PETITIONER: STEEL AUTHORITY OF INDIA LTD. Vs. RESPONDENT: SALEM STAINLESS STEEL SUPPLIERS DATE OF JUDGMENT03/11/1993 BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) SAWANT, P.B. CITATION: 1994 AIR 1414 1994 SCC (1) 274 JT 1993 (6) 408 1993 SCALE (4)339 ACT: HEADNOTE: JUDGMENT:
The Judgment of the Court was delivered by
KULDIP SINGH,J.– Steel Authority of India (the
Authority),the appellant herein, issued a price circular
dated March 17, 1989 (the circular)offering a discount
scheme with a view to give a thrust to the off-take of
stainless steel of thinner gauges. The circular stated as
under:
“(a) An off-take of over 400 mts. per month of thinner
gauges namely 0.3,0.4, 0.5, and 0.63 taken together by any
customer from any
from the judgement and October 9, 1990 of the March High
Court in W.A.Nos.601 to 604 of 1990.
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region will entitle them for an additional discount of Rs
2000 PMT over and above the normal monthly discount on the
incremental quantity.
(b) A bonus incentive of addl. Rs 2000 PMT
would be admissible at the end of 6 monthly
period provided the off-take is over 400 mts.
in each of the 6 months. This additional
incentive will be applicable on the
incremental quantity in excess of 2400 mts.
during the period of 6 months.
(c) Benefits under (a) and (b) above will be
applicable to any customer including trade and
their associate concerns both on direct
dispatch from plant as well as quantities
lifted from stockyard of any region,
irrespective of the region to which the
customer is attached,”
The circular was issued by the Calcutta office of the
Authority.
2. Standard Metal Trading Company, respondent 3 herein, by
its letter dated November 27, 1989 sought clarifications as
to whether the subject discount would be available on the
quantities lifted by a “group of dealers not related to each
other by constitution” and how the said discount would be
disbursed to the individual dealers. A request was also
made that the period of operation of scheme under the
circular, be extended to one year as against six months.
The Authority by its letter dated December 2, 1989 furnished
the necessary clarifications, to respondent 3, which are as
under:
“Kindly refer to your letter dated November
27, 1989 and December 1, 1989 on the above
subject. We wish to clarify as under:
1. The quantity discount under the subject
scheme will be paid on quantities lifted
together by a group of dealers/actual users
who are not related to each other by
constitution provided they declare their
intention to join together for committing
combined off-take as per the scheme.
2. The scheme will be applicable on
quantities lifted by a group of dealers not
related to each other by constituting dealing
at different regions.
3. After the completion of the current
month on the basis of actual off-take the
quantity as per the eligibility may be passed
on to any one of the constituents or
alternatively on pro-rata basis to all the
constituents subject to the entitled group.
What they want.
4. Guarantee for continuation of the scheme
can be given for a minimum period of 6 months
from the month in which off-take commences.
We also expect an increase in the off-take of
material by the dealers in the Southern
Region.
We also wish to make it clear that indents as
per the existing procedure should be given
well in advance to enable us to complete the
despatch of material.”
Thereafter six traders, including respondents 1 to 4, sent a
letter dated December 4, 1989 to the Authority stating that
they had formed a group and
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wanted to avail the additional discount on the basis of
their combined off-take as a group. They also suggested a
formula for the distribution of the discount, on the basis
of their combined off-take, amongst the individual members
of the group.
3. The proposal of combined off-take by a group of traders
was not warranted by the circular, The formula of
distribution of discount amount amongst the individual
members of an unorganised group was also not envisaged under
the circular. In any case such formula was not even in
accordance with the clarifications given by the Authority in
its letter dated December 2, 1989.
4. The Authority sent a telegram dated December 19, 1989
to all the six traders including respondents 1 to 4
intimating them that the matter was still under
consideration and till the time a final decision in that
respect was taken the, scheme regarding group off-take could
not operate. The relevant part of the said telegram is
extracted as under:
“YOUR SUGGESTION, INTER ALIA, FOR MANNER OF
ADJUSTMENT OF DISCOUNT UNDER THE SCHEME TO
INDIVIDUAL TRADERS WAS TAKEN UP WITH SSP
AUTHORITIES AND REQUIRES FURTHER EXAMINATION
(.) THIS WILL HAVE TO BE SORTED OUT BEFORE
COMMENCING OPERATION OF THE SCHEME- (.) THE
MATTER IS BEING PUT UP TO THE COMPETENT
AUTHORITY FOR NECESSARY CLARIFICATIONS AND
APPROVAL (.) UNTIL SUCH TIME APPROVAL IS
RECEIVED WE ARE UNABLE TO OPERATE THE
5. After the receipt of the telegram dated December 19,
1989 the group of traders- addressed a letter dated December
30, 1989 to the Authority offering to withdraw their
suggestion for the disbursement of the discount amount in
the manner suggested by them in their letter dated December
4, 1989.
6. The proposal made by the six traders as contained in
their letter dated December 4, 1990 was considered by the
Authority and it was found that under the scheme contained
in the circular, there was no provision for the disbursement
of discount benefits to a group of customers. The
modification of scheme, as proposed by the respondents, was
not found practicable. Accordingly, by the letter dated
January 23, 1990, addressed to each of the six traders, the
Authority reiterated the contents of its telegram dated
December 19, 1989 and further informed them that the
suggestion made by the traders in their letter dated
December 4, 1989 was not acceptae to the Authority, inter
alia, for the reason that the said suggestion was contrary
to the scheme contained in the circular.
7. The respondents filed a writ petition before the Madras
High Court contending that they had started lifting material
since December 4, 1989 and as such they sought a direction
from the High Court that the discount benefit be disbursed
to them. The writ petition was allowed by a teamed Single
Judge of the High Court by the judgment dated April 17, 1990
primarily on the ground that the clarifications given by the
Authority by its letter dated
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December 2, 1989 were binding on the Authority. The
Authority filed appeals against the judgment of the learned
Single Judge. A Division Bench of the High Court by the
impugned judgment dated October 9, 1990 dismissed the
appeal. These appeals by the Steel Authority, of India are
against the judgment of the Division Bench of the High
Court.
8. The Division Bench of the High Court upheld the
findings of the learned Single Judge on the following
reasoning:
“Thus, the entitlement for the discount and
the willingness to avail such’ discount are
quite separate and distinct in the sense that
while ‘discount is on the quantity lifted and
thus these, dealers or actual users who
qualified under the circular automatically
became entitled to discount, the claim on
behalf of those who joined in a group was
required to be indicated for the purpose of
working out some formula under which the
discount amount could be equitably distributed
among them. Such equitable distribution could
be in the manner indicated in the
clarification as well as left to the dealers
who decided how they would inter se distribute
the discount amongst themselves. They
indicated a formula in a subsequent letter
dated December 4, 1989. It appears however,
that nothing was said why the formula
indicated by them was not accepted by the
appellants. The learned Single Judge has
rightly taken notice of this aspect of the
matter to conclude that when the writ
petitioners are a group of business people who
had joined together and had in fact lifted
quantities in excess of 400 metric tonnes in
the month of December 1989, and when they
projected a claim for a discount based on the
scheme which is still in force, the refusal on
the part of the appellants to implement the
scheme cannot be permitted. We are satisfied
that there has been no mistake committed by
the learned Single Judge in accepting the
promise under the circular of the entitlement
of discount as clarified under letter dated
December 2, 1989. The right under the
circular was not in the nature of a contract
which depended upon the acceptance or
otherwise of the offer of the appellants by
the dealers.”
It is obvious that the High Court did not allow the writ
petitions on the ground that a binding contract had
concluded between the parties but solely on the ground that
under the price circular dated March 17, 1989 the
respondents were entitled to the discount. We agree with
the High Court that the respondents could claim the discount
only in terms of the price circular and not on the basis of
any contract purported to have been concluded as a result of
the correspondence exchanged between the parties. We are,
however, of the view that High Court fell into patent error
in appreciating the scope and extent of the circular. A
bare reading of the circular makes it clear that the benefit
thereunder was available to “any customer” and not to a
group of customers. Suppose there are 20 traders in the
city of Madras and each one of them lifts 300 tonnes of
steel per month. The off-take being less than 400 tonnes
per month, individually none of them would be entitled to
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the benefit of the scheme. Can they claim that since
jointly they have lifted 6000 tonnes of steel which is more
than 400 tonnes in a particular month they are entitled to
the discount under the scheme for the off-take over and
above 400 tonnes. Accepting such a claim would be making
mockery of the scheme under the circular. As mentioned
above the price discount scheme under the circular was for
“any customer” and not for “group of customers”. The
circular did not permit a group of customers not related to
each other by constitution to avail the benefit of the
scheme on the basis of their combined off-take. The
respondents could not have availed the benefit of the scheme
jointly unless and until the scheme as a whole was amended
and made applicable to all the customers of the Authority by
issuing a fresh circular informing all concerned about the
change in the scheme.
9. Even otherwise there could be no concluded contract
between the parties. It was for the first time on December
4, 1989 that the six traders made an offer and expressed
their desire to avail the benefit of the circular on the
basis of their combined off-take. Prior to that there was
no communication from the traders as a group to the
Authority with regard to the admissibility of any such
discount to them under the circular. The methodology
suggested by the traders to share the discount was not
envisaged under the circular. The said method was even not
in accordance with the letter dated December 2, 1989 written
by the Authority. The Authority rejected the offer of the
traders by its telegram dated December 19, 1989 and the
letter dated January 23, 1990. No concluded contract can,
thus, be deciphered from the correspondence between the
parties. Looked from any angle, the High Court fell into
patent error in directing the Authority to extend the
benefit of the circular to the respondents.
10. We allow the appeals, set aside the judgment of the
learned Single Judge dated April 17, 1990 and of the
Division Bench of the High Court dated October 9, 1990 and
dismiss the writ petitions filed by the respondents before
the High Court with costs throughout. We quantify the costs
as Rs 20,000.
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