Managing Director, Central Ware Housing Corporation vs Paramananda Sahu

Sanju Panda, J.—This First Appeal is directed against the judgment and decree dated 9.2.1983 and 23.2.1983 respectively passed by the learned Subordinate Judge, Berhampur in Money Suit No. 50 of 1978 (Class-III) decreed the Plaintiffs suit in part with cost and directed the Defendant to pay the decreetal amount along, with pendete lite interest and future interest at the rate of 17% per annum to the Plaintiff till realization.

The facts of the case as narrated in records are as follows:

The Defendant is the Appellant. The Respondent as Plaintiff filed Money Suit No. 50 of 1978 for realization of Rs. l,03,153.19p. from the Defendant. The Plaintiff pleaded that he was a Contractor carrying on business in the name and style of M/s. Paramananda Sahu. He entered into an agreement on 15.7.1973 with the Defendant to handle the transportation, loading, unloading, stacking, weighing and standardization, all the goods of different Companies, such as Food Corporation of India, Madras Fertilizers, Shamac Enterprisers, Orissa State Corporative Marketing Society, Fertilizer Corporation of India, Coromondal Fertilizer and Indian Potash Limited, who were storing their goods in the godown of the Defendant. As per the said terms and conditions of the contract, the Plaintiff submitted his Bill for the work done by him and also filed a statement along with the plaint showing the amount due from the Defendant on account of performance of his work. Though the Plaintiff demanded payment and wrote several letters to the Defendant, there was no result.

While the matter stood thus, the Defendant wrote a letter on 13.1.1975 intimating the Plaintiff that he appointed one A.N. Lallar, Regional Director, Central Ware Housing Corporation, Calcutta as Arbitrator invoking Clause-19 of the agreement. As the Arbitrator did not proceed with the arbitration proceeding, the Plaintiff filed M.J.C. No. 23 of 1976 before the learned Subordinate Judge, Berhampur for removal of the Arbitrator. But subsequently, the arbitrator resigned and one K. Viswanadhan was appointed as Arbitrator on. 21/24.2.1977. The Defendant flied their counter-claim against the Plaintiff before the Arbitrator claiming Rs. 1,07,832.90p. admitting the claim of the Plaintiff to the extent of Rs. 77,731.70 p. and security deposit of Rs. 3,000. The Plaintiff filed M.J.C. No. 148 of 1978. The Plaintiff also filed his claim statement before the Arbitrator as the claim of the Defendant was fictitious. The Arbitrator refused to issue summon to the witnesses. On M.J.C. No. 148 of 1978 being filed by the Plaintiff, the authority of the Arbitrator was revoked for his misconduct. In the meantime, the period of con tract expired on 14.7. 1976. Therefore, the plain tiff was constrained to file the suit.

The Defendant filed their written statement traversing the Plaintiffs averment and admitting the execution of the agreement dated 15.7.1973. He alleged that since the Plaintiff did not discharge his duty properly and there were lapses and cause of non -performance and mis-performance by him, the Plaintiff was not entitled to get any money. He further stated that the Bill submitted by the Plaintiff which were not scrutinized by the Corporation, also not accepted but properly submitted by the Plaintiff, were duly passed by the Corporation and payment was made. Again he stated that against the claim of Rs. 1,77,575.19p. of the Plaintiff it was found that as per the terms of the contract he was entitled to get only Rs. l,52,698. Out of the said amount, Rs. 72,820 has been paid by the Defendant and the balance of Rs. 79,877.98 p. has been adjusted by way of set up as per the agreement towards the claim of Defendant from the Plaintiff due to non-performance of the work. An allegation of misconduct against the Arbitrator was denied by the Defendant and he stated that the claim of -the Plaintiff was barred by limitation. Further he stated that since the claim was pending before the Arbitrator, any dispute to the said claim of the Defendant should have been made by the Plaintiff before the Arbitrator and the Plaintiff was not entitled to the interest.

On the above pleadings of the parties, the trial court framed as many as six issues and the relevant issues are as follows:

(i) Whether the Defendant is liable to pay the suit amount or any amount to the Plaintiff?

(ii) Whether the suit claim is barred by limitation?

(iii) Whether the suit is bad for misjoinder of parties?

(iv) Whether the court has got jurisdiction to try the suit when the dispute is pending before an Arbitrator?

In support of his pleadings, the Plaintiff examined three witnesses including himself as P.W.2. P.W.1 was a Technical Assistant in Central Ware Housing Corporation at the relevant time and P.W.3 was the Quality Inspector of F.C.I., Berhampur at the relevant time. The Defendant examined two witnesses. Both the parties filed their documentary evidence which were marked as Exts. After considering the pleadings and evidence adduced by the parties, the trial court came to the finding that in M.J.C. No. 148 of 1978 it was observed by the court that since the recent claims of the parties were going to be decided in the suit, it was not necessary to proceed with the Arbitration and the said order not having been challenged in the higher forum was binding on both the parties. Therefore, there was no dispute pending before the Arbitrator. The civil court had the jurisdiction to try the suit. So far as question of misjoinder of the parties was concerned, it held that there was no mis-description of the Plaintiff in the cause title as the Plaintiff was handling and transporting the contract in his individual capacity and hence the suit by him was maintainable. So far as issue Nos. 1 and 2 were concerned, it held that the Plaintiff proved that he did not misappropriate the goods and performed the work as per the agreement and as such the Defendant was not entitled to any set off amount towards consequential damages and the Defendant''s claim and counter-claim were fictitious and not maintainable. He is liable to pay the suit amount as claimed by the Plaintiff except the cost of the arbitration and the amount claimed towards damages for the loss of business. On the above findings, the trial court partly allowed the suit.

Learned Counsel for the Appellant submitted'' that the civil court had no jurisdiction to try the suit when the dispute was pending before an Arbitrator. Further, he contended that the Plaintiff described himself as a person having the contract with the firm, i.e., Mis. Paramananda Sahu. Therefore, the suit was not maintainable for mis- description of the parties and the Plaintiff was not entitled to get any relief as the firm had not filed the suit. The suit having been filed on 9.5.1978 was barred by the law of limitation, as the claim made by the Plaintiff was in respect of the work completed by him prior to 9.5.1975. The Plaintiff did not deliver 412 bags of wheat and had misappropriated the amount of the said wheat. As per the term of the contract, the Corporation was not liable to pay any interest.

Learned Counsel for the Respondent submitted that the Plaintiff was a Contractor and he executed the work as per the contract in his individual capacity since the Corporation accepted the contract. Therefore, he filed the suit in his individual capacity for realization of the claim towards the lost of the work done by him as per the agreement. Hence, the suit was not barred by limitation and the Plaintiff explained the delay as per Article-14 of the Indian Limitation Act. Further, he submitted that taking into consideration the evidence adduced by the Plaintiff towards non-delivery of 412 bags of wheat, the irresistible conclusion was that there was no shortage in the accounts of the Food Corporation of India in respect of wheat. The Food Corporation of India had no allegation that it had not received the total quantity of wheat. Therefore, the contention regarding misappropriation of 412 bags of wheat was not sustainable. He supported the findings of the learned trial Judge.

The pleadings of the parties, the evidence adduced by them and the record reveal that the Plaintiff entered into an agreement with the Defendant as M/s. Paramananda Sahu; which was a firm. In the plaint, he stated that the contracting party was M/S. Paramananda Sahu.

Clause-8 of the agreement subsequently pro ides that during pendency of the suit, the contractors shall not make any change in the constitution of the firm during the period of contract without prior written approval of the Corporation. However, the Plaintiff filed the suit in his individual capacity as a Contractor. Further, the record reveals that the Plaintiff as per the agreement was handling and transporting the goods of different depositors in his individual capacity as a Contractor. In the agreement, it was subsequently stated that Shri Paramaanda Sahu (hereinafter called "the Contractor") was carrying on business in the name and style of Mis. Paramananda Sahu. The Central Ware Housing Corporation accepted the terms and conditions of the said agreement and executed the same. Therefore, the above terms indicate that Paramananda Sahu was a Contractor who had accepted the contract in his individual capacity and not as a partnership firm. Though the Plaintiff was running his business in the name and style of Mis. Paramananda Sahu, he entered into the agreement as Paramananda Sahu, the Contractor in his individual capacity. Therefore, there was no mis description of the Plaintiff. In the present suit, the description of the Defendant was "Managing Director, Central Ware Housing Corporation representing the Central Ware Housing Corporation, South Extension, Part-III, New Delhi-40". Section-3 of the Ware Housing Corporation Act,1962 states that Central Ware Housing Corporation was a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of property and to contract and may by the said name sue and be sued. Thus in view of the above provision and description given by the Plaintiff in the plaint, he sued the Central Ware Housing Corporation and not its Managing Director and "representing the Central Ware Housing Corporation" did not mean that the Managing Director was sued in his individual capacity. The Plaintiff impleaded him in the cause title to represent the Central Ware Housing Corporation and also described the said fact. The Plaintiffs claim was against the Corporation. Therefore, there was no mis-description of the parties.

The Plaintiff in support of his pleadings examined himself as P.W.2. He stated that he used to get the work-slips from the office of the Defendant for the work done by him. He requested the Defendant to supply the copies of the work-slips. As per the said work-slips, after the work was over he submitted his Bills. The work-slips and Bills were marked as Exts.12 and 18 series. Ext.25 is the letter dated 17.6.1976 issued by the Corporation to the Plaintiff for necessary compliance of some direction. Ext. 25 (a) to (d) were some other letters of the Superintendent of the Corporation to the Plaintiff regarding the correspondences done between the parties regarding payment of the dues claimed by the Plaintiff. Those documents show that the Plaintiff claimed before the Defendant for the work he had completed for which work-slips were issued. The Plaintiff further proved by filing the statement of accounts relating to the works done by him and the entitlement of the amount therefor.

From the record, it transpires that it is not disputed that as per the agreement between the parties, the dispute had been referred to the Arbitrator. Before the Arbitrator the parties filed their respective claim and counter-claim. The matter was continuing before him in respect of the claims till 5.2.1982. Therefore, it cannot be said that at the time of filing of the suit, i.e., on 9.5.1978, during the pendency of the arbitration proceedings the claim made by the Plaintiff was barred by limitation. Further, Exts.22 and 23 show that those were the claims of the Plaintiff and counter-claims of the Defendant respectively before the Arbitrator. Ext.F is the letter dated 26.7.1976 of the Accounts Officer of the Regional Office of the Defendant-Corporation addressed to the Superintendent of the Central Ware Housing Corporation, Berhampur enclosing a Cheque of Rs. 5,000 towards payment to the Plaintiff. Likewise, Ext.F/1 is another letter dated 18.4.1977 of the Accounts Officer enclosing a Cheque of Rs. 11,655,46 for payment towards claim of the Plaintiff. Ext.F /2 is the letter dated 1. 7.1977 where the Defendant Corporation also made part payment to the Plaintiff. So all those letters show that some accounting had been done in order to arrive at a particular figure for payment towards the claims of the Plaintiff. Those amounts were paid as per the Bills submitted by the Plaintiff vide Exts.12 and 18 series. Since the Defendant accepted the Plaintiffs Bills and admitted the dues and made part payment till July, 1977, it cannot be said that the Plaintiffs suit was barred by limitation.

Therefore, while not accepting the submission of the Defendant-appellant, this Court confirms the finding of the trial court that the suit was not barred by limitation.

Though no specific issues had been framed regarding misappropriation of 412 bags of wheat by the Plaintiff and the damage sustained by the Defendant and to set off the damages towards the claim of the Plaintiff, the Appellant-defendant argued about the said damages. From the pleadings of the Defendant, it appears that at paragraph-6 he stated about the adjustment of Rs. 79,877.98p. by way of set off as per the agreement towards the claim of the Defendant from the Plaintiff with regard to the works which were not performed and the consequential damages sustained by the Defendant and also for mis-appropriation of goods by the Plaintiff carrier. In the said paragraph he further stated that the Plaintiff was not entitled to any dues as claimed by him in the suit. Except the above pleadings, there was no further pleading in the written statement regarding mis-appropriation of goods by the Plaintiff or damages sustained by the Defendant. While adducing evidence, the Defendant exhibited the document which was marked as Ext.A. It reveals that the entries were made in the deposit register of the Defendant and the said entries had been manipulated in the office of the Defendant with the connivance of the Plaintiff with regard to handling of 13600 bags of wheat. Further, referring to the entry in Exts.9 and 9/a, he stated that the Defendant received 13600 bags of wheat (1003280 kgs.) at the railway station. On a reference to Exts.6 and 8/a, it appears that there was a difference of 20,480 Kgs. of wheat which was evidently not brought to the godown of the Defendant. Therefore, there was shortage of 412 bags of wheat. Since the Plaintiff had handled the said bags, the Defendant was entitled to the damage and adjustment.

The above contention reveals that at one time the Defendant disputed that the Plaintiff handled 13600 bags of wheat. At the same time, he claimed that he sustained loss of 412 bags of wheat and also claimed for adjustment of the amount as the Plaintiff has misappropriated the goods. In the evidence of P.W.1 who was a Technical Assistant officer-in-charge of the Ware Housing Corporation, he categorically stated that the Plaintiff had handled 13600 bags of wheat belonged to Food Corporation of India in one consignment between'' 7.9.1973 and 9.9.1973. The said consignment was received at the godown of the Defendant. The goods were subsequently standardized on the direction of the authorities of the Food Corporation of India. He had taken the delivery of the said goods at the railway good shed. Those consignments were transported by the Plaintiff. P.W.3, who was the Quality Inspector of Food Corporation of India posted at Berhampur from June, 1973 to March, 1974, stated that his department supervised the transportation of the said stock of wheat by the Plaintiff and were present when they were delivered the goods at the god own of the Defendant. The standardization register maintained by the Defendant was signed by him and the office accounts would be in respect of 13600 bags of wheat. Therefore, it can safely be concluded that the Food Corporation of India had no grievance against the Plaintiff and their quality Inspector had received the said goods in full. The claim of the Defendant regarding adjustment and mis-appropriation of the goods are not acceptable and the same was rightly dealt with by the trial court. Therefore, the claim of the Plaintiff regarding transportation of 13600 bags of wheat is accepted as he has proved the said facts and the Defendant has not rebutted the said fact. Further, the Plaintiff examined himself as P.W.2 and stated that though the charge was at the rate of Rs. 1 per bag, the officer-in -charge of the Corporation orally agreed that the Corporation would pay at the rate of Rs. 3 per bag for standardization. The said fact had not been denied by the Defendant and the Plaintiff proved the statement of accounts. Therefore, he is entitled to the charges for transportation of the goods of the Defendant Corporation. The evidence reveals that there is no justification on the part of the Defendant to detain the charges of transportation made by the Plaintiff. Therefore, the Plaintiff is also entitled to the interest on the said amount as his dues have not been paid within the reasonable time.

Thus taking into consideration the rate of interest given by the nationalized bank and money deposit, this Court thinks it proper that the rate of interest should be allowed at the rate of 8% per annum in stead of 17% per annum as allowed by the trial court. Therefore, this Court confirms the judgment and decree of the trial court regarding the claim of the Plaintiff towards the work done by him as per the agreement with the Defendant and only modifies the rate of interest as claimed by the Plaintiff from 17% per annum to 8% per annum.

The appeal is allowed in part. No costs.