{"id":85446,"date":"1993-11-03T00:00:00","date_gmt":"1993-11-02T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/steel-authority-of-india-ltd-vs-salem-stainless-steel-suppliers-on-3-november-1993-3"},"modified":"2015-04-13T02:40:58","modified_gmt":"2015-04-12T21:10:58","slug":"steel-authority-of-india-ltd-vs-salem-stainless-steel-suppliers-on-3-november-1993-3","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/steel-authority-of-india-ltd-vs-salem-stainless-steel-suppliers-on-3-november-1993-3","title":{"rendered":"Steel Authority Of India Ltd vs Salem Stainless Steel Suppliers on 3 November, 1993"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Steel Authority Of India Ltd vs Salem Stainless Steel Suppliers on 3 November, 1993<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1994 AIR 1414, \t\t  1994 SCC  (1) 274<\/div>\n<div class=\"doc_author\">Author: K Singh<\/div>\n<div class=\"doc_bench\">Bench: Kuldip Singh (J)<\/div>\n<pre>           PETITIONER:\nSTEEL  AUTHORITY  OF  INDIA LTD.\n\n\tVs.\n\nRESPONDENT:\nSALEM  STAINLESS  STEEL\t SUPPLIERS\n\nDATE OF JUDGMENT03\/11\/1993\n\nBENCH:\nKULDIP SINGH (J)\nBENCH:\nKULDIP SINGH (J)\nSAWANT, P.B.\n\nCITATION:\n 1994 AIR 1414\t\t  1994 SCC  (1) 274\n JT 1993 (6)   408\t  1993 SCALE  (4)339\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n<p>The Judgment of the Court was delivered by<br \/>\nKULDIP\t SINGH,J.&#8211;   Steel   Authority\t  of   India\t(the<br \/>\nAuthority),the\tappellant  herein, issued a  price  circular<br \/>\ndated  March  17,  1989 (the  circular)offering\t a  discount<br \/>\nscheme\twith  a\t view to give a thrust to  the\toff-take  of<br \/>\nstainless  steel of thinner gauges. The circular  stated  as<br \/>\nunder:\n<\/p>\n<p>&#8220;(a)  An  off-take  of over 400 mts. per  month\t of  thinner<br \/>\ngauges\tnamely 0.3,0.4, 0.5, and 0.63 taken together by\t any<br \/>\ncustomer from any<br \/>\nfrom  the  judgement and October 9, 1990 of the\t March\tHigh<br \/>\nCourt in W.A.Nos.601 to 604 of 1990.\n<\/p>\n<p><span class=\"hidden_text\"> 275<\/span><\/p>\n<p>region\twill entitle them for an additional discount  of  Rs<br \/>\n2000  PMT over and above the normal monthly discount on\t the<br \/>\nincremental quantity.\n<\/p>\n<p>\t      (b)   A bonus incentive of addl.\tRs 2000\t PMT<br \/>\n\t      would  be admissible at the end of  6  monthly<br \/>\n\t      period provided the off-take is over 400\tmts.<br \/>\n\t      in  each\tof the 6  months.   This  additional<br \/>\n\t      incentive\t  will\t be   applicable   on\t the<br \/>\n\t      incremental  quantity in excess of  2400\tmts.<br \/>\n\t      during the period of 6 months.\n<\/p>\n<p>\t      (c)   Benefits under (a) and (b) above will be<br \/>\n\t      applicable to any customer including trade and<br \/>\n\t      their   associate\t concerns  both\t on   direct<br \/>\n\t      dispatch\tfrom  plant as\twell  as  quantities<br \/>\n\t      lifted   from   stockyard\t  of   any   region,<br \/>\n\t      irrespective  of\tthe  region  to\t which\t the<br \/>\n\t      customer is attached,&#8221;\n<\/p>\n<p>The  circular  was  issued by the  Calcutta  office  of\t the<br \/>\nAuthority.\n<\/p>\n<p>2.   Standard Metal Trading Company, respondent 3 herein, by<br \/>\nits letter dated November 27, 1989 sought clarifications  as<br \/>\nto  whether the subject discount would be available  on\t the<br \/>\nquantities lifted by a &#8220;group of dealers not related to each<br \/>\nother  by constitution&#8221; and how the said discount  would  be<br \/>\ndisbursed  to  the individual dealers.\tA request  was\talso<br \/>\nmade  that  the\t period of operation  of  scheme  under\t the<br \/>\ncircular,  be  extended to one year as against\tsix  months.<br \/>\nThe Authority by its letter dated December 2, 1989 furnished<br \/>\nthe necessary clarifications, to respondent 3, which are  as<br \/>\nunder:\n<\/p>\n<blockquote><p>\t      &#8220;Kindly  refer to your letter  dated  November<br \/>\n\t      27,  1989\t and December 1, 1989 on  the  above<br \/>\n\t      subject.\tWe wish to clarify as under:\n<\/p><\/blockquote>\n<blockquote><p>\t      1.    The quantity discount under the  subject<br \/>\n\t      scheme  will  be\tpaid  on  quantities  lifted<br \/>\n\t      together\tby a group of  dealers\/actual  users<br \/>\n\t      who   are\t not  related  to  each\t  other\t  by<br \/>\n\t      constitution   provided  they  declare   their<br \/>\n\t      intention\t to  join  together  for  committing<br \/>\n\t      combined off-take as per the scheme.\n<\/p><\/blockquote>\n<blockquote><p>\t      2.    The\t  scheme  will\tbe   applicable\t  on<br \/>\n\t      quantities  lifted by a group of\tdealers\t not<br \/>\n\t      related to each other by constituting  dealing<br \/>\n\t      at different regions.\n<\/p><\/blockquote>\n<blockquote><p>\t      3.    After  the\tcompletion  of\tthe  current<br \/>\n\t      month  on\t the basis of  actual  off-take\t the<br \/>\n\t      quantity as per the eligibility may be  passed<br \/>\n\t      on   to  any  one\t of  the   constituents\t  or<br \/>\n\t      alternatively  on\t pro-rata basis to  all\t the<br \/>\n\t      constituents  subject to the  entitled  group.<br \/>\n\t      What they want.\n<\/p><\/blockquote>\n<blockquote><p>\t      4.    Guarantee for continuation of the scheme<br \/>\n\t      can be given for a minimum period of 6  months<br \/>\n\t      from the month in which off-take commences.<br \/>\n\t      We also expect an increase in the off-take  of<br \/>\n\t      material\tby  the\t dealers  in  the   Southern<br \/>\n\t      Region.\n<\/p><\/blockquote>\n<blockquote><p>\t      We also wish to make it clear that indents  as<br \/>\n\t      per  the\texisting procedure should  be  given<br \/>\n\t      well  in advance to enable us to complete\t the<br \/>\n\t      despatch of material.&#8221;\n<\/p><\/blockquote>\n<p>Thereafter six traders, including respondents 1 to 4, sent a<br \/>\nletter dated December 4, 1989 to the Authority stating\tthat<br \/>\nthey had formed a group and<br \/>\n<span class=\"hidden_text\">276<\/span><br \/>\nwanted\tto  avail the additional discount on  the  basis  of<br \/>\ntheir  combined off-take as a group.  They also suggested  a<br \/>\nformula\t for the distribution of the discount, on the  basis<br \/>\nof  their combined off-take, amongst the individual  members<br \/>\nof the group.\n<\/p>\n<p>3.   The proposal of combined off-take by a group of traders<br \/>\nwas   not  warranted  by  the  circular,  The\tformula\t  of<br \/>\ndistribution  of  discount  amount  amongst  the  individual<br \/>\nmembers of an unorganised group was also not envisaged under<br \/>\nthe  circular.\t In any case such formula was  not  even  in<br \/>\naccordance with the clarifications given by the Authority in<br \/>\nits letter dated December 2, 1989.\n<\/p>\n<p>4.   The  Authority sent a telegram dated December 19,\t1989<br \/>\nto  all\t the  six  traders  including  respondents  1  to  4<br \/>\nintimating   them   that   the\tmatter\t was   still   under<br \/>\nconsideration  and  till the time a final decision  in\tthat<br \/>\nrespect was taken the, scheme regarding group off-take could<br \/>\nnot  operate.\tThe relevant part of the  said\ttelegram  is<br \/>\nextracted as under:\n<\/p>\n<blockquote><p>\t      &#8220;YOUR  SUGGESTION, INTER ALIA, FOR  MANNER  OF<br \/>\n\t      ADJUSTMENT  OF  DISCOUNT UNDER THE  SCHEME  TO<br \/>\n\t      INDIVIDUAL  TRADERS  WAS\tTAKEN  UP  WITH\t SSP<br \/>\n\t      AUTHORITIES  AND REQUIRES FURTHER\t EXAMINATION<br \/>\n\t      (.)  THIS\t WILL HAVE TO BE SORTED\t OUT  BEFORE<br \/>\n\t      COMMENCING  OPERATION OF THE SCHEME-  (.)\t THE<br \/>\n\t      MATTER  IS  BEING\t PUT  UP  TO  THE  COMPETENT<br \/>\n\t      AUTHORITY\t FOR  NECESSARY\t CLARIFICATIONS\t AND<br \/>\n\t      APPROVAL\t(.)  UNTIL  SUCH  TIME\tAPPROVAL  IS<br \/>\n\t      RECEIVED WE ARE UNABLE TO OPERATE THE\n<\/p><\/blockquote>\n<p>5.   After  the receipt of the telegram dated  December\t 19,<br \/>\n1989 the group of traders- addressed a letter dated December<br \/>\n30,  1989  to  the  Authority  offering\t to  withdraw  their<br \/>\nsuggestion  for the disbursement of the discount  amount  in<br \/>\nthe manner suggested by them in their letter dated  December<br \/>\n4, 1989.\n<\/p>\n<p>6.   The  proposal made by the six traders as  contained  in<br \/>\ntheir  letter dated December 4, 1990 was considered  by\t the<br \/>\nAuthority  and it was found that under the scheme  contained<br \/>\nin the circular, there was no provision for the disbursement<br \/>\nof   discount  benefits\t to  a\tgroup  of  customers.\t The<br \/>\nmodification of scheme, as proposed by the respondents,\t was<br \/>\nnot  found  practicable.  Accordingly, by the  letter  dated<br \/>\nJanuary 23, 1990, addressed to each of the six traders,\t the<br \/>\nAuthority  reiterated  the contents of\tits  telegram  dated<br \/>\nDecember  19,  1989  and  further  informed  them  that\t the<br \/>\nsuggestion  made  by  the  traders  in\ttheir  letter  dated<br \/>\nDecember  4, 1989 was not acceptae to the  Authority,  inter<br \/>\nalia,  for the reason that the said suggestion was  contrary<br \/>\nto the scheme contained in the circular.\n<\/p>\n<p>7.   The respondents filed a writ petition before the Madras<br \/>\nHigh Court contending that they had started lifting material<br \/>\nsince  December 4, 1989 and as such they sought a  direction<br \/>\nfrom  the High Court that the discount benefit be  disbursed<br \/>\nto  them.  The writ petition was allowed by a teamed  Single<br \/>\nJudge of the High Court by the judgment dated April 17, 1990<br \/>\nprimarily on the ground that the clarifications given by the<br \/>\nAuthority by its letter dated<br \/>\n<span class=\"hidden_text\"> 277<\/span><br \/>\nDecember  2,  1989  were  binding  on  the  Authority.\t The<br \/>\nAuthority filed appeals against the judgment of the  learned<br \/>\nSingle\tJudge.\t A Division Bench of the High Court  by\t the<br \/>\nimpugned  judgment  dated  October  9,\t1990  dismissed\t the<br \/>\nappeal.\t These appeals by the Steel Authority, of India\t are<br \/>\nagainst\t the  judgment\tof the Division Bench  of  the\tHigh<br \/>\nCourt.\n<\/p>\n<p>8.   The  Division  Bench  of  the  High  Court\t upheld\t the<br \/>\nfindings  of  the  learned Single  Judge  on  the  following<br \/>\nreasoning:\n<\/p>\n<blockquote><p>\t      &#8220;Thus,  the entitlement for the  discount\t and<br \/>\n\t      the  willingness to avail such&#8217;  discount\t are<br \/>\n\t      quite separate and distinct in the sense\tthat<br \/>\n\t      while &#8216;discount is on the quantity lifted\t and<br \/>\n\t      thus  these,  dealers  or\t actual\t users\t who<br \/>\n\t      qualified\t under\tthe  circular  automatically<br \/>\n\t      became  entitled\tto discount,  the  claim  on<br \/>\n\t      behalf  of  those who joined in  a  group\t was<br \/>\n\t      required\tto be indicated for the\t purpose  of<br \/>\n\t      working  out  some  formula  under  which\t the<br \/>\n\t      discount amount could be equitably distributed<br \/>\n\t      among them.  Such equitable distribution could<br \/>\n\t      be   in\tthe   manner   indicated   in\t the<br \/>\n\t      clarification  as well as left to the  dealers<br \/>\n\t      who decided how they would inter se distribute<br \/>\n\t      the   discount   amongst\t themselves.\tThey<br \/>\n\t      indicated\t a  formula in a  subsequent  letter<br \/>\n\t      dated  December 4, 1989.\tIt appears  however,<br \/>\n\t      that   nothing  was  said\t why   the   formula<br \/>\n\t      indicated\t by  them was not  accepted  by\t the<br \/>\n\t      appellants.   The\t learned  Single  Judge\t has<br \/>\n\t      rightly  taken  notice of this aspect  of\t the<br \/>\n\t      matter   to  conclude  that  when\t  the\twrit<br \/>\n\t      petitioners are a group of business people who<br \/>\n\t      had  joined  together and had in\tfact  lifted<br \/>\n\t      quantities  in excess of 400 metric tonnes  in<br \/>\n\t      the  month  of December 1989,  and  when\tthey<br \/>\n\t      projected a claim for a discount based on\t the<br \/>\n\t      scheme which is still in force, the refusal on<br \/>\n\t      the  part of the appellants to  implement\t the<br \/>\n\t      scheme cannot be permitted.  We are  satisfied<br \/>\n\t      that  there has been no mistake  committed  by<br \/>\n\t      the  learned  Single Judge  in  accepting\t the<br \/>\n\t      promise under the circular of the\t entitlement<br \/>\n\t      of  discount as clarified under  letter  dated<br \/>\n\t      December\t 2,  1989.   The  right\t under\t the<br \/>\n\t      circular\twas not in the nature of a  contract<br \/>\n\t      which   depended\t upon  the   acceptance\t  or<br \/>\n\t      otherwise\t of the offer of the  appellants  by<br \/>\n\t      the dealers.&#8221;\n<\/p><\/blockquote>\n<p>It  is\tobvious that the High Court did not allow  the\twrit<br \/>\npetitions  on  the  ground  that  a  binding  contract\t had<br \/>\nconcluded between the parties but solely on the ground\tthat<br \/>\nunder\tthe  price  circular  dated  March  17,\t  1989\t the<br \/>\nrespondents  were entitled to the discount.  We\t agree\twith<br \/>\nthe High Court that the respondents could claim the discount<br \/>\nonly in terms of the price circular and not on the basis  of<br \/>\nany contract purported to have been concluded as a result of<br \/>\nthe  correspondence exchanged between the parties.  We\tare,<br \/>\nhowever, of the view that High Court fell into patent  error<br \/>\nin  appreciating  the scope and extent of the  circular.   A<br \/>\nbare reading of the circular makes it clear that the benefit<br \/>\nthereunder  was\t available to &#8220;any customer&#8221; and  not  to  a<br \/>\ngroup  of  customers.  Suppose there are 20 traders  in\t the<br \/>\ncity  of  Madras and each one of them lifts  300  tonnes  of<br \/>\nsteel  per month.  The off-take being less than\t 400  tonnes<br \/>\nper month, individually none of them would be entitled to<br \/>\n<span class=\"hidden_text\">278<\/span><br \/>\nthe  benefit  of  the scheme.  Can  they  claim\t that  since<br \/>\njointly they have lifted 6000 tonnes of steel which is\tmore<br \/>\nthan  400 tonnes in a particular month they are entitled  to<br \/>\nthe  discount  under the scheme for the\t off-take  over\t and<br \/>\nabove  400 tonnes.  Accepting such a claim would  be  making<br \/>\nmockery\t of  the scheme under the  circular.   As  mentioned<br \/>\nabove  the price discount scheme under the circular was\t for<br \/>\n&#8220;any  customer&#8221;\t and  not for  &#8220;group  of  customers&#8221;.\t The<br \/>\ncircular did not permit a group of customers not related  to<br \/>\neach  other  by\t constitution to avail the  benefit  of\t the<br \/>\nscheme\ton  the\t basis\tof  their  combined  off-take.\t The<br \/>\nrespondents could not have availed the benefit of the scheme<br \/>\njointly\t unless and until the scheme as a whole was  amended<br \/>\nand made applicable to all the customers of the Authority by<br \/>\nissuing\t a fresh circular informing all concerned about\t the<br \/>\nchange in the scheme.\n<\/p>\n<p>9.   Even  otherwise  there could be no\t concluded  contract<br \/>\nbetween the parties.  It was for the first time on  December<br \/>\n4,  1989  that the six traders made an offer  and  expressed<br \/>\ntheir  desire  to avail the benefit of the circular  on\t the<br \/>\nbasis  of their combined off-take.  Prior to that there\t was<br \/>\nno  communication  from\t the  traders  as  a  group  to\t the<br \/>\nAuthority  with\t regard\t to the admissibility  of  any\tsuch<br \/>\ndiscount  to  them  under  the\tcircular.   The\t methodology<br \/>\nsuggested  by  the  traders to share the  discount  was\t not<br \/>\nenvisaged under the circular.  The said method was even\t not<br \/>\nin accordance with the letter dated December 2, 1989 written<br \/>\nby  the Authority.  The Authority rejected the offer of\t the<br \/>\ntraders\t by  its telegram dated December 19,  1989  and\t the<br \/>\nletter\tdated January 23, 1990.\t No concluded contract\tcan,<br \/>\nthus,  be  deciphered from the\tcorrespondence\tbetween\t the<br \/>\nparties.   Looked from any angle, the High Court  fell\tinto<br \/>\npatent\terror  in  directing the  Authority  to\t extend\t the<br \/>\nbenefit of the circular to the respondents.\n<\/p>\n<p>10.  We\t allow\tthe appeals, set aside the judgment  of\t the<br \/>\nlearned\t Single\t Judge\tdated  April 17,  1990\tand  of\t the<br \/>\nDivision  Bench of the High Court dated October 9, 1990\t and<br \/>\ndismiss\t the writ petitions filed by the respondents  before<br \/>\nthe High Court with costs throughout.  We quantify the costs<br \/>\nas Rs 20,000.\n<\/p>\n<p><span class=\"hidden_text\">280<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Steel Authority Of India Ltd vs Salem Stainless Steel Suppliers on 3 November, 1993 Equivalent citations: 1994 AIR 1414, 1994 SCC (1) 274 Author: K Singh Bench: Kuldip Singh (J) PETITIONER: STEEL AUTHORITY OF INDIA LTD. Vs. RESPONDENT: SALEM STAINLESS STEEL SUPPLIERS DATE OF JUDGMENT03\/11\/1993 BENCH: KULDIP SINGH (J) BENCH: KULDIP [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-85446","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Steel Authority Of India Ltd vs Salem Stainless Steel Suppliers on 3 November, 1993 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/steel-authority-of-india-ltd-vs-salem-stainless-steel-suppliers-on-3-november-1993-3\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Steel Authority Of India Ltd vs Salem Stainless Steel Suppliers on 3 November, 1993 - Free Judgements of Supreme Court &amp; 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