BENCH AT AURANGABAD v. Satish Kumar

Judgment

{2} FIRST APPEAL No.530/1994

1. The appellants-original defendants, by this appeal, have challenged the legality and correctness of the judgment and decree dated 28.02.1991 passed by the Joint Civil Judge, Senior Division, Aurangabad in Special Civil Suit No.109/1982 thereby partly decreeing the suit and awarding compensation of Rs. 2,07,350/- with future interest @ 15% p.a. from the date of suit to the plaintiffs.

2. It appears that respondent No.2 expired during the pendency of the suit and hence the appeal stood abated against respondent No.2 vide order dated 19.09.2011.

3. At the outset, it may be stated that the respondents- plaintiffs had filed the Special Civil Suit contending that they were the members of the Joint Hindu Family at the material time. It was contented that the present appellants had invited tenders for purchase of Tendu leaves at Udgir Unit No.1 for the year 1980-81 in which bid of respondent No.1 / original plaintiff No.1, being {3} FIRST APPEAL No.530/1994 highest, was accordingly accepted by appellant No.3 and confirmed by appellant No.2. The rate of purchase of Tendu leaves was fixed

at Rs.277 per standard bag. Accordingly, the plaintiffs had deposited Rs.23,900/- towards security so also they had furnished the requisite solvency certificate. On 05.03.1981, an agreement (Exhibit-86) was executed between original plaintiff and the authorized officer of appellant No.3. As per the terms of the agreement the payment towards purchase of Tendu leaves was to be made in 3 installments on 01.10.1981, 01.11.1981 and 01.12.1981 and the Tendu leaves were to be given in proportionate to the payment. As per the agreement, the expenses for collection of the leaves was to be born by the plaintiffs, the leaves were to be stored in a godowoon of the appellants and the same was to be insured at the cost of the plaintiffs. According to the plaintiffs they had complied with all the conditions of the agreement. It was further averred that the season of collection of Tendu leaves was only during the months of March, April and first half of May and totally 1034 bags of leaves were collected and price was calculated by the appellants and necessary information was provided to the plaintiffs. As per the agreement, the purchaser could sale the {4} FIRST APPEAL No.530/1994 leaves as per their choice after taking delivery from the appellants. The plaintiffs had incurred expenses of Rs.1,25,000/-towards collection of leaves. It was the case of the plaintiffs that due to financial crises, the plaintiffs could not pay the entire purchase price as per the schedule of the payment and hence they had prayed for extension of time to deposit the second and third installments. Appellants, vide letter dated 07.12.1981 called upon plaintiff No.1 to pay the purchase price of 1034 bags of leaves of Rs.2,40,411.30 including 15% interest along with sales tax of Rs. 19,615.30 till 15.12.1981. Simultaneously, plaintiff was also served with a show cause notice as to why agreement dated 05.03.1981 should not be terminated. On the request of the plaintiff, the time to pay the purchase price along with interest and sales tax was extended till 28.12.1981. On 28.12.1981, the plaintiff deposited a Demand Draft of Rs.2,20,000/- towards 85% of the purchase price and a receipt was also issued by the appellants. Deceased respondent No.2 had also requested the appellants to adjust his commission charges towards the purchase price and requested to hand over the delivery of leaves in proportion to the payment deposited by the plaintiffs. Accordingly, plaintiff No.1 was called at {5} FIRST APPEAL No.530/1994 Aurangabad as appellant No.3 intended to consult with appellant No.2. On 29.12.1981, respondent No.2 moved an application before appellant No.2 expressing willingness to deposit the balance amount of Rs.13,150/- or the due amount as per the accounts of the appellants by the end of 31.01.1981. The plaintiffs had also requested to deliver at least 500 bags of leaves to enable them to raise funds, however the said request was turned down by the appellants and appellant No.2 demanded the balance amount by

31.12.1981 by Demand Draft and the plaintiffs shown their willingness to deposit by cash as 31st December was bank holiday. However, without considering the payment made by the plaintiffs, the letter of termination of agreement was issued by appellants and high handedly terminated the agreement dated 05.03.1981. The Revenue and Forest Department of Government of Maharashtra had passed a resolution on 11.01.1982 thereby issuing general instructions for granting extension for payment of third and final installment for purchase price of leaves up to 31.01.1982. Benefit of the said resolution was extended to other contractors and purchasers of the leaves, however, though the plaintiffs were entitled for the said benefit, the same was denied to them. Initially, {6} FIRST APPEAL No.530/1994 the suit was filed for declaration of illegality of the termination of contract dated 03.05.1981. The Demand Draft submitted by the plaintiffs on 28.12.1981 was not deposited / presented by the appellants in the bank and the plaintiffs had never instructed to their bankers to stop payment of the said Demand Draft. Respondent No.1 had represented the matter before the Hon’ble Minster of the concerned department and his request was accepted by the Minister. Appellant No.2 was telephonically communicated to allow plaintiff No.1 to pay the balance amount and to deliver the leaves. Accordingly, an application was moved on 16.01.1982 before appellant No.2 to accept the balance amount of Rs.15,000/- or the amount due. On 16.01.1981 itself, appellant No.3 communicated the plaintiff that as the demand draft was not encashed, the request letter dated 16.01.1982 cannot be accepted, however the said communication is silent as regards instructions of the Minister. Deceased respondent No.2 had entered into contract of sale of leaves with different perspective buyers including one from Andhra Pradesh from whom earnest money was also accepted by the plaintiffs. It was the case of the plaintiffs that contracts of other defaulters were not terminated, however, the appellants {7} FIRST APPEAL No.530/1994 discriminately terminated the contract of the plaintiffs. Termination of agreement dated 05.03.1981 resulted in filing of criminal case against the plaintiffs by their perspective purchasers. At the time of termination of the contract, the market rate of the Tendu leaves was about Rs.410/- to Rs.450/- per standard bag and total value of the 1034 bags of Tendu leaves was Rs. 4,65,300/-, which amount was claimed by way of compensation and damages for illegally terminating the contract. Accordingly, the plaint was amended and compensation by way of damages was claimed.

4. The appellants resisted the suit by filing written statement including to the amended plaint inter alia contending that agreement dated 05.03.1981 between the parties was not executed by respondent No.1 for undivided Hindu Family and hence it was the agreement between the appellants and respondent No.1 and respondent No.2 has no concern with the same. According to the appellants, original respondent No.2 was appointed as an agent under Rule 3 (1) of the Maharashtra Minor Forest Produce (Regulation of Trade) Act, 1969 on his application. {8} FIRST APPEAL No.530/1994 It is alleged that though respondent No.1 had paid part purchase price @ 30% per standard bag, yet has not paid 10% net royalty. The appellants denied about the expenses incurred by respondents for collection of tendu leaves. It is also denied that the respondents had insured the godowon as agreed. It is stated in paragraph No.7 of the written statement that on termination of contract, the appellants came in complete custody of the leaves stored in the godowon. According to the appellants, the total quantity of the leaves was 1087 standard bags as against 1034 claimed by the plaintiffs. Though it is admitted by the appellants that the plaintiffs had prayed for extension of time for the first time on

09.11.1981, yet the plaintiffs had not paid the second installment as agreed nor respondent No.1 had applied for extension 10 days prior to the due date of the installment as per the terms of the agreement. It is also averred that as per the terms of agreement purchaser has to pay the amount by challan only but respondent No.1 had remitted the demand draft to the appellants to avoid payment. It was also the contention of the appellants that as the case in respect of agency agreement was remained to be examined, the request of respondent No.2 for adjustment and handling the {9} FIRST APPEAL No.530/1994 commission charges towards dues of respondent No.1 could not be decided. It was specifically pleaded by the appellants that the plaintiff had not paid the sales tax so also the first and second installments till 28.12.1981, moreover the said amount was paid by demand draft and not by way of treasury challan. Though the amount paid by the plaintiffs, i.e. 3,28,017.17 is taken into consideration yet the same is short by Rs.83,924.67 towards the full and final payment as per the agreement. As only 3 days had remained for the expiry of the contract, the appellant No.3 did not deliver the leaves for want of adequate payment. It was also pleaded by the appellants in paragraph No.18 of the written statement that the directions issued by appellant No.1 vide resolution dated 11.01.1982, were in respect of third and final installment only and as the demand draft deposited by the plaintiff was not encashed the government had in fact not received any payment from the purchaser and therefore, the benefit of the resolution dated 11.01.1982 could not have been extended to the plaintiffs. The appellants also contended that the appellants were anticipating that the plaintiff would pay the balance amount by way of treasury challan on 29th or 30th December and the entire {10} FIRST APPEAL No.530/1994 amount could be deposited by one single challan and hence the appellants did not take immediate steps to encash the demand draft. Even the plaintiff failed to remit the full and final payment till 31.12.1981 as per contract and hence the appellants rightly terminated the contract on 31.12.1981. Thereafter, on the first working day i.e. on 02.01.1982, the demand draft was presented in the bank, however in view of the instructions of stop payment due to police case, the same could not be realized. As the demand draft given by the plaintiff could not be encashed, the appellants did not deliver the leaves to the plaintiff though requested by the plaintiff. According to the appellants, the plaintiffs misrepresented the Minister. The appellants had justified their action of termination of contract, as respondent No.1 has committed breach of the terms and conditions of the same. According to the appellants, the delay in auction of the leaves was caused due to court proceedings initiated by the plaintiff and hence the plaintiff had no right to claim any compensation or damages. According to the appellants even the leaves were to be auctioned at a lesser price which caused loss to the Government. In paragraph No.35 of the written statement, the appellants had taken a stand that in view of bar {11} FIRST APPEAL No.530/1994 u/s 18 of the Maharashtra Minor Forest Produce (Regulation of Trade) Act 1969, the civil court has no jurisdiction to try and entertain the suit. The appellants had also taken a specific stand that deceased respondent No.2 had no concern with the contract entered into between the appellants and respondent No.1 and respondent No.2 was never appointed by the appellants as agent and respondent No.2 had misrepresented himself to be the agent. It was also contended that the claim of the plaintiff seeking compensation was barred by time and hence was prayed for dismissal of the suit.

5. Record shows that on the basis of the pleadings of the parties, the trial court had framed in all 8 issues including the issue as regards to the jurisdiction and legality of termination of contract by the appellants. Record further indicates that respondents had examined total 7 witnesses including both the respondents, four perspective purchasers and one agent Sangram Patil. The plaintiffs had tendered, got proved and exhibited various documents in the evidence of respondent No.2. The appellants had also examined 3 witnesses i.e. DW-1 Ramesh Joshi, who, at the {12} FIRST APPEAL No.530/1994 material time, was working as Conservator of Forests, Aurangabad and was the controlling authority; DW-2 Sashikant Kaderkar, the Sub Divisional Forest Officer, Osmanabad who had auctioned the leaves and DW-3 Nandkishior Bhat, Sub Divisional Forest Officer, Beed and was holding the charge of SDFO, Osmanabad at the material time. DW-3 Bhat was the only witness who was conversant with the suit transaction.

6. Trial court, after appreciation of the evidence on record, concluded that the civil court has jurisdiction to try and entertain the suit and that the appellants had illegally terminated the contract and hence, the plaintiffs are entitled for compensation and awarded compensation of Rs.2,07,350/- with future interest @ 15 % p.a. from the date of the suit till the realization of the amount of compensation by partly allowing the suit. This judgment and decree is impugned in the present appeal.

7. Admittedly, the plaintiff had not challenged the part dismissal of the suit by filing any appeal. {13} FIRST APPEAL No.530/1994

8. In this background, heard learned AGP for the appellants followed by the learned counsel for respondent No.1.

9. Learned AGP for appellant State would urge that by virtue of the provisions of section 18 of the Maharashtra Minor Forest Produce (Regulation of Trade) Act, 1969 (hereinafter, will be referred as Act of 1969) and the rules made thereunder, there is bar to the civil court to try and entertain the suit, if the action is taken in good faith. Learned AGP invited my attention towards the agreement dated 05.03.1981 (Exhibit-86) and contents therein and relying on the terms of the same, learned AGP urged that the facts revealed in oral and documentary evidence before the trial court demonstrate that the plaintiff had committed breach of the contract as regards payment of purchase price as agreed by firstly not making payment in stipulated time and secondly by not making the payment by treasury challans. Therefore, learned AGP contended that, the appellants had every right to terminate the contract dated 05.03.1981. Learned AGP further urged that the action of termination of contract is done by the appellants in good faith while discharging their official duties and hence they are not {14} FIRST APPEAL No.530/1994 liable to be prosecuted in view of bar u/s 18 of the Act of 1969. It was further urged that in view the last clause of the agreement i.e. in case of any dispute, the right of appeal to the Conservator of Forest, Nagpur was provided, and as the remedy of appeal was not availed by the plaintiffs hence the suit ought to have been failed. It was further asserted that the forfeiture clause was provided under the agreement and the appellants had deposited the demand draft given by plaintiff towards the forfeiture clause and exercise of this right was within the powers to recover the loss. It was further contended that the Government Resolution dated 11.01.1982 would not be applicable to the respondents because the said resolution gives relaxation for the payment of third and final installment only, however the respondents were in arrears of the entire payment of the purchase price as well as taxes and royalty and therefore, they were not entitled for the benefits of the said government resolution. Lastly, it is urged that without considering the facts of the case and the law applicable to it, the trial court has partly decreed the suit directing the appellants payment of compensation with interest and hence, requested to allow the appeal and quash and set aside the impugned judgment and decree. {15} FIRST APPEAL No.530/1994

10. Per contra, learned counsel for respondent No.1 supported the impugned judgment and decree. According to him, as no forum is provided under the Act of 1969 vesting with the powers of the civil court to decide the issue involving civil nature, it cannot be inferred that the jurisdiction of the civil court to try and entertain the suit is expressly barred. It is further submitted that though respondent No.1 was defaulter in making payment of purchase price as agreed, yet he had paid near about 85% of the amount towards the arrears, however, by way of reciprocal part of the agreement, he had not received a single tendu leave. According to him, failure to deliver tendu leaves to respondent No.1 on the part of the appellants resulted in illegal termination of the contract. It was submitted that the Government Resolution dated

11.01.1982, granting extension of time to make payment of third installment and to clear dues till 31.01.1982, was not considered by the appellants in its true spirit in view of the fact that major part of the purchase price was already paid by the respondent. It is also contented that the illegal termination of contract by the appellants not only caused loss to the respondent but also to the {16} FIRST APPEAL No.530/1994 Government and hence the respondent is entitled for the compensation by way of damages. Therefore, it is prayed to dismiss the appeal.

11. Considering the rival submissions, the following points are framed for my consideration.

1. Whether the jurisdiction of the civil court is barred to try and entertain the suit instituted by the plaintiffs?

2. Whether the appellants had terminated the contract legally?

3. If the finding on points No.1 and 2 is answered in negative then whether the respondents are entitled for payment of compensation?

4. What order?

12. Finding on point No.1 – Reliefs claimed by the respondent-plaintiffs, in the suit read thus- “A) That it be kindly declared that the purchaser’s agreement dt.5.3.1981 entered into between the plaintiff No.1 and the defendant No.1 in respect of the purchase of Tendu leaves of Udgir Unit No.1 of Osmanabad District has not been legally terminated by the {17} FIRST APPEAL No.530/1994 defendant No.2 and that the said agreement in law subsists so as to govern the respective rights and liabilities of the parties thereunder B) That it be kindly further declared that the plaintiffs are entitled to get the credit of an amount of Rs.2.20 lakhs under the demand draft paid by plaintiff No.1 deft.No.3 on 28.12.1981 and the plaintiffs cannot be compelled to make the double payment of the suit amount. C) That the suit of the plaintiff may kindly be decreed for the claim of compensation and damages for the amount of Rs.4,65,300=00 ps. Along with the future rate of interest at 19% oft he Bank rate till its payment?” Thus, from reliefs claimed by the plaintiffs vide prayer clause “A” and “B it will be clear that the same are declaratory in nature and so far as prayer clause “C” is concerned, the same is in the nature of claim of compensation and damages, which is squarely covered under the provisions of the Specific Relief Act and Indian Contract Act and certainly, civil rights of the parties are required to be adjudicated.

13. Section 9 of the Part I of the Civil Procedure Code reads thus- “9. Courts to try all civil suits unless barred – The Courts shall (subject to the provisions herein contained) {18} FIRST APPEAL No.530/1994 have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred”

14. Section 18 of the Act of 1969 under the head Savings in respect of acts done in good faith reads thus- “18. (1) No suit, prosecution or other legal proceedings shall lie against any person for anything which is in good faith done or intended to be so done in pursuance of this Act or the rules made thereunder. (2) No suit or other legal proceedings shall lie against the State Government for any damage caused or likely to be caused or any injury suffered or likely to be suffered by virtue of the provisions of this Act, or by anything which is in good faith done or intended to be so done in pursuance of this Act, or the rules made thereunder” Section 19 (2) (c) of the said Act of 1969 reads thus- “19 (1) ........ (2) In particular and without prejudice to the generally of the foregoing provisions such rules may provide for all or any of the following matters namely - (a) ...... (b) ...... (c) manner of holding enquiries under this Act.”

15. Perusal of the Act of 1969 with the rules made thereunder do not indicate that any forum is provided to decide any dispute or civil rights of the parties. {19} FIRST APPEAL No.530/1994

16. Learned AGP relied on the clause 3 (J) (K) and (L) and clause 7 of the agreement (Exhibit-86). The relevant clauses read thus- (3) The purchaser shall insure the leaves stored by him in the godown(s) with the Government Insurance Fund against loss or damage by theft, fire, strike, riot and civil commotion for the sum equivalent to the cost of the leaves at purchase rate: (J) If the Purchaser commits a breach of any of the terms and conditions of this Agreement and it is not proposed to terminate the Agreement on account of any such breach, the Divisional Forest Officer may impose a penalty not exceeding Rs. Five hundred for each breach. An appeal against such order shall lie to the Conservator of Forests, in whose jurisdiction the unit is situated. The Purchaser may within 30 days of the receipt by him of the order passed by such Conservator of Forests, appeal to the Conservator of Forests, Tendu Leaves Circle, Nagpur, against the order passed in appeal by such Conservator of Forests. (K) If the Purchaser commits a default in making payment or in complying with any of the provisions of these presents without prejudice to any other rights and remedies that the Government may have the respective territorial Conservator of Forests in whose jurisdiction the area of contract is situated may at his option terminate the Agreement and forfeit the security / deposit resale the stork of Tendu Leaves not taken delivery by the Purchases, if any, lying with the Government of its Officer or Agent. If the price secured {20} FIRST APPEAL No.530/1994 on such resale falls short of the purchase price of such stock calculated at the rate mentioned in the sub-clause (A) (i) of clause 4 above, the amount of loss calculated as hereinafter mentioned, that is to say L+B (Or – Pr) (Where L+ Loss, B=No. Of standard bags agreed to be purchased by the Purchaser. Or is rate tendered by the Purchaser and accepted by the Government and Pr is the rate realised on resale) less the security deposit forfeited as aforesaid if not paid to the Government by the purchaser within 15 days of the receipt of notice of demand for payment may without prejudice to any other rights, remedies and powers of the Government be recovered by the Government from the Purchaser as arrears of land revenue. If on such resale there is a surplus, the Government shall be entitled to retain the full amount and the Purchaser shall have no right or claim thereto. All Penalties and other dues arising out of this (L) Agreement shall be paid by the Purchaser within 15 days of the receipt by him of notice of demand for payment failing which the same may be recovered as arrears of land revenue from him. (7) The Purchaser may, within 30 days of the receipt by him of any order passed by the Divisional Forest Officer, appeal against the same to the Conservator of Forests in whose jurisdiction the unit is situated. If no appeal is filed within the said period, the decision of the Divisional Forest Officer concerned shall be final and binding on the Purchaser. The Purchaser may within 30 days of the receipt by him of the order passed by such Conservator of Forests appeal to the Conservator of Forests, Tendu Leaves Circle, Nagpur, against the order passed in appeal by such Conservator of Forests.”

17. By drawing my attention towards these clauses in the {21} FIRST APPEAL No.530/1994 agreement, learned AGP urged that clause 7 is to be read along with section 18 2 (c) of the Act of 1969 and the Rules made thereunder, which according to her is a forum provided in law.

18. While opposing these submissions, learned counsel for respondent No.1 urged that whenever there is statutory bar to the Civil Courts, then under those statutes, specific forum has to be provided with vested powers. In absence of any such provision under the Special Statute, it is to be held that there is no express bar for the civil courts to try and entertain the suit. To buttress his contention, learned counsel for respondent No.1 placed reliance on the observations of the Supreme Court in “State of Andhra Pradesh V/s Manjeti Laxmi Kantha Rao” AIR 2000 SC 2220 and in “Dwarka Prasad Agarwal V/s Ramesh Chandra Agarwala” AIR 2003 SC 2696.

19. Considering the rival submissions, I think it appropriate to advert to the observations of the Apex Court in “State of Andhra Pradesh V/s Manjeti Laxmi Kanta Rao” referred supra, wherein it is observed thus- {22} FIRST APPEAL No.530/1994 “The normal rule of law is that civil Courts have jurisdiction to try all suits of civil nature except those of which cognizance by them is either expressly or impliedly excluded as provided under Section 9 of the Code of Civil Procedure but such exclusion is not readily inferred and the presumption to be drawn must be in favour of the existence rather than exclusion of jurisdiction of the civil courts to try civil suit. The test adopted in examining such a question is (I) whether the legislative intent to exclude arises explicitly or by necessary implication, and (II) Whether the statute in question provides for adequate and satisfactory alternative remedy to a party aggrieved by an order made under it. Where a statute gives finality to the orders of the special tribunals jurisdiction of the civil courts must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory Tribunal has not acted in conformity with the fundamental principles of judicial procedure.”

20. Further, it is also necessary to quote the observations in “Dwarka Prasad Agrawal V/s Ramesh Chandra Agarwala” referred supra, which reads thus- “Section 9 of the Code of Civil Procedure confers jurisdiction upon the Civil Courts to determine all disputes of civil nature unless the same is barred under a statute either expressly or by necessary implication. Bar of jurisdiction of a civil court is not to be readily {23} FIRST APPEAL No.530/1994 inferred. A provision seeking to bar jurisdiction of civil court requires strict interpretation. The Court, it is well settled, would normally lean in favour of construction, which would uphold retention of jurisdiction of the civil court. The burden of proof in this behalf shall be on the party who asserts that the civil Court’s jurisdiction is ousted.”

21. Considering the nature of dispute between the parties, as reflected in the pleadings so also from the reliefs sought in the suit, it can safely be inferred that the dispute is eminently of civil nature. Moreover, as discussed earlier, no adequate and satisfactory alternative remedy is provided to the aggrieved party under the special statute i.e. Act of 1969. Therefore, certainly, jurisdiction of the civil court has to be held as not expressly barred to try and entertain the suit. Hence, finding has to be recorded to point No.1 in negative by positively concluding that the jurisdiction of the civil court is not barred.

22. Finding to point No.2 – It has revealed from the evidence on record that the agreement dated 05.03.1981 was terminated by notice dated 31.12.1981 on the alleged ground that respondent No.1 had committed breach of conditions of clause 4 (d) {24} FIRST APPEAL No.530/1994 (i to iii), 2 and 3, i.e. failure to pay the cost of collection of leave, 10% royalty, purchase price of the leaves, 8% sales tax and that the godown was not insured as per agreement.

23. Learned AGP would urge that as per the terms of the contract, respondent No.1 was to pay 3 installments on the stipulated dates as mentioned in the agreement and that too by treasury challans and not by any other mode. It is further asserted by learned AGP that relaxation was provided under the Proviso to clause 4 (3) of the agreement subject to the condition that the purchaser shall make written request 10 days in advance. According to learned AGP inspite of issuance of show cause notice to respondent No.1, on 07.12.1981, the respondents did not comply the same. It is submitted that the stand of respondent No.1 that he had submitted the demand draft of Rs.2,20,000/- on 22.12.1981 itself is violative and in breach of the agreement, as according to learned AGP, as per the terms of the agreement, the payment was to be made by treasury challans only and not by any other mode. It is further urged that the balance amount was not paid till

30.12.1981 and hence the agreement dated 05.03.1981 was rightly {25} FIRST APPEAL No.530/1994 terminated by the appellants. According to learned AGP the Government Resolution dated 11.01.1982 is in no way helpful to respondent No.1, as the same relates to relaxation to third and final installment of payment only and not to first and second installments.

24. While opposing these submissions, learned counsel for respondent No.1urged that the admissions given in oral evidence of DW-3 Bhat have to be considered along with the documents proved in the evidence of the witnesses examined on behalf of the respondents/plaintiffs. It is further submitted that the payment by treasury challan is not mandate as per the agreement, because as per the letter of acceptance issued by appellant No.2, the respondents were directed to make payment towards security deposit of Rs.23,900/- by demand draft and the same is also acknowledged in clause 3 (1) of the agreement. So also it is admitted by DW-3 Bhat that his office had accepted the demand draft of Rs.2,20,000/- and had not refused to accept the same. Not only that but even requisite acknowledgment was also issued by the appellants towards acceptance of the demand draft of Rs. {26} FIRST APPEAL No.530/1994 2,20,000/-. According to learned counsel for respondent No.1, it has been specifically admitted by the witnesses examined on behalf of the appellants that till 30.12.1981, the appellants had received total amount of Rs.2,83,212/- from the respondents excluding the commission and agent charges payable to respondent No.2. According to learned counsel for respondent No.1, approximately 85% of the due amount was thus paid by the respondents till 30.12.1981. My attention is also drawn by learned counsel for respondent No.1 to a letter dated 09.11.1981 by which the respondent No.1 had requested some time to arrange for the payments as per clause 4 (d) (iii) of the agreement.

25. The submissions advanced before me and the documents proved before the trial court coupled with the evidence on record, clearly demonstrate that as per the notice (Exhibit-89) issued by appellant No.3, the demand was for Rs.2,30,871.59 including the residue of purchase price and balance of royalty, payment of all the three installments with penalty interest and the sales tax charges thereon. Against this demand of Rs.2,30,871.59, respondent No.1 had already remitted the demand draft of Rs. {27} FIRST APPEAL No.530/1994 2,20,000/- drawn in the name of the appellants on 28.12.1981, which indicates that as per this demand, only Rs.10871.59 was remained to be paid by the respondents till 31.12.1981.

26. In this respect, the provisions of sections 85A and 90 of the Negotiable Instruments Act needs to be considered, which reads thus- 85A. Drafts drawn by one branch of a bank on another payable to order Where any draft, that is an order to pay money, drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand, purports to be endorsed by or behalf of the payee, the bank is discharged by payment in due course.

90. Extinguishment of rights of action on bill in acceptor' s hands. If a bill of exchange which has been negotiated is, at or after maturity, held by the acceptor in his own right, all rights of action thereon are extinguished

27. Interpretation of these sections is further made clear by the Division Bench of this Court in “Tukaram Bapuji Nikam V/s The Belgaum Bank Limited” AIR 1976 Bombay 185 wherein it is observed thus- “From a consideration of these authorities, in my opinion, the following propositions emerge- {28} FIRST APPEAL No.530/1994

1. The relationship of purchaser of a draft and the bank from which that draft has been purchased is merely that of debtor and creditor;

2. The purchaser of the draft can, therefore, call upon the bank from which he has purchased it to cancel the draft and pay back the money to him at any time before the draft has been delivered to the payee.

3. If, however, the sole object of the issue of the draft was to transmit the money to another person, a fiduciary relationship is created between the purchaser of the draft and the bank which issued it, and the purchaser of the draft can countermand payment only if the bank has not actually parted with the money held by it as agent, thus terminating the relationship of principal and agent.

4. Ordinarily, a bank issuing a draft cannot refuse to pay the amount thereof, unless there was some doubt as to the identity of the person presenting it as being or properly represented the person in whose favour it was drawn, or, in other words, unless there is reasonable ground for disputing the title of the person presenting the draft and

5. Once the draft has been delivered to the payee or his agent the purchaser is not entitled to ask the issuing ban to stop payment of the draft tot he payee on other grounds such as matters relating to consideration, and the issuing bank can thereafter pay back the amount of the draft to the purchaser of the draft only with consent of the payee”

28. Further, it is necessary to advert to the observations of the Supreme Court in “Ramlal Onkarmal V/s Mohanlal Jogani {29} FIRST APPEAL No.530/1994 Rice” AIR 1965 SC 1679” wherein it is observed thus- “Held (as per Bachwat, Raghubar Dayal and V.Ramaswamy, JJ) : That the failure of the respondents and their agents to cash the draft within a reasonable time altered the position of the appellants for the worse, and caused prejudice to them. In the circumstances, the respondents must be regarded as having kept the draft in absolute payment of the cheque. The cheque must be treated as duly paid and consequently, the the original debt stood discharged. AIR 1957 Assam 133, Reversed; Per Mudholkar J (Concurring) : As the respondents, accepted the demand draft drawn by T Bank they must be deemed to have accepted that draft as a legal tender or as absolute payment of the amount payable under the cheque endorsed in their favour by the appellant. Subsequent dishonour of draft would not revive appellants liability. Respondents rights thereafter would rest only upon the demand draft and not upon the original debt which the appellants owed to them. The remedy of the respondents would be against their own bank of against T bank but not against the appellants.”

29. Fact remains, that though the appellants had received the demand draft of Rs.2,20,000/- on 28.12.1981 in respect of the settlement arrived at on 22.12.1981, yet it finds no place in the termination order by which the contract was terminated. So also, inspite of having accepted the demand draft issued in the name of appellant No.2 towards the due payment, terminating the contract {30} FIRST APPEAL No.530/1994 on the ground of non payment, clearly establishes that the appellants had acted illegally and high handedly while terminating the contract. It is also to be noted that under the terms of the agreement, it was agreed that the purchaser was entitled for the proportionate leaves as per the deposit of payment towards purchase price. Though approximately 85% of the purchase price was paid by the respondents, yet admittedly, not a single leave was delivered to the respondents.

30. At this juncture I have to take a note of the fact that though much ado was made by the appellants that the respondents are not entitled for the benefit of the Government Resolution dated 11.01.1982 as it was in relation to relaxation to third and final installment only, yet as discussed above and as it is admitted position that 85% amount was paid by the respondents towards the purchase price of leaves against the three installments. If this amount is taken into consideration then certainly, the respondents had paid more than 2/3rd amount towards the purchase price i.e. 85% and hence it can safely be {31} FIRST APPEAL No.530/1994 inferred that the due payment from the respondents was less than the amount of third installment of the purchase price. Under such circumstances, the respondents were entitled for the benefit of the Government Resolution dated 11.01.1982. It appears that all these facts are blindly rejected by the appellants, which resulted in illegal termination of the contract. Therefore, the only inference can be drawn that the appellants had illegally terminated the agreement. In this light of the matter, the finding to point No.2 to be recorded in the negative that the appellants had not terminated the contract legally.

31. Finding on point No.3 – Once it is held that the appellants had illegally terminated the contract then certainly the respondents are entitled for the compensation by way of damages, as provided u/s 73 of the Indian Contract Act. While considering this aspect it has to bear in mind that at one hand the appellants contend that making payment by demand draft is violative of terms of the agreement and on the other hands the appellants themselves had accepted the demand draft from the respondents {32} FIRST APPEAL No.530/1994 and the same was also deposited by the appellants with their banker. The reason for depositing the demand draft with the bank is given by the appellants that they had forfeited the amount deposited by the purchaser by demand draft however, and in the notice dated 16.01.1982 it was stated that as the payment was stopped, the demand draft could not be encashed and hence delivery of the leaves was not given to the respondents. Therefore, it has to be held that the appellants had accepted the amount deposited by the respondents by demand draft and had also presented the demand draft with the bankers for encashment. The respondents had claimed compensation of Rs.4,65,000/- in the suit in view of the sale price of the standard bags of leaves as per the prevailing market rates i.e. Rs.410 to Rs.450/- per standard bag for 1034 bags. According to the respondents this much loss is caused to them due to illegal termination of contract by the appellants. Apart from this, the respondents had also to face criminal trial initiated on behalf of the perspective purchasers. While determining the amount of compensation for the loss caused to the respondents, the trial court has taken into consideration the amount paid by the respondents by demand draft towards {33} FIRST APPEAL No.530/1994 purchase price, security deposit and commission charges, and while calculating the net profit, the net sale price was subtracted and thus, it is concluded that the respondents are entitled for the compensation by way of damages of Rs.2,07,350/-. Learned AGP appearing on behalf of the appellants is unable to demonstrate that this is a wrong calculation arrived at by the trial court. In view of the evidence on record, the amount of compensation, as calculated by the trial court has to be accepted. In substance, finding to point No.3 is to be recorded in affirmative that the respondents are entitled for the compensation of Rs.2,07,350/- as awarded by the trial court.

32. Admittedly, the respondents had raised the said amount by accepting earnest money from the perspective purchasers and for not supplying the leaves to the perspective purchasers the respondents had also to face criminal trial, therefore, the respondents are also entitled for the interest on the amount of compensation, which the trial court has rightly awarded @ 15% p.a. from the date of the suit. {34} FIRST APPEAL No.530/1994

33. In the premise and in view of the above discussion, I do no find any fault with the impugned judgment and decree, which requires any interference by this Court.

34. Consequently, the appeal, which is devoid of any merit, stands dismissed with no order as to costs. drp/B11/fa530-94 [A.V.POTDAR, J.]