JUDGMENT
Neelam Sanjiva Reddy, J.
1. This is the defendants’ appeal against the judgment and decree passed by the learned Subordinate Judge, Gudivada, on 31-3-1982 in O.S.No.17 of 1976 filed for recovery of Rs. 25,915/- from the defendants towards the value of 177 bags of Chemical fertilizer supplied to them.
2. Facts culminating in this appeal and necessary for its disposal briefly stated are that the plaintiff, a firm by name, Edupuganti Lingayya and Company, Gudivada, represented by its Managing Partner Edupuganti Lingayya, was doing business in chemical fertilizers etc. The first defendant, a firm by name, Sri Balaji Trading Company, Pedana, represented by its Managing Partner, Kolluri Radhakrishna Murthy – the second defendant, was doing business in chemical fertilizers. Defendants 2 to 4 and Kuralla Madhava Rao were partners of the first defendant-firm. Consequent on the death of Kuralla Madhava Rao, his heirs were impleded as defendants 5 to 8. On 10-1-1976, the second defendant on behalf of first defendant-firm contacted E. Lingayya, Managing partner of the plaintiff firm, on telephone and agreed to buy 9 tonnes of “Grow More N.P.K. 14:35:14” fertilizer of parry and Co. at concessional rate of Rs. 142-15 ps per bag from the plaintiff. The terms of the contract were that the first defendant should bear both loading and transport charges and pay the price of the fertilizer to the plaintiff firm at Gudivada. The plaintiff, after obtaining required particulars from the second defendant on telephone on 12-1-1976, sent 177 bags of fertilizer by lorry No. APD-1982 alongwith credit bill No. 36/51 and way bill No. 3/3 dated 12-1-1976. On the same day, the second defendant received the goods and paid the loading and transport charges to the driver of the lorry. The first defendant did not pay the price of the goods supplied in spite of requests in that regard. The second defendant postponed the payment and issued a registered notice on 16-2-1976 to the plaintiff alleging that they did not buy the material as Stated by the plaintiff and that they should take them back. A reply notice was issued on behalf of the plaintiff on24-2-1976settingoutits case. The second defendant got issued another notice on 1-3-1976 to the plaintiff reiterating the facts mentioned in his earlier notice. Under those circumstances, the plaintiff filed suit O.S. No.17 of 1976 for recovery of Rs. 25,915/- with subsequent interest at 6% per annum on the principal amount of Rs. 25,160/- from the defendants.
3. The defendants resisted the suit by filing written statements pleading inter alia that the plaintiff and the first defendant were retail dealers in chemical fertilizers and that both of them buy fertilizers from Parry and Co., the wholesale dealer in chemical fertilizers. The fertilizer “Grow More N.P.K. 14:35:14” was newly introduced in the market and was not popular and had no demand in the market. The wholesale dealer, Parry and Co., was pressurising the retail dealers to sell this new product along with other popular brands of fertilizers supplied by them. The first defendant had placed an order for 6 tonnes of the same fertilizer with Parry and Co., which they received on 12-1-1976, and there was no further need of the same commodity. The plaintiff’s managing partner requested the second defendant on telephone to buy his stocks at concessional rate for which the second defendant did not agree and in fact, it was mentioned that purchase of fertilizers by one retail dealer from another retail dealer was contrary to rules and public policy. The managing partner of the plaintiff pleaded that he would talk to Mr. C.V. Reddy, the supervisor of Parry and Co. , and speak to him latter on. On 12-1-1976, Simhachalam, plaintiff’s clerk informed the second defendant on telephone that his boss had talked to Mr. C.V. Reddy, who okayed the idea of sale at concessional rate. But, the second defendant clearly told Simhachalam that they could not enter into this contract unless Mr. C.V. Reddy, spoke to him personally and agreed not to insist on their order for the same fertilizer. The second defendant did not authorise his clerk to receive the stocks from the plaintiff. When the second defendant returned to the shop in the evening, he learnt that the stocks from Parry and Co. had arrived and later on, the stocks sent by the plaintiff also arrived and since his clerk could not take a decision on his part, paid the transport charges and allowed the stocks to be placed in the shop. In fact, the said expenditure was debited to the account of the plaintiff. On 14-1-1976, the second defendant met the managing partner of the plaintiff and told him that it was unfair on his part to send the stocks without his consent and that the plaintiff must take back the same. The second defendant also sent his clerk to the plaintiff to request them to take back the stocks. A notice was issued to the plaintiff setting out the true facts in this regard. The plaintiff got issued a reply with false allegations. Ultimately, all the stocks, except 12 bags, were sold at prices ranging from Rs. 115/- to Rs. 120/- per bag to minimise the damage and thereby, realised a total sum of Rs. 19,059/-. As the alleged sale of fertilizers by one retail dealer to another retail dealer was opposed to public policy and contrary to Section 23 of the Contract Act, the plaintiff is not entitled to any relief.
4. The parties went to trial on appropriate issues. As many as nine witnesses were examined and Ex. A-1 to A-45 were marked for the plaintiff. D.Ws. 1 and 2 were examined and Ex. B-1 and B-22 were marked for the defendants. Exs. X-1 to X-3 were marked by the Court. The learned Subordinate Judge, after considering the pleas and evidence adduced by the parties, found that the first defendant-firm contracted to buy fertilizers from the plaintiff-firm and accordingly, fertilizers were sold to them, as the money was not paid the plaintiff was entitled to interest at 12% per annum from the date of demand and that the sale transaction was not opposed to public policy, the Sub-Court, Gudivada, had jurisdiction to entertain the Claim of the Plaintiff, and the plaintiff is entitled to the suit amount. Consequent upon the said findings, the suit was decreed as prayer for. Aggrieved by the said judgment and decree, defendants have preferred this appeal. The plaintiff filed cross-objections claiming interest at 12% per annum on the suit amount from the date of the suit.
5. Pending the appeal, the second defendant died and his legal representative was brought on record as 9th appellant. Edupuganti Lingayya, managing partner of the plaintiff-firm also died and his legal representatives were brought on record as respondents 2 and 3 in the appeal. Parties would be referred to as arrayed in the trial Court for the sake of convenience.
6. Learned counsel for the appellants contended that the trial Court erred in coming to the conclusion that the first defendant-firm contracted to buy fertilizers from the plaintiff-firm and accordingly, fertilizer was sold to them, and that the contract was not opposed to public policy. The plaintiff and the first defendant were retail dealers in chemical fertilizers at the relevant period. The plaintiff had no licence for wholesale dealership in chemical fertilizers. There is abundant evidence to establish these facto and they are not disputed. The case of the plaintiff is that at the request of the second defendant on behalf of the first defendant-firm, 177 bags of Grow More N.P.K.14:35:14 fertilizer of Parry and Co. were sold and delivered to the first defendant-firm. The case of the defendants is mat they never wanted to buy fertilizer in question and mat the said bags were voluntarily supplied by the plaintiff without their request and consent and their clerk received them as he could not take any decision in their absence and that the sale transaction was opposed to public policy and the contract is not enforceable.
7. There is no written contract between the parties. The contract, if any, has to be inferred from the conduct of the parties. It is seen from the evidence of P.W.1, managing partner of the plaintiff-firm, mat the stock alleged to have been sold to the first defendant-firm, was purchased by the plaintiff-firm about 7 or 8 months prior to the sale. It was apparently old stock and there was no demand in the market for it. Further, the price of the said fertilizer was falling day by day.
8. The evidence of P.W.7, representative of Parry and Co., and D.W.1, the second defendant, and Ex. A-20 delivery order show that the first defendant-firm had ordered for supply of 120 bags of “Grow More N.P.K. 1435:14” fertilizer from the wholesale dealer and it was supplied to them on 12-1-1976. These facts show that about the date 12-1-1976, there was no need for first defendant-firm to buy the same fertilizer from the plaintiff-firm.
9. There is no documentary evidence to establish that the first defendant-firm contacted the plaintiff-firm for supply of fertilizer “Grow More N.P.K. 14:35:14”. Ex. B-1 dated 12-1-1976, a covering letter sent by the plaintiff’s clerk, P.W.5, to the first defendant-firm through P.W.6 – driver of the lorry by which 177 bags of fertilizer were sent, does not refer to any order said to have been placed by the first defendant-firm with the plaintiff-firm. This fact was also admitted by P.W.1 in his evidence, Ex. A-12, credit bill in respect of the fertilizer supplied, was neither signed by the defendants nor their clerk at the column ‘purchaser’s signature’. It was signed by P.W.6, the driver of the lorry engaged by the plaintiff for transporting the goods. Likewise, Ex. A-13 was also signed by the driver only. If really the goods were supplied to the first defendant-firm on their order, signature of any of the defendants or their clerk could have been obtained in Ex. A-12 at the ‘Purchaser’s column’. This fact lends support to the plea of the defendants that their clerk, in their absence, could not take a decision and therefore, received the goods after paying the transport charges to the driver.
10. P.W.9 – A.G. Prakasa Rao, Assistant Manager of Parry and Co. at Guntur, admitted in his cross-examination that the second defendant requested him to tell the plaintiff to take back the stocks as he had not asked for it. He advised them to settle the matter amicably out of Court as both of them are their dealers.
11. D.W.1, the second defendant, testified in support of their pleas and that in spite of correspondence between the parties, the plaintiff did not arrange to take back the stock after paying the rent. After filing the suit, to minimise the damage, he sold away the fertilizer sent by the plaintiff at rates ranging from Rs. 115/- to Rs. 120/- per bag and twelve of them, at a still lower price.
12. In exercise of the powers conferred by Clause-5 of the Fertilizer (Control) Order, 1957, Ex. B-21 G.O. was issued. As per Clause -I of Ex.B-21, no person shall carry on the business of selling fertilizers except under and in accordance with the terms and conditions of a licence granted to him under the said order. For the purpose of this notification, definitions of the terms “retail dealer”, “retail sale and “wholesale dealer” were given in the same G.O., which read:
(a) “Retail dealer” means any person who sells or keeps for sale fertilizers for the purpose of consumption by the person by whom or on whose behalf the fertilizers are or may be purchased;
(b) “Retail sale” means sale of fertilizers by a retail dealer for the purpose of consumption by the person by whom or on whose behalf the fertilizers are or may be purchased;
(c) “Wholesale dealer” means any person who sells, or keeps for sale fertilizers to dealers in such fertilizers for the purpose of trade.
13. From the above definitions, it is quite clear that a retail dealer can only sell to a person who consumes fertilizers, that is, the farmer. This restriction as to the sale of fertilizers by the retail dealers was imposed obviously to avoid too many middle-men which would result in increase of prices and difficulty in controlling too many retail dealers in the fair distribution and supply of fertilizers to the fanners. In the light of the above provisions of law relating to sale of fertilizers by retail dealers, the sale of 177 bags of “Grow More N.P.K. 14:35:14”, in my view, is opposed to public policy.
14. P.W.1, managing partner of the plaintiff-firm and D.W.1, managing partner of the first defendant-firm, being retail dealers in chemical fertilizers since a very long time, had been complying with the rules and regulations regarding dealership in Chemical fertilizers and it has to be presumed that they were aware of the sale of fertilizers by one retail dealer to another retail dealer was not permitted under the rules governing them and that any such violation attracted penal provisions under the Essential Commodities Act.
15. The above evidence and circumstances lead us to the conclusion that there was probably no contract for sale of the fertilizer between the plaintiff-firm and first defendant-firm and that P.W.1 unsuccessfully attempted to dispose of his unsold stocks of “Grow More N.P.K. 1435:14” through first defendant-firm and in the process, failed to get the sale proceeds of the stocks sent to the first defendant-firm. Even if the contract is presumed to be true, it is unlawful and opposed to public policy and is void in view of Section 23 of the Contract Act. The facts and circumstances of this case do not enable the plaintiff to claim restoration of goods or compensation for them either Under Section 65 or Under Section 70 of the Contract Act. This view of mine finds support in the following decisions:
Venkata Subbayya v. Attar Sheik Mastan, AIR (36) 1949 Mad. 252
M. Seetharama Sastry v. N. Kaulwar and Sons, 1968 (2) An.W.R. 267
Rakurti Manikyam v. Medidi Satyanarayan, and
Kuju Collieries Limited v. Jharkhand Mines Limited and Ors.,
16. For the aforesaid reasons, the appeal is allowed and the cross-objections are dismissed. In the circumstances of the case, parties shall bear their own costs.
