the Joint Registrar Co-operative Societies) did not constitute an acknowledgement under S. 18 of the Limitation Act. The present court disagreed with that appraisal.
Nature and effect of Ex. PW8/C: The present court analysed Ex. PW8/C and concluded it could be split into two parts: (a) an admission that the goods claimed were in the custody of the defendant's manager (an admission of the claim), and (b) an explanation that the goods were retained against outstanding bills (relating to the defendant's counter-claim). The court held that the document did amount to an acknowledgement within the meaning of S. 18 of the Limitation Act so as to render the claim within time. The court noted that while part of the letter related to a counter-claim, that counter-claim was unproven and unsubstantiated.
Lien and counter-claim: Both courts below dismissed the suit largely on the ground that the defendant had a lien against the goods for unpaid price of goods supplied by it to the plaintiff. The present court held that the defendant failed to lead evidence to establish the quality, quantity and price of the foodgrains it alleged to have supplied to the plaintiff; therefore, the assertion of lien and the counter-claim were not proved. The court observed that even if a lien existed, it could not exceed the amount pleaded in the written statement. The court criticised both lower courts for proceeding on assumptions rather than evidence.
Quantification and net entitlement: The court noted that the plaintiff's total claim of Rs. 2,67,270.90 stood proved on the evidence and concessions recorded. The defendant's counter-claim was not substantiated to the extent alleged (Rs. 92,554.20). The court observed that even if the counter-claim had been proved in full, the plaintiff would still be entitled to a net recovery (Rs. 2,67,270.90 less Rs. 92,554.20 = Rs. 1,74,716.70). Because the counter-claim was not established, the court concluded the plaintiff's full claim succeeded.
Relief and costs: The court therefore allowed the appeal, set aside the judgments and decrees of the courts below, and decreed the plaintiff's claim for Rs. 2,67,270.90 with interest as claimed in the plaint. The court awarded costs throughout and assessed counsel fee at Rs. 1,000.

Holding and Implications

Holding: The appeal is allowed; the judgments and decrees of the courts below are set aside; the plaintiff's suit succeeds.

Direct consequences for the parties:

The plaintiff is entitled to a decree for recovery of Rs. 2,67,270.90 with interest as claimed in the plaint.
The counter-claim of the defendant (for Rs. 92,554.20) was held not to be established by evidence and therefore did not reduce the plaintiff's recovery.
Costs were awarded to the plaintiff throughout, and counsel fee was assessed at Rs. 1,000.
The trial court's findings that the defendant held specified gunny bags and two tarpaulins as trustee for the plaintiff were accepted by the appellate process and factually reinforced in this decision.

Broader legal implications:

The opinion addresses application of S. 18 of the Limitation Act to an asserted acknowledgement and the evidentiary burden to establish a lien and a counter-claim. The court emphasised that assertions of lien and counter-claims must be proved by evidence and that a judicial decision must be founded on evidence rather than assumption. The opinion does not purport to establish a novel precedent beyond resolving the facts and legal issues in this dispute.

Show full summary ...

Food Corporation Of India v. The Panipat Co-Operative Marketing Processing Society Limited And Another

1. This Regular Second Appeal is directed against the judgment of District Judge, Karnal, who on appeal affirmed the judgment and decree of the trial Judge dismissing the suit of the appellant for recovery of some articles and in the alternative for recovery of Rs. 2,67,270.90.

2. THE FACTS;

The appellant (hereinafter referred to as the plaintiff) came to the Court on the allegations that the plaintiff had appointed defendant No. 1 as commission agent for purchasing food grains for it vide letter dated October 27, 1969. The plaintiff placed gunny bags at the disposal of defendant No. 1 for filling food grains therein. The plaintiff also delivered two tarpaulins of the value of Rs. l,000/- each to the defendant for protecting the food grains from rains. The defendant No. 1 did not account for the material supplied and made short supply of food grains by 441 quintals 52 kgs. 800 grams of the value of Rs. 34,517.20. The claim .was split up as under:--

Articles Quantity Value

1. Tarpaulins Rs. 2000.00

2. A Class gunnies 51035 Rs. 229657.50

3. B Class gunnies Rs. 520.20

4. C Class gunnies Rs. 576.00

5. Wheat shortage 441 quintals Rs. 34517,20 52 Kgs.

899 grams Rs. 267270.90

3. The contesting respondent-defendant (hereinafter referred to as the defendant) controverted the material allegations made in the plaint. It denied its appointment as an agent for purchasing food grains for the plaintiff. The act of the plaintiff appointing it as commission agent was unilateral. It denied having made short supply of food grains. The receipt of the Tarpaulins was admitted but these were of the value of Rs. 100/-. Some gunny bags were received but the plaintiff lifted 937 gunny bags from the godown of the defendant and the plaintiff failed to account for these bags in its account. The authority of the District Manager to file the suit was assailed. An additional plea was taken that the suit was beyond limitation.

4. The defendant made a counter-claim for recovery of Rs. 92,554.20 against the plaintiff towards supply of wheat, market fee, commission fee and labour charges etc. The defendant claim lien against the gunny bags belonging to the plaintiff for the recovery of the outstanding dues.

5. The pleadings of the parties gave rise to the following issues:--

1. Whether the suit has been filed through a duly authorised person by the plaintiff? OPP

2. Whether the gunnies, as detailed in para 4 of the plaint, and two tarpaulins as referred to in para 3 of the plaint were held by the defendant as trustees on behalf of the plaintiff corporation as alleged? OPP

3. Whether defendant No. 1 had not delivered 334 bags weighing 441 quintals 52 kgs. and 800 grams of food grains to the plaintiff and the value of the undelivered food grains comes to Rs. 34,517/- ? OPP

4. Whether the value of the articles, as referred to in paras 3 and 4 of the plaint including the shortages as referred to in para, 5 of the plaint and held by the plaintiff as trustees is Rs. 2,67,270.00, as detailed in para 18 of the plaint? OPP

5. Whether the suit is within time? OPP

6. Whether letter dated 11-4-1975 of Joint Registrar Co-operative Society, Haryana, amounts to an acknowledgment on the part of defendant No. 1, as alleged? OPP

7. Whether the plaintiff is entitled to the recovery of articles mentioned in paras 15 and 16 of the plaint? OPP

8. Whether, in the alternative, the plaintiff is entitled to the recovery of Rs. 2,67,270.90 as alleged? OPP

9. Whether the plaint does not disclose the accrual of cause of action, as alleged? If so, to what effect? OPD

10. Whether the suit is bad for misjoinder of the parties and causes of action? OPD

11. Whether the bags placed in the premises of the defendant remained under the control of the plaintiff, as alleged? OPD

12. Whether the defendant is entitled to adjustment of any amount due from the plaintiff, towards the claim of the plaintiff, as alleged in para 2 of additional pleas of written statement? OPD

13. Relief.

6. The learned trial Judge found that the District Manager was validly authorised to file the suit. Under issue No. 2, the learned trial Judge found that 51035 A class gunnies, 153 B class gunnies, 240 C class gunnies and two tarpaulins were held by the defendants on behalf of the plaintiff as trustees. Issue No. 3 was answered against the plaintiff for the reason that it failed to prove that the defendants made short supply of the food grains. Issue No. 4 was answered in favour of the plaintiff and it was held that the defendant counsel conceded the claim of the plaintiff regarding the receipt of the gunny bags and the tarpaulins and value thereof as mentioned in the plaint and proved by the plaintiff on evidence. Issue No. 5 was answered against the defendant and it was held that the claim of the plaintiff was within limitation. Issue No. 6 was answered in favour of the plaintiff and it was held that vide letter Ex. PW8/C it was admitted that the goods subject matter of the suit were in possession of the defendants. Issues Nos. 7 and 8 were not separately dealt with. It was observed that these will be dealt with under the relief clause. Issues Nos. 9 and 10 were not pressed by the defendants. These were answered in favour of the plaintiff and against the defendants. Under issue No. 11, it was held, on the concession of the defendants counsel, that the gunny bags supplied by the plaintiff were in possession of the defendants. Issue No. 12 was answered against the plaintiff on the ground that the defendant had a lien for the unpaid price of the food grains supplied by it to the plaintiff.

7. The findings recorded by the learned trial Judge were affirmed on appeal except under issue No. 5. The learned First Appellate Judge held that the suit for the recovery of Rs. 34,517.20 for short supply of wheat filed by the plaintiff was beyond limitation. In other respect, the finding of the learned trial Judge was maintained. Both the courts on appraisal of the evidence and on concession made by the defendants' counsel, gave a firm finding of fact that gunny bags of various qualities and tarpaulins of the value of Rs. 2,32,753.70 were supplied by the plaintiff and not utilized by the defendants.

8. The short supply of food grains to the extent of 441 quintals 52 kgs. 800 grams valuing at Rs. 34,517.20 was upheld by both the courts but the learned Appellate Judge found that the suit qua the recovery of the amount pertaining to the short supply of food grains by the plaintiff was beyond limitation. The learned Appellate Judge modified the judgment of the trial Judge under issue No. 5 on the ground that letter Ex. PW8/C dated April 11, 1975 written by Joint Registrar Co-operative Societies did not amount to acknowledgment. Paragraph 3 of the letter indicates that the Registrar Co-operative Societies acknowledged that the goods claimed were in the custody of the Manager of the defendant but clarified that these were retained against the outstanding bills of the defendant from the plaintiff. The learned Appellate Judge erred in observing that this letter does not amount to acknowledgment. The claim of the plaintiff is admitted and also the liability of the defendants but a counter claim has been set up. The learned Appellate Judge was not correct in his observation that the letter does not amount to acknowledgment within the meaning of S. 18 of the Limitation Act. The letter can be split up in two parts, namely, admission of liability and acceptance of jural relationship. A counter claim was pleaded and it was asserted that the goods were retained for recovery of the amount payable by the plaintiff towards the outstanding bills of the defendants. The second part of the document relates to counter claim set up by the defendant. There is no proof of counter claim and it remained unsubstantiated. The finding of the learned Appellate Judge under issue No. 5 cannot be sustained. The finding of the learned trial Judge is affirmed and it is held that the suit is within limitation.

9. Both the courts below have dismissed the suit on erroneous grounds. They hastened to dismiss the suit on the ground that the defendant had a lien against the goods for unpaid price of the goods supplied by it to the plaintiff, The defendant did not lead any evidence to establish the quality, quantity and price of the food granins which was allegedly to have been supplied by it to the plaintiff and the latter did not pay for it. If the defendant had made supplies of the food grains as alleged by it. there was no difficulty in proving the value thereof. Both the courts below have proceeded on assumptions. The First Appellate Court referred to some judgment to prove that an agent has a lien against the goods of the principal for payment of its commission fee or any other outstanding due or dues against the principal. There is no quarrel with the proposition. The question is only of its applicability and on the facts proved, there is hardly any justification to hold that the defendant had exercised the lien against the goods of the plaintiff for payment of its outstanding dues. Assuming that the defendant had a lien against the goods of the plaintiff for realisation of their dues, it cannot have a lien for a sum exceeding the one mentioned in the written statement. The claim of the plaintiff for the recovery of Rupees 2,67,270.90 against the defendant stood proved and the counter claim even if stood proved would be to the extent of Rupees 92,554.20 only. Even then, the plaintiff is entitled to a decree of Rs. 1,74,716.70. I fail to understand on what logic the courts below have dismissed the suit of the plaintiff in its entirely. A judicial officer is expected to act fairly. He has to play an important role in the administration of justice when he is dealing with civil rights of the parties. The least which could be expected of him is a just decision on evidence.

10. I have already held that the defendant has failed to establish its counter claim to the extent of Rs. 92,554.20 as alleged by it. The plaintiff has succeeded in proving its claim in its entirety. It is entitled to a decree for recovery of Rs. 2.67,270.90 with interest as claimed in the plaint. The appeal is accepted. The judgments and decrees of the courts below are set aside. The Suit of the plaintiff succeeds with costs throughout. Counsel fee is assessed at Rs. 1,000/-.

11. Order accordingly.

Food Corporation Of ... v. The Panipat Co-Opera...