JUDGMENT
A.K. Sikri, J.
1. The plaintiff in the instant case is State
Trading Corporation of India Ltd. which is a company
registered under the Indian Companies Act,1956. It is
having one of its Branch Offices in Delhi situated at
En Kay House,3-4, Shopping Centre, Dharam Marg,
Chanakya Puri, New Delhi. One of the business
activities of the plaintiff is sale of second hand
imported cars and other vehicles. The plaintiff has
alleged in the plaint that the said Delhi Branch issued
a Tender Notice No.DLH-44/Sept.25/81 dated 11.9.1981
for the sale of imported cars and other vehicles
mentioned including a Mercedes Benz 300-D Sedan Car
mentioned at S.No.3 in the said Tender Notice. In Suit No. 1260/85:
response to the said Tender Notice, besides others,
M/s.Madhu Enterprises (P) Ltd., defendant No.1,
M/s.L.S.Bagla H.U.F., defendant No.2 and Shri Shyam
Goel, defendant No.3 also offered their tenders for
several cars mentioned in the said Tender Notice and
remitted Bank draft/pay-orders of the amount of earnest
money for the required category of vehicles. All the
defendants also filed tender offers for the said
Mercedes Benz 300-D Sedan Car mentioned at S.No.3 of
the said Tender Notice dated 11.9.1981 along with the
Demand Draft/pay-orders of the amount of Rs.40,000/-
each by way of earnest money. The tenders were opened
in the presence of the tenderers who chose to be
present including defendants 1 to 3 and following
offers for the said Mercedes Benz car mentioned at
S.No.3 were found to be the highest in the order
mentioned below:-
1. Madhu Enterprises(P)Ltd.
(Defendant No.1) :Rs.13,57,000/-
2. L.S.Bagla H.U.F.
(Defendant No.2) :Rs.11,83,979/-
3. Sh.Shyam Goel
(Defendant No.3) :Rs.11,15,300/-
4. Sh.Nalin Bhatia :Rs. 9,81,501/-
2. It is further alleged in the plaint that on
coming to know that tenders submitted by the defendants
1 to 3 were the highest and that they had given a very
high bid than the next tenderer Shri Nalin Bhatia,
their intention became bad and the defendant No.3 in
collusion with the defendant No.2 raised an objection
in respect of tender submitted by the defendant No.1
alleging that the said tender was not accompanied by a
valid Bank Draft. The defendant No.3 even sent a
written representation dated 26.9.1981 requesting for
rejecting the tender of the defendant No.1 and demanded
that fresh tenders be called for the sale of said car.
The plaintiff after considering the representation and
objection rejected the aforesaid representation of the
defendant No.3 and accepted the highest tender offer of
defendant No.1 requiring the defendant No.1 to pay the
balance of the tender price with octroi duty by
26.10.1981 and take delivery of the car. Thereafter on
24.10.1981 the defendant No.2 withdrew his earnest
money. However, the defendant No.3 in collusion with
the defendant No.1 filed suit for permanent injunction
against the plaintiff on 25.10.1981 seeking restraint
against the plaintiff from selling the car in question
to the defendant No.1. Initially ex-parte injunction
was granted on 26.10.1981. The Defendant No.1 on the
same day came to the office of the plaintiff and handed
over a letter dated 26.10.1981 and a Bank Draft in the
sum of Rs.13,14,118/- for the delivery of car in
question. However, the car could not be delivered
because of the aforesaid restraint order. On receiving
this letter, the defendant No.1 requested the plaintiff
to return the Bank Draft. Thereafter vide letter dated
23.4.1982 the defendant No.1 sent a legal notice to the
plaintiff refusing to purchase the car, terminating the
contract and claiming the refund of earnest money.
3. The suit filed by the defendant No.3 was
ultimately dismissed on 3.7.1982. After the dismissal
of the suit, the plaintiff sent telegram dated
24.7.1982 calling upon the defendant No.1 to pay the
balance price of the said car and take delivery of the
car on or before 30.7.1982. The defendant No.1,
however, refused to take the car on the ground that as
the plaintiff could not deliver the car earlier the
contract had been terminated. The defendant No.1 also
filed suit for recovery of Rs.40,000/- being Suit
No.984/82 which was pending in the Court of Additional
District Judge, Delhi at the time of filing the suit.
As the defendant No.1 refused to take the car the
plaintiff auctioned the car again for Rs.9,03,079/-.
4. On summons having been served upon the
defendants, the defendants 1 and 2 appeared and filed
their separate written statements denying various
allegations made in the plaint. The preliminary
objection to the effect that suit is time barred is
also taken. On the pleadings, following issues were
framed on 6.11.1995:
1. Whether the plaint is signed and
presented by a duly authorised person on
behalf of the plaintiff?
2. Whether the plaintiff proves that
defendant No.1 had offered a valid tender
for purchase of vehicle – a Mercedes Benz
300-D Sedan Car?
3. Whether the plaintiff proves that the
suit No.488/81 was filed by defendant
No.1 by colluding with defendant No.3?
4. Whether the notice issued by defendant
No.1 on 23.4.1982 is illegal and invalid?
5. Whether the plaintiff proves that the
defendant No.1 has committed a breach of
contract?
6. Whether the plaintiff proves that
plaintiff has suffered a loss of
Rs.4,53,921/-?
7. Whether the plaintiff is entitled to
claim and get Rs.2,56,960/- by way of
interest for the period running between
1.8.82 to 15.7.85?
8. Whether there is any cause of action for
the plaintiff to sue defendants 1 to 3?
9. Whether plaintiff’s suit is within
limitation?
10. What is due from the plaintiff and from
which of the defendants?
11. What order and decree?
5. Thereafter the defendants stopped appearing
and by order dated 8.7.1996 the defendants were
proceeded ex-parte. The plaintiff has filed affidavit
of Mr.George Verghese, Deputy Finance Manager of the
plaintiff Corporation in support of its case.
6. The central issue in this case is Issue No.3
inasmuch as if the plaintiff is able to prove this
issue and collusion between the defendants is
established leading to filing of Suit No.488/81 by the
defendant No.1 in the District Court it would not be
difficult to find answers to other issues. We have to
keep in mind that the defendants have remained ex-parte
and, therefore, there is no evidence of the defendants
in support of their case. The version of the plaintiff
supported by an affidavit of Mr.George Verghese its
Deputy Finance Manager remains unrebutted. He has
proved on record through various documents the entire
tendering process i.e. the submission of bids by
various persons including the defendants herein;
opening of tenders; objection of defendant No.3 to the
tender submitted by defendant No.1; turning down the
said objection; acceptance of tender of defendant
No.1, rejection of that objection; filing of suit by
defendant No.3 challenging the bid of defendant No.1;
order of Trial Court in that suit dismissing the
injunction application ultimately; communcations to
the defendant No.1 to take the delivery of the car and
on refusal of the defendant No.1 to make balance
payment and take the delivery of the order; selling
the said car by fresh auction. In his testimony
Mr.Verghese has stated as under:
2. “That in those days defendant No.1
and No.2 were almost the biggest buyers
of cars from S.T.C. and used to buy more
than any other single party in a given
tender. Mr.S.Srinivasan was the
authorised attorney of defendants 1 & 2.
The said Mr.Srinivasan and Mr.L.K.Bagla,
the Karta of defendant No.2 H.U.F. were
frequent visitors to the office of the
Imported Cars Division. They were also
assisted by others including Mr.Shyam
Goyal, the defendant No.3 herein who also
used to visit STC office sometimes alone
and sometimes in company of Mr.Srinivasan
and Mr.Bagla. Sometimes the defendant
No.3 also filed tenders in his own name.
All the aforesaid three persons used to
write and sign at STC office and also
tenders and other correspondence were
received at my office. I am conversant
with their handwriting and signature and
can identify the same”.
7. In order to prove the conspired dealing by the
defendants, the plaintiff has also produced on record
bids submitted by these defendants in respect of
various other tenders issued by the plaintiff for sale
of various other cars. Paras 7 to 9 of the testimony
of Mr.Verghese mention these aspects in the following
manner:
7. “That Ex.PW-1/27 to Ex.PW-1/53 are
tenders filed by defendant No.1 for
various cars in pursuance of tender
No.DLH/44/Sept-25/81, all of them bear my
initials and initials of Shri N.P.Dubey,
Shri B.P.Gupta and S.Kumar. They also
bears the signatures of Shri L.K.Bagla,
Director of defendant No.1 under the date
13.2.1986.
8. That Ex.PW-1/54 to Ex.PW-1/60 are
tenders filed by defendant No.2 which
bears my initials and initials of Shri
N.P.Dubey and Shri S.Kumar. All these
tenders have been signed by Shri
S.Srinivasan attorney of defendant No.2
which I identify. Ex.PW-1/61 to
Ex.PW-1/63 are the tenders of defendant
No.3 which bears his signatures which I
identify. They also hear my initials,
initials of Shri N.P.Dubey, Shri
B.P.Gupta, FM and of Mr.S.Kumar. The
endorsement on Ex.PW-1/61 at point X is
in the hand of Mr.Bhupinder Singh,
General Manager, Delhi Branch Ex.PW-1/64
to Ex.PW-1/66 are the letters of
defendant No.1 received by our office in
connection with the payment of price of
various cars purchased by defendant No.1
in the tender No.DLH/44/Sept-25/1981
forwarding the bank draft/pay order
mentioned therein. Ex.PW-1/67 is the
letter from defendant No.2 under the
signatures of Shri S.Srinivasan
forwarding Bank draft/pay order in
payment of the price of car at serial
number 4,31,44 & 56 of the said tender.
It also bears the initials of Shri
N.P.Dubey and Shri HC Gupta and the
signature of Shri L.K.Bagla Karta of
defendant No.2.
9. That Ex.PW-1/68 to Ex.PW-1/74 are the
tenders filed by defendant No.2 in
response to tender notice
No.DLH/42/July-29/1981 opened on 29th
July,1981 for various cars serial numbers
whereof are stated therein. Each of them
is signed by Shri S.Srinivasan attorney
of defendant No.2 and is witnessed by
defendant No.3. I identify the
signatures of Shri S.Srinivasan and Shri
Shyam Goyal defendant No.3. Each one of
the tenders bears my initials and
initials of Shri N.P.Dubey as members of
the tenders opening Committee having
opened the tenders on 29th July,1981″.
8. As per the aforesaid dealings as well as
circumstantial evidence in the present case may lead to
the conclusion that three defendants were known to each
other and they wanted to purchase the car in question.
May be for this reason the bid given by these
defendants is much more than the next bid of another
person. The bid of defendant No.1 was for an amount of
Rs.13,57,000/-, defendant No.2 for an amount of
Rs.11,83,979/- and defendant No.3 for an amount of
Rs.11,15,300/-. The next bid was of another person
Mr.Nalin Bhatia. It was for an amount of
Rs.9,81,501/-. Thus it appears that when the tenders
were opened they found that they were paying much more
price than the bid of the highest bidder outside their
“cartel”. They thus wanted to frustrate the tender.
First salvo was filed by M/s.Madhu Enterprises which is
sole proprietorship concern of Mr.L.K.Bagla. The suit
was filed by M/s.Madhu Enterprises alleging that the
bid should not be accepted as it had also submitted its
bid which was the highest bid which was not at all
considered. This Suit No.397/83 was dismissed by the
Court of Smt.Bimla Makan, Sub-Judge, IInd Class, Delhi
on 27.9.83 (Ex.PW1/25). Then defendant No.3 challenges
the bid of defendant No.1 and sent a notice.
Significantly he only said in the notice that the car
be reauctioned. If the bid submitted by defendant no.1
was not proper and defendant No.3 was challenging the
same earnestly the only demand would have been to
accept his bid who was the next highest bidder.
However, strangely he requested for reauctioning. When
his request was turned down he filed the suit and
managed to get ex-parte injunction which was ultimately
vacated on this very ground, namely, he had no locus
standi to challenge the bid submitted by defendant No.1
when he was not asking for the purchase of car by
himself in the alternative. In all this game plan they
played smart because immediately after the injunction
order dated 26.10.1981 served upon the plaintiff,
defendant No.1 through Shri S.Srinivasan, Attorney of
defendant No.1 approached the plaintiff with a bank
draft of the balance consideration and requested for
delivery of the car knowingly fully well that because
of the injunction order the plaintiff would not be in a
position to do so. Thereafter taking advantage of the
operation of the said injunction order, defendant no.1
withdrew his offer to purchase the car. There are
certain other circumstances which lead to the inference
that there was collusion between the defendants: These
are:
(a) The moneys of defendant No.1/2 were
utilized by defendant No.3.
(b) Ex.PW.1/63 which is tender of defendant
No.3 for car at S.No.23 mentions draft No.696749/49 has
been mentioned. Defendant No.3 was unsuccessful bidder
and draft which was really given by defendants 1 and 2
was utilized by defendant No.1 in purchase of the car
at S.No.3.
(c) Ex.PW.1/2 is a tender of defendant No.1
for the said car. It mentions the draft No.696712
which is scored out and in its place draft Nos.031205
and 031206 of Rs.20,000/- each are added in its place.
This draft No.696712 has been used by defendant No.3
for his tender for the said Mercedeze Benz Car.
(d) PW.1/40 is the tender of defendant No.1.
Also this draft No.051207/357 is scored of and in its
place draft No.695796 is written. This draft
051207/357 is used by defendant No.3 in Ex.PW.1/61 as
earnest money for car at serial No.56.
(e) Beside Ex.PW.1/61 which is tender of
defendant No.3 in which draft No.696748/48 and
051207/357 of Rs.20,000/- each have been given by way
of earnest money for car at S.No.56. As defendant No.3
was unsuccessful bidder and offer of defendant No.2 was
accepted for the said car, the said two drafts which
were the property of defendants No.1 and 2 were
utilized by defendant No.2 for the purchase of cars at
Serial No.4, 31,44 and 56 (Ex.PW.1/67).
9. In view of the aforesaid documents produced on
record supported by uncontroverter testimony of the
plaintiff’s witness and in the absence of any evidence
produced by the defendants, it stands established that
Suit No.488/81 was filed by defendant No.1 in collusion
with defendant No.3.
10. In view of this finding, it is not difficult
to unfold the events and to reach the conclusion,
namely, the defendant No.1 did not want to purchase the
car at such a high price mentioned by him in his bid
and, therefore, in order to wriggle out from this
obligation everything was managed. Thus by not
purchasing the car in question, defendant No.1
committed breach of the contract which forced the
plaintiff to reauction the said car. The plaintiff has
produced the documents showing that the car was
reauctioned for a sum of Rs.9,03,197/- and in this way
it suffered a loss of Rs.4,53,921/- than the offer made
by defendant No.1. The defendant No.1 would thus be
liable to make good this loss suffered by the
plaintiff. The defendant No.1 had given earnest money
of Rs.40,000/-. It may be pointed out at this stage
that defendant No.1 had filed this suit for recovery of
this amount alleging that the money could not be
forfeited. This suit, being Suit No.2992/88 was filed
in the District Court which was transferred to this
court and ultimately dismissed in default by order of
this Court on 21.3.1990. After adjustment of this
amount, the plaintiff shall be entitled to recover a
sum of Rs.4,13,921/- from the defendant No.1.
11. After recording the aforesaid conclusion on
the main issue, it would be appropriate to record
issuewise findings. I proceed to do so now:
Issue No.1. The plaint is signed by
Mr.S.Dayal, Marketing Manager of the plaintiff.
Ex.PW1/84 is the delegation of powers of the plaintiff
company, which authorised Marketing Managers to sign
and verify the plaint. Under the heading, signing and
verification of legal documents, it is stated that the
Chairman, any Executive Director, any Group Executive,
Chief Engineer, Chief Finance Manager and Marketing
Manager, any Finance Manager, Chief Legal Advisor,
Legal Advisor, Deputy Legal Advisor are authorised and
empowered on behalf of State Trading Corporation to
sign, verify, declare and affirm plaint, written
statement, memorandum of appeal or other pleadings,
vakalatnama, affidavit and miscellaneous applications.
It is further mentioned that the officers mentioned in
para-1 shall for the purpose of CPC be deemed to be the
principle officers of the State Trading Corporation.
Hence the suit has been signed and verified by an
authorised person. Therefore, issue no.1 is decided in
favor of the plaintiff and against the defendants.
Issue No.2. In fact the defendant No.1 never
challenged that it had not given a valid tender. Its
tender was challenged by defendant No.3 for which suit
was filed and the same was dismissed. In view thereof
this issue does not even survive. Be that as it may,
insofar as the plaintiff is concerned it has proved on
record that tender was submitted by defendant No.1
along with earnest money. The tender was accompanied
by a demand draft payable at Madras. It was not a
pay-order and thus did not require to be made payable
in Delhi or New Delhi. In any case, as mentioned
above, the defendant No.1 had itself accepted the
tender as a valid tender. This issue is decided in
favor of the plaintiff and against the defendants.
Issue Nos.3 & 4. In view of detailed
discussion above, these issues are decided in favor of
the plaintiff and against the defendants. It is held
that the suit No.488/81 was filed by defendant No.1 in
collusion with defendant No.3. Therefore, notice of
defendant No.1 dated 23.4.1982 withdrawing from the
tender was not valid notice. Moreover insofar as bid
of defendant No.1 is concerned the same was admittedly
accepted by the plaintiff and thus a valid enforceable
contract came into existence. If the plaintiff could
not deliver the car earlier it was because of the
injunction order issued by the Court. The Defendant
No.1 was also a party in the Suit No.488/81 and had not
only in the knowledge of the injunction order, it was
equally bound by the said injunction order. This
injunction order dated 26.10.1981 was vacated by the
Court only on 3.7.1982. Immediately thereafter the
plaintiff offered to deliver the car to defendant no.1.
During the currency of the aforesaid injunction order,
defendant No.1 sought to withdraw the bid by letter
dated 23.4.1982 which was, therefore, not a valid
action of the defendant No.1. These issues are
accordingly decided in favor of the plaintiff and
against the defendants.
Issue Nos.5,6,8 & 10. When a concluded
contract stands proved between the plaintiff and
defendant No.1 and it also stands proved that defendant
No.1 wrongly refused to accept the delivery of the car
and to pay balance amount after the vacation of the
injunction order, it is clear that defendant No.1
committed breach of the contract. As already recorded
above, the plaintiff has been able to prove the loss of
Rs.4,53,921/-. Since there is a breach of the contract
because of which the plaintiff suffered loss, it is
held that the plaintiff has a cause of action to sue
defendants 1 to 3. Issue Nos.5,6,8 & 10 are therefore
decided in favor of the plaintiff and against the
defendants. Since breach is committed by defendant
No.1 and the beneficiary of the collusion is defendant
No.1, it is defendant No.1 who would be liable to pay
the amount in question.
Issue No.7. The plaintiff has suffered a loss
of Rs.4,13,921/-. In normal course the car was offered
for delivery on 30.7.1982 when the defendant No.1 had
refused to take delivery of the car and pay the balance
consideration. The car was reauctioned on 1.10.1982.
The plaintiff has calculated interest on Rs.4,13,921/-.
It would be entitled to interest thereon w.e.f.
1.10.1982 when it received Lesser consideration on
re-sale of the car and suffered loss of Rs.4,13,921/-
on that date. However, the claim of interest at the
rate of 21% appears to be excessive. Interest at the
rate of 11% is granted for the period 1.10.1982 to
15.7.1985. This issue is decided accordingly.
Issue No.9. As mentioned above, defendant
No.1 refused to take the delivery of the car on
30.7.1982. Thereafter the car was sold to some other
person on 1.10.1982 on that date when the loss was
ascertained the plaintiff would have cause of action to
file the suit. The suit is filed on 15.7.1985. Thus
even if the limitation is taken from 30.7.1982 when the
defendant No.1 committed breach by refusing to accept
the car the suit is within the period of limitation.
This issue is decided in favor of the plaintiff and
against the defendants.
Issue No.11.
12. The result of the aforesaid discussion is that
suit is decreed in the sum of Rs.4,13,921 along with
interest at the rate of 12% w.e.f. 1.10.1982 to
15.7.1985 against the defendant No.1 only. The
plaintiff shall also be entitled to pendente lite and
future interest at the rate of 12% p.a.. The plaintiff
shall also be entitled to costs. Decree sheet be drawn
accordingly.