JUDGMENT
P.K. Bahri, J.
(1) Plaintiff in this suit has sought a decree for recovery of Rs.7,88,247.00 as price of the motorcycles supplied to the Union of India with interest@ 18% per annum and pendente lite and future interest. It has a lso sought declaration to the effect that no valid and binding contract came into existence between the parties and in the alternative to declare that the contract, if any, stood frustrated and the plaintiff stood discharged of its obligations and the demand of the defendant for alleged general damages and/or risk purchase damages is illegal,not maintainable and for injunction restraining the Union of India from enforcing any such alleged demand of damages.
(2) The facts averred in the plaint leading to the filing of the present suit, inbrief, are that in response to invitation to tender issued by the Director General of Supplies & Disposals, New Delhi, the plaintiff submitted its tender dated July 19,1976, which was purported to be accepted vide advance acceptance of tender letterNo. October 8,1976 and the formal acceptance letter dated October 12, 1976, wasissued. The plaintiff made supplies of motorcycles, in pursuance to the said acceptance of tender, of the value of Rs. 7,88,24 7/- in between the period December9,1977 to February 27,1979. It is pleaded by the plaintiff that the defendant had not paid the price of the said motorcycles supplied by the plaintiff. Plaintiff had then averred that tender of the defendant was vague and the contract had not come into existence as contemplated by provisions of Articles 298 & 299 of the Constitution of India and one of the conditions of the contract being that same is subject to general conditions of the contract as contained in Form DGS&D-68(Revised) makes the term arbitrary and hit by Article 14 of the Constitution. It is averred that plaintiff is entitled to have the price of the vehicles already supplied because that supply was not made gratuitously and defendant is legally bound to reimburse the plaintiff with regard to the price of the said vehicles in terms of Section 70 of the Contract Act.
(3) It is alleged that defendant had raised a claim to the tune of Rs. 35,51,283/20P claiming the same as general damages for breach of contract on the part of theplaintiff in not supplying the remaining quantity of the motorcycles contemplated by the alleged contract. This demand has been raised vide letter dated August 8,1980. It is pleaded that the defendant had later on claimed damages to the tune ofRs. 59,36,051 /21P. It is averred that the alleged contract provided for risk purchase and thus, the defendant is not entitled to have any general damages and defendan thas not shown that the defendant had suffered any damages on effecting any riskpurchase. It is further pleaded that defendant had required the supply of these motorcycles for its own consumption and had not taken the said supply for resale and thus, the defendant was not entitled to have damages on account of any variation occurring in the price of the motorcycles agreed upon and the increase in price taking place due to market fluctuations. So, after serving the notice under Section 80 of the Code of Civil Procedure the plaintiff instituted the present suit.
(4) Defendant initially, before filing the written statement, moved an application under Section 34 of the Arbitration Act seeking stay of the suit invoking the arbitration clause existing under the contract but that application came to bedismissed on May 13,1985. It is averred in the written statement that according to the terms of the contract the plaintiff was to commence the supply of the goods within one month i.e. November 5,1976 and complete the supply of all the vehicles by May 5, 1978 with average monthly delivery of 500 vehicles. It is averred thatplaintiff failed to adhere to the schedule of the supply and wanted vide its letter dated August 23, 1977, extension of time for making the balance supply claiming that there had taken place some lock-out in its factory. up to August 19, 1977, theplaintiff had supplied 2,780 vehicles and 4531 vehicles were yet to be supplied. Theplaintiff sought extension of time up to September 30,1978 for making the balance supply and by subsequent letter dated November 7, 1978, the supply period was required to be extended up to March 31, 1979. Realizing the difficulties of theplaintiff, defendant, however, extended the period for delivery at first up to November 30, 1978 and thereafter up to March 31, 1979. Later on the plaintiff instead of supplying the vehicles requested for increase in the price of the vehicles which the defendant did not accept and the plaintiff then refused to supply there maining vehicles and in all plaintiff supplied 4751 vehicles leaving the balance quantity of 2560 vehicles. Defendant vide letter dated August 21, 1979, cancelled the contract at the risk and cost of the plaintiff and the defendant floated a tender for risk purchasing the remaining supply of the vehicles but the plaintiff did not respond to the said tender and thus, no risk purchase could be made for theremaining quantity of the vehicles.
(5) It is pleaded further in the written statement that subsequently the defendant purchased more vehicles from the plaintiff at the higher prices which resulted in loss of about Rs. 53,24,672/- to the defendant and the defendant ultimately found that on breach of the contract by the plaintiff the defendant is entitled to recover general damages on the basis of difference between the accepted price of the contract and the market rate on the date of the breach i.e. March 31,1979which amount came to Rs. 35,51,283/20P. It is pleaded by the defendant that as the contract contained an arbitration clause the defendant appointed an Arbitrator with regard to the claim of the defendant of the said amount of damages. A plea Was taken that the only Arbitrator already appointed according to the term of thearbitration clause is the sole authority to look into the damages claimed by thedefendant and the suit in this respect is not maintainable.
(6) On merits the defendant further contended that the contract has been entered into between the parties and the same meets with the requirements of Article 299 of the Constitution of India as Mr. Suri, Assistant Director (Supply) had been duly authorised to sign the contract documents on behalf of the President of India and it is Mr. Suri who had accepted the tender of the plaintiff. It was controverter that any term of the contract is hit by Article 14 of the Constitution.So, it was averred that the plaintiff is not entitled to have any relief in this suit and rather the defendant is entitled to have the damages from the plaintiff for breach ofthe contract.Following issues were framed: 1. Whether the plaint in the suit has been signed and verified and the suit has been instituted by a duly authorised person?2. Whether the suit is within time?3. Whether the suit is not maintainable?4. Whether the plaintiff is entitled to claim damages from the defendant?If so, to what extent? 5. Relief.
(7) Issue No. 1: Plaint has been signed and verified by one Mr. P.R. Sundaram,Secretary of the plaintiff. PWI- Sh. R. Raghvan,the only witness examined by theplaintiff in support of its case, deposed that he is familiar with the signatures of Mr.Sundaram as he has been seeing his signatures during the course of his duties andthus, he identified the signatures of Mr. Sundaram on the plaint. He also identified the signatures of Mr. S. Vishwanathan, Chairman-cum-Managing Director and Mr.Prabhakar, Director of the company, appearing on the original power of attorney,copy of which is Ex. P4. The power of attorney is duly registered. No evidence has been led by the plaintiff to show that Chairman-cum-Managing Director and the Director had the authority on behalf of the plaintiff-company to execute the power of attorney in favor of Mr. Sundaram to enable him to institute the present suit.No resolution of the Board of Directors of the plaintiff-company has been proved.The power of attorney is not attested and authenticated by any Notary so that a presumption could be drawn under Section 85 of the Indian Evidence Act that the executants of the Power of Attorney had the due power from the company for executing and signing the power of attorney in favor of Mr. Sundaram. Section 85 of the Indian Evidence Act does not allow raising of such a presumption by the Court in respect of power of attorney which is registered under the Indian Registration Act.
(8) The only presumption which can be drawn, if the power of attorney isregistered, is that the executants who had executed the power of attorney were properly identified persons and it can be presumed that in the present case Chairman-cum-Managing Director and the Director of the plaintiff-company have executed the power of attorney in favor of Mr. Sundaram, but unlike Section 85 of the Indian Evidence Act which allows drawing of a presumption that in case the power of attorney is duly attested and authenticated by a Notary Public or anyCourt, Judge, Magistrate, Counsel or Vice Counsel or representative of the CentralGovernment, then it can be said that the persons, who had so executed the power of attorney, had the authority to do so but mere registration of the power of attorney does not bring about any such presumption that the Chairman-cum-Managing Director and the Director of the company had the authority on behalf ofthe company to execute the power of attorney in favor of Mr. Sundaram.In view of the abovediscussion, I hold that the plaintiff has failed to prove that the plaint has been signed and verified and the suit has been instituted by a duly authorised person on behalf of the plaintiff-company. Issue is decided against theplaintiff.
(9) Issue No. 2: The main relief of the plaintiff is for recovery of Rs. 7,88,247/- as the price and other incidental charges like sales-tax due to the plaintiff on account of supply of the motorcycles to the defendant. It is, indeed, not in dispute that the vehicles were supplied in between the period December 9,1977 to February27,1979. This suit had been filed in this Court after serving notice under Section 80 of the Code of Civil Procedure on April 4,1983 i.e. after much expiry of period of three years and two months of notice period. Under Article 14 in Part I of the Schedule to the Limitation Act, three years period has been prescribed for filing a suit for recovery of the price of the goods supplied and the limitation commences from the date of the supply of the goods. It is evident that the claim of the plaintiffin this regard stands barred by limitation.
(10) As far as the relief of declaration and injunction are concerned that they appear to be not barred by limitation because Article 58 of Part Iii of the Schedule to the Limitation Act would govern which prescribes period of three years from the date the right to sue first accrues. The defendant had raised its claim against theplaintiff vide letter dated August 8,1980, demanding Rs. 35,51,283/20P as generaldamages. So, the reliefs of declaration and injunction with regard to this particular matter is within time. The relief of injunction would be covered by residuary Article 113 of Part X of the Schedule to the Limitation Act which also prescribes a period of three years when the right to sue accrues. So, this issue is partly decided in favor of the plaintiff and partly against the plaintiff.
(11) Issue No. 3: The learned Counsel for the defendant has contended that the suit is not maintainable as the defendant has already invoked arbitration clause and had appointed an Arbitrator under the contract for deciding the claim of thedefendant with regard to general damages due to the defendant from the plaintiff on account of the breach of the contract by the plaintiff.
(12) The learned Counsel for the plaintiff has, on the other hand, contended that there is no evidence led by the defendant to prove that in fact, there has come about a valid subsisting contract between the parties inasmuch as it is not shown that the officer who had signed the letter of acceptance of tender of the plaintiff was a duly competent officer to sign such letter for bringing about a contract between the parties in accordance with the provisions of Article 299 of the Constitution of India.
(13) Although in the written statement a plea was taken that Mr. Suri, Assistant Director (Supply) was fully competent to sign the contract on behalf of the President of India yet no notification or any other document had been produced and proved in this case to show that any such authority had been vested in Mr. Suri to execute the contract on behalf of the President of India. It is not disputed that the present contract is purported to have been made in the exercise of the executive power of the Union. Article 299 of the Constitution of India says that if that is so,then contract must expressly to be made in name of the President and all such contracts and all assurance of property shall be executed on behalf of the President by such person and in such manner as he may direct or authorise. No order of the President has been produced to show that he had authorised Mr. Suri to execute thepresent contract.
(14) In Union of India v. M/s. Hanuman Oil Mills Ltd. & Ors.. Air 1987(Suppl)SCC 84, the Supreme Court held that where the competency of the person to act for and on behalf of the President in terms of Article 299 had been expressly questioned the Government must lead evidence to show that contract had been made incompliance with the provisions of Article 299 and mere averment in the pleadings would not suffice. In the said case a plea was taken that a notification No. SRO-3442dated November 2,1955, had been issued authorising Deputy Director to accept the tender for and on behalf of the President of India but no such notification wasproduced. The Supreme Court held that no valid contract had come into existencebetween the parties.
(15) In view of the above, I hold that in the present case also it must be held that no valid and binding contract has come into existence between the parties and thus,the arbitration clause existing in such invalid contract could not have been invoked and the present suit is maintainable. Issue is decided in favor of the plaintiff.
(16) Issue No. 4 : It is, indeed, not in dispute that the defendant had not paid the price of the motorcycles which were supplied by the plaintiff to the defendant but even though there was no binding contract between the parties even then in view of Section 70 of the Contract Act the plaintiff would have been entitled to be reimbursed in respect of the price of the such vehicles taken by the defendant.However, unfortunately for the plaintiff, the claim of the plaintiff for recovering the price of the said vehicles stands barred by time. Counsel for the plaintiff has argued that even if the main claim of the plaintiff for price of the vehicles is barred by time even then the plaintiff is entitled to have the sales-tax amount calculated at 4% in view of the provisions of the Tamil Nadu Sales Tax Act whereas in the bills the sales-tax amount mentioned was calculated at 3%. The learned Counsel for theplaintiff forgets that if the plaintiff’s claim with regard to the price of the goods stands time barred, any incidental charges linked with the price of the goods like excise duty and sales-tax are also not recoverable. So, the plaintiff is not entitled tothe relief of recovery of any amount as the same is barred by time. Issue is decided against the plaintiff.
(17) Issue No. 5: In view of the fact that there has not come about any binding contract between the parties, the defendant obviously is not entitled to recover any general damages as claimed by the defendant from the plaintiff on account of any breach of the contract by the plaintiff. The fact that the plaintiff had committed the breach of the contract is not in dispute but in view of the fact that the contract was not valid, the breach of such invalid contract does not give any right to thedefendant to have any general damages from the plaintiff. Even otherwise no evidence has been led by the defendant to show that the defendant had effected any risk purchase of the quantity of the vehicles which were not supplied by theplaintiff. So, the plaintiff is entitled to have the reliefs of declaration and in junctionin this case, but in view of the decision in issue No. 1, the suit has to be dismissed as having been not instituted by a duly authorised person on behalf of the plaintiff.The suit is dismissed but in view of the peculiar facts, I leave the parties to bear their own costs.