The Haryana Co-Opera... v. Joint Hindu Family F...

Pritam Singh Pattar, J.:— By this judgment the following two regular first appeals which are directed against the judgment dated January 22, 1966, of Sub-Judge Ist Class, Sonepat, will be decided:—

1. R.F.A No. 100/1966 Haryana Co-operative Sugar Mills Ltd., Rohtak v. Joint Hindu Family Firm (styled as Gupta Drum Supply Company).

2. R.F.A No. 171 of 1966—Joint Hindu Family styled as Gupta Drum Supply Company v. The Haryana Co-operative Sugar Mills Ltd., Rohtak.

2. The facts of this case are that the plaintiff-respondent, the Joint Hindu Family styled as Messrs Gupta Drum Supply Company carries on business in New Mandi, Rohtak. The defendant-appellant. The Haryana Co-operative Sugar Mills Ltd. Rohtak, is a limited Co-operative Society carrying on the business of manufacturing sugar and molasses at Rohtak. The defendant invited tenders for the purchase of molasses to be produced by it during the crushing season 1962–1963 in its Mills, by means of advertisements in several newspapers and one such advertisement was published in the Daily Tribune dated November 2, 1962. The last date fixed for the receipt of such tenders was November 10, 1962. The plaintiff firm submitted its tender to purchase the whole quantity of molasses prepared by the defendant during the aforesaid season at the rate of 65 N.P per maund. The defendant accepted this offer on November 10, 1962 and informed the plaintiff of the said acceptance vide their letter dated November 12, 1962. The plaintiff was also required to deposit Rs. 15,000/- with the defendant as security for due performance of the said contract. The molasses were to be delivered to the plaintiff as and when they were ready and were to be finally cleared by the plaintiff by October 15, 1963. In accordance with this letter of acceptance, the plaintiff deposited Rs. 15,000/- on November 12, 1962, as security. The defendant-mill started working on or about November 30, 1962, and by December 17, 1962, it produced 3966 quintals of molasses. The plaintiff demanded delivery of this quantity of molasses, but the defendant delayed and neglected to deliver the same. The plaintiff brought suit for a decree on December 18, 1962, for the delivery of 10,000/- maunds of molasses or any other quantity shown by the defendant to have been produced upto that date on payment of 65 N.P per maund and in the alternative a decree for Rs. 8,000/- as damages was claimed against the defendant for non-delivery of the molasses. The relief for specific performance was declined and decree for recovery of Rs. 8000/- as damages was passed in favour of the plaintiff-Joint Hindu Family Firm against the defendant-mill, vide Exhibit P. 9, which is a copy of the judgment dated August 13, 1963. It appears that the market price of the molasses rose and the defendant-mill during the pendency of the above mentioned civil suit repudiated the contract by its letter dated December 20, 1962, alleging that the acceptance was not legal and was not binding on it. It is alleged that the defendant-mill entered into a contract with Messrs Haryana Shira Supply Company, Rohtak, and sold all the molasses at the rate of Rs. 2.55 per maund to that company. The total quantity of molasses prepared by the defendant from December 19, 1962, till October 15, 1963, was estimated to be Rs. 70,000 maunds. The plaintiff has assessed the damages caused to it amounting to Rs. 1,33,000/- at the rate of Rs. 1.90 per maund for the non-delivery of Rs. 70,000 maunds of molasses. The plaintiff also claimed refund of the security of Rs. 15,000/-. Claim was also made for the recovery of Rs. 7,000/- as interest at the rate of 9 per cent on the deposit amount of Rs. 15,000/- as also on the amount of damages from October 13, 1963, till the date of the suit. It was prayed that a decree for the recovery of Rs. 1,55,000/- be passed in favour of the plaintiff against the defendant. The suit was contested by the defendant on various grounds. It was pleaded that the plaint did not disclose any cause of action, that this suit is barred by Order 2, rule 2, Civil Procedure Code, and that the plaintiff is not entitled to get any interest. It was denied that the plaintiff is a Joint Hindu Family firm and Chattar Sain and Phul Chand were its Managers. The defendant maintained that the tender of the plaintiff-firm was accepted subject to its depositing the security amount of Rs. 15,000/- and also executing an agreement by November 17, 1962. The deposit of the security money by the plaintiff was admitted but since the plaintiff failed to execute the agreement, which was a condition precedent, therefore, there was no valid contract. The conditional acceptance of the General Manager was subject to the approval of the Board of Directors, and since this agreement was not approved by the Board of Directors, therefore, there is no valid contract. All other allegations made in the plaint were denied.

3. On these pleadings of the parties, the following issues were framed by the Subordinate Judge:—

(1) Whether the plaintiff-firm is Joint Hindu Family firm with Messrs Phul Chand and Chattar Sain as its Managers?

(2) If so, whether the plaintiff firm requires registration under the Indian Partnership Act?

(3) Whether the defendant entered into a contract with plaintiff-firm for the sale of molasses produced in the mills during the crushing season 1962–1963?

(4) Whether the decision given in the previous suit operates as res-judicata? If so, on what matters?

(5) Whether the suit is barred under Order 2, rule 2, Civil Procedure Code?

(6) To what damages, if any, is the plaintiff entitled?

(7) Whether the plaintiff is entitled to claim any interest? If so, how much?

(8) Relief.

4. The learned Sub-Judge decided issue No. 1 in favour of the plaintiff while issue No. 7 was decided against the plaintiff. Issue No. 2 was decided against the defendant. It was held that there was a valid contract between the parties for the purchase and sale of molasses and that the decision on this point in the previous suit operated as res-judicata and issues Nos. 3 and 4 were decided accordingly in favour of the plaintiff. The suit was held to be not barred by Order 2, rule 2, and issue No. 5 was decided against the defendant. On issue No. 6 it was held that the plaintiff was entitled to recover Rs. 1,48,001/- by way of damages. As a result, decree for Rs. 1,48,000/- was passed in favour of the plaintiff-firm against the defendant-mill. Feeling aggrieved, the defendant-Haryana Co-operative Sugar Mills Ltd., filed Regular First Appeal No. 100 of 1966, alleging that the decision of the trial Court is wrong and incorrect and it may be set aside and the suit of the plaintiff may be dismissed. The plaintiff Joint Hindu Family Firm filed Regular First Appeal No. 171 of 1966, alleging that the decision of the trial Court disallowing its claim for Rs. 7,000/- as interest is wrong and incorrect and that a decree for Rs. 7,000/- as the amount of interest may also be passed in its favour against the defendant.

5. Mr. M.L Sarin, the learned counsel for the appellant, contested the decision of the trial Court on issues Nos. 5 and 6 only. Order 2, rule 2, of the Code of Civil Procedure, reads as follows:—

“(1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court.

(2) Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished.

(3) A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs, but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any reliefs so omitted.

Explanation.—For the purpose of this rule an obligation and a collateral security for its performance and successive claims arising under the same obligation shall be deemed respectively to constitute but one cause of action.”

6. Rule 2 of Order 2 of the Code of Civil Procedure is based on the principle that the defendant should not be is twine vexed for one and the same cause. If the plaintiff omits any portion of the claim which he is entitled to make or any of the remedies which he is entitled to claim in respect of a cause of action for the suit, he shall not thereafter sue for the portion of the claim or for the remedy so omitted. However, this rule does not preclude a second suit based on a distinct and separate cause of action. If the right to relief in respect of which further suit is brought did not exist at the date of the former suit then this rule does not apply. This rule also does not operate as bar when a subsequent suit is based on a cause of action different from that on which the first suit was based. It is well-settled law that the correct test in cases falling under Order 2, rule 2, of the Code of Civil Procedure is whether the claim in the new suit is in fact founded upon a cause of action distinct from that which was the foundation for the former suit. The cause of action means every fact which will be necessary for the plaintiff to prove if trasversed in order to support his right to the judgment. If the evidence to support the two claims is different then the causes of action are also different. The causes of action in the two suits may be considered to be the same if in substance they are identical, vide Mohammad Khalil Khan v. Mahbub Ali Mian,1 Mohammad Hafiz v. Mirza Mohammad Zakariya . AIR 1922 PC 23. and Bakhshi v. Dasaunda Singh,3 Similar was the law down in Zila Parishad v. Smt. Shanti Devi . AIR 1965 All. 590 F.B.. In Naba Kumar Hazara v. Radhashyam Mahish,5 it was held as under:—

“The relief for rent and profits which could have been prayed for in a previous suit for conveyance of properties and arising out of the same cause of action cannot be prayed for in a subsequent suit.”

7. In Sidramappa v. Rajasketty,6 it was held as under:—

“The requirement of Order 2, rule 2, (Civil Procedure Code) is that every suit should include the whole of the claim which the plaintiff is entitled to make in respect of a cause of action. ‘Cause of action’ means the ‘cause of action for which the suit was brought’ Cause of action is a cause of action which gives occasion for and forms the foundation of the suit. If that cause of action enables a person to ask for a larger and wider relief than that to which he limits his claim, he cannot afterwards seek to recover the balance by independent proceedings.

Where the cause of action on the basis of which the previous suit was brought does not form the foundation of the subsequent suit and in the earlier suit the plaintiff could not have claimed the relief which he sought in the subsequent suit, the plaintiff's subsequent suit is not barred by Order 2, Rule 2.”

8. Having stated the law I proceed to discuss the facts of this case. Exhibit D.1 is the advertisement dated November 2, 1962, issued by the defendant-appellant Mills inviting tenders for the sale of mollasses to be produced by it during the sugar crushing season 1962–1963, and it reads as follows:—

“Tenders are invited for the sale of molasses to be produced by the Mills during the season 1962–1963. The factory expects to produce 1.4 lac maunds of molasses.

Tenders should Indicate the rate, quantity and the probable time to be taken in clearing the stock. The last date for the receipt of tender is 10th November, 1962.”

9. Exhibit P. 2 is a copy of the letter dated November 10, 1962, written by the plaintiff to the defendant appellant informing them that they had accepted their offer of purchase of molasses at 65 N.P per maund for the entire quantity to be produced during the crushing season 1962–1963. It was further stated in Exhibit P. 2 that they shall remove all the Stocks upto October 15, 1963, and they will deposit Rs. 15,000/- as security and the balance amount will be paid in monthly instalments. This offer of the plaintiff was accepted by the defendant-appellant vide their letter dated November 12, 1962, (this accepted letter was also wrongly marked as Exhibit D.1), and it reads as follows:—

“Please refer to your quotation dated the 10th November, 1962, for the purchase of molasses. We are pleased to inform you that we have accepted your offer of purchase of molasses at 65 N.P per maund for the entire quantity to be produced during the enduing crushing season 1962–1963. You are requested to pay immediately on receipt of this letter a sum of Rs. 15,000/- as security and attend for the execution of the formal agreement latest by the 17th November, 1962.”

10. It is admitted that no formal agreement containing the terms and conditions of the contract between the parties regarding the purchase of molasses was executed in this. In the previous suit between the parties, it was held by the trial Court that these three documents, namely, advertisement Exhibit D.1 dated November 2, 1962, the letter Exhibit P. 2 dated November 10, 1962, by the plaintiff conveying its offer to purchase molasses and Exhibit D.1 dated November 12, 1962, acceptance of the offer, constituted the contract between the parties, and the copy of that judgment dated August 13, 1963, is Exhibit P. 9. This decision was confirmed by the District Judge in his judgment, copy whereof is Exhibit P. 10. A Regular Second Appeal No. 583 of 1964 was filed against the judgment of the District Judge in this Court, which was dismissed in limine on May 22, 1964, vide Exhibit P. 11. It is admitted that the decision on this point in the previous suit operates as res-judicata.

11. Exhibit P. 6 is the copy of the plaint dated December 18, 1962 of the previous suit filed by the Joint Hindu Family, plaintiff respondent, against the appellant, the Haryana Co-operative Sugar Mills Ltd. It was alleged in the plaint that the molasses for the sugarcane crushing season 1962–1963 were to be delivered to the plaintiff by the defendant as and when they were ready and that the defendant-mills started working on or about November 30, 1952, and began to produce molasses which were to be delivered to it. It was the case of the plaintiff in the suit that as the Mills had started working, the plaintiff entered into contracts with other persons for supplying molasses to them and they pressed for delivery and the plaintiff made oral requests to the defendant for delivery of about 10,000/- maunds of molasses which they had manufactured after November 30, 1962, but they delayed the delivery. The plaintiff then sent a telegram on December 5, 1962, and a registered letter on December 6, 1952, and again a telegram on December 16, 1962, was also sent requesting them to deliver the ready molasses. No reply to the notice and the telegrams was received by the plaintiff. Chattar Sain plaintiff went to the premises of the defendant on December 17, 1962, to take delivery, but the same was not given to him. I he plaintiff then filed the previous suit on December 18, 1962, wherein it was prayed that a decree for the delivery of 10,000/- maunds of ready molasses or any other quantity shown by the defendant to have been produced by them upto that date on payment of Rs. 65 N.P per maund may be passed, and in the alternative it was prayed that decree for Rs. 8,000/- as damages may be passed for non delivery of molasses by December 17, 1962.

12. Exhibit P. 7 is the copy of the written statement filed by the defendant in that suit, wherein it was alleged that after the acceptance of the offer of the plaintiff a deposit of Rs. 15,000/- as security was made on November 12, 1962, but no formal agreement was executed by the plaintiff by November 17, 1962, and therefore there was no concluded contract between the parties and the question of its performance by them did not arise. It was further pleaded that the Board of Directors of the Mills did not accept the offer of the plaintiff and the contract was repudiated and the necessary intimation was sent to the plaintiff vide their letter dated December 20, 1962. The Senior Sub-Judge, Rohtak, who tried that suit, in his judgment dated August 13, 1963, copy whereof is Exhibit P. 9, held that the plaintiff was not entitled to decree for specific performance for the delivery of 10,000 maunds of molasses alleged to have been manufactured by the defendant till December 18, 1962, the date of tiling of the suit, but he passed decree for Rs. 8,000/- with costs as damages against the defendant-Mills. An appeal against this decree filed by the defendant-Mills was dismissed by the District Judge and regular second appeal against that judgment was also dismissed in limine by this Court on May 22, 1964, vide Exhibit P. 10 and P. 11, respectively. It is thus clear that the cause of action in that suit was non delivery of the molasses, which the defendant had manufactured upto December 18, 1962 and the relief claimed was a decree for the delivery of 10,000 a maunds of molasses and in the alternative decree for Rs. 8,000/- as damages was claimed. It appears that the defendant did not intend to perform the contract because the price of the molasses had risen after the acceptance of the offer of the plaintiff and for that reason they did not send any reply to the plaintiff of the letter written by it on December 6, 1962, and the telegrams sent on December 5, 1962, and December 16, 1962. Admittedly, the defendant had not repudiated the contract till December 18, 1962, when the previous suit was filed by the plaintiff, and consequently the plaintiff had no cause of action to file suit for damages for the whole of contract on December 18, 1962, when the first suit was filed.

13. In this respect the admissions made by Shri J.S Sarohia D.W 1, who is the General Manager of the defendant-Mills, are very relevant. He stated that the contract regarding the purchase of the molasses was not complete because the agreement was not executed and for this reason the delivery of molasses was not made to the plaintiff. He admitted that he did not inform the plaintiff regarding the repudiation of the contract before December 20, 1962, when letter Exhibit D.10 was written to the plaintiff on that date. He deposed that the plaintiff did not contact him alter the acceptance of the tender till December 20, 1962, and there was no occasion to repudiate the contract verbally before December 20, 1962. He admitted that a couple of days before December 20, 1962 he received a telegram from the plaintiff requiring him to make delivery of the molasses. According to him, the notice dated December 4, 1962, given by Shri Raghu Hath Sahai, Advocate, Rohtak, on behalf of the appellant was received in his office on December 10, 1962, but he could not say on what date thereafter it was put up before him. The copy of that notice is Exhibit P. 21. He also admitted that molasses are ready for delivery generally 20 days after the Mills start in the season.

14. The letter Exhibit D.10 dated December 20, 1962, written by this witness Shri J.S Sarohia D.W 1 to the plaintiff reads as follows:—

“Subject:—Molasses for the year 1962–1963.

15. Dear Sir,

16. With reference to our letter No. HMB/35-12257 dated 12th November, 1962, we have to inform you that since you failed to execute a formal agreement by the last date given to you, viz., the 17th November, 1962, our acceptance of your tender does not hold good. We shall be within our right to make sale of molasses for the year 1962–1963 to whomsoever we like.

Yours faithfully”

17. It is thus clear that the contract was repudiated by the defendant-appellant for the first time by letter Exhibit D.10 dated December 20, 1962, and the cause of action to bring the present suit for damages for breach of the contract arose on December 20, 1962, and not before that. The plaintiff had three years period of limitation to file suit for damages and suit was brought on January 5, 1964, and is clearly within time. When the previous suit was filed on December 18, 1962, at that time the plaintiff had no cause of action to bring the present suit for recovery of damages for the breach of the contract.

18. The above-mentioned facts reveal that the cause of action for the present suit is quite distinct and separate from the cause of action for the first suit. The right to claim the relief in the present suit did not arise on December 18, 1962, when the first suit was filed. The cause of action for this suit arose on December 20, 1962 (i.e during the pendency of the first suit), when the defendant appellant repudiated the contract and refused to perform it vide letter Exhibit D.10 This suit is based upon a cause of action distinct from that, which was the foundation for the former suit. The evidence to support the claims in both the suits is quite different. Therefore, for the reasons given above and the law laid down in the above mentioned decisions, it is held that this suit is not barred by Order 2, rule 2 of the Code of Civil Procedure. The decision of the lower Court on issue No. 5 is correct and the same is affirmed.

19. It is undisputed that during the period from December 19, 1962, till the closing of the sugarcane crushing season in October, 1963, the defendant-appellant manufactured 70,000 maunds of molasses. The defendant had agreed to sell the molasses manufatured for that year to the plaintiff-respondent at the rate of 65 paisa per maund. After committing the breach of the contract with the plaintiff, molasses manufactured by the defendant-appellant during the crushing season 1962–1963 was sold to a firm constituted by Som Nath P.W 2 and others at the rate of Rs. 2.55 P. per maund. According to him, the total quantity of malasses manufactured during that year by the defendant and purchased by their firm was 8083 maunds, vide bills Exhibits P.W 2/4. This witness Som Nath P.W 2 testified that they sold the molasses in the wholesale at the rate varying from Rs. 2.55 per maund to Rs. 2.87 per maund and that the price of molasses never fell below Rs. 2.53 per maund. Thus, by selling the molasses to this witness Som Nath P.W 2 and others, the defendant-appellant made a profit of Rs. 1.90 per maund. The plaintiff is, therefore, entitled to damages at the rate of Rs. 1.90 on 70,000 maunds of molasses, which comes to Rs. 1,33,000/-. Besides this, the plaintiff is also entitled to get refund of the security amount of Rs. 15,000/-, which had been deposited with the defendant for due performance of the contract. Since the breach of contract was committed by the defendant, therefore, the plaintiff is entitled to get that amount refunded to it.

20. Shri M.L Sarin, the learned counsel for the appellant, contended that the contract was repudiated by the appellant on December 20, 1962, and, therefore, the plaintiff is entitled to get damages according to the rate of molasses prevalent on that day and since there is no proof on the file that what was the market price of the molasses on the date of the breach, therefore, the suit of the plaintiff must be dismissed. In support of this contention, he relied on Murlidhar Chranjilal v. Harishchandra Dwarkadas . A.I.R 1962 S.C 366.. The facts of this case were that a firm entered into a contract with another firm for sale of certain canvas at the rate of Re. 1/- per yard, and the delivery was to be made through railway receipt for Calcutta for Kanpur. The cost of transport from Kanpur to Calcutta and the lahour charges in that connection were to be borne by the plaintiff. It was also agreed that the railway receipt would be delivered on August 5, 1947. However, the railway receipt was not delivered on that day and the other party was informed that as booking from Kanpur to Calcutta was closed, the contract had become impossible of performance and consequently the contract was cancelled and the advance amount which had been received was returned. On these facts it was held that the rate of goods in Kanpur and not in Calcutta in or about the date of breach would determine the quantum of damages. This authority has no application to the facts of this case. In that case the railway receipt was to be delivered on August 5, 1947. In other words, the whole of the quantity of the contracted goods was to delivered on one day i.e August 5, 1947, and since the delivery was not made and the breach of the contract took place, therefore, the rate of the goods at Kanpur, was to determine the quantum of the damages. In the instant case, the defendant-appellant had agreed to supply the molasses manufactured by it during the sugarcane crushing season 1962–1963 and the delivery was to be made as and when the molasses were to be ready. The mills of the appellant started working with effect from November 30, 1962, and the whole of the molasses manufactured was to be removed by the plaintiff on or before October 15, 1963. Therefore, in this case the price of the molasses on any particular date when the contract was repudiated by the defendant would not determine the quantum of mamages payable to the plaintiff. It may ??? observed that the whole quantity of the molasses which was to be manufactured by the defendant was sold by it to the firm of Som Nath P.W 2 and others at the rate of Rs. 2,55 N.P per maund i.e at a profit of Rs. 1.90 per maund. Thus, there is no force in the contention of the learned counsel for the appellant and the same is rejected. It is held that the plaintiff-respondent was rightly held to be entitled to Rs. 1,48,000/- as damages including the sum of Rs. 15,000/- as security amount from the defendant-appellant. The decision of the lower Court on issue No. 6 is also correct and the same is affirmed.

21. In para No. 16 of the plaint, it was pleaded that the plaintiff is entitled to interest at the market rate of 9 per cent per annum on the amount found due to it on the damages from October 15, 1963, till the date of the suit. But, this claim was restricted only to Rs. 7,000/- as interest. The defendant controverted this allegation and it was pleaded that no interest on damages can be awarded. It is undisputed that there was no agreement between the parties to pay interest on the security amount of Rs. 15,000/- deposited by the plaintiff with the defendant or to pay interest on the amount of damages. It was conceded by Shri G.C Mittal, the learned counsel for the plaintiff-respondent that the plaintiff is not entitled to get interest on this amount for any period till the date of filing of the present suit in view of the law laid down in Union of India v. Watkins Mayor and Co.,8 and Vithal Dass v. Rup Chand . AIR 1967 SC 188.. The learned counsel for the plaintiff, however, contended that the plaintiff is entitled to interest on the decrotal amount from the date of decree the date of realisation at the rate of 6 per cent per annum. In para No. 20(b) of the plaint, it was pleaded that further interest on the amount decreed be awarded till the realisation of the amount of she decree. In Bengal Nagpur Railway Co. Ltd. v. Puttanjit Ramjit . AIR 1938 PC 67. it was held that according to proviso 17 section 1 of the interest Act, 1839, the Court of equity can exercise jurisdiction to allow interest even on damages. This decision was followed in Bihar Agents Ltd. v. Union of India,11 wherein it was held that further interest on damages can be granted. It was a suit filed by Bihar Agents against Union of India for short delivery of goods booked in the railway. Similar view was taken in Vithal Dass v. Ruy Chand (Supra), wherein it was observed that Court can also toward interest under the rule of equity. In view of the law laid down in these authorities, the plaintiff is awarded interest on the sum of Rs. 1,48,00/- at the rate 6 per cent per annum from the date of decres of the trial Court till the date of the realisation of the amount, and issue No. 7 is decided accordingly. The decision to the contrary of the lower on this issue is set aside.

22. For the reasons given above, it is held that there is no force in R.F.A No. 100 of 1966 filed by Haryana Co-operative Sugar Mills Ltd., Rohtak, and the same is dismissed. Regular First Appeal No. 171 of 1966 filed by joint Hindu Family styled as Messrs gupta Drum Supply Company is accepted and the appellant-plaintiff is granted interest at the rate of 6 percent per annum on the decretal amount from the date of decree of the trial Court till the date of realisation of this amount. In view of the point of law involved, there will be no order as to costs in both the appeals.

23. D.S Tewatia, J.:— I agree.

24. Appeal dismissed.