Babban Prasad Singh v. The State Of Bihar

Mr. Arvind Kumar, G.P. 20 Mr. Anil Kumar Sinha, J.C.to G.P. 20 -----------

27.02.2009 The petitioner is a manufacturer of Handloom. State for bring the weaver into the main stream of society decided to give the weaver free Handlooms so that they could waive Handloom cloth on their own and make a livelihood and the economic prosperity thereof would result in bringing them into the main stream of social development. Tenders were floated and ultimately the Tender Committee selected the petitioner to supply 150 Handlooms with its accessories. “Kril” which is an important part used in operating the Handloom of equal number were ordered to another Firm of Bhagalpur. - 2 - These were to be supplied within twenty days as per supply order dated 06.03.2007. It was further stated in the supply order that the supplier was liable to deliver Handlooms at the distribution centre for which no extra freight would be paid. It appears that the State had a plan of holding a distribution ceremony with due publicity on 20.04.2007 wherein these were to be distributed free of cost to various weavers who are to be called there. Petitioner supplied the requisite number of Handlooms and its accessories. So far as “Kril” is concerned, it is stated in the writ petition that those were not supplied by the Bhagalpur Firm and as such they were asked to be supplied by the petitioner because without “Kril”, Handlooms would have been useless. Petitioner immediately complied with the orders which were verbal and emergent for the purpose of face saving. The supplies were undisputedly made on

19.04.2007 at the District Industry Centre, Patna. On the next date i.e. on 20.04.2007 in a public ceremony they were all distributed free of cost to various weavers who took them to their respective residences admittedly without any protest or complaint. When the matter of payment came up, they were being delayed and ultimately after a delay of over three months part payment of Rs. 12,61,797/- was made and thereafter on - 3 -

29..9.2007 a further sum of Rs. 10,09,437/- was paid leaving a balance of about 2,52,360. So far as 150 pieces of “Kril” worth Rs. 60,000/- is concerned, payment is now being denied on the ground that written orders had not been given to the petitioner but another Firm of Bhagalpur. It may be mentioned that having accepted these supplies and distributed it, much later complaints were received from the weavers and an enquiry team was set up. The Enquiry Team went to weaver’s residences and then drew up a report on 30.12.2008 more than 1‰ yrs after distribution. The same has been appended to the supplementary counter affidavit. Now it is this enquiry report which is not only the basis for denying balance payment to the petitioner but asking the petitioner to refund all the payments which he had received. Thus the petitioner has moved this Court not only with a prayer for payment of balance of the money due but also objecting to the demand of refund based on report of the Enquiry Team. It is not in dispute that the Handlooms have not been retrieved by the State from the weavers and returned to the petitioner. It is not in dispute that the goods as delivered were not found to be defective in any manner at the time when deliveries were made. It is also - 4 - not in dispute that when they were distributed to various weavers there was no dispute as to the quality of the Handlooms. There is no dispute that when weavers received the same they did not complain about the quality or that they were damaged in any manner. It is for the first time the enquiry report is drawn up pursuant to enquiry conducted after almost one and half years of the distribution to the weavers which had been made on 28th April, 2007 and the Enquiry is being made on 30th December, 2008 at the place of weavers residence. Firstly the law in this regard is settled by Section 42 of the Sale of Goods Act, 1930 which is quoted hereinunder. “The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.” Here in view of the undisputed facts above, the State had a right to reject the goods when they were delivered to the District Industries Centre by the petitioner but neither they objected the quality nor they - 5 - rejected the goods rather for seeking publicity and in furtherance of governmental policy they were distributed free of cost to the weavers. Even at the time of delivery neither the State Officials nor the weavers protested in any manner and the protest is only coming after one and half years by the weavers with whom petitioner had no direct concern. In my view, Section 42 of the Sale of Goods Act, 1930 is the complete answer in this regard and at this late stage State can not legally contemplate of rejecting goods much less asking for refund of the money. It is then submitted that as per the report aforesaid the goods in several cases were found to be damaged. Firstly this damage report is coming for the first time after one and half years of the goods lying with the weavers. There was no such report received when the goods were delivered at Patna by the petitioner or they were distributed by the State to the weavers or when the weavers received the same free of cost. Such a belated report or a complaint of damaged goods having been received is of no consequence or significance as such a late stage. Even if we assume that this was a breach of a condition to be treated as warranty again Section 13 of the Sale of Goods Act, 1930 is complete answer which is quoted hereinunder. - 6 - When condition to be treated as warranty:- (1) where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated. (2) Where a contract of sale is not severable and the buyer has accepted the goods or part thereof, [***] the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or implied, to that effect. (3) Nothing in this section shall affect the case of any condition or warranty fulfillment of which is excused by law by reason of impossibility or otherwise. In either case at best the State can bring an action against the petitioner for damages upon proof of defective/damaged delivery but it can not repudiate the sale itself. Now we come to the Enquiry Report in detail which has been appended as Annexure-A-1 to the supplementary counter affidavit. All that complaints that - 7 - have been made are that full part of the Handlooms were not given to the weavers. I do not know what the petitioner has to do with it as when the petitioner delivered the same they were accepted without demur or protest and now after one and half years the weavers are complaining that the machine is not full and complete or some parts thereof are broken or damaged. I fail to understand under what law can the petitioner held liable or guilty for the same. There is no complaint on part of the District Industries Centre that when they received the Handlooms from petitioner they were incomplete or damaged in any manner. Then we come to the question of inferior quality of machine in which the same reason applies. I may notice one thing that the Enquiry Report states that some parts thereof ought to have been of teak wood(Sagwan). The Supply order does not state so, even the Enquiry Report does not say that supplies were contrary to the quality standards as set out in the supply order. The Enquiry team has self assumed certain quality standard without there being any such standard specification or any such thing mentioned in the supply order and noted that the supply was of inferior quality and that too after one and half years of the same remaining in the hands of the weavers. - 8 - In my view, these are mere pretence of an excuse being made belatedly to deny balance payments and create a pretence of a dispute where there is none. Thus in view of the law and the facts as noticed above, the action of the State is per say arbitrary on the face of it and contrary to Article 14 of the Constitution. State can not withhold payment to the petitioner at this belated stage having once accepted the supplies and utilized it fully completely and without any reservation. State must pay the full amount in as much as in view of Section 32 of the Sale of Goods Act, 1930 which is quoted hereunder. Payment and delivery are concurrent conditions:- unless otherwise agreed, delivery of goods and payment of the price are concurrent conditions, that is to say, the seller shall be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer shall be ready and willing to pay the price in exchange for possession of the goods. Payment and delivery are concurrent conditions and payment can not be held back on pretence of a dispute. Thus the writ petition is disposed of with a direction to the respondents to ensure balance payments - 9 - to the petitioner within a period of one month from the date of production of this order before the Director, Industries and consequentially in view of the facts and the law as discussed above, no order of recovery can be made and/or enforced as against the petitioner at this belated stage. The writ application with the aforesaid observation and direction stands disposed of. Shageer (Navaniti Prasad Singh, J)